Monsanto (NYSE:MON) may be winning the biotech agriculture war in the technology department, but it's going to take wins in the courtroom to secure the company's future. With a pair of small legal wins on Friday, Monsanto looks like it's off to a good start.
Monsanto got a favorable ruling in its dispute with rival DuPont (NYSE:DD) on Friday when a judge ruled that DuPont's new line of seeds violates its licensing contract with Monsanto. DuPont licensed Monsanto's Roundup Ready trait, but the terms of the contract preclude DuPont from combining the trait with its herbicide-resistant Optimum GAT.
Monsanto is OK with making money by combining traits with its rivals -- it's developing a super corn with Dow Chemical (NYSE:DOW) for instance -- but doesn't want rivals combining their herbicide-resistant traits with Roundup Ready as that would give the rivals a distinct advantage over Roundup Ready alone.
DuPont -- and possibly the Department of Justice -- see it differently and think Monsanto has created an unfair monopoly. Unfortunately for Monsanto, the judge didn't rule on whether Monsanto had the right to insert the language into the contract in the first place. This battle is far from over.
Monsanto's other win on Friday came when the Supreme Court agreed to review a case in which a lower court ruled that the U.S. government couldn't approve Monsanto's genetically modified alfalfa without conducting an environmental review. A win in front of the Supreme Court could help Monsanto get its products on the market sooner, but it could also help rivals like DuPont, Dow and Syngenta (NYSE:SYT) if environmental requirements are relaxed.
Just like Microsoft (NASDAQ:MSFT) in the 1990s, Monsanto's stock price will likely be tied to the result of court battles as much as the innovations it makes over the next few years.
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Syngenta is a Motley Fool Global Gains selection. Motley Fool Options has recommended a diagonal call on Microsoft. The Fool has a disclosure policy.
