tall corn

As a follow up to Syngenta Under Pile of Lawsuits, the United States 8th Circuit Court of Appeals recently broke up Syngenta Seeds, Inc.’s attempt to pass the Viptera problem to Bunge North America, Inc.

In 2013 Syngenta tried to get ahead of the problems caused by China’s ban of Viptera corn by suing Bunge for refusing to accept corn which contained the Viptera trait. Knowing Bunge would not accept Viptera corn, farmers subsequently refused to purchase Syngenta products resulting in lost profits, market share and goodwill.

Syngenta alleged Bunge’s refusal to accept Viptera corn breached Bunge’s obligations under the United States Warehouse Act (USWA), breached a duty to third-party beneficiaries of Bunge’s licensing agreement with the federal government, and Bunge engaged in false advertising in violation of the Lanham Act.

Under the USWA, Bunge is required to treat depositors of grain in a fair and reasonable manner.  Syngenta claims Bunge violated its obligation to treat all grain depositors equally by refusing to accept Viptera corn.  However, the 8th Circuit Court found the USWA did not allow seed producers to sue for a breach of the Act nor did it provide a private right of action against the warehouse operator.

Syngenta also claimed it was a “third party beneficiary” of Bunge’s Licensing Agreement with the federal government which also requires Bunge to treat all depositors fairly and reasonably.  The 8th Circuit disagreed and found the Licensing Agreement did not intend to benefit seed producers.  Consequently, Syngenta was not a third-party beneficiary to the agreement and had no claim under the agreement for Bunge’s refusal to accept Viptera corn.

Finally, Syngenta claimed Bunge posted signs falsely advertising Viptera was not approved in major export destinations and Bunge, therefore, could not accept corn with the Viptera trait.  The District Court had dismissed Syngenta’s false advertisement claim finding (1) Syngenta could not bring a false advertisement claim because Syngenta was not Bunge’s competitor; and (s) Bunge’s signs were not considered commercial speech.  Giving Syngenta a glimmer of hope, the 8th Circuit returned Syngenta’s false advertisement claim back to the District Court.

The 8th Circuit did not determine Syngenta had standing or Bunge’s signs constituted commercial speech.  Rather, the 8th Circuit instructed the District Court to determine whether Syngenta had standing under the “zone of interest” and “proximate causality” tests recently developed by the Supreme Court in Lexmark Int’l, Inc. v. Static Control Components.

The Viptera problem is multi-faceted and has effected the entire chain of grain distribution in the U.S.  Syngenta will do what it can to make sure it is not holding the ball for the problems caused by China’s ban of Viptera.  Per the 8th Circuit, Syngenta gets another down to prove it has standing under the Lanham Act to complete a pass of the Viptera problem onto Bunge.

For the full opinion see: Syngenta Seeds, Inc. v. Bunge North America.