Updated: Appellate Court Suspends Lower Court Ruling in Rio Grande do Sul Brazil

6/21/2012

Statement on the decision of the Superior Court (STJ)

Regarding the decision rendered today (06/12/12) by the Third Chamber of the Superior Court of Justice (STJ), in Brasilia, on the scope of the lawsuit filed by certain unions in Rio Grande do Sul against the payment of royalties for the use of Roundup Ready® Technology in soybeans, Monsanto announced that the decision of the Supreme Court does not affect the merits of the matter, provided it only establishes the national scope of future decision on the merits of the lawsuit which is still pending decision by the Court of Rio Grande do Sul (TJRS).

Monsanto maintains, as always, the respect and confidence in the Brazilian judiciary system.

While the lawsuit lasts and the Courts do not render a final decision on the merits, the royalty collection system for the use of Monsanto’s Roundup Ready® technology will continue operating normally based on legal safeguards established.

The payment of royalties is the way through which Monsanto is paid for the investments made for the development of technology for soybeans. There are two ways to make this payment and the farmer can choose between one of them. These royalties can be paid at the time of purchase of seeds or upon delivery of grain in one of the licensed warehouses. Today, the majority of Brazilian soybean farmers prefers to pay royalties at the time of purchase of seeds, and other producers pay at the delivery of grain. These options are also valid for those who prefer to keep (or "save") seeds from the previous harvest.

The system has played an important role, helping to encourage new investments in Brazilian soybean production. This system has allowed Monsanto and other participants in the industry to release new agricultural technologies in Brazil, as well as has ensured that the value generated by these products to be shared with farmers, seed producers, multipliers, and exporters, among others.

Previous: (4/30/2012) Royalty collection system will continue operating during appeals process

Monsanto Company (NYSE: MON) welcomed an initial ruling by the state appeals court in Rio Grande do Sul, Brazil, on the industry’s royalty collection system for Monsanto’s patented Roundup Ready® soybeans (“POD System”). The ruling, which suspended a decision from a lower state court, will allow the POD system to continue to operate during the appeals process. 

Monsanto said the same appellate state court will now consider the company’s full appeal of the lower court’s ruling. The company anticipates that the appeals process could take approximately 1 to 2 years to complete.

“We are pleased with this initial ruling from the appeals court, as it ensures that the POD system is not disrupted while the court considers the merits of our case on appeal,” said Todd Rands, Monsanto’s Legal Director for Latin America. “We remain confident in the merits of our case, as the lower state court’s ruling stood in stark contrast to prior rulings on the same issues by other Brazilian courts. These prior rulings have repeatedly recognized the value of both patents and plant variety protection in the country.”    

The POD system was first established in Brazil by Monsanto and other industry participants in the 2003/2004 season. Since that time, numerous Brazilian state and federal courts have reviewed the legal merit of the POD system and have repeatedly upheld the system and the value of patents.  Since its introduction, the POD system has played an important role in spurring new investments in the Brazilian soybean industry. The system has allowed Monsanto and other industry participants to invest in and introduce new agricultural technologies for Brazil. The system has also enabled the value created by these new products to be shared with growers, seed companies, grain elevators, and exporters. 

Previous: Monsanto Plans to Appeal Rio Grande do Sul State Court Ruling

Monsanto Company said it will immediately appeal a recent lower state court ruling in Rio Grande do Sul, Brazil, relating to the industry’s royalty collection system (“POD System”) for Monsanto’s patented Roundup Ready® soybeans system in that state.  Monsanto’s appeal will seek to overturn the lower court’s ruling to ensure that the POD system is not disrupted. 

The POD system was first established in Brazil by Monsanto and other industry participants in the 2003/2004 season.  Since that time, numerous Brazilian state and federal courts have upheld the system, and recognized the value of patents for Roundup Ready soybeans. 

“This ruling stands in stark contrast to prior decisions rendered by other Brazilian courts.  The courts have been consistent in their handling of these issues in the past, and repeatedly recognized the value of both patents and plant variety protection in Brazil,” said Todd Rands, Monsanto’s Legal Director for Latin America. “We plan to appeal this decision as it is inconsistent with patent and plant variety protection act statutes in the country. We will take immediate action to ensure the POD system is not disrupted during this process.”    

In Brazil, growers pay royalties for using the patented Roundup Ready soybeans.  The royalties are paid at the time seed is purchased, or when grain is delivered into the POD system.  Today, the majority of Brazilian soybean farmers choose to pay the applicable royalty at the time they purchase new seed. 

The POD system allows the remaining growers to pay the royalty when they deliver grain, including those who choose to save their seed from one season to the next.  The POD system has played an important role in helping to spur new investments in the Brazilian soybean industry. The system has allowed Monsanto and other industry participants to introduce new patented technologies in Brazil, and has ensured that the value created by these new products was shared with growers, seed companies, grain elevators, and exporters. 

“Most growers appreciate the flexibility that the POD system provides, as they can choose to pay the royalty when they deliver grain,” said Andre Dias, Row Crops Lead of Monsanto’s Brazil operations. “As a result of this system, new soybean technologies are being introduced into Brazil that will significantly increase productivity of the industry.  It is a system that benefits everyone.”

Cautionary Statements Regarding Forward-Looking Information:

Certain statements contained in this release are "forward-looking statements," such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of biotechnology products; the success of the company's research and development activities; the outcomes of major lawsuits and the previously-announced SEC investigation; the previously reported material weakness in our internal controls over financial reporting; developments related to foreign currencies and economies; successful operation of recent acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the company's ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and other risks and factors detailed in the company's most recent Form 10-K Report to the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results.