Monsanto won't fight generic seeds

CHICAGO — Monsanto says it won't block competitors from creating generic versions of any of its gene-modified seeds as they lose patent protection, a decision that may help mute calls for an antitrust case against the world's largest seedmaker.

Farmers for the first time will be allowed to save and replant Monsanto's Roundup Ready soybeans after the patent expires in 2014, and rivals such as DuPont will be able to sell their own Roundup-tolerant seeds without restriction, CEO Hugh Grant said in an interview. Farmers criticized Monsanto in the 2008 documentary "Food Inc." for its contracts that keep them from saving seeds after a harvest.

"Here is how we think patent expiration will look," Grant said. "Farmers will be free to plant, to replant that seed. Licensees will be able to do the same thing."

Monsanto could have thwarted proposed generics by raising multiple patent claims or safety questions with regulators. Grant said his decision not to throw up obstacles starting with the 2015 planting sets the template the company expects to follow as other advances such as insect resistance come off patent later in the decade.

Roundup Ready soybeans are engineered to withstand Monsanto's Roundup, the world's most popular weed-killer. Contracts prohibit farmers from saving seeds from one year's crop to plant in the next.

The Justice Department will hold a March workshop on crop-seed competition and has made inquiries into allegations from DuPont that Monsanto unfairly uses genetic licenses to dominate the engineered seed market. Including seeds made by licensees, about 93 percent of U.S. soybean plantings last year contained Monsanto's Roundup Ready trait.

Grant's lawyers in May sued DuPont to keep it from engineering seed that resists Roundup in two ways, with the patented Roundup Ready trait licensed from Monsanto plus DuPont's own genetic technology.

"Companies like DuPont will be able to stack" any genetic traits they develop on the new generics, Grant said.

David Begleiter, a New York-based analyst at Deutsche Bank, said Monsanto's decision is "part of their overall response to the growing antitrust pressure coming out of Washington.

"By allowing generics, they are trying to push back on the claim that their business practices are anti-competitive," Begleiter said.

Monsanto has broadly licensed its genetic technology to rival seed makers since 1996, when it began selling Roundup Ready soybeans, its first engineered seed, Grant said. The company also allows competitors to combine other genetic traits with its technology, a process known as stacking, with one or two exceptions, Grant said.

DuPont's Pioneer Hi-Bred unit, the biggest U.S. soybean seed producer, violated one of those exceptions when it stacked Monsanto's Roundup Ready gene with a second gene that allows crops to resist the same glyphosate-based herbicide, Grant said. Monsanto sued DuPont in May to block the Optimum GAT soy and corn seeds, and DuPont countersued.

DuPont subsequently delayed commercial sales of both products until the middle of the decade. While that's around the time Monsanto plans to allow competitors, including DuPont, to copy the off-patent Roundup Ready technology, Grant said he won't drop the lawsuit because "five years is a ways away."

Monsanto's promise to allow generic versions of its crop seeds doesn't guarantee generics will reach the market, said James Denvir III, a Washington-based attorney for DuPont.

Denvir, who led the Justice Department's breakup of AT&T, said Monsanto's promise isn't legally binding and may not allow time for rivals to get export approvals for gene-modified crops they develop for markets such as the European Union or China.

"There are a lot of questions that remain," Denvir said. "It's not at all clear that generic competition will ever happen. We want the way to be absolutely cleared for generic competition."

Gina Talamona, a Justice Department spokeswoman, declined to comment.