Brazil judge orders Monsanto to deposit royalties related to GMO seed

By Ana Mano

SAO PAULO (Reuters) - A Brazilian judge has ordered local units of Monsanto Co to put royalties related to a GMO soy seed technology in an escrow account, in a decision likely to hinder the U.S. seed company's ability to collect royalties from the business.

The July 3 ruling relates to a patent dispute between Brazilian soy growers in the state of Mato Grosso and Monsanto, which was recently acquired by Germany's Bayer AG in a 63 billion-euro deal.

The judge ordered local units of Monsanto to deposit in an escrow account royalties related to the Intacta RR2 Pro genetically modified soy seed technology pending the end of the patent litigation, according to the decision seen by Reuters.

Brazilian soy growers suing Monsanto over the validity of that patent said on Wednesday they expect the company to collect 800 million reais ($204 million) in royalties related to that seed technology in the 2017/18 crop cycle.

Monsanto declined to comment on the value of Intacta-related royalties in Brazil.

Bayer declined to comment on the court ruling, saying it is not allowed to discuss Monsanto affairs before their integration.

The Mato Grosso state branch of grain growers' association Aprosoja praised the court decision.

"It is fair that the value of the royalties is deposited in an escrow account until a final decision on the matter," Mato Grosso's Aprosoja said.

The decision, regarding royalties those growers would normally pay to Monsanto, is effective immediately, a lawyer for the plaintiffs said in a telephone interview.

The court decision dated is related only to Intacta RR2 Pro, which is protected by patent PI0016460-7, court documents showed.

Soybean growers in Mato Grosso state last November asked a federal court to cancel Monsanto's Intacta RR2 Pro patent.

In the lawsuit, they claimed irregularities related to the patent, including the company's alleged failure to prove it brings de facto technological innovation.

In January, Brazil's patent office said after re-examining the issue that Intacta RR2 Pro patent for genetically modified soy seed technology should be declared void.

Intacta's patent protection extends through October 2022.

(Reporting by Ana Mano in São Paulo and Tom Käckenhoff in Dusseldorf; Editing by Chizu Nomiyama and Matthew Lewis)