Legal setback for Monsanto in Argentine soy dispute
Reuters, March 9 2010
http://www.reuters.com/article/idUSLDE6280O520100309?type=marketsNews

LUXEMBOURG) - U.S. biotech giant Monsanto's (MON.N) EU patent on its Roundup Ready soybean seeds should not extend to cover imports of processed soybean meal into the 27-nation bloc, an adviser to Europe's top court said.

The opinion from Advocate General Paolo Mengozzi must still be confirmed by the European Court of Justice (ECJ) in a final ruling. But it is a setback for Monsanto in its legal battle to secure royalty payments on the use of its seeds.

At stake is more than 3 billion euros ($4.1 billion) of annual trade in Argentine soymeal to Europe. Argentina is the world's top soymeal supplier and the European Union is its No. 1 client.

Monsanto filed a lawsuit in the Netherlands against Dutch soymeal importer Cefetra after the biotech firm's patented Roundup Ready DNA sequence was discovered in three soymeal shipments from Argentina in 2005 and 2006.

In 2008 a court in The Hague asked the ECJ for an opinion on whether the presence of Monsanto's patented DNA sequence in the imported soymeal constituted a breach of its EU patent.

"The protection for a patent relating to a DNA sequence is limited to the situation in which the genetic information is currently performing the function described in the patent," the European Court of Justice said in a statement on Tuesday.

Protecting Monsanto's patented DNA sequence where it is "a kind of residue" in products would mean "an unspecified number of derivatives products would come under the control of whoever had patented the DNA sequence of a plant", the court adviser said.

Patenting mere discoveries -- such as the isolation of a DNA sequence without any indication of a function -- would breach the basic principles of EU patent law, the adviser said.

EU legislation on the patentability of genetically modified organisms "constitutes an exhaustive body of rules" that precludes individual member states from offering wider patent protection, the statement added.

Monsanto has no patent in Argentina but nearly all local farmers plant the seeds, genetically modified to resist the company's Roundup herbicide. Some farmers buy certified seed, but others buy contraband or legally extract and reuse the GM seeds without paying royalties.

(Reporting by Michele Sinner, writing by Charlie Dunmore, editing by Dale Hudson)