On March 25, seed giants DuPont and Monsanto entered into technology licensing agreements that ended their ongoing patent and antitrust lawsuits. According to the terms of the agreement, DuPont will pay at least $1.75 billion in licensing and royalty fees to Monsanto from 2014 to 2023. These payments include fixed royalty payments from 2014 to 2017, totaling $802 million, and per-unit based royalty payments from 2019 to 2023, subject to annual minimums, totaling $950 million. DuPont and Monsanto also will dismiss their respective patent and antitrust lawsuits, including the August 2012 damage award of $1 billion against DuPont that have been pending since 2009. Further details on these agreements can be found in DuPont and Monsanto’s joint March 26 press release and DuPont’s March 26 Form 8-K.
Through these agreements, DuPont will have broad access to Monsanto’s Genuity® Roundup Ready 2 Yield® and Genuity® Roundup Ready 2 Xtend™ patented seed technologies. Monsanto, in turn, will have access to several of DuPont’s crop-disease resistance and corn defoliation patented technologies.
This truce is likely to help DuPont and Monsanto, both market giants, to remain dominant in seed markets. Collectively, DuPont’s Pioneer seed unit and Monsanto generated sales in excess of $20 billion in 2012.
Looming over the horizon for Monsanto is the Supreme Court’s pending decision in Bowman v. Monsanto, a case involving the issue of patent exhaustion and self-replication relating to seed technologies. Oral arguments were heard by the Court on February 19, 2013. A decision in this case is expected in June 2013.
Gibbons will continue to monitor developments in this case.
James J. Kang is an Apprentice in the Gibbons Intellectual Property Department. Estelle J. Tsevdos, a Director in the Gibbons Intellectual Property Department, co-authored this post.