Roundup Ready Soybean Patent Infringement Suit Between Monsanto and DuPont: Part II

In the medieval world property rights first and foremost concerned land. The medieval sovereign made grants of property to assure support from local noble land owners, support in the form of taxes paid and armies raised to defend the sovereign domain. The system was not characterized by much innovation, but when innovation occurred, the sovereign had taxes in mind when he grated patent rights.  He granted monopoly rights to the innovator to encourage the creation of an income stream that could be taxed and allow him to collect fees for the granting of the patent. It was in this context that the individual rights of the inventor came to exist.

The modern world redefined the purpose of the patent. A patent was conceived as promoting innovation for the public good. Article One, Section 8(8) of the U.S. Constitution states that:

The Congress shall have power…To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries:

By defining a purpose for patents, the constitution and its framers provided a standard by which patent law could be evaluated. We can judge patent law by how it incentivizes innovation for the “progress of science and the useful arts.”

In the court system not only to individuals and corporations come into conflict with each other and the state but different legal concepts and rules come into conflict with each other. In the recent court case of Monsanto Company versus E.I. Dupont De Nemours and Company over patent infringement it is not only the conflict between the companies which is of interest but the conflict between legal concepts.

Monsanto and DuPont battle over intellectual property rights and antitrust issues

Monsanto and DuPont have an on going battle not only in the market but in the courts.

Monsanto’s patent for Roundup Ready ® soybeans 1 (RR soybeans and the 247 patent) contains a mind numbing list of claims to the gene that they created, at various levels of specificity and generality. The claim to the gene itself is followed by claims to glyphosate plant cells and plants containing the gene and a method for controlling weeds based on the gene or its variants. Just to make the scope of the claims perfectly clear, it provides a list of crops within which they claim plants containing the gene.

The list of claims which directly influence the licensing and commercialization of the trait come next. These claims related to soybeans, which is the transformed plant which Monsanto actually had in hand when the patent was filed. In order to make a general claim in a patent the inventor must have created at least one example. Claims to the invention in hand are stronger than more general claims.  The patent claims the seeds of soybean plants with the gene. It claims hybrids made from the soybean plants carrying the gene in which the gene is heterozygous. It calms the seeds of those soybean hybrids. With these later 2 claims Monsanto has claimed the right to control all breeding with plants containing their gene. The other traits that the hybrid plants might contain do not create exceptions. The recent Federal District Court case concerns whether these patent claims applied to DuPont’s use of the RR gene around 2008. 2  The jury decided that they did, and decided that Monsanto had suffered $1 billion in damages because of DuPont’s actions.

The major conflict in the law in operation here is the conflict between the monopolies granted by patents and the monopolies which are prohibited by the Sherman Antitrust Act. That part of the story of the conflict between Monsanto and DuPont has yet to come to maturity. We don’t yet need to pull out our yard stick of the “progress of science and the useful arts”  to start measuring how patent law is working as patent grated monopolies impact restrict markets for plant traits in the U.S. Most of the patent policy which was used to judge DuPont  and Monsanto at this point is set and relatively uncontroversial.  Although we have not got to the part of the story which is relevant to policy controversy, much has already happened in the story of the lawsuit brought against DuPont and Pioneer by Monsanto but to this point we have not gotten to the point where there will be policy conflict

Monsanto Suit Against DuPont

The simple statement that Monsanto had a patent which allowed control of breeding with its trait and DuPont was found to have willfully rejected Monsanto’s control might seem to make the situation simple, but the situation was most definitely not simple, and there is more to the situation than this abbreviated account indicates.

First, there is the content of an agreement which Monsanto and DuPont created in 2002. In that agreement Monsanto Granted DuPont a license to use the RR soybean covered by the patent trait in certain ways.

Monsanto sued DuPont in Federal Court in May of 2009.  In addition to the patent infringement which I mentioned above, the suit accused DuPont and Pioneer of violation of the contract.  Monsanto held that the contract did not include a license for DuPont to combine the RR gene with other glyphosate herbicide tolerances and that DuPont and Pioneer had violated the terms of the contract by so doing, and unjustly enriched themselves in the process. Monsanto asked the court to order DuPont to stop violating the contract, and asked the court to order DuPont to pay Monsanto damages. 3

Prior to 2006 DuPont and Pioneer were in the process of creating a gene called Optimum ® GAT ®, or glyphosate and acetolactate synthase tolerance (OGAT). Acetolactate synthase tolerance is important to DuPont. As Monsanto is known for the invention of glyphosate herbicide, Roundup ®, DuPont is known for the creation of herbicides in the sulfonyl urea family. The sufonyl urea herbicides are inhibitors of acetolactate synthase. 4 A gene resisting sulfonyl urea herbicides such as Optimum GAT would permit DuPont to sell their sulfonyl urea herbicides in higher volumes. Sulfonyl compounds originally formulated for other crops could be used in soybeans.  For example a corn herbicide such as nicosulfuron, Accent®, which is usually extremely lethal to soybeans, might become a soybean herbicide in ALS tolerant beans.

In understanding the power of patents it is important to understand that the underlying assumption is that the patent holder has control of the innovation as described in the patent claims. Here we go back to the old definition of property, including intellectual property. Property is not just a right to collect income from the use of something, say land, it is a right to control it. If a land owner chooses to let his farmland land go back to scrub rather than rent it, that is his choice. If he chose to rent the land without hunting rights because he wants to hunt on it or to control hunting, that is his choice. Patents grant a right to control an invention, not just the right to collect royalties when an invention is used.

On the other hand, if the land owner rents the land without hunting rights he needs to have an agreement to that effect with the renter. The first part of this story concerns the agreement between Monsanto and DuPont with respect to the use of RR with OGAT. In this case a judge decided what the contract said. Monsanto had the right to control what was granted in the contract under the patent, but DuPont disputed what the agreement stated.

That Federal Court ruling came in January of 2010. 5  The Court found that DuPont had stacked the genes as asserted by Monsanto. The fact that Pioneer had referred publicly to results from tests of the stacked products in both soybeans and corn left little doubt that hybrids had been made between lines carrying the RR gene and OGAT and that progeny from those crosses had been used by DuPont. DuPont even had a patent on the combination of OGAT glyphosate tolerance and RR soybeans.

More importantly the court found that the provision which defined what DuPont was sufficiently specific as to exclude stacking. This was what the license allowed:

3.01(a) Subject to the terms of this Agreement, Monsanto hereby grants to Licensee, and Licensee hereby accepts, a non-exclusive license with the Licensed Field in the territory under Monsanto Patent Rights, Biological Material and Licensed Patent rights to develop, use, produce, have produced, offer to sell, sell and import Licensed Commercial Seed. 6

This does not expressly prohibit stacking. There is a condition which DuPont interprets as allowing stacking with RR in general:

3.01(e) The parties agree that except for applicable patents, Licensee shall be free to introduce any gene and/or trait into, and commercialize as set forth in 3.01(a), Licensed Commercial Seed produced by traditional plant breeding or crossing any gene and/or trait without prior consent of Monsanto, except as specifically provided in subparagraph 3.01(g) and 3.01(h)… 7

But the licensing of the right to stack was conditional on compliance with 3.01(a) and the Court noted that the definition of “the Licensed Field” restricts the scope of what is licensed in 3.01(a). In the contract the Licensed Field is defined as:

Licensed Commercial Seed which exhibits genetically engineered protection against Glyphosate herbicide solely due to the presence of the Glyphosate-Tolerant Soybean Event: 40-3-2 [or Corn Event: NK603].  {emphasis added}

DuPont and Pioneer interpreted this as restricting the license to 40-3-2 (RR soybeans) and NK603 (RR corn) as opposed to other events that might be covered by the 247 patent.  The court noted however that this interpretation made the existence of the world “solely” in the sentence meaningless. The court decided that the word should mean something and that its presence means that the license did not extend to a combination of 40-3-2 or NK603 with any other glyphosate tolerance event. A combination of 40-3-2 or NK603 with OGAT was excluded from the license because OGAT included glyphosate tolerance and the license required that “Licensed Commercial Seed” contain solely 40-3-2 (or NK603) glyphosate tolerance. In the opinion of the court DuPont had accepted this condition when it accepted the contract.

In addition to there is another relevant section of the contract in which Pioneer:

3.01(i) …agrees not to commercialize a variety of Licensed Commercial Seed which carries a gene or genes not supplied by Monsanto and which results in increased tolerance to a non-glyphosate herbicide, …

unless Pioneer demonstrates that it does not reduce the seed products glyphosate tolerance. The Judge’s ruling questions why there would not be a similar restriction on glyphosate tolerance traits if the agreement intended them to be allowed.

The court found that Monsanto had a right to partial judgment in its favor with respect to the allegation that DuPont was not licensed to stack the Roundup Ready traits with OGAT.  There was section on contract law which concluded that Monsanto could properly assert claims of breach of contract. The court also rejected DuPont’s request for a dismissal of the suit.

Countersuit and the Separation of DuPont’s Antitrust Allegations

On June 16 2009 DuPont and Pioneer replied to Monsanto’s accusations and filed a countersuit to Monsanto’s Complaint. The request for dismissal of the contract dispute was a just a small part of the countersuit. The court ruling in January of 2010 was a narrow ruling which did not address other issues associated with the countersuit. The other parts were the important ones.

The DuPont and Pioneer response to Monsanto not only rejected the claim that DuPont had violated the 2002 contract between Monsanto and DuPont, but also claimed that the 247 patent was invalid because Monsanto had withheld information from the U.S. Patent office when the application for the original patent was submitted, and that Monsanto was and is improperly using its market power in traits to restrict competition in the market for traits in the United States.

The most important part of the countersuit included accusations of antitrust activities by Monsanto. DuPont accused Monsanto of using its market dominance of its traits to interfere with the participation of others in the markets for other traits in the U.S. Patents grant a monopoly for an invention. New inventions in an area of commerce can create new industries or lead to the radical restructuring of old ones.  Successful innovation can lead to the dominance of a new inventor in the new industrial landscape. Monsanto is the inventor which can to dominate in agricultural biotechnology. Apple, Microsoft, and IBM provide examples from other industries.  Patents and combinations of patents play an important part in the growth of such giants. There is an inherent tension between the legitimate monopolies granted by patents and anticompetitive activities which are not legal. The tensions increase because technologies are rarely used alone. They get incorporated into complex products. In our industry, the complex products have stacked genes. In the case of Microsoft there were combinations of operating systems and programs. In the case of IBM the issue was the interaction of hardware and software.

In this case. DuPont had asserted that at least some of Monsanto’s allegations were invalid because they were associated with Monsanto demands which would not be allowed under the Sherman Antitrust Act of 1890. The Sherman Act which makes illegal some kinds of interference with trade. In this case DuPont is asserting, among other things, that Monsanto is interfering with the use of OGAT by independent seed companies. In September of 2010, the judge in this case, Mr. Richard Weber, decided that the issues about competition and the possibility that Monsanto might be misusing its market power would be split off into a different case.

That case will be tried next year, but the accusations resulted in investigations by the Department of Justice and the Department of Agriculture into Monsanto’s competitive practices. Such investigations are reminiscent of the Department of Justice and other governments’ accusations against IBM in the 1970’s and Microsoft in the 1998-2001 period. Apple has yet to acquire this level of dominance, but it is now in court defending its patent rights against Samsung in a case in which Samsung is investigating how closely it can model its phones on Apple’s IPhone without actually using Apple’s patented technology.

The Case Decided in July 2012

The jury trial which just concluded addressed Monsanto’s accusations that DuPont had infringed the 247 patent, DuPont’s counter accusation that the 247 patent was invalid, and the size of the damages which Monsanto had suffered.

The conceptual simplicity of the trail had been achieved by the judge’s separation of the questions of whether the license included a license to combine RR with OGAT and the antitrust issues.

It might have seemed that the trial should have been structured with the determination of the validity of the patent first, but I assume that the order was dictated by the order in which the claims and counter claims were made.  Monsanto filed first, so Monsanto’s infringement claims were considered first. I will take the liberty of reversing the order.

Patent 247 was reissued in 2003 to correct claims errors which Monsanto made in the application for the predecessor patent. The 247 patent would be invalid if the application for its predecessor was incorrect in its specification of the requirements for a patent.  This section of the decision is complicated by the long list of patent requirements which DuPont suggest that Monsanto had failed to fulfill:

  • “DuPont and Pioneer contend that the asserted claims are not fully supported by the specification of the applications filed in 1990 or 1991, and thus have a priority date of 1994.” This is relevant to novelty because “DuPont and Pioneer contend that claims 1, 2, 10, 57, 69, 103, 104, 105, 107, 108, 119, 125, 128, 131, and 143 of the ’247 patent are anticipated by International Publication No. WO 92/04449 … which published as a printed publication on March 19, 1992.” 8  This would have been more than 1 year before 1994 and the novelty requirement for a patent would not have been meet.
  • “The patent law contains certain requirements for the part of the patent called the specification.  DuPont and Pioneer contend that claims 10, 57, 69, 103, 104, 105, 107, 108, 119, 125, 128, 131 and 143 of Monsanto’s ’247 patent are invalid because the specification does not contain a sufficiently full and clear description of how to make and use the full scope of the invention claimed in each of the asserted claims.” 9
  • “DuPont and Pioneer contend that claims 10, 57, 69, 103, 104, 105, 107, 108, 119, 125, 128, 131 and 143 of the ’247 patent are invalid for failure of the patent to provide an adequate written description of the claimed invention.” 10
  • “The patent law contains certain requirements for the part of the patent called the specification. DuPont and Pioneer contend that claims 119 and 125 of Monsanto’s ’247 patent are invalid because the specification does not describe the best way to make and use the claimed invention. 11” For this to have invalidated the patent DuPont would have to show that failure was intentional.
  • DuPont contends “that the ’247 patent is invalid because it fails to name Dennis McCabe, Paul Christou, and Brian Martinell as inventors. A patent is invalid if it fails to meet the requirement that all of the actual inventors, and only the actual inventors, be named as inventors in the patent.” 12

The jury did not find any of these DuPont claims convincing. In so finding, they determined that the original patent based on the 1994 application was valid.

In addition to the validity of original patent, DuPont raised questions about the manner in which Monsanto’s representatives proceeded during the reissue process.  Reissue is only valid if the errors which were being corrected in the original were unintentional. DuPont asserted that Monsanto had deliberately made false claims in the application for predecessor patent, and did not have a valid right to ask the Patent office to correct those errors. In addition DuPont alleged that Monsanto knew that its representatives had made intentional errors in the original patent and was deceiving the Patent Office when it asked for the reissue process. Such deception on the part of Monsanto, if it had occurred, would have invalidated the 247 patent because it would have corrupted the process by which the patent was issued. The jury rejected accusations by DuPont and Pioneer that Monsanto made improper statements to the patent office when asking the patent be reissued. This being the case, the 247 patent itself was found to be valid.

With the valid 247 patent in place, one can then decide on the infringement issues.

The jury found that DuPont had directly infringed the following 247 patent claims: 103, 104, 105, 107, 108, 119, 125 and 128. Claims 103-108 describe the RR soybean gene. Number 119 claims a soybean plant with a specific part of the gene, the part that confers resistance to glyphosate. Number 125 claims soybean seed with that same part of the gene conferring glyphosate resistance. Number 128 covers a plant cell with, among other DNA segments, the same part of a gene specified in 119 and 125.

The jury found that actions by DuPont had substantially infringed additional claims in the 247 patent:  1, 2, 10, 57, 69, 131 and 143. Claims 1, 2, 10, 57, 69, 131 involve claims to DNA sequences and combinations of sequences which are similar to, but not identical with, those in the RR soybean gene and its corn equivalent. The original claims included claims to similar sequences which expressed similar functions. Claim number 143 claims glyphosate resistance which is produced using combinations of sequences in this group.

In both these categories, the jury found that because DuPont had no license to be using the genes or the glyphosate tolerance produced using them, that DuPont had infringed on Monsanto’s right, conferred by the patent, to control the use of the genes and tolerance. Monsanto had a right to ask for a royalty and had been damaged when it asked and was refused by DuPont and Pioneer.

In addition to the question of infringement of the 247 patent by DuPont, the jury trial also addressed the issue of whether any infringement by DuPont was willful. If infringement was found to be willful, then there is a possibility that the court could add punitive damages to the actual damages resulting from any infringement.  The jury found that DuPont’s infringement actions were willful.  This means that the Judge can award punitive damages in addition to the actual damages suffered by Monsanto.  At this date he has not yet done so.

In this trial the jury is responsible to determine the level of damages. The judge instructed the jury to estimate the damages to Monsanto on a reasonable royalty which Monsanto could ask DuPont to pay for the use of the RR and OGAT combination. The jury set the damages at $1 billion.

At one point during the trial, DuPont’s legal team, with a view to limiting their liability I think, wanted to inform the jury about DuPont’s decision in 2011 to completely abandon OGAT commercialization. They judge refused the request. Future royalties are not the central issue. As I said at the beginning, patent rights are about the right to control the invention, not primarily about the collection of royalties. Even though the judge told the jury to decide the value of the injury to Monsanto based on a reasonable royalty, the injury itself was the loss of control of something which they wanted to control.

Context in the Seed World

In one place above I said that this part of the Monsanto DuPont patent story was relatively uncontroversial, and that is true within the meaning of the world “relatively”. There is little controversy in the modern world in which the influence of science, economic progress, and individuality (human rights including property rights) are taken to be positive. There are postmodern and pre-modern points of view from which patents and patents on biotechnology are controversial.

The U.S. constitution describes the process by which ownership creates incentives for the “progress of science and the useful arts.” There are those like Joe Stiglitz who think that progressive society should take more control of the innovation process. He thinks that patents are inefficient because sometimes they reward inventors too much. Dr. Stiglitz thinks that the patent period of 20 years is too inflexible. After all U.S. society recently changed the patent period. Formerly it was 17 years from invention.  Now it is 20 years from filing. The change brought the U.S. into line with the rest of the world. To Dr. Stiglitz the fact that the period can be changed just illustrates the weakness of patent ownership as an innovation reward system. He would like to see the rewards handed out by a government committee.

Then there are critics who don’t like the science and progress which the patent system encourages or incentivizes, and don’t like the individualism which permits science to advance and progress to occur. This group is postmodern or pre-modern. Superficially they would like to find a moral platform from which technology can be judged before it has a chance to change society in ways of which they disapprove. They don’t like patents, not only because they give an individual or a corporation the right use the innovation, like RR soybeans, but also because they give an individual the right to set up a distribution system, like Monsanto’s system of licensees, which spread that technology around the world. They especially don’t like the WTO, because the WTO institutionalizes the modern world, a modern world in which the acceptance of individual intellectual property ownership makes it possible for owners to globalize the spread of technology, like agricultural biotechnology, in ways which are beyond the control of individual societies. The postmodern point of view sees the creation of new community solidarity which will pass judgment on technology and make certain kinds of technology socially unacceptable. Most of the agrarian part of the anti-biotechnology movement falls into this category. They reject patents because they do not wish a player like Monsanto to be able to set up a successful distribution system and don’t like government which supports such a patent system.

There is also a pre-modern, traditionalist, or social conservative category of objections to the power of science to bring progress. Most of the world’s major religions have made their peace with science and progress. Most major religions have accepted agricultural biotechnology. The acceptance of science is expressed in different ways in different religions, but one can take the Catholic Church’s concept of two Nonoverlapping Magisteria as an example. There are religious reformers who would reform traditional religion in ways which would reject the power of science, technology, and ownership to change society. These reformers tend to see science as an affront to God. Those in the postmodern category tend to see biotechnology as a new form of corruption requiring something like a new religion of naturalism to oppose it. To some traditionalists, biotechnology is a sign of an old corruption reappearing, the hubris of man in relation to his Creator. This form of rejection of the power of patents is not very frequent within U.S. Society. When I think of this kind of reforming or reactionary religion I think of some kinds of Islamism which reject modern Western civilization as crime against the true God.

To these opponents who find the patent system fundamentally controversial, whether DuPont or Monsanto won the court battle in St. Louis was of little importance. They oppose the system of law within which the conflict between took place. For that matter, they oppose the U.S. Constitution which created the system of law and the frame of mind in society which supports the U.S. Constitution and similar contractual constitutions around the world. It is surprising how much controversy subject matter which is “relatively uncontroversial” can hide.

Discussion of the resistance to the patent system will appear in the discussion of the third part of the Monsanto v. DuPont case, the part which deals with the counter claims which DuPont made that Monsanto was misusing the monopoly power granted by the RR soybean patent and other patents to improperly influence the market for traits. Opposition to the patent system is rejection of monopoly power, even legal monopoly power. Some of the arguments which will be made in support of DuPont’s position will be arguments which reduce the weight of patents in the balance which must be struck between the monopoly power grated by patents and the illegitimate used of monopoly power which is prohibited by the Sherman Act. From my perspective the positive contributions in the debate will be those who seek to find rules which will clarify the balance between the two kinds of monopoly in a way that can be explained to the public or at least their representatives in Congress and the courts. Unfortunately, I expect that much of the rhetoric which will accompany the court case will be designed to obscure rather than clarify.

Paul Christensen

Christensen Consulting

Seed Notes:

1 United States Patent No. U.S. RE 39,247E. The ’247 patent was reissued to Monsanto on August 22, 2006 from U.S. Patent No. 5,633,435, which was originally issued to Monsanto in 1997 based on an application submitted in 1994.

2 Monsanto Company v. E.I. Dupont De Nemours and Company, et. al., Case No. 4:09-cv-00686-ERW (E.D. Mo. May 10, 2011)

4 ALS inhibitor family includes sulfonylureas (SUs), imidazolinones (IMIs), and some other less common herbicide families. BASF is the specialist in IMI herbicide since they merged with American Cyanamid where the IMIs were discovered.

6 In the same document

7 In the same document

8 Richard Weber, Jury Instructions, Case: 4:09-cv-00686-ERW Doc. #: 1566 Filed: 08/01/12

9 In the same document.

10 In the same document

11 In the same document

12 In the same document

Seed Keywords:

Intellectual property, seed, Roundup Ready, Optimum GAT, patent, Pioneer, Monsanto, DuPont, License, suit, countersuit, infringement, contract, agreement, seed business, industry, Case No. 4-09-cv-00686, lawsuit.

About Paul Christensen

I am retired Coordinator of the Seed Technology and Business program at the Iowa State University Seed Science Center and Staff member of BIGMAP, the Biosafety Institute for Genetically Modified Agricultural Products. I have also worked for Monsanto, DEKALB Genetics, and Funk Seeds International, which is now part of Syngenta, and worked for USAID in Africa. Much of my technical activity has been associated with product testing and development. As a University Faculty member, I was exposed to many forms of opposition to agricultural biotechnology and the commercial seed industry, and I think that I have developed a unique understanding of some of the philosophical opposition to modern plant technology. I have a well-developed understanding of the kinds of arguments used for and against seed and biotechnology regulation and policy. I have focused on corn, sorghum and sunflower.
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