Four Ontario farmers have helped clarify the cost of seed patent infringement in the most important legal decision involving agriculture since the Percy Schmeiser case, says their lawyer.
Monsanto counters that the courts have simply determined there are costs associated with stealing its technology and those costs vary with each case.
The Federal Court of Appeal sided with the four farmers in judgments dealing with damages on Aug. 6 and Oct. 1, 2010. They were appealing an earlier judgment on what they owed Monsanto Canada for stealing its Roundup Ready soybean technology.
The appeal court judges ruled the farmers owed 18 percent of their profits, which amounted to $24 per acre for Charles Rivett and $28.14 per acre for Alan Kerkhof, Lawrence Janssens and Ronald Janssens, who farmed jointly.
The amounts were close to what the farmers were willing to pay in settlement discussions.
Monsanto had been seeking 100 percent of their profits, or awards of more than $130 and $150 per acre respectively.
The farmers were also forced to pay pre-and post-judgment interest and a portion of Monsanto’s legal costs, raising their total costs to $38.78 per acre for Rivet and an average of $57.93 for the other three farmers.
Kurtis Andrews, a lawyer with Donald R. Good Professional Corp., said the case accomplishes what the Schmeiser case failed to do, which is to establish a precedent for settling future claims with Monsanto.
The Supreme Court of Canada found that Schmeiser, a farmer from Bruno, Sask., had violated Monsanto’s Roundup Ready canola patent. However, he didn’t benefit from the infringement because he didn’t spray the crop with Roundup, which resulted in no profit award.
The Supreme Court said a patent holder that selects an accounting of profits as its remedy is only entitled to profits that are causally attributed to the patent.
The Ontario farmers’ legal team phrased it another way in its appeal.
“Monsanto did not invent soybeans and should only be entitled to the benefit provided by their patent, not profits attributable to soybeans generally,” said Andrews.
Monsanto spokesperson Trish Jordan said farmers shouldn’t assume future profit awards will be in the same range as the recent Ontario cases.
Instead, it varies by what the courts accept as deductible expenses.
There have been two other judgments involving Ontario soybean growers who violated Monsanto’s patent. Paul Benita was ordered to pay the company $160 per acre and Eddie Wouters was ordered to pay $274 per acre.
She also said the costs extend well beyond the profit award, interest costs and Monsanto’s legal fees. Growers have to pay their own legal costs and out of pocket expenses and devote a lot of personal time for preparation and court appearances.
“Finally, and probably most important, if you are an infringing farmer, is that these growers have been placed on Monsanto’s unauthorized grower list and will not have access to any of Monsanto’s technologies in any crop, including those sold by other licensees now and in the future,” said Jordan.
Andrews said the Wouters case involved a farmer without adequate legal representation so the judge had no choice but to use Monsanto’s numbers.
He said the Rivet and Janssens and Kerkhof cases will have a lasting influence despite the fact that the patent on the first generation of Roundup Ready soybean technology expires this August.
The profit judgments in these cases were based on a comparison with conventional soybeans. Once growers are allowed to plant farm-saved Roundup Ready soybean seed in 2013, it will become the new legal comparison in cases involving infringement of Monsanto’s new Roundup Ready 2 Yield soybeans.
Andrews believes the profit benefit will be smaller, resulting in a smaller award. As a result, he thinks the company will be forced to ask legislators to consider some other type of deterrent for stealing seed technology.
“I’d be kind of surprised, in fact, if Monsanto didn’t start rallying the troops to try to get something like that to happen.”
Jordan rejected Andrews’ theory, saying Roundup Ready 2 Yield soybeans deliver a seven to 11 bushel per acre yield advantage over the original technology.
“The value on Roundup Ready 2 is significantly greater than Roundup Ready 1,” she said.
Jordan said Andrews is portraying patent infringement as a mistake made by growers without consequences, which is misleading.
“Growers don’t mistakenly infringe our patent. They do it intentionally to gain advantage over other producers who play by the rules.
“And when they are caught, there are obvious and significant consequences.”