Lawyers from Winston & Strawn and Husch Blackwell delivered a $1 billion patent verdict for Monsanto Co. against rival DuPont, in a case that raised eyebrows among the intellectual property bar because it involved products in development and happened in a jurisdiction not known for being unduly friendly to plaintiffs.
A St. Louis jury returned the verdict on August 1, concluding that E.I. DuPont De Nemours and Co. and a subsidiary infringed Monsanto’s proprietary Roundup Ready herbicide-resistant technology for soybeans and corn.
Winston partner George Lombardi, the lead plaintiffs attorney in the case, declined comment. In a press release, Monsanto general counsel David Snively said the verdict underscored that DuPont’s “unauthorized use of the Roundup Ready technology was both deliberate and aimed at rescuing its own failed technology.”
DuPont’s lead lawyer, Leora Ben-Ami, a New York partner at Chicago’s Kirkland & Ellis, did not respond to a request for comment. Boies, Schiller & Flexner and St. Louis firms Haar & Woods and Lewis, Rice & Fingersh also represented DuPont.
DuPont general counsel Thomas Sager said in a formal statement that that the damages award was unjustified, particularly since the company never sold or intended to sell any of the seeds at issue.
In fact, he said, the evidence showed that Monsanto’s soybean patent was “invalid and unenforceable and that Monsanto intentionally deceived the United States Patent and Trademark Office on several occasions as it sought patent protection.”
He added: “Several aspects of Monsanto’s misconduct involving this patent, which were not tried in this case, will be presented to a different jury as part of DuPont’s antitrust and patent misuse case against Monsanto in September 2013.”
Monsanto sued DuPont and its DuPont Pioneer subsidiary in May 2009 seeking to stop the unlicensed combination of Monsanto’s proprietary herbicide-resistant soybeans and corn seeds with a DuPont product. According to Monsanto, it offered DuPont a license many times before and during the trial.
Independent legal experts noted that it was hard to assess Monsanto’s damages theory because all the relevant motions on damages, including the court’s rulings, were filed under seal.
“But what is interesting is that Monsanto got such a large award even though DuPont claims that it never sold a single accused product,” said Michael Albert, co-chairman of the litigation group at Boston-based Wolf, Greenfield & Sacks. “Monsanto’s theory appears to be that DuPont’s development efforts alone, though never actually resulting in a product being sold, caused a billion dollars’ worth of damages.”
What was known was that Monsanto claimed DuPont would reap $3 billion in revenue from the accused product between 2008 and the patent expiration date in 2014, Albert said. “Presumably, its argument was that DuPont would have been willing to pay $1 billion in licensing fees based on its anticipated $3 billion in profits,” and that Monsanto was entitled to that amount as a so-called “reasonable royalty.”
According to Monsanto spokesman Lee Quarles, “The jury determined its view of the damages based on the facts and testimony of damage experts in the case. Those facts and that expert’s testimony discussed a reasonable royalty calculation based on a hypothetical negotiation at the time of the infringement.”
The technology involved is somewhat harder to quantify than many other types of technology in patent cases, said Ed Reines, a partner in the Redwood Shores, Calif., office of Weil, Gotshal & Manges.
“Patent damages law is complicated in general and it is easier to apply to simple product sales,” Reines said. “When someone is selling widgets…it makes it a lot easier to calculate damages.”
The verdict was “unsurprising in these competitor-to-competitor patent lawsuits that used to dominate patent litigation,” said Tom Melsheimer, a Dallas partner at Fish & Richardson. “In a business like this, you can see the numbers getting into the hundreds of millions or billions of dollars. Anytime you have two big competitors suing each other for patent infringement, the monetary stakes are likely to be quite high.”
The Eastern District of Missouri “is not a noted hotbed for damages cases,” he added.
“It’s not part of the country people associate with large damages awards. It must have been a fairly convincing set of proof to convince a Midwestern jury like that to award those kinds of numbers.”
Cases with sky-high verdicts harder to settle, he said, “because the plaintiff has a very high value on their case and the defendant doesn’t want to pay anything near that.”
The independent lawyers agreed that the verdict’s size makes it a candidate for close scrutiny by the U.S. Court of Appeals for the Federal Circuit, which has picked apart and rejected some damages theories in the recent past.
“I would not be surprised if this case gets a very close look from the Federal Circuit as well, assuming the verdict is not modified by the district court in post-trial motions,” Albert said.
Sheri Qualters can be contacted at firstname.lastname@example.org.