Monsanto Co. v. E.I Du Pont De Nemours & Co.
2014 U.S. App. LEXIS 8746
Fed. Cir.2014Background
- Monsanto owned a patent covering the Roundup Ready (RR) soybean trait and licensed Pioneer (a DuPont subsidiary) in a 2002 License to produce/sell RR-containing seed within a defined "Licensed Field."
- DuPont later developed its own glyphosate-tolerant trait (OGAT) and created an OGAT/RR stack that increased yield in trials; DuPont did not commercialize the stack but asserted rights under the License to do so.
- Monsanto sued DuPont (2009) for breach and patent infringement; the district court granted partial judgment on the pleadings (2010) holding the License (as a matter of law) did not permit stacking OGAT with RR.
- DuPont sought leave to amend to assert contract reformation counterclaims (mutual mistake, unilateral mistake with Monsanto’s knowing silence, and fraud) based on its asserted subjective belief that the License allowed stacking.
- During discovery DuPont produced internal emails (including in-house counsel and negotiators) that contradicted DuPont’s litigation assertions about its subjective belief; Monsanto moved for sanctions alleging DuPont misrepresented its beliefs and perpetrated a fraud on the court.
- The district court struck DuPont’s reformation defense/counterclaims and awarded Monsanto attorneys’ fees (limited to fees defending the reformation claims after Jan. 29, 2010); DuPont appealed only the sanctions orders.
Issues
| Issue | Plaintiff's Argument (Monsanto) | Defendant's Argument (DuPont) | Held |
|---|---|---|---|
| Whether sanctions under the court’s inherent power were proper | DuPont knowingly misrepresented its subjective belief; sanctions were warranted to remedy abuse of process | DuPont made reasonable legal arguments about contract interpretation; sanctions punished zealous advocacy and relied on selected documents | Sanctions affirmed: district court did not abuse discretion in imposing narrowly tailored sanctions for factual misrepresentations |
| Whether DuPont’s advocacy was legal argument vs. factual misrepresentation | Sanctions targeted factual misstatements of DuPont’s subjective belief (material to reformation) not reasonable legal interpretation | DuPont argued objective interpretation was a legal issue and sanctions impermissibly punished legal claim | Court found objective meaning had been decided earlier; later assertions of a subjective belief were factual and contradicted by DuPont’s documents; sanctionable |
| Whether internal emails / individual employees’ statements could be imputed to DuPont | Emails authored by negotiators and in-house counsel were DuPont corporate statements and relevant (privilege waived) | DuPont said employee views shouldn’t be attributed to corporate belief; some statements were conservative legal advice and irrelevant to 2002 belief | Court properly relied on those high‑level participants’ emails as circumstantial and direct evidence of DuPont’s subjective belief |
| Whether conduct amounted to fraud on the court and justified fee award | Repeated misrepresentations undermined the litigation and warranted fees for bad faith; fraud-on-the-court standard not necessary to award fees under inherent power when bad faith found | DuPont contended conduct did not meet the high fraud-on-the-court standard and sanctions were excessive | Court found bad faith and abuse of process (though not meeting the narrow "fraud on the court" highest standard); fee award was permissible because court found bad faith and narrowly limited fees |
Key Cases Cited
- Chambers v. NASCO, Inc., 501 U.S. 32 (court’s inherent powers to sanction and assess fees)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (review standards and sanctions guidance)
- Stevenson v. Union Pac. R.R. Co., 354 F.3d 739 (8th Cir. 2004) (bad‑faith requirement for some inherent‑power sanctions; abuse of discretion review)
- Cerberus Int’l, Ltd. v. Apollo Mgmt. L.P., 794 A.2d 1141 (Del. 2002) (reformation requires clear and convincing proof of prior agreement)
- Nichols v. Klein Tools, Inc., 949 F.2d 1047 (8th Cir. 1991) (narrow definition of "fraud on the court")
- Pfizer Inc. v. Int’l Rectifier Corp., 538 F.2d 180 (8th Cir. 1976) (examples of "fraud on the court")