WASHINGTON, March 2, 2017 - Dow AgroSciences is on the hook for $455 million in payments to Bayer CropScience after a federal appeals court upheld a patent infringement award involving a gene used in glufosinate-tolerant seed.
The Federal Circuit Court of Appeals in Washington, D.C., affirmed a January 2016 district court judgment that confirmed an October 2015 arbitration award issued by an international tribunal.
Bayer alleged that Dow infringed on four patents that “describe and claim various technologies related to the pat gene, which confers resistance to the herbicide glufosinate,” the appeals court said in its ruling issued yesterday.
Bayer uses the gene in its LibertyLink line of products. Dow uses it in its Enlist cotton and soybean seeds.
The tribunal, operated by the International Chamber of Commerce, “awarded contract damages to compensate Bayer CropScience AG for certain revenues that it would have earned had Dow not breached” a 1992 agreement’s restriction on sublicensing certain rights it obtained from Bayer, the Federal Circuit found.
The court said its review of the arbitration award was “very limited.”
“Ordinary legal or factual error is not a ground for disturbing an arbitral award like the one at issue here,” the court said.
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“Bayer’s position in its arguments to the Federal Circuit was that Dow had raised no legitimate ground for overturning the district court’s judgment confirming the arbitration award, as none of the very narrow grounds for vacating an arbitral award under the Federal Arbitration Act were present,” Bayer said.
Dow said it disagreed with the decision and is examining its legal options. The company could ask the full appeals court to review the decision or petition the Supreme Court for review, but neither option has a statistically high chance of succeeding.
“Dow AgroSciences continues to believe that it had a valid license to the technology at issue, that Bayer’s underlying patents are invalid for multiple reasons, and that the damages awarded by the arbitration panel are grossly excessive,” the company said.
“Neither the arbitration award nor the federal court’s decision changes the company’s plans for Enlist™, or its soybean or cotton businesses,” Dow added.
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