Article

by Carey Gillam

U.S. chemical maker DuPont and its agricultural seed unit, Pioneer, acted in bad faith in a long-running legal battle with rival Monsanto Co, according to a federal appeals court ruling on Friday that affirmed sanctions against DuPont.

The U.S. Court of Appeals for the Federal Circuit agreed with a lower court decision in Missouri that sided with Monsanto in a dispute over DuPont's use of Monsanto's patented seed technology that makes certain crops able to tolerate glyphosate-based herbicide.

The appeals court ruling said the lower court was correct in finding that "DuPont had abused the judicial process and acted in bad faith," and should be sanctioned for its conduct. The court found that DuPont's actions did not rise to the level of "fraud on the court," however.

Friday's ruling did not specify the amount of sanctions, but they are to cover Monsanto's attorneys fees.

Monsanto had little to say about the latest turn in the five-year-old court battle.

"The decision speaks for itself," said Monsanto spokesman Thomas Helscher.

"We are disappointed in the decision reached by the Federal Circuit today in the now-concluded litigation with Monsanto," said DuPont spokesman Dan Turner. "It is important to note, however, that the appellate panel agreed with our long-standing position that we did not commit fraud on the court."

A jury in the U.S. District Court in St. Louis in 2012 ordered DuPont to pay Monsanto $1 billion in damages for violating a 2002 licensing agreement between the two companies. But last year, DuPont said it would pay Monsanto $1.75 billion in a new licensing deal that threw out the jury award.

That deal allowed DuPont to appeal the sanctions, however, which DuPont did, leading to Friday's ruling.

Monsanto filed suit against DuPont and its Pioneer unit in May 2009, citing the unlicensed use of the so-called Roundup Ready trait. It said DuPont violated the licensing agreement when it tried to develop a new product that stacked its own technology with Monsanto's.

DuPont countered that Monsanto acted fraudulently in obtaining its patent, rendering it invalid. And notably, Dupont argued it was not aware it could not put its own trait on top of, or "stack" it with, the Roundup Ready trait.

But email communications revealed through discovery showed that DuPont was advised by its own lawyers that the licensing arrangement restricted stacking of its own trait with Monsanto's. Monsanto asked the court for sanctions against DuPont for the misrepresentation.

Both companies have strong positions in the U.S. seed industry and have been racing each other to develop higher-yielding crops through genetic modifications and other means.

Monsanto introduced its Roundup Ready soybean technology in 1996. Roundup Ready crops can tolerate sprayings of Roundup, or glyphosate-based, herbicide. The technology has become a foundation for many key crops, including corn, alfalfa, cotton, canola and sugar beets.

(Reporting by Carey Gillam in Kansas City, Mo.; editing by Matthew Lewis)