The Iowa State University Research Foundation filed a lawsuit this week accusing Monsanto of commercializing a low-linolenic acid content soybean, which had been bred to be healthier than conventional soybeans.
The lawsuit, filed in the US District Court for the Southern District of Iowa, claims that after the Research Foundation was awarded several patents relating to the soybeans, Monsanto started marketing the products.
Monsanto was aware of the problem, states the lawsuit, which says that the university had already challenged Monsanto over the issue.
The biotech company claims that it came to an agreement with Iowa over the use of the patent back in February to stop the problem escalating and denies that it ever used patented soybean technology from Iowa State University.
"Monsanto's scientists developed its patented soybean product containing low-linolenic acid, using publicly available germplasm," said the company in a statement.
"We did not use any patented material from ISU and did not infringe upon any of ISU's patents," added Monsanto.
"Nevertheless, when we learned there was a dispute, to avoid litigation, we worked to resolve the issue…We did indeed reach an agreement on this issue.
We believe ISU's claims are without merit and we hope for a timely resolution."
According to Iowa State University, low levels of linolenic acid in soybean oil are good for the food industry because they increase a product's shelf life.
Demand for the oil from the food industry has also been high because of its "excellent frying and flavor stability without the hydrogenation process that creates trans fats," states the university on its website.
It claims that some of its most recently produced oils contain only one gram of saturated fat per tablespoon, thereby matching the saturated fat content of canola oil and reducing by half the saturated fat found in traditional soybeans.
The food industry is coming under increasing pressure to remove all trans fats from its products as more studies suggest they are guilty of raising LDL (bad) cholesterol levels, causing the arteries to become more rigid and clogged, and increasing the risk of heart disease.
Changes in labeling requirements to clearly reveal the trans fat content of foods has also boosted reformulation efforts in the US over the past few years.
New York recently becoming the first city to ban the use of the fats in restaurants and anti-trans campaigns are also well under way in other cities, which are expected to follow suit with similar moves in the near future.
Trans fatty acids - also known as trans fats - are formed when liquid vegetable oils are partially hydrogenated or 'hardened' for use as spreads such as margarine, cooking fats for deep-frying and shortening for baking.