Monsanto suspends seed royalties in Brazil, fighting state court

SAO PAULO Wed Oct 17, 2012 12:45pm EDT

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SAO PAULO (Reuters) - Monsanto Co (MON.N) has temporarily stopped charging royalties on its Roundup Ready soybean seeds throughout Brazil as it seeks to overturn a state court ruling on the matter, the U.S. biotechnology company said on Wednesday.

A local court had ordered Monsanto to drop the royalties in the agricultural state of Mato Grosso on October 8. Judges sided with the state's powerful farming and ranching federation, which claims that Monsanto's patent on the seeds expired in 2010 and has not been renewed in Brazil.

"Monsanto has voluntarily stopped charging for the use of the first generation of RR soybeans nationwide," the company said in a statement.

Monsanto has previously defended its right to apply royalties to patented seeds in Brazil in federal court and says it is still entitled to charge royalties on the Roundup Ready seeds.

"Previous decisions in Brazil clearly recognized the intellectual property rights of Monsanto and allowed the company to levy royalties on its products," wrote Monsanto Legal Director for Latin America Todd Rands. "We hope to reverse the decision in the coming weeks."

Demand for soybeans in Brazil has increased sharply this year as farmers sow what is expected to be a record 82-million-tonne crop. The harvest will likely put South America's largest country ahead of the United States in soybean production for the first time after severe drought hit U.S. plantings this year.

Monsanto could eventually face losses if it is made to return royalties it charged farmers after 2010. St. Louis-based Monsanto recently reported net income of $2.09 billion in the fiscal year ending August 31, its biggest profit in three years.

Monsanto shares were down 1.8 percent to $88.87 in Wednesday afternoon trading on the New York Stock Exchange. (Reporting by Caroline Stauffer; Editing by Tim Dobbyn)

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