Docket No. 2013-1349
LOURIE, REYNA, WALLACH
May 9, 2014
Brief Summary: The FC panel agreed with Monsanto that the DC did not abuse its discretion as it “did not sanction DuPont for making legal arguments concerning the objective meanings of the License” but “for knowingly making factual misrepresentations concerning its subjective belief in order to maintain its [contract] reformation claims.”
Summary: DuPont (and its subsidiary Pioneer Hi-Bred Int.) appealed from DC imposition of sanctions on DuPont by striking its contract reformation defense and counterclaims and awarding Monsanto attorney fees. This dispute relates to Monsanto’s Roundup Ready® (RR) brand name (known as the 40-3-2 event, the RR trait) and its RE 39,247E (‘247 patent). In 1992, Monsanto granted Pioneer a nonexclusive license to sell RR soybeans. In 2002, DuPont, Monsanto and Pioneer entered into a new license that superseded the 1992 license. In 2006, DuPont developed its own herbicide-resistant trait “Optimum GAT®” (GAT) which it then combined with the RR trait in soybeans. DuPont did not sell any of the GAT/RR soybeans and discontinued it in 2011-12. In May 2009, Monsanto sued DuPont for breach of contract, maintaining that it did not allow DuPont to “stack” RR with any other herbicide-resistance trait. The DC concluded that DuPont had made multiple misrepresentations regarding its position (evidenced by emails from in-house attorneys) that “since the beginning of the litigation” they always believed they had “the right to stack and commercialize” the traits. The DC therefore awarded sanctions because “DuPont had perpetrated a fraud on the court and abused the judicial process”. In their appeal, DuPont argued that the DC relied only on “selected documents to find that DuPont misrepresented” and “the full record reflected a contested factual issue.” The FC panel agreed with Monsanto that the DC did not abuse its discretion as it “did not sanction DuPont for making legal arguments concerning the objective meanings of the License” but “for knowingly making factual misrepresentations concerning its subjective belief in order to maintain its [contract] reformation claims.” No error was found in the DC’s reliance on statements of “high-level executives and in-house attorneys, who directly participated in the negotiation” (or later statements such as “no surprise at an expected claim by Monsanto that the [License contained] stacking restrictions”) in part because “DuPont had waived its attorney-client privilege to pursue the reformation counterclaims”. The opinion also explained that the DC decision was consistent with other Eight Circuit cases that “apply a lower standard for sanctions under the court’s inherent powers and do not require a finding of ‘fraud on the court’” (a higher standard). Thus, the DC decision was affirmed.