Microalgae specialist Solazyme says it has secured a “clear and complete victory” over its former French business partner Roquette in a legal dispute over intellectual property rights following the 2013 collapse of their joint venture Solazyme Roquette Nutritionals (SRN).
The partners – who teamed up in November 2010, but parted company in June 2013 owing to “divergent views on an acceptable commercial strategy”- have been wrangling over IP ever since, and have both gone to market with ‘whole algal flour’ and ‘whole algal protein’ products (Solazyme’s under the AlgaVia brand and Roquette’s under the algility brand).
However, speaking to analysts on Solazyme’s Q4 earnings call Thursday, CEO Jonathan Wolfson said that an independent arbitration panel had sided with Solazyme.
He added: “Last week the arbitration panel handed down the decision and it was a clear and complete victory for Solazyme… To say that we are pleased with the award… would be an understatement.”
The panel, said Wolfson, awarded solely to Solazyme all SRN patent applications, know how related to high lipid algal flour and protein powders, all Roquette patent applications filed since November 2010 relating to algal food and ingredients plus methods for making and using them, and awarded the company $2.35m for legal fees and expenses.
Solazyme seeking ‘extensive damages for Roquette’s misappropriation of Solazyme’s trade secrets’
The award, claimed Wolfson, is “binding and not appealable”, but he noted that Roquette had commenced legal action in Delaware contending that the award is void because the panel took too long to come to its decision.
He added: “We do not believe this argument has any merit and earlier today we filed asking the court to confirm the award and order Roquette to comply… We are also seeking extensive damages for Roquette’s misappropriation of Solazyme’s trade secrets, breach of contract and misuse of our confidential information.”
Roquette’s contribution to JV ‘primarily in the form of money and manufacturing capacity’
In court papers seen by FoodNavigator-USA, Solazyme alleges that it teamed up with Roquette because it needed a partner that could provide sugar (for use in the fermentation process), manufacturing capabilities, and marketing experience, and agreed that “Roquette’s contribution would be primarily in the form of money and manufacturing capacity and Solazyme’s contribution would be primarily in the form of technology”.
According to Solazyme, Roquette decided to terminate the JV and ceased funding it, while Solazyme “wanted to continue”.
Later on, alleged Solazyme, bosses discovered that Roquette had been filing patent applications based upon patent applications filed by the joint venture, and had started marketing products under the algility brand name that “were developed by Solazyme and that had improvements made during the time that the joint venture was in effect”.
While Roquette claims that it had “found a new process” to make the products in question, said Solazyme, “the record is devoid of any evidence” to support that claim.
Roquette: Award is void because the panel took too long to come to its decision
However, Roquette – which scooped an innovation award at the Food Ingredients Europe trade show in 2013 for its algility HL whole algal flours, produced in Lestrem, France – argued that under the joint venture agreement, both parties the right to use the IP in dispute.
In court papers, it said: “[The JV agreement] provides that all intangible rights owned by SRN other than those specifically proven to be distributed as ‘improvements’ shall be assigned by SRN jointly to Roquette and Solazyme, each of which shall have the right to use, practice, and license such intellectual property for any and all uses without any accounting to the other.”
Roquette: We will continue to be an active participant in the algal food product market
In a statement sent to FoodNavigator-USA Friday morning, Roquette said: “Prior to the attempt to render an award, the authority and the jurisdiction of the arbitrators had been challenged by Roquette in two separate lawsuits before a United States District Court.”
It added: “Roquette further notes that the United States Patent Office has repeatedly rejected Solazyme’s attempts to obtain patents on algal food products and that there are no patent barriers to Roquette’s full participation in the algal food market. Roquette reconfirms that it will continue to be an active participant in the algal food product market.”
65 active food and beverage projects
San Francisco-based Solazyme, which posted a net loss of $44.9m on revenues up 29% to $14.5m in the fourth quarter – admitted it was frustrated by progress at its oils and lubricants facility in Moema in Brazil, but said production of AlgaVia food ingredients at its fermentation facility in Peoria, Illinois, was going well, while new products featuring its new high-oleic algal oil (made in Clinton, Iowa) would hit shelves later this year.
All three ingredients have been the subject of ‘no objections’ letters from the FDA to their GRAS (Generally Recognized as Safe) determinations, news that had proved a “very strong tool to accelerate sales on the food side”, said Wolfson. Solazyme is currently working on 65 food and beverage application projects across 30+ product categories, double where it was six months ago, he said.
Photo: Solazyme and Roquette teamed up in 2010, but parted company in 2013 owing to “divergent views on an acceptable commercial strategy”. Picture: Solazyme’s AlgaVia whole algal flour