The patent in question, European Patent EP1417211B1, relates to the composition of the ingredient. The EPO revoked this patent in December 2009, and on Tuesday rejected Neptune’s appeal of that earlier revocation.
Enzymotec, the Israel-based lipid chemistry company that is one Neptune main competitors, has been locked in litigation with Neptune over krill patents for several years (Aker BioMarine, the other main player in the krill sphere, is in litigation with Neptune, too.) According to Enzymotec, yesterday’s action by the EPO means “there is no scientific ground to substantiate Neptune's patents. We predict that other aggressive legal attempts this company is taking will likely fail again in the future.”
Ruling on flavonoids, not phospholipids
Neptune officials take a much different view of course; to Neptune, yesterday’s ruling was the smallest of bumps in the road.
“This does not mean anything really. This is a patent that is concentrated on the flavonoids. This was the first patent we got when we thought that the flavonoids in krill was going to be important,” said Tina Sampalis, Chief Global Strategic Officer for Neptune.
“As we went on we realized that the market is not interested in the flavonoids; it was interested in the omega 3s. What we managed to do around the world except for in Europe was to concentrate our patents on that one factor,” she said.
The EPO’s action was taken on narrow technical grounds, Sampalis said.
“The fact is that the patent office today rule on pure technicalities. They are revoking the patent on the flavonoids, but our business is on omega-3 fatty acids not flavonoids. The phospholipids (that contain the omega 3s) were never discussed. They were never challenged,” she said.
“Whenever we have pursued patent protection covering phospholipids, such as in the U.S., Australia, and Canada, we did not base it on flavonoids and we have succeeded with the issuance and allowance of patents in those jurisdictions,” said Benoit Huart, Neptune’s general counsel.
"We feel like the right decision was made," said Todd Norton, vice president of business development for Aker BioMarine. "We’ve got facts. We've got documents to support our claims for invalidity. When an unbiased expert has a chance to look at that and can look at the entire context of things, it seems to be pretty straightforward.
"There are issues still in play that we continue to work through for the good of the category and for the good of consumers," Norton said.
In a statement today, Neptune said Tuesday’s ruling would not affect the ongoing disputes in the U.S. and elsewhere, including Neptune’s recent filing with the U.S. International Trade Commission (ITC).
“Nobody likes to lose, of course. I am upset and disappointed about our loss but I am not concerned about our business,” Sampalis said.
In addition to its ongoing legal struggles with its competitors in North America, Australia and Europe, Neptune is dealing with the loss of its entire production capacity after an explosion and fire in November heavily damaged its facility in Sherbrooke, Quebec. The company has announced a recovery plan under which it plans to rebuild that facility while simultaneously forming new production agreements with third party processors.