IP Law Daily, PATENT—EDMo: Sanctions Order for Litigation Misconduct During Patent Dispute over Soybean Technology to Be Unsealed, (Nov 19, 2012)

By Thomas Long, J.D.

The federal district court in St. Louis has granted a motion by Monsanto Company to unseal an order imposing sanctions against E.I. Du Pont De Nemours and Company and Pioneer HiBred International, Inc. for litigation misconduct during a patent lawsuit (Monsanto Co. v. E.I. Du Pont De Nemours and Co., November 16, 2012, Webber, E.). The order was sealed under a protective order issued during the pendency of patent litigation between the parties, but now that the lawsuit has concluded, the public’s need for access to the order outweighed Du Pont’s and Pioneer’s need for confidentiality.

Monsanto initiated the action by filing suit against Du Pont and Pioneer for breach of contract, patent infringement, inducement to infringe, and unjust enrichment. The defendants were accused of violating Monsanto’s rights by unlawfully combining, or “stacking,” their Optimum® GAT® (“OGAT”) trait with Monsanto’s Roundup Ready® (“RR”) trait in soybeans. The defendants asserted that license agreements provided them with the right to produce seed products stacking the traits. Following a jury trial, the jury returned a verdict for Monsanto and awarded damages of $1 billion.

On June 28, 2010, the court issued a protective order limiting the dissemination of confidential information contained within documents filed with the court and produced between the parties. Pursuant to the order, the court filed several memorandum opinions and orders under seal. One of those orders, filed December 21, 2011, was a sanctions order finding that e-mails exchanged between several of the defendants’ senior business executives, inside counsel, and outside counsel during the period of 2002 through 2008 showed that the defendants knew that their license agreements with Monsanto prohibited them from stacking and commercializing glyphosate-tolerate traits. Despite this knowledge, the defendants, throughout two years of litigation over the OGAT and RR stacked products, stated that they negotiated for stacking rights and always believed they had those rights.

The court found that the defendants belatedly produced documents showing that, for more than a year, the defendants had made false representations to the court about issues critical to their breach-of-contract defenses and counterclaims. The court said that the egregiousness of the defendants’ behavior and their lack of remorse showed that only the most severe sanctions would deter their misconduct and preclude them from continuing to abuse the judicial process. Accordingly, in addition to awarding Monsanto attorney’s fees incurred from defending the defendants’ reformation counterclaim and filing its motion for sanctions, the court ordered that the defendants’ breach-of-contract claims and counterclaims be stricken.

The sanctions order was sealed to avert the possibility that media coverage might taint or prejudice the jury pool in the patent infringement trial. After the conclusion of the suit, Monsanto moved the court to unseal the order. The defendants opposed the motion.

Now that the patent trial had concluded, the court’s concern regarding negative pretrial publicity was no longer a consideration in determining whether the defendants’ need for confidentiality outweighed the presumption in favor of allowing public access to court documents, the court said. The defendants’ contention that unsealing the sanctions order would prejudice an ongoing antitrust trial between the parties and regarding the same technology, or would prejudice other litigation between them and Monsanto, was insufficient to justify maintaining its confidentiality. The antitrust trial—docketed to begin in late 2013—was still remote, in the court’s view, and the opportunity for voir dire examination will serve to eliminate biased jurors.

The defendants had the opportunity to litigate their legal rights with respect to stacking and had made the issue public, the court noted. The defendants continued to maintain the position that they did not infringe the RR soybean patent and that the patent was invalid. They also continued to represent that they believed they had a right to stack under their license agreement with Monsanto.

The findings in the order concerned important issues in the patent dispute, the court said. The order could serve to inform the public about the legal system and could help the public understand some of the basic theories underlying Monsanto’s claims and the defendants’ defenses.

The defendants and their attorneys knowingly perpetrated a fraud against the court and unreasonably protracted the patent suit, according to the court. The public was entitled to a full disclosure of this fraud.

The sanctions order contained no trade secrets or other confidential information. The order quoted provisions of the license agreement between the parties, but those provisions were made available to the public during an October 2009 hearing and the patent trial. The only other documents quoted in the order were the e-mails that contradicted the defendants’ assertion that they believed they had the right to sell RR/OGAT stacked seeds.

The defendants failed to point to specific private or public interests that needed protection. Any potential embarrassment or discomfort resulting from allowing public access to the order was not enough to justify sealing court records, in the court’s view.

The case is No. 4:09CV00686 ERW.

Adam S. Nadelhaft (Winston and Strawn, LLP) for Monsanto Co. Amy J. Mauser (Boies and Schiller, LLP) for E.I. Du Pont De Nemours and Co.

Cases: Patent MissouriNews