Monsanto Kills the Love

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That's the problem with holding hands with the enemy. Eventually a joy buzzer appears and someone gets their hand stung.

Yesterday Monsanto (NYSE: MON) announced that it's suing DuPont (NYSE: DD) over a claimed misuse of Monsanto's herbicide-tolerant Roundup Ready technology. DuPont has licensed the right to use the technology, but Monsanto doesn't want the Roundup Ready gene combined with a similar gene developed by DuPont. For its part, DuPont claims Monsanto is trying to set up a monopoly -- every Fool's dream company. Combining the genes would likely result in seeds superior to Monsanto's Roundup Ready alone, so it's understandable how both sides want to get their way.

I've commented before about how the friendliness of agricultural companies is a bit weird. Syngenta (NYSE: SYT) and Monsanto have a deal to swap licenses to their seed traits, Syngenta and DuPont are developing chemicals together, and Monsanto has a deal with BASF to discover new traits.

Don't get me wrong; the combination of forces is good for farmers because it usually results in a superior product. And if companies can make more money from combining traits than from selling them individually, I guess investors can't complain. But the amount of friendliness among foes has always seemed a bit odd to me.

Drug companies often combine drugs in a similar fashion. Bristol-Myers Squibb (NYSE: BMY) and Gilead Sciences (Nasdaq: GILD) have an HIV drug based on the combination of the two company's drugs, and GlaxoSmithKline (NYSE: GSK) and Pfizer (NYSE: PFE) are setting up a similar arrangement. But I don't know of any example where a company has licensed the right to combine drugs to so many different competitors.

When companies set up that kind of system, there's bound to be a tussle. Monsanto and DuPont have fought in the past over one of Monsanto's other technologies, so I doubt this will be the last time someone busts out a joy buzzer.

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