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4-Patents: On Monsanto's patent fee fight

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                                  PART I
-------------------------------- GENET-news --------------------------------

TITLE:  Monsanto asks Brazil GM-soy exporters to pay royalty
SOURCE: Reuters
DATE:   May 22, 2003

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Monsanto asks Brazil GM-soy exporters to pay royalty

WASHINGTON - Exporters selling genetically modified soybeans from Brazil
may be asked to buy a license from Monsanto Co., the developer of the
variety, or "be subject to enforcement actions," the firm said. Monsanto
said the proposal was an attempt to end piracy of its technology. Growers
in the United States and elsewhere pay a fee for use of Monsanto's
"Roundup Ready" soybeans. According to the American Soybean Association,
growers in Brazil save 41 U.S. cents to 95 cents a bushel in production
costs because they pay no fees. Brazil has not approved use of GMO
soybeans but there are estimates that up to 30 percent of its soybean
plantings are of the Roundup Ready variety. The soybeans are genetically
enhanced to tolerate herbicides, which results in better weed control and
higher yields. "Our plan will allow the export of Roundup Ready soybeans
from Brazil by those who choose to execute an agreement acknowledging our
intellectual property rights," Monsanto Vice President Carl Casale said
in testimony prepared for a Senate Foreign Relations subcommittee
hearing. Casale said the agreement would "provide fair compensation to
Monsanto." Exporters and importers would need to acquire "this fee-
bearing license ... if the beans they are shipping from Brazil include
above threshold quantities of Roundup Ready soybeans," he said. "Traders
who elect not to secure a license will be subject to enforcement actions.
There are a myriad of procedures available to insure fair enforcement,"
Casale said. In addition, Monsanto would not introduce other biotech
varieties to Brazil "until intellectual property rights are respected and
effectively enforced," Casale added. Subcommittee chairman Norm Coleman,
Minnesota Republican, said the current situation was unacceptable. It
gives Brazil's farmers a cost advantage over U.S. farmers and violated
Monsanto's property rights, he said.

                                  PART II
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TITLE:  Monsanto reaps some anger with hard line on reusing seed
        Agriculture giant has won millions in suits against farmers
SOURCE: St. Louis Post-Dispatch, USA, by Peter Shinkle
DATE:   May 12, 2003

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Monsanto reaps some anger with hard line on reusing seed
Agriculture giant has won millions in suits against farmers

A farmer secretly gathers seed, glancing nervously over his shoulder and
wondering whether a neighbor might dial the anonymous tip hot line.

A corporation sends out spies and goes out of its way to make examples
out of growers it catches violating patents.

A defiant farm owner makes a stand and is sentenced to prison.

It's a hardball battle out there between an uncounted slice of farmers
and Monsanto Co., the agricultural giant based in Creve Coeur that
assembled a staff of 75 and a budget of $10 million a year to win it. For
years, Monsanto fought environmentalists over potential effects of its
genetically modified seed. Now, it's fighting activists who embrace the
seed but not the contract that comes with it. Farmers generally find the
seed easier and cheaper to use. But some resent a purchase contract that
says they cannot reuse seed from the crops they grow. More and more,
their differences are ending up in court. Often, that's federal court in
St. Louis. In fact, farmers agree to the court venue, convenient to
Monsanto, when they sign the agreement. Monsanto has not yet lost a
single fight. But there are still some farmers battling.

Save Our Seed

Mitchell Scruggs hardly fits the profile of an activist. A 53-year-old
Mississippian, Scruggs runs a cotton gin and owns the biggest farm in
three counties surrounding Tupelo. Until a few years ago, he had never
protested over civil rights, the environment or anything else. That
changed when he found that Monsanto forbids those using its product from
the age-old practice of saving seeds from one crop to plant the next. The
licensing agreement says they must buy new seed each year. Now Scruggs is
fighting in the courts, by word of mouth and just about any way he can.
He helped form Save Our Seed, a farmers' rights group that advocates seed
recovery as it has been done for generations. "I'm opposed to what
Monsanto's about," Scruggs said in an interview last week. "They're
raping farm communities and breaking farmers, because farmers do not have
any other place to go to get this planting seed."

The manufacturer says it is entitled to protect the value of its
"intellectual property" and to recover research costs. It says those who
violate the licenses commit "seed piracy." Scruggs, whose family has
farmed in Mississippi for more than a century, is among 73 farmers sued
by Monsanto in the past five years on civil claims of patent violations.
He countersued, saying that the patents are invalid and that Monsanto
enforces a monopoly over the seed industry. The case is pending in U.S.
District Court in Tupelo. But many farmers have accepted Monsanto's
agreements as legitimate.

Neal Bredehoeft, who works the land near Alma, Mo., and is a director of
the American Soybean Association, said his family saved soybean seeds for
decades but stopped to use Monsanto's. "Monsanto has to have the dollars
there to do some research," he said. "I believe they are taking the
technology fee and doing research to make a better bean." The company
touts a string of victories in the courts, including a $2.5 million
settlement with an Arkansas farmer. Farmers also are turning to the
courts. Some have filed class-action lawsuits asserting Monsanto is
violating anti-trust laws by gaining control of seed markets. Monsanto
denies it.

A farming revolution

Saving seed has long been an elemental part of farming, although some
farmers favored the practice more than others. Many have bought seed for
generations. In the 1990s, Monsanto began marketing its patented seeds
with genetic modifications. They included soybean and cotton seeds
engineered for immunity to Monsanto's own herbicide, known as Roundup.
The new technology meant that farmers could simply spray Roundup to kill
weeds without taking labor-intensive measures to avoid also killing their
crops. Monsanto says its Roundup Ready seeds make for better crops with
less use of chemicals and less work.

Bredehoeft said he will use Roundup Ready seeds for all 1,000 acres of
soybeans he grows about 65 miles east of Kansas City. "The Roundup Ready
seeds have really improved the economics of soybean farming," he said.
It's so popular that about 80 percent of the 73 million acres of soybeans
to be planted in 2003 in the United States are expected to be herbicide-
resistant, according to the U.S. Department of Agriculture.

Monsanto says its technology accounts for virtually all of the herbicide-
resistant soybean seeds on the market. Farmers are allowed to take seeds
produced from the crops and use them to feed pigs or crush them as
fertilizer for a flower bed. But second-generation seeds cannot legally
be planted, said Scott Baucum, lead manager for intellectual property
stewardship at Monsanto. Baucum, who grew up saving seed on his family's
cotton farm in western Texas, says Monsanto's product is so good that
it's worth buying fresh every year.

A bitter harvest

Some farmers don't see it that way. One of them is Kem Ralph, 47, who
raises soybeans and cotton with his brother on a farm in Tipton County,
Tenn., 40 miles northeast of Memphis. In 1999, Ralph decided to help
Dewayne Hendrix, a longtime friend and fellow farmer. When they were
young, the two men had started out driving trucks for big-time farmers
like Lloyd Bentsen, father of the former U.S. senator from Texas. They
had finally gotten their own farms, and by the late 1990s, they were each
planting thousands of acres near Covington, Tenn. But in 1999, Hendrix
was struggling financially, Ralph would later testify. Hendrix had used
Monsanto's engineered cotton seed in 1999, and instead of complying with
the license, he saved a truckload of seed from his ginned cotton and took
it to a company in Kennett, Mo., for processing, federal prosecutors say.
There, lint was removed from the seed, and it was placed in bags for the
next growing season.

It was a risky step. Monsanto has inspectors who visit farmers' fields,
and seed handlers to check for crops grown from saved seed. Monsanto also
has a toll-free hot line to encourage anonymous tips. The company says it
is unfair that some farmers honor the agreement and others don't. Many
farmers share that view. In December 1999, Ralph arranged for documents
to be sent to the Kennett company indicating that the seed belonged to
him, not Hendrix, according to a plea agreement Ralph signed in February.
Hendrix's brother picked up the seed and signed a receipt indicating it
was Ralph's.

Monsanto catches on

Monsanto began investigating Ralph's handling of Monsanto seed. In
January 2000, it sued in federal court claiming that testing discovered
illicit Roundup Ready seeds in Ralph's fields in 1999. At Monsanto's
request, U.S. District Judge Rodney Sippel ordered Ralph not to move his
crops or seed. But on March 2, 2000, he took a truckload of cotton seed
from his farm and dumped it into a gravel pit. With the help of his
brother and some farm workers, he used tires and diesel fuel to start a
fire that burned for two days. When Ralph told his lawyer, Lou Leonatti
of Mexico., Mo., about the burning, Leonatti reported it to Monsanto's
lawyers. A few days later, Monsanto investigators took samples at the
burn site. On March 24, 2000, Ralph unburdened himself, admitting he
burned an estimated 900 bags of saved seed.

His actions would cost him. Judge Sippel ordered Ralph to pay Monsanto
about $100,000. Sippel also threw out Ralph's defense, which included a
claim that he had never signed a Monsanto licensing agreement. Under
Sippel's ruling, Ralph was automatically found to have violated the
agreement. A jury considered only how much he would have to pay Monsanto
for using the seed improperly, and it settled on $1.7 million. In
February 2003, Ralph pleaded guilty in St. Louis to conspiring to commit
mail fraud when he helped Hendrix hide the saved seed. His plea included
a finding that Ralph had obstructed justice by burning the seed. On
Wednesday, Ralph was sentenced to eight months in prison and ordered to
pay the company $165,469 more.

The enforcers

Monsanto has built a whole department to enforce its seed patents and
licensing agreements. It has 75 employees and an annual budget of $10
million, said spokeswoman Shannon Troughton. The company tries to settle
with farmers before taking them all the way to court, but that doesn't
always work out, Troughton said. It often turns to Husch & Eppenberger,
the big St. Louis law firm that handles much of the company's legal work.
Of the 73 suits filed against farmers, 30 of them are in federal court in
St. Louis because of a provision in the licensing agreements that gives
Monsanto the choice of having them heard here. The other cases are spread
over 19 states ranging from Nebraska, east to New Jersey, and from
Michigan, south to Louisiana. Monsanto also distributes information to
farmers and seed companies about its court victories, including five
cases that have gone to trial.

A "Seed Piracy Update" brochure published by the company lists the Ralph
case as well as judgments of $780,000 against farmer Homan McFarling of
Mississippi and $593,000 against Bill "Dude" Trantham of western
Tennessee. When Ralph appeared in federal court for sentencing Wednesday,
Baucum, Monsanto's lead manager for intellectual property stewardship,
told the judge that others would make decisions "according to the results
here today." Paul D'Agrossa, attorney for Ralph, told the judge that
Monsanto has distributed information about his client in an effort to
damage his reputation and "destroy his family." Emerging from court after
Judge Richard Webber sentenced Ralph, D'Agrossa said: "I don't believe
justice is served by sending Mr. Ralph to jail for one day. As far as I'm
concerned, it's a pound of flesh Monsanto has been after for a long
time." Baucum said later: "We have not been focused on doing anything to
Mr. Ralph. We have been focused on defending our interests."

Some critics contend that Monsanto has gone too far.

Missouri state Rep. Wes Shoemyer, a Democrat from the rural northeastern
part of the state, complained that the company's commercials encourage
farmers to inform anonymously on each other. "They put a rift in the
social fabric of America that I absolutely abhor: Look at your neighbor
as someone to turn in," he said. Shoemyer, a farmer, is the sponsor of
legislation that would permit Missouri farmers to save seed if they pay a
royalty to the patent owner. The bill passed the House Agriculture
Committee 22-0 recently, and Shoemyer said he hopes to advance it as an
amendment on the House floor in the closing days of the legislative
session this week.

Farmers turn to law

Scruggs, the Mississippi farmer, is using the courts to fight back. He
hired James Robertson, a lawyer who served nine years as a justice on the
Mississippi Supreme Court. Scruggs denies that he saved Monsanto seed and
also contends that Monsanto's patents are invalid and monopolistic. Peter
Carstensen, a University of Wisconsin law professor hired as an expert
for Scruggs, said Monsanto has put an anti-competitive restraint on
farmers. The company denies it.

Last fall, Monsanto sought to remove the dispute over one of its patents
from Scruggs' trial, saying it would simplify the litigation. The judge
refused the request, and Scruggs says he sees a weakness. "I don't think
any of the patents are good, and I'm ready to go to court, the quicker
the better," he said. But attorney Clifford Cole, who represented
Arkansas farmer Ray Dawson, says anyone should be cautious before taking
on Monsanto. Dawson, who once farmed 50,000 acres in three states, used
to goad the company by wearing a hat bearing the words, "Monsanto Folds,
Dawson Farms."

But in the end, Dawson filed for bankruptcy and later settled with
Monsanto for $2.5 million, though the settlement ultimately permitted him
to pay only about $200,000, Cole said. "They were going to beat our
brains out," Cole said of Monsanto's attorneys. "These old boys, they're
good. They've got the tools, they've got the law on their side, and
they've got the money to back 'em."