Monsanto Fights Back

There's mud getting slung down on the farm. Monsanto (NYSE: MON  ) and DuPont (NYSE: DD  ) have escalated their squabble over DuPont's license of Monsanto's Roundup Ready gene.

Monsanto gave DuPont a license to use the technology but doesn't want its competitor to combine the trait with a similar gene developed by DuPont. That's understandable, considering that the combined seed would likely result in crops superior to Roundup Ready alone. DuPont cried foul, claiming Monsanto has a monopoly. Monsanto went to court last May, but the war of words has just begun.

Monsanto's CEO Hugh Grant reportedly sent a letter to DuPont Chairman Charles Holliday Jr. this week characterizing DuPont's allegations that Monsanto has a monopoly as "misleading to the public and a serious breach of business ethics far beyond honest competitor behavior." Them's fightin' words.

Monsanto is upset that DuPont is supporting organizations that are attacking Monsanto. It's is kind of an easy target, and even some of my fellow Fools aren't too fond of the company.

I'm not convinced that Monsanto is to blame here, though. It's not like Monsanto isn't capable of getting along with its rivals. It's developing a new corn combining its traits with those of Dow Chemical (NYSE: DOW  ) . Monsanto has also swapped licenses with Syngenta (NYSE: SYT  ) and has a deal with BASF to discover new traits.

It seems to me that the patent holder should be able to license -- or not -- the technology to whatever companies it wants and be able to limit the scope of those partnerships. No one seems to be complaining that Pfizer (NYSE: PFE  ) combined its Lipitor drug with a high blood pressure drug to make Caduet, but it hasn't licensed the blockbuster drug to any of its competitors that I know of.

Maybe Monsanto is just a bully, but I like the competitive moat it's formed, and I'd have to guess that Buffett would, too.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a Motley Fool Inside Value recommendation. The Fool has a disclosure policy.


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  • Report this Comment On August 20, 2009, at 4:13 PM, Lepkalou wrote:

    one important point - the gene stack that DD wants to do, simply doesn't work without the MON trait. the DD trait will not work alone. When stacked with the MON trait, it only works as good as the MON trait alone.

    otherwise - nice read!

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