(BN) DuPont Hid Failure of Soybeans for Years, Monsanto Says

DuPont Co. (DD), the most valuable U.S. chemical company, didn't tell investors for years that efforts to develop its own herbicide-tolerant soybean seeds had failed, Monsanto Co. told a jury at the start of a patent trial.

DuPont knew as early as 2006 that its GAT soybeans didn't grow as well as Monsanto's Roundup Ready beans and didn't make the information public until 2009, George C. Lombardi, an attorney for Monsanto, said today at the start of a patent trial in St. Louis. Monsanto is suing DuPont for adding the Roundup Ready trait to make its product work, a patent infringement it said is worth as much as $1 billion.

"For years, they told the world GAT was going to work," Lombardi, a Chicago-based lawyer with Winston & Strawn LLP, told the jury in Monsanto's opening arguments. "When it failed, they relied on the Roundup Ready product."

DuPont claims there was no infringement because St. Louis- based Monsanto got the Roundup Ready patent fraudulently. Monsanto intentionally withheld information about the genetic sequence that made its Roundup Ready technology work from the U.S. Patent and Trademark Office, said Leora Ben-Ami, a DuPont lawyer. That makes that patent invalid and unenforceable, she said.

"Monsanto didn't want people to know what was inside the bag, what was inside the seed," Ben-Ami, a New York-based lawyer with Kirkland & Ellis LLP, told the jury. "Monsanto didn't want people to know how the seed was made."

Soybean Sales

The Roundup Ready trait is engineered into more than 95 percent of soybeans, largely through licensing agreements, generating $22 billion of revenue over eight years for Monsanto and the more than 200 seed companies that license the technology, Lombardi said. The technology drove $6 billion in soybean seed sales for DuPont's Pioneer unit in that time, he said.

The Roundup Ready trait, introduced by Monsanto (MON) 16 years ago, allows crops to survive applications of glyphosate, marketed by Monsanto as Roundup, the world's best-selling weedkiller. DuPont's GAT seeds were developed to tolerate glyphosate and other weedkillers.

DuPont in 2008 developed hundreds of seed lines as it got ready to begin selling GAT soybeans that included the Roundup Ready trait, Lombardi said. That violated the companies' 2002 licensing agreement that prohibited combining the Roundup Ready trait with a second trait that also allows plants to tolerate glyphosate, he said. It also violated the company's patent, Lombardi said.

Head Start

Monsanto sued in 2009 to block the combination.

Infringing the patent in 2008 gave DuPont a six-year head start on the 2014 expiration of the Roundup Ready patent, Lombardi said. DuPont expected to generate $3 billion of revenue from the GAT soybean seed over those six years, which translates into $800 million to a $1 billion in damages to Monsanto, he said.

Ben-Ami acknowledged the GAT soybean seed had performance problems during severe stress, such as drought. The company, based in Wilmington, Delaware, contends the legal fight caused it to cancel plans to introduce its GAT corn and soybeans.

DuPont said Monsanto uses monopoly power to stifle innovation, restricting use of the Roundup Ready trait while making it difficult for competitors to develop a competing trait. Those antitrust claims have been split off into a separate case, with a trial scheduled for April.

The case is Monsanto Co. v. E.I. duPont de Nemours & Co., 09cv686, U.S. District Court for the Eastern District of Missouri (St. Louis).