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Court dismisses Cyanotech's counterclaims in ongoing astaxanthin dispute with Valensa

By Hank Schultz , 21-Mar-2014
Last updated on 21-Mar-2014 at 16:41 GMT

Court dismisses Cyanotech's counterclaims in ongoing astaxanthin dispute with Valensa

On Wednesday a federal court in Florida dimissed two counterclaims on technical grounds made by Cyanotech Inc. in its ongoing astaxanthin patent infringement battle with Valensa Inc. Cyanotech has option to refile the claims after correcting certain legal deficiencies identified by the court.

Cyanotech had asserted that Valensa and its president, Rudi Moerck, PhD,  had acted in bad faith in its communications with Cyanotech over the patent claims.  It further asserted that the patent itself was invalid, and that even if it were valid, no infringement occurred because the patent covers medical uses of astaxanthin for eye conditions and Cyanotech had only promoted prophylactic uses.

Two counterclaims

Cyanotech made two specific counterclaims: that Valensa was engaging in unfair competitive practices and claims under the Lanham Act, which governs trademarks.  The court dismissed those claims, but said Cyanotech could refile if it reformulated them so as to avoid their current “shotgun” nature.  This is legal jargon referring to claims that include a number of different legal approaches, forcing a court to sift through what information is pertinent to the specific claim and what isn’t.

At issue is the so-called Tso patent, named for its originator (Dr. Mark O.M. Tso and titled “Method of Retarding and Ameliorating Central Nervous System and Eye Damage”) and held by the University of Illinois. This covers the use of methods and formulations of astaxanthin to treat eye conditions.   Valensa is the sole licence holder of this patent.

As a matter of corporate policy, Cyanotech declined to comment on the ongoing court proceedings.  Moerck said from Valensa’s point of view, the infringement on the patent was clear.

“Cyanotech has admitted that they have been using the information in the Tso patent and have been doing presentations on it,” Moerck told NutaIngredients-USA. 

This is corroborated in the recent court ruling, which said: “the Defendants have admitted that their Medical Director, Dr. Robert Corish, gave a presentation at the nation’s largest health supplement convention, during which he specifically referenced Dr. Tso and the Tso

Patent, and discussed the use of Cyanotech’s astaxanthin products for the treatment and prevention of macular degeneration, light-induced eye damage, eye strain and fatigue, as well as for the promotion of visual acuity.”

Battle stretching over years

The legal wrangling began in 2012 when Valensa filed a complaint against Cyanotech in Florida accusing it of ‘tortious interference with a business relationship’.

Historically, Cyanotech has supplied astaxanthin biomass to Valensa, which from 2011 onwards, supplied astaxanthin extracts made using this biomass to the Mercola Group, said Valensa.

Later that year, Cyanotech approached the Mercola Group direct and offered to supply it with astaxanthin oleoresin at a discounted price, “freezing out Valensa” alleged Valensa.

“As a direct and proximate result of Cyanotech’s use of Valensa’s confidential information and interference, the Mercola Group has advised Valensa that it no longer wishes to purchase its highest demand item - Valensa’s advanced asta-perilla formulated product - from Valensa.”  

Cyanotech: We never said we would not compete with Valensa

Cyanotech immediately sought to dismiss the lawsuit, claiming that its supply agreement with Valensa did “not prevent Cyanotech from obtaining information and does not prohibit Cyanotech from using such information for Cyanotech’s own financial benefit”.

It added: “Nothing in the amended complaint alleges that Cyanotech and Valensa agreed, either expressly or impliedly, not to compete.”

Two weeks later, Cyanotech filed its own complaint in Hawaii against Valensa and the University of Illinois accusing Valensa of engaging in unfair competition and deceptive and unfair trade practices by claiming that Cyanotech was infringing on the patent.

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