MONSANTO SETS THE RECORD STRAIGHT ON DUPONT’S SUBMISSION
As the Justice Department continues its review of the seed and trait industry, Monsanto remains confident
that a comprehensive review of the facts will show that competition is alive and flourishing in the seed
and trait industry.
Monsanto‟s technologies have enabled the seed business to be more competitive and robust with
increased seed choices and more technologies available to customers of all sizes.
While Monsanto‟s success has resulted in one of the most innovative business achievements in history,
that innovation needs to be respected and appropriately protected through the patent process.
DuPont‟s public comments submitted to the Justice Department and their continued effort to push for a
federal review of the industry are nothing more than a campaign aimed at diverting attention from their
own financial and scientific failures to innovate and keep up with the competition.
DuPont‟s actions, when viewed in perspective, are part of a larger effort to conceal how vulnerable their
business has become because of their failure to deliver successful innovations.
DuPont‟s concerns stem from its financial performance and its business pipeline. Its soybean
business is built on a license provided by Monsanto to the Roundup Ready® technology. DuPont
is now calling for assistance because after expiration of the Roundup Ready soybean patent its
soybean sales, representing hundreds of millions of dollars in gross profit, will be dependent on
their ability to sue farmers on variety patents to prevent farmers from saving and replanting
Pioneer soybeans.
In an effort to mask their failure to innovate (Optimum® GAT® presents “unacceptable risks” to
farmers) and bad business decisions (failed to obtain the required patent rights from Monsanto),
DuPont chose to violate Monsanto‟s contract rights and U.S. patents by misusing the Roundup
Ready soybean trait to conceal fundamental problems with their Optimum GAT trait.
DuPont recently admitted that their Optimum GAT (OGAT) trait, which was to compete with
Monsanto‟s Roundup Ready trait, presented “unacceptable risks to farmers.” This admission only
reinforces the fact that the company has no interest in pursuing innovation but instead seeks to
use litigation to stack a “risky” OGAT trait to Roundup Ready before the patent expires. Simply
put, if DuPont‟s OGAT technology does not acceptably convey glyphosate-tolerance, then it
appears their desperate attempts are aimed at identifying a way to charge farmers for the Roundup
Ready soybean technology following the expiration of the patent in 2014.
Monsanto announced that after trait patent expiration it will allow farmers to save (and replant on
their own farms) seed of Monsanto-developed varieties of Roundup Ready soybeans. Thus
Monsanto is taking the farmer-friendly position that despite having valid patent rights, we would
not use them to prevent farmer saved seed. DuPont has never stated its position about enforcing
its variety patents following trait patent expiry, and recently started suing soybean farmers to
enforce variety patents.
DuPont statements regarding Roundup Ready technology have shifted over the years to mask the
failure of their business plan. First, DuPont spoke loudly of what they perceived as the pitfalls of
Roundup Ready technology and the advantages of the trait they were developing. Once their
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product was deemed too risky, DuPont changed its story by announcing that the OGAT
technology “needed” to be stacked with Roundup Ready and then suggested that all seed traits
needed to be paired with Roundup Ready. DuPont‟s reversal of position is yet another
diversionary tactic designed to distract focus from their business decisions.
DuPont‟s willful breach of licensing agreements signed with competitors has evolved into a
pattern of behavior that extends beyond Roundup Ready. They have chosen to breach all three
licenses with Monsanto and also have a contract dispute with Dow on Herculex®. Their
disappointing pipeline has forced them to adopt a strategy of accessing technology through
licensing agreements and then searching for loopholes in the existing agreements to stack others‟
innovations with their defective products.
Certain facts remain undisputed; Monsanto made the risky and ultimately right business decision to invest
early in biotechnology research and development. Thirty years later, the company‟s success in the
industry is a result of smart business development decisions that created superior products now preferred
and considered first in class by many customers.
Put simply, the reason behind Monsanto‟s success today is good old-fashioned innovation and smart
business decisions. Any suggestion to the contrary is pure fiction.
Here are DuPont‟s primary claims and the real facts behind them:
DuPont’s claim: Monsanto has an “overwhelming monopoly” in the soybean and corn trait
markets, with approximately 98 percent and 79 percent share, respectively, as well as some 60
percent of the corn and soy germplasm licensed in the U.S.
Facts: Trait share does not equal monopoly power. Monsanto does not have a monopoly – overwhelming
or otherwise – in either traits or germplasm. DuPont‟s claims would suggest that Monsanto is the only
trait provider in the corn and soybean industry and that is not the case.
Farmers report that they have a wide number of choices available to them when it comes to both seed and
traits, as well as the companies they purchase them from. There are approximately 173 corn companies
and 157 soybean companies operating in the United States. These companies compete for the farmers‟
business annually and are going to sell what farmers want to buy. Trait share is a reflection of farmer
preference. No one requires any of these seed companies to use Roundup Ready technology or purchase
Monsanto‟s seed or trait products. Seed companies sell what they think farmers will buy and farmers buy
what they want, each and every growing season.
While those sales numbers may sound impressive, they are deceptive. There is no question that
Monsanto‟s Roundup Ready trait has proven extremely popular. It is found in a high percentage of
soybean and corn seed because Monsanto has licensed competing seed companies to use it in their seed,
and they have chosen to do so. But “monopoly” implies control over price. Monsanto does not control
the price at which Roundup Ready soybean seed or corn seed is sold. For example, in soybeans, Pioneer
and Syngenta combined have over 40 percent of the Roundup Ready soybean sales, and have very
special, highly preferred licenses which allow them great operating freedom. This point would be
apparent if DuPont would agree to disclose the terms of its licenses to use the Roundup Ready trait. But
DuPont refuses to make those terms public. What does DuPont not want you to know?
Furthermore, while DuPont cites share data for our brands in corn and soybeans, they fail to disclose their
own market share in these two crops. Pioneer fails to point out that they have very similar brand share to
Monsanto‟s business.
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DuPont’s claim: Monsanto is a trait “monopolist” that is using its restrictive agreements and
practices to foreclose new competitors from gaining access to customers.
Facts: This is false. The reality is that growers do have choice. Traits are not foreclosed. In 2009, U.S.
farmers chose from 30 different corn trait profiles, 6 different soybean trait profiles and 12 different
cotton trait profiles when making their seed selection. These products were developed by six companies:
BASF, Bayer Crop Science, Dow AgroSciences, DuPont, Monsanto and Syngenta. Nobody has been
foreclosed -- just look at the rapid growth of Dow‟s Herculex traits in corn.
In fact, DuPont fails to tell you that they could have lawfully made a product stacking the ALS portion of
OGAT with Roundup Ready, just like they did when they offered the now off-patent STS and Roundup
Ready. They have always had the specific set of rights of their choosing. Those rights just didn‟t include
what they later did with OGAT. Even with OGAT, Monsanto filed a legal case to determine the correct
interpretation of the contract and its patent rights. We did not ask for a preliminary injunction to stop or
change their development plans. OGAT was saddled with its own delays due to technical “unacceptable
risks” as explained by DuPont.
The Federal Court just ruled on the matter and noted that the Monsanto-DuPont license agreements „are
unambiguous and do not grant Pioneer the right to stack‟ the Roundup Ready trait with the Optimum
GAT trait. DuPont negotiated and signed a contract with a specific set of rights, at the financial terms they
preferred, and the rights did not include making this stacked combination. This was DuPont‟s business
decision.
DuPont’s claim: Any or all soybean traits developed for U.S. farmers must be combined with
Roundup Ready technology.
Facts: This is simply false, and DuPont knows it. It also highlights how DuPont‟s story has changed.
Since 2006, DuPont has stated that their Optimum GAT product would replace Roundup Ready
technology. Now, DuPont‟s story has changed completely – alleging that not just OGAT, but all traits
need to be stacked with Roundup Ready technology if they want to be commercialized. Nothing could be
further from the truth. Bayer Crop Science just introduced its Liberty Link herbicide-tolerant soybean
technology to farmers without stacking it with Roundup Ready technology. Iowa State University (ISU)
also developed a 1 percent low-lin soybean without it. What DuPont is trying to say is that their OGAT
technology does not work unless they combine it with Monsanto‟s Roundup Ready trait.
DuPont’s claim: Monsanto’s implementation of Roundup Ready 2 Yield has forced seed companies
to upgrade, notwithstanding our December communication on Roundup Ready soybeans.
Facts: This section of DuPont‟s submission contains multiple erroneous claims. No seed company has
been or is required to sell Roundup Ready 2 Yield®. No seed company has been or is required to stop
selling Roundup Ready soybeans in order to get access to Roundup Ready 2 Yield.
Pioneer and Syngenta have licenses run through patent expiration. No one needs a license to sell the
technology post patent. We have always known that Roundup Ready soybeans would be readily available
to growers after patent expiry. Our communication in December 2009 was not essential to whether or not
Roundup Ready soybeans were going to remain available; rather, that communication was designed to
dispel the misinformation that has been spread about the availability of that seed. To be clear, we think
that due to the availability of better performing products there will be little demand for seed with the first
generation trait, but now there should be no doubt that the industry will be able to respond to any farmer
demand for that seed.
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We have publicly committed to provide global import approval support at least through 2017, and to work
with the industry to provide a means for longer term support. We treat this as a binding commitment
relating to the proper stewardship of traits.
DuPont’s claim: Monsanto has not offered seed companies, which switched to Roundup Ready 2
Yield® before Monsanto’s supposed change in position, the opportunity to revert to Roundup
Ready® licenses to its knowledge.
Facts: Monsanto did not require or encourage licensees to give up their Roundup Ready licenses in order
to obtain a license to Roundup Ready 2 Yield, and no seed company did so. All independent seed
companies that had a Roundup Ready license before Monsanto began offering Roundup Ready 2 Yield
still have a Roundup Ready license. All of these seed companies have the right to produce and sell
Roundup Ready seed through patent expiration and beyond.
DuPont’s claim: Monsanto’s announced “concession” that it will no longer enforce contractual
provisions requiring Independents to switch to Roundup Ready 2 Yield® is meaningless and will be
seen as such by seed companies and farmers.
Facts: There is no contractual provision that requires (or at any time required) any seed company to
switch to Roundup Ready 2 Yield. Moreover, Monsanto has offered to extend the term of any Roundup
Ready license that otherwise would have expired before the Roundup Ready patent through the life of the
patent. Thus, any seed company that wants to will be able to continue to sell seeds containing the
Roundup Ready trait through the life of the patent and beyond.
DuPont’s claim: Monsanto’s licensing agreements are onerous for seed companies because they
include clauses which prevent another company from combining different characteristics in a single
seed (often referred to as “stacking”), including both Monsanto and non-Monsanto technology.
Facts: No company has done more to enable stacking of competitive products than Monsanto. In fact,
DuPont currently markets a stacked trait offering in soybeans (STS/RR) and has already announced its
intent to market Plenish™ High Oleic soybean oil product stacked with Roundup Ready soybeans.
Similarly, DuPont sells Herculex corn stacked with Roundup Ready.
It is true that not all Roundup Ready licenses convey stacking rights. First, as DuPont notes in its
comments, many independent seed companies do not have their own breeding programs and therefore are
not in a position to create varieties containing new stacks or combinations of traits. These companies
have not asked for stacking rights.
Moreover, as DuPont itself states in its comments, before seed containing a new biotechnology trait or a
new stack or combination of traits, is sold, it is important that either the trait developer or the company
creating the stack obtain the necessary government regulatory approvals in key export markets for the
crops that will be grown from that seed. For soybeans, this includes jurisdictions like the EU, China, and
Japan. Many seed companies lack the resources to obtain and maintain these approvals. For this reason,
granting unlimited stacking rights to every licensee would be irresponsible. All trait developers are
careful about what stacks can be made, who can make them, and what conditions should be met before
they can be sold. For more information on stacking, please visit:
http://www.monsanto.com/monsanto_today/for_the_record/gene_stacks_facts.asp.
Monsanto has no say about whether any seed companies make stacked products using Roundup Ready
soybeans following patent expiration. Hopefully all companies will follow our model for stewardship and
gain regulatory approvals globally for their stacks, so each farmer growing corn or beans is not impacted
by lower commodity prices due to the loss of export markets. (Technologies that don‟t have U.S.
regulatory clearance and/or clearance in certain markets can disrupt trade, and there have been a couple of
examples of this over the last decade.)
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DuPont understands stacking rights and restrictions. What they have not discussed is whether they use
such provisions in their own licenses. These provisions are not unique to Monsanto. DuPont and other
trait licensors use these same sort of provisions. It would interesting to hear DuPont‟s explanation for its
use of stacking restrictions.
DuPont’s claim: The Department of Justice (“DOJ”) recognized the adverse competitive impact of
Monsanto’s stacking restrictions when, in 2007, it required Monsanto to eliminate them in its
cotton trait licenses as a condition of its approval of Monsanto’s acquisition of Delta and Pine Land
Company.
Facts: The DOJ did not require Monsanto to eliminate stacking restrictions in its cotton licenses because
it concluded that stacking restrictions are anticompetitive. Rather, because prior to the acquisition, Delta
and Pine Land had broad rights to stack other traits with Monsanto traits, the DOJ wanted to ensure that
other companies could step into Delta and Pine Land‟s shoes following the acquisition.
Of note: DuPont cites the American Antitrust Institute as one of its sources and highlights that
group’s allegation on Monsanto’s business.
Facts: DuPont neglected to mention that it has provided funding to the American Antitrust Institute (AAI)
as well as the Organization for Competitive Markets (OCM). By no coincidence, both groups have
published reports highly critical of Monsanto‟s business over the last two years. These reports have the
identical line of logic. It is unclear if DuPont, in granting funding to OCM and AAI, specifically asked
the groups to issue such reports. It‟s also unclear if DuPont has provided funding, either directly or
indirectly, to other groups that have been critical of Monsanto‟s business, and it‟s unclear how many
groups they have funded in their effort to spearhead a coordinated campaign of misinformation on
Monsanto‟s business.
Editor's Note: Roundup Ready and Roundup Ready 2 Yield are trademarks of Monsanto Technology LLC.
Optimum® GAT® and Plenish™ are registered trademarks or trademarks of DuPont or its affiliates.
HERCULEX® is a registered trademark of Dow AgroSciences LLC.
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