Federal Court Rules Monsanto's Fines for Seed Saving Are Excessive

Appeals court sets aside $780,000 Monsanto award in
dispute with farmer
JIM SUHR
Associated Press, Wed, Apr. 28, 2004

ST. LOUIS - An appeals court has thrown out the $780,000 in damages a
Mississippi farmer was ordered to pay Monsanto Co. in a seed-patent dispute,
calling the agriculture biotechnology giant's formula for calculating such
damages "unenforceable" under Missouri law.

Under the ruling from a three-judge federal court panel in Washington, a
judge or jury in Missouri
must decide what Homan McFarling actually owes the company for saving and
replanting genetically altered seeds in violation of an agreement with
Monsanto.

The 30-page ruling, issued April 9, affirmed that McFarling, a soybean
grower, infringed on St. Louis-based Monsanto's patent and breached his
contract with the company.

"This ruling once again confirms that Monsanto's market approach to selling
patented seed and traits is legal and enforceable," the company said
Wednesday. "We now turn our attention to the jury trial to determine
patent-infringement damages independent of the contract provision."

McFarling attorney Jim Waide of Tupelo, Miss., was out of town this week and
unreachable for comment, his office said.

In November 2002, the St. Louis-based U.S. District Court for Missouri's
eastern district ruled that
McFarling violated a Monsanto-held seed patent and ordered him to pay the
company $780,000 in damages, given his admission that he saved seeds after
harvesting crops grown from Monsanto's patented Roundup Ready soybean seed.

Such seeds have been genetically engineered to resist Monsanto's Roundup
brand herbicide.

Monsanto bars farmers from saving or reusing the seeds once the crop is
grown. Seed-saving has been a common agricultural practice, and some farmers
bitterly oppose Monsanto's forbidding it in licensing agreements, calling
the pricing excessive.

In agreeing in writing to the prohibition when he first bought the seeds
from Monsanto, McFarling
also agreed that if he breached the deal he would have to pay damages of 120
times the $6.50-per-bag technology fee the company gets from each bag of
soybeans sold.

Monsanto, arguing its fees are justified so it can recoup costs and pay for
future research, has
said it has filed more than 70 lawsuits against farmers in recent years over
the issue. Monsanto
first sued McFarling in 2000.

McFarling admitted he saved 1,500 bushels of seed from his 1998 crop -
enough to plant about 1,500 acres - and replanted it in 1999, then saved
3,075 bags of soybeans from his 1999 crop and replanted those the next year.

But in its ruling this month, the federal appeals court declared the 120
multiplier "not a reasonable
estimate of the harm that would be anticipated to flow from breach of the
prohibition prohibiting
replanting seed." Waide had argued as much, questioning the
constitutionality of a contract
"asking for enormous damages for what was a very small actual loss."

In a similar case a year ago, a Tennessee farmer opposed to Monsanto's
genetic seed licensing
practices was sentenced in a St. Louis federal court to eight months in
prison for lying about a
truckload of cotton seed he hid for a friend.

Kem Ralph's prison term for conspiracy to commit fraud was believed to be
the first criminal
prosecution linked to Monsanto's crackdown on farmers it claims have been
violating agreements on using genetically modified seeds.

Ralph already has been ordered to pay Monsanto more than $1.7 million.

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