A patent infringement lawsuit filed Jan. 9, 2009, by Dr. John Larry Sanders and Specialty Fertilizer Products LLC, Leawood, Kan., against The Mosaic Co., Cargill Inc., and Cargill Fertilizers Inc. over the defendants’ product, MicroEssentials, continues to linger in the U.S. District Court for the Western District of Missouri, while the plaintiffs have sent it back to the U.S. Patent and Trademark Office (PTO) for reexamination of the patentability of the claims.

In late February, the Court agreed to stay the lawsuit until a decision is made, saying that a reexamination by the Patent Office could simplify the issues to be litigated in this matter and facilitate any eventual trial of the case. Earlier in the litigation, Mosaic had won at the lower court level, but it was reversed on appeal and sent to the U.S. District Court.

“Re-examinations are taken very seriously by the U.S. PTO because, like ours, most re-exams have serious consequences,” Dr. Sanders told Green Markets last week. “The U.S. PTO gives no specific timeline, but we expect the results could come anytime.”

Sanders said the infringement allegation involves its micronutrient patents, and not its widely-distributed Avail product, which enhances phosphate use.
Sanders, like Mosaic, declined to discuss the merits of the case.

Earlier in February, the Court had ordered the parties to participate in a settlement conference with an outside mediator. However, those discussions did not result in a resolution.

In the meantime, MicroEssentials has grown within Mosaic to pull in over $500 million each year in revenues. It now represents 14 percent of Mosaic phosphate sales, and is expected to grow as more capacity comes online. The company has committed some $70 million to expand capacity of the product from 1.5 million tons to 2.3 million tons per year. Mosaic said that in North America, in only a few years of distribution, MicroEssentials has captured an approximate 9 percent share of all phosphate products sold.

Mosaic has also launched new MicroEssential products – MicroEssentials S9, a production specifically developed for Brazil; MicroEssentials S5, which is focused on grain production; and Nexfos, a feed phosphate product.

Mosaic says MicroEssentials generates approximately 5 percent more margin than does DAP, or an approximate $38 per ton of incremental gross margin on a product ton basis. While it does incur additional research and development, marketing, and technical sales costs of about $10 per ton, that leaves a net incremental cost of $28 per ton.

Mosaic told analysts Feb. 22 that MicroEssentials allows it to overcome growth constraints it has in its phosphate business. The company said it is constrained by rock resources and P205 production. “Relative to DAP, we can produce about 15 percent more finished MicroEssentials product per ton of phosphoric acid and at higher margins. So our returns on a ton of P205 are substantially higher than DAP,” said Mosaic Senior Vice President-Commercial Richard McLellan.

Mosaic says field tests show the product increased yields by 2.7-7.7 more bushels per acre than competing products.

The U.S. Environmental Protection Agency has approved an Interim Record of Decision that would cap rather than extract radioactive slag, buried phosphorus, and heavy metals that remain at the site of the former FMC Corp. elemental phosphorus complex west of Pocatello, Idaho.

From 1947 to December 2001, FMC operated the world’s largest elemental phosphorus plant until it was shut down. All of its structures, including four massive electric furnaces, have been torn down and removed. Since 1990, that site and adjacent property – where the J.R. Simplot Co. continues to operate a phosphate fertilizer plant – have been designated the Eastern Michaud Flats Superfund site. Unlike the Simplot plant, the FMC plant operated within the Fort Hall Indian Reservation boundaries in Power County.

Shoshone-Bannock tribal officials had urged that the FMC waste be removed rather than left on the property for fear it would contaminate the nearby Portneuf River, which runs through the reservation. They have argued that the billions of dollars in profits that FMC made from its elemental phosphorus plant should be spent on completely cleaning up the property.

After receiving hundreds of comments about the plan, EPA announced the “cap and retention” cleanup strategy at a special meeting April 13 in the Chubbuck City Council chambers. Officials said the existing property poses risks to people and the environment.

The plan, which will be funded by FMC, calls for capping major sections of the property. Installing extraction and treatment wells downstream would capture runoff pollutants. Drilling wells and actual removal of dirt are expected to take a year to start.

EPA will negotiate with FMC to forge a consent decree and draw up engineering and design plans for the cleanup. Once that is finalized, FMC will hire contractors to design and implement the project, which will be monitored by EPA.

The first EPA Record of Decision (ROD) regarding the FMC property was signed in 1998. Shoshone-Bannock opposition to a plan that calls for capping the waste has delayed reaching an interim ROD for more than a decade.

Tribal officials have called the EPA plan short-sighted, but EPA officials counter that removing all the waste would be prohibitively expensive and dangerous. As a concession to the tribes, EPA will fund a third party of experts to examine whether it is feasible to remove and treat the waste. EPA officials have said the undertaking will require removing large volumes of earth, plus special precautions to minimize surface runoff and air pollution. Hauling in clean soil and contouring hills near the property will involve hundreds of acres. It is estimated the entire remediation project could take up to four years. The extraction wells could be installed before the capping.

FMC ponds used to manage wastewater were capped and closed under a 1999 Resource Conservation and Recovery Act (RCRA) consent decree. In 1998, FMC paid $11.9 million – at that time the largest civil penalty settlement ever – under a 1976 hazardous waste law. It also had to cap the ponds, which had caught fire at times over the decades. Construction of the pond caps was completed by 2005.

Power County lost its major tax base when the FMC operation shut down. Plans call for the property to be developed commercially and industrially after the property is cleaned up.