Monsanto Tech Fee Takes Hit in Brazilian Courts

Monsanto Tech Fee Takes Hit in Brazilian Courts

Dispute centers on Brazil's intellectual property laws

Back in West Tennessee, I used to take my mom to Yard sales, and we often passed a place with a plywood bed board propped up as a sign, with dripping letters painted in white shoe polish warning us of black helicopters and blue berets. One World Government. Well, if I worked at Monsanto that might be just what I would want. Differing domestic rules are hampering the company in a big way these days, and the latest blow came from Brazil.

Dispute centers on Brazil's intellectual property laws

At the end of last week, the U.S. Supreme Court said it would hear the case of Monsanto versus Indiana farmer Vernon Bowman. The company alleges Bowman infringed on its seed technology patents. And shortly thereafter, a few miles south of the Hoosier State, Monsanto's tech fee took a hit in Brazilian courts.

The Brazilian state of Mato Grosso is Brazil's top soybean producer, and its farmers are big buyers of Roundup Ready Soybeans. In Mato Grosso, a judge slapped an injunction on the St. Louis-based company, preventing them from charging a tech fee any longer, as its intellectual property rights for Roundup technology expired on September 1, 2010. From that point on, the court said, the technology went public.

Brazilian patent law, say Mato Grosso producers, doesn't allow for an extension of patent rights, and patent protection for RR technology ended then.

Meanwhile, Monsanto says it's just protecting its property, which is "duly patented and protected" according to what it calls the "clear rules" of Brazil's Intellectual Property Law. The company says it can continue to charge a tech fee until 2014, under Brazilian law.

And that tech fee has added up. Given that some 80% of Mato Grosso soybeans have RR technology, the state's soybean producers have paid, according to reports, about $150 million to Monsanto at the current exchange rate. As a result, the Mato Grosso court not only suspended the tech fee, but ordered Monsanto to pay producers back several million dollars for what it ruled were unwarranted charges since 2010.

The state's Agriculture Federation issued a statement saying it recognizes the need for companies to earn back their investments in Ag technology, which is why "we wish to clarify that we are in favor of payments for intellectual property rights. We defend fair charges."

It's been calculated that Brazilian farmers pay an average of about $4.40 per acre in tech fees for the use of RR beans.

It's the latest setback for Monsanto, which has had to destroy 1.3 million bushels of Intacta RR2 seed in Brazil after the same Mato Grosso soybean association warned its members against planting the product—as China has not yet approved it.

There is little doubt the company will appeal to a higher court—just as it did when the Brazilian state of Paraná refused to let RR beans across its borders even though biotech had been approved nationally in Brazil.

With the millions at stake in the biotech game, you have to figure Monsanto might find it easier to do business, and market new technology, if there were fewer bureaucracies and local laws to deal with.

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