Since 1996, Bollgard and Roundup Ready technology logos have been prominently displayed on bags of Delta & Pine Land (D&PL) cottonseed, reflecting the company's U.S. licensing agreements with Monsanto. Even so, the relationship between the two entities has been tenuous at times.
In a surprise announcement on May 20, Monsanto revealed that it is seeking the right to terminate its licensing agreements with D&PL because of long-standing unresolved business disputes. Monsanto filed its request with the American Arbitration Association (AAA) after several failed attempts to resolve the issues directly with D&PL.
"We had several options available to us under our licensing agreements with D&PL," says Monsanto spokesperson Lori Fisher. "After two years of trying to resolve the issues between us, we came to the conclusion that our best remaining option was to ask an impartial arbiter panel to weigh in as to a fair resolution.
"We have not asked for termination, we have asked for the right to terminate, which is an important distinction," she says.
Kerry Preete, vice president for U.S. crop protection for Monsanto explains: "If we are successful in the arbitration, we will work to minimize potential seed supply disruptions. We have various options to do this, including terminating Delta and Pine Land's licensing agreements in a timeframe that we believe will minimize the effect in the marketplace."
Monsanto's grievances against D&PL include the following:
- Failing to calculate, collect and ensure that Monsanto was paid all royalty amounts due under the agreements;
- Breaching its fiduciary duty to Monsanto as the Managing Agent of D&M Partners by neglecting to properly collect and allocate the income of the D&M partnership; and
- Misusing Monsanto's intellectual property by inappropriately providing Monsanto's technology to an unlicensed party.
D&PL responds to the allegations
On May 20, D&PL learned of the arbitration filing by Monsanto but at that time had not received a copy of the filing.
In the company's initial response, D&PL stated it "does not believe it has violated the terms of any of its agreements with Monsanto. The issues Monsanto raised during the dispute resolution process have been reviewed carefully and D&PL believes these claims are without merit."
D&PL said it intends to "respond appropriately" once the arbitration filing has been received.
"As previously reported in D&PL's publicly filed documents, D&PL and Monsanto have had in-depth negotiations regarding various commercial disputes, some raised by D&PL and some by Monsanto, which are covered by the Bollgard and Roundup Ready technology licenses with Monsanto," the statement continues.
"The arbitration filing purportedly relates to some of the issues that remain unresolved.
"Pursuant to the terms of these licenses, matters in dispute must first be submitted to a panel of Senior Management to seek resolution. If the issues cannot be resolved by the panel, either party may submit the disputed issues to arbitration."
A timeline for the arbitration panel's decision is unknown.
"We [Monsanto] are seeking as quick a resolution as possible, but that's really up to the AAA and the procedures that they follow," Fisher says.