DES MOINES (AP) -- Holden Foundation Seeds Inc. says it will appeal an order that it pay $46.7 million to the leading North American producer of seed corn, denying it stole trade secrets.
Pioneer Hi-Bred International Inc., which won the judgment but sought $76.2 million in damages and interest, also is considering an appeal.
An analyst said that even if an appeal is pending, the case already has made it clear that only those companies that can afford extensive research will survive in the seed business.
Pioneer said Monday'sthe decision will help the seed industry and benefit farmers. But Holden said only Pioneer would benefit if the award is upheld on appeal, while maintaining farmers would be hurt.
Holden, based in Williamsburg, provides research and corn lines for hundreds of seed companies. Those companies provide seed for about 45 percent of the corn grown in the United States each year.
``Although this huge judgment is a temporary setback for Holden's, we are confident we will prevail in the long run and, in any event, will continue to produce high quality inbred corn for the market,'' said Ron Holden, president of the company.
Pioneer, based in Des Moines, accounts for more than a third of all seed sold to corn farmers in North America.
The award ordered by U.S. District Judge Donald E. O'Brien came in the liability phase of a case first filed by Pioneer in 1981. Pioneer claimed that Holden's customers took sales from Pioneer with hybrids containing material developed from a Pioneer line in the 1970s.
In addition to the monetary judgment, Pioneer said O'Brien barred Holden from selling or otherwise disposing of any of the 177 seed varieties in the dispute until the court decides what is to be done with the material. Pioneer has asked that the seed varieties be turned over to Iowa State University for use in developing public corn hybrids for the seed corn industry.
A public line refers to seed varieties and breeding material made available to all companies, usually for a price. In contrast, Pioneer claimed the seed varieties were proprietary material restricted to its use only.
O'Brien based the damages on Pioneer claims for ``lost profits'' between 1980 and 1990 for seed strains it alleged were copied.
Pioneer asked for $46.7 million in damages plus $29.5 million in interest. O'Brien declined to award prejudgment interest, according to Pioneer.
``We feel that this theory of damages is wrong and the size of the judgment is totally out of proportion to the value of the Pioneer lines in question,'' Ron Holden said.
He said the calculations of ``lost profits'' covered a period when Pioneer increased its sales and market shares at a rate exceeding the period either before or after Holden's material was on the market.
``The effect of the court's ruling is to give Pioneer an even greater increase. This is unreasonable on its face,'' Holden said.
George Dahlman, an analyst who follows Pioneer for the Minneapolis securities firm Piper Jaffray &; Hopwood, said the most important part of the case was the signal sent out through the industry by Pioneer -- ``It intends to protect its work.''
He said the result is intensified industry work to develop proprietary seed technology, especially work in genetic engineering.
``Whether one likes it or not, it does indicate the industry is realizing more and more that this is a research-driven industry. If you do not have the dollars to pour into research you are not going to be a survivor.''
Thomas Urban, the chairman of Pioneer, said his company will aggressively protect its breeding materials and other intellectual profits.
``We are investing $80 million in research this year,'' Urban said. ``If we are to continue such investments in the future, prudence demands that we protect them.''
Ron Holden said only Pioneer would benefit from the judgment.
``Harming their major research competitor will only help Pioneer,'' Holden said. ``Patent protection was extended to corn varieties in the 1980s, which provides better legal protection than any legal precedent set in this case.''
Urban said the judgment will be good for the seed industry and farmers.
``Seed companies will be willing to make substantial investments in research, knowing that those investments will be protected from misappropriations by other companies,'' Urban said. Farmers will benefit from having a wider variety of hybrids to chose from, with improved productivity resulting from genetic research, he said.
Holden said the decision would hurt the American farmer because it ``will have a chilling effect on anyone doing research on any public lines even similar to Pioneer's.''