In June, biotech giant Monsanto filed a patent infringement suit in Denmark against two importers of Argentine soybeans after samples from a vessel showed the beans contained the patented gene enabling crops to tolerate the company's Roundup herbicide.
According to Monsanto the suits are merely meant to support its claim that it has a legal right to collect royalties on its seeds. Moreover, the company says it wants to keep talking with Argentine officials and farmers to reach a consensus solution to the problem and to design a system of royalty collection.
Argentina is one of the world's major producer and exporter of GM soya and it is believed that over 90% of the soya grown in the country are Roundup Ready soya.
The Government of Argentina, however, decided to suspend talks with Monsanto over the design of a payment system that would allow the company to collect royalties on the use of its transgenic soybean seeds. On the law suit initiated by Monsanto, the Argentine Government said it will challenge the law suit and will not continue talks unless Monsanto backs down.
"How are we going to keep talking while we've got these suits?" the Argentine Agriculture Minister was quoted to have said.
Monsanto's move to collect royalties in Argentina follows a succcessful attempt by the company to introduce a system under which Brazilian farmers pay royalties for using Roundup Ready technology for the 2005/06 soy crop. These moves are part of a growing trend whereby corporate holders of patents are using the state machinery to enforce private patents and act as a royalty
collector.
See the following article:
Argentina to fight Monsanto in court, suspend soybean talks
Dow Jones, USA, by Taos Turner
Argentina, a leading soybean exporter, has decided to suspend talks with biotechnology giant Monsanto Co. (MON) over the design of a payment system that would allow the company to collect royalties on the pervasive use of its popular soybean seeds, Agriculture Secretary Miguel Campos said Friday.
"Monsanto has shown that it continues to be a national embarrassment," Campos said angrily at a press conference. He met with journalists to discuss lawsuits recently filed by Monsanto in Denmark over the shipment of Argentine soybean products to the country.
Campos said the lawsuits have already harmed Argentina's farmers and exporters. "This has already created a chain reaction in the entire grain market," Campos said. "Importers are already trying to have any costs associated with this type of suit transferred to exporters. And we obviously know that any additional cost will end up being paid for by farmers. We will fight this and we'll use the best lawyers we can get to defend ourselves."
Tests carried out on the products showed that they were made with Monsanto's genetically modified Roundup Ready seeds, which are used to plant 95% of Argentina's soybeans. Monsanto has a patent on Roundup Ready in Denmark and in most other E.U. countries, but it has never been able to patent the seeds in Argentina.
This has made it hard for the company to get farmers here to pay for the right to use the seeds. Monsanto says it filed the lawsuits "to clarify its intellectual property rights since some parties (in Argentina) have expressed doubt about those rights."
Those rights, and what they imply legally in Argentina, have been the center of heated and often bitter public talks between Monsanto, Argentine officials, farmers and soybean exporters. At issue is how, and how much, Monsanto should be able collect for the use of its seeds.
Monsanto says Argentines properly pay for certified seed only 17% of the time, down from 50% in 1996, when Roundup Ready was introduced in the local market. Campos said Friday that around 30% of the seeds used are legally certified.
Monsanto said earlier this week that the suits are merely meant to support its claim that it has a legal right to collect royalties on its seeds. Moreover, the company says it wants to keep talking with officials and farmers to reach a consensus solution to the problem.
"This (legal action) does not mean that we don't want to continue searching for a local solution and a local agreement," said Monsanto Argentina spokesman Federico Ovejero. "This is our commitment and we are still willing to sit down and find an agreement."
But Campos made it clear Friday that he will not resume talks unless Monsanto backs down. "The only kind of negotiation I'll accept now is for Monsanto to withdraw its lawsuits," he said.
The lawsuits, Campos said, amount to extortion, endanger fair trade and call into question Argentina's ability to exercise its sovereign rights. "How are we going to keep talking while we've got these suits?" he asked. "I'm very angry."
The Agriculture Secretariat has asked Argentina's Foreign Ministry to assist it in defending Argentina's interests in any court where Monsanto has or might file a lawsuit.
"The Argentine government will act as a third party in these lawsuits," Campos said. "We think we have a perfectly winnable, or at least debatable, case," he said. To support his argument, Campos noted that Monsanto doesn't have a patent on Roundup Ready in Argentina and that Argentine law allows farmers to repeatedly use Roundup Ready seeds they have properly paid for.
In addition, he said there is a legal difference between the patented seed that Monsanto has sold here and the products that derive from it. "It's very difficult, but possible, for us to lose this case," he said. "If we do lose, then we'll have to pay."
However, it's not clear exactly what Argentina would have to pay. Monsanto has declined to discuss the details of its suit, and it is not clear if the company is seeking specific financial damages or if it is simply trying to strengthen its hand at the negotiating table.
Also, it's unclear, even if Monsanto's did win its lawsuits, what this would mean. Not long ago, Monsanto told exporters that it wanted to collect a $15 fee for every metric ton of soybeans or soybean products shipped abroad.
Monsanto says such a fee is negotiable. But if the company is unable to negotiate with farmers or the government, this could mean that such a fee would be decided by a European court. "This is a complicated problem," said Jose Frogone, a grain trader andanalyst at the Buenos Aires-based brokerage Cortina Beruatto.
"This is the only country in the world where Monsanto can't collect royalties. The majority of producers believe that to continue receiving technology like this, one has to pay for it. The problem is (figuring out) how much should be paid and in what way. If a court allows (Monsanto) to collect fees on soybean shipments, exporters here will be in a complicated situation."
Argentina exported about 10 million tons of soybeans, soyoil and soymeal to E.U. countries in 2004, according to Agriculture Secretariat data. A rough calculation of the value of these exports, based on current prices, would put the annual value of soy-based exports to the E.U.
at around $1.7 billion.
Around 20% of Argentina's agricultural exports go to the E.U., and about 70% of these are soybeans or soybean products, Campos said. An Argentine official familiar with the issue told Dow Jones Newswires the E.U. is largely dependent on Argentina as a supplier and that this is likely to limit its ability to turn away from Argentina in case of legal problems.
Even so, the official said Monsanto's lawsuits will likely hurt Argentine farmers. "The situation in Denmark, by going to trial, obviously creates concern among European importers, but it is also true that Argentina today provides 90% of the soybean meal - used to feed animals - that is imported by the 25 countries of the E.U.," the Argentine official said.
"What will probably happen is that the judge will rule in favor of the company and set a value for compensation. That cost will be paid by the exporters and they will pass it on to farmers. This will set a precedent for futures shipments."
Earlier this week Monsanto said it and other companies need to be compensated for their innovations and that they will not sell new products in Argentina if they are not paid properly. Campos said Friday that this not a concern for now. He said Argentina is capable of inventing new biotech products on its own.
Moreover, Campos also said, given the problems Monsanto has caused, he would not be inclined to approve of any new products designed by the company. "Argentina has been a strategic partner in the development of Roundup Ready and this should be of interest to Monsanto," Campos said.
"Instead, Monsanto looks at Argentina as if it were just an Excel spreadsheet, forgetting about everything Argentina has done to advance biotechnology."
