Two grain industry behemoths are duking it out over who will be the new oil baron.
Cargill and Dow AgroSciences are embroiled in a series of legal battles over which company invented high oleic canola oil, a product both firms believe will take the food industry by storm.
At stake is the ownership claim to a specialty canola that could one day eclipse today’s entire conventional canola crop, says Dave Dzisiak, a spokesperson for Dow.
High oleic varieties could expand the North American canola crop to 20 million acres from the 13 million acres seeded in 2004, said , Dzisiak, Dow’s global business leader for oilseed sales.
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As much as two-thirds of that 20 million acres could be seeded to high oleic varieties.
“This is a great chance for canola to literally take market share away from soybean and other oils,” he said.
Rob Meijer, director of public affairs with Cargill Canada, had a more conservative outlook for the crop.
“It will never get to the point where it’s going to replace conventional canola oil.”
But he said there is huge opportunity for high oleic oils to satisfy growing consumer demand for zero trans fats in processed foods, which until now has been the domain of competitors like soybean oil.
The potential to go where no canola oil has gone before is at the crux of a legal battle between the two patent holders.
Cargill contends it invented the specialty canola, which it markets to farmers as InterMountain Canola. It has launched a number of offensives to prevent Dow from realizing any revenue from the Natreon oil made from its Nexera canola seed.
The U.S. Patent Office recently threw out two of Cargill’s challenges but the main legal battle, a lawsuit filed in the U.S. Federal Court in September 2003, is outstanding.
Meijer said the patent interferences, which were an attempt to have Dow’s two high oleic patents awarded to Cargill, were dismissed on procedural grounds related to the timing of Cargill’s filings.
“We didn’t exactly get our homework right,” he said.
Dzisiak said that is true but there was another important aspect outlined in the U.S. Patent Office ruling, which is that Cargill didn’t have any evidence to support its interference claims.
Cargill has an opportunity to re-examine and refile its patent interferences, but Meijer said most of the company’s legal efforts will focus on the 17-month-old lawsuit.
“That gets right down to the heart of the matter in Cargill claiming there is an infringement on our existing four high oleic canola patents.”
The U.S. Federal Court will eventually decide whether Dow has the right to contract, sell and produce Natreon oil, which Cargill claims infringes four of its 34 high oleic patents.
“There’s a lot of time and money and R&D effort that goes into producing these varieties. It’s intellectual property. This suit is about protecting that intellectual property,” said Meijer.
He said the U.S. Patent Office ruling shouldn’t have a bearing on the lawsuit because they are separate actions.
But Dzisiak wasn’t as quick to dismiss the dismissal.
“Although the (actions) are not related, the subject matter and the content and the arguments are,” he said.
According to industry estimates, Canadian growers seeded 800,000 acres of high oleic canola in 2004, which represents about seven percent of the total canola crop. Both companies expect a doubling or tripling of that acreage in 2005.
