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.