DuPont committed fraud and lied in Monsanto seed patent case, judge rules

2012-11-30T12:46:00Z 2012-11-30T17:43:15Z DuPont committed fraud and lied in Monsanto seed patent case, judge rulesBloomberg News
November 30, 2012 12:46 pm  • 

DuPont Co., which owns Pioneer Hi-Bred International seeds, lied to a federal court and investors about its right to use Monsanto Co. seed technology as a central part of its defense in a patent lawsuit, a federal judge has ruled.

DuPont "knowingly perpetrated a fraud against the court," according to an order by U.S. District Judge Richard Webber unsealing sanctions he levied last December that limited DuPont's defenses in the lawsuit brought by Monsanto.

The two companies are the largest in the $34 billion commercial seed market.  

Emails from DuPont executives and lawyers show they knew the company didn't have an agreement allowing it to combine Monsanto's Roundup Ready soybeans with a second trait, while telling the court and public for years that it had such a right, Webber ruled. Because the sanction order was sealed, DuPont has "been able to continue their public relations spin," the judge wrote.

"The public is entitled to a full disclosure of the defendants' fraud, which unduly delayed resolution of this litigation," Webber wrote in his order. "Possible embarrassment or discomfort is not enough to justify sealing court records."

Webber will decide whether to uphold or increase a $1 billion award to Monsanto made Aug. 1 in the patent case by a federal jury after 40 minutes of deliberations. He also will preside in an October trial over DuPont's claims that Monsanto illegally extended its market dominance in genetically modified crops.

DuPont on Friday asked Webber to unseal more documents that show "we told the truth," Thomas L. Sager, DuPont general counsel, said in a statement. "The sanctions ruling is dead wrong," he said.

DuPont probably has damaged its relationship with the judge, perhaps to the point he may triple the jury award, said Ronald A. Cass, dean emeritus of the Boston University School of Law. The judge can increase the award based on the jury's finding that the infringement was intentional.

"I wouldn't put a lot of money on DuPont winning the antitrust claim, either," Cass, who also is president of Cass & Associates, a legal consultancy. "What DuPont did was pretty outrageous and put Monsanto in a difficult position because they were being raked over the coals in public."

Monsanto sued DuPont in 2009, saying the company was infringing a patent for seeds that are genetically modified to tolerate application of the herbicide Roundup. Monsanto argued that DuPont was not allowed to combine its own seed trait with Monsanto's Roundup Ready trait.

DuPont in turn accused Monsanto of trying to monopolize the seed market. Webber split the dispute, with the patent issue tried first and the antitrust case scheduled for trial next year.

After ruling in December that DuPont had misled the court, Webber prevented the company from arguing to the jury that it acted within the terms of a 2002 licensing contract. The judge also ordered DuPont to pay some of Monsanto's legal bills.

"Defendants show no remorse for their wrongdoing, but to compound the seriousness of their behavior, insist on maintaining their bogus arguments, despite the overwhelming evidence that those arguments are clearly contradicted by the facts," Webber wrote in his order sanctioning DuPont. "Defendants have made a mockery of this proceeding."

Webber, in his November order, said he provided the Department of Justice's antitrust division with a copy of his fraud findings in February. The department announced this month it dropped its investigation into possible anti-competitive practices in the seed industry.

Webber's orders "speak for themselves," said Kelli Powers, a Monsanto spokeswoman, who declined to comment further.

Webber said he sealed the document to avoid publicity that would have tainted the pool of jurors. Monsanto asked the judge to make the order public. After Webber's sanctions, DuPont wants to get the case before the U.S. Court of Appeals for the Federal Circuit in Washington, which specializes in patent law, Cass said.

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