Novartis Loses Bid for $194 Mln in Corn Patent Suit (Update1)
Bloomberg News
November 9, 1998, 2:13 p.m. ET
Novartis Loses Bid for $194 Mln in Corn Patent Suit (Update1)
(Adds comment, background in 5th through 10th paragraphs.
Updates stock prices in 12th paragraph.)
Wilmington, Delaware, Nov. 9 (Bloomberg) -- Novartis AG,
the world's largest agricultural products company, lost a bid to
collect $194 million from Monsanto Co. and DeKalb Genetics Corp.
when a jury invalidated Novartis' corn seed patent.
After three hours of deliberation following a two-week
trial, a federal jury of five women and four men in Wilmington,
Delaware today also said Basel, Switzerland-based Novartis
failed to prove that Monsanto or DeKalb infringed on patent
claims. The patent, filed in 1987, was awarded last year.
The verdict was a significant victory for St. Louis-based
Monsanto and Illinois-based DeKalb, which claimed that their
scientists invented the technology for inserting a modified
Bacillus thuringiensis (Bt) gene into corn plants to produce a
protein that kills corn-eating insects. The market for such
bioengineered crops could reach $20 billion in the next decade,
analysts say.
''We're extremely pleased with the outcome. This reaffirms
that we are the pioneers with DeKalb in this form of
biotechnology,'' said Monsanto lawyer David Snively.
Novartis said it plans to appeal. Edward Resler, a lawyer
for Novartis' U.S. unit, said the company was ''disappointed,''
but added that ''the outcome will not affect Novartis' ability
to supply (Bt) corn hybrids to farmers.''
It's now questionable whether either Monsanto or Novartis
has an exclusive legal claim on the pest-resistant corn since
juries have invalidated patents of both companies.
In June, a federal jury in Delaware decided that Novartis
and San Diego-based Mycogen Corp. -- a unit of Midland, Michigan-
based Dow Chemical Co. -- did not infringe on a Monsanto Bt corn
patent and invalidated that patent.
In the latest case, Novartis claimed Monsanto and DeKalb
should pay up to $194 million in lost sales and royalties
because they allegedly used Novartis' patented process for
making the corn seed. The suit was filed in 1997.
Key Question
A key question in the case was whether laboratory workers
could make viable Bt corn plants using the recipe laid out in
the Novartis patent.
Dimitrios Drivas, a Novartis lawyer, told the jury in
closing arguments that ''as long as you're following these same
methods, you can do it (make Bt plants).''
Monsanto attorney John Lynch countered that Novartis' 1987
patent application was merely ''prophetic'' because the company
couldn't produce Bt-filled corn seeds.
''There was not a solitary glimmer of success'' for
Novartis in developing viable Bt corn seed until 1994, Lynch
added.
Tom Brakel, an analyst at Mehta Partners in New York who
follows Monsanto, said today's decision will protect the life-
sciences company's financial flanks.
''It would have been bad for Monsanto to have to spend any
money at this time since their resources are strapped,'' said
Brakel, who has a ''Neutral'' recommendation on the company's
shares.
Monsanto's coffers are depleted after the company went on a
buying binge, acquiring agricultural seed businesses as part of
its strategy to become the dominant player in the life-sciences
industry.
In May, Monsanto offered $1.82 billion for Delta & Pine
Land Co., which sells cotton and soybean seeds. The next month,
Monsanto agreed to buy Cargill Inc.'s international seed
business for $1.4 billion to gain a worldwide distribution
network for its plant genetics technology. Then in July it
bought Unilever Plc's wheat-seed unit for $520 million.
Shares of Novartis fell 16 francs to 2,467 today in Zurich.
American depositary receipts of Novartis, with a U.S. unit in
Golden Valley, Minnesota, rose 3/4 to 91 when last traded
Friday. Monsanto fell 1 1/16 to 38 7/8 in afternoon trading
today. DeKalb shares fell 9/16 90 5/16.
--Phil Milford and Jef Feeley in Wilmington, Delaware (302) 984- |
