Monsanto and local growers in dispute over Brazilian intellectual property law

October 31, 2012
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Monsanto and Local Growers Dispute

Earlier this month, a Brazilian appellate court upheld an injunction requested by Brazilian growers against Monsanto Company, an agricultural technology company and owner of the well-known Roundup brand. While Monsanto is currently appealing the decision, it has halted the collection of royalty payments from Brazilian growers on its Roundup Ready soybean products.

At the heart of the dispute are the intellectual property rights of Monsanto, which believes that Brazilian law dictates that it should receive royalties through 2014. Meanwhile, local growers believe that the patent expired in 2010. Contingent upon a forthcoming decision from an appellate court, Monsanto may be required to repay royalties stretching back to 2011. Since 2005, Brazilian farmers have been charged a 2 percent fee on their Roundup Ready soy product sales, according to the journal Nature.

In a Bloomberg Businessweek piece analyzing the impact of the decision on Monsanto stockholders, financial experts noted that for the fiscal year 2013, approximately 20 cents per share of earnings could be at risk, leaving some investors nervous.

"Today's events will have to cause investors to consider the potential impact of an earnings hit in 2013," said Jason Dahl, who co-manages a mutual fund that includes Monsanto shares. "They have a good track record of defending their patents historically."

The history of Monsanto's products in Brazil

In 2005, Brazilian lawmakers finally allowed for the use of genetically modified crops, which allowed soy farmers to legally use these products, including those produced by Monsanto. Prior to that decision, many soy farmers had used genetically modified crops smuggled across the Argentinian border, and since the ban on those products was not actively enforced, soy production trailed only the United States as of 2005, according to an Environmental News Network piece.

As the Brazilian court system nears closer to a resolution, this case serves as a reminder for any foreigner or abroad organization with legal interests in Brazil that a leading Brazilian law firm should be counseled whenever there is a possibility of an intellectual property dispute.

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