The developments mark a turning point in the history of the sector, said Mike Timperio, Neptune’s senior vice president of global sales.
“One aspect is really the recognition of our IP, our patent rights,” Timperio told NutraIngredients-USA. “The second part is for Neptune to go to a different model (for production).”
New strategy needed
Neptune was forced to reevaluate its strategy after the explosion and fire in November, 2012 that destroyed the company’s only production facility in Sherbrooke, Quebec. That plant is being rebuilt and will come online by February 2014 with an initial annual capacity of 150 metric tons, Timperio said. But part of the company’s recovery strategy has been to broaden its base of both supply and production to ensure against similar disruptions in supply in the future, and the new agreement grows out of that.
Rimfrost, part of Norway-based Olympic Seafood, signed a strategic non-exclusive krill oil manufacturing and supply agreement giving Neptune the right to purchase, at a preferred price, up to 800 metric tons of krill oil during the first three-year term of the renewable agreement.
Neptune’s CEO Henri Harland called the agreement, “another important step in our action plan to secure and increase our krill oil supply chain through third party agreements. The krill oil purchased from Rimfrost will be further processed by Neptune to meet our EKO krill oil standards.”
In the patent dispute, Rimfrost USA, LLC; Olympic Seafood AS; Olympic Biotec Ltd.; Avoca, Inc.; and Bioriginal Food & Science Corp. entered into a settlement with Neptune and its subsidiary Acasti Pharma that ends their portion of Neptune's suit with the International Trade Commission over Neptune’s patent rights.
As part of the settlement, Neptune granted a world-wide, non-exclusive, royalty-bearing license to the companies, allowing them to market and sell within the nutraceutical market products containing components extracted from krill. The respondents also agreed to pay Neptune an additional royalty amount due for the manufacture and sale of krill products prior to the effective license commencement date. As part of the settlement, Neptune agreed to dismiss a related patent infringement case against Rimfrost, Olympic Seafood AS and Avoca, Inc. filed in March, 2013 with the United States District Court for the District of Delaware. However, the exact terms and conditions of the settlements are confidential.
Timperio said the agreement means Neptune and Olympic can move forward in using their energy in a more productive direction.
“The good thing I see with this major settlement and agreement is this will help the krill industry to work together. I can foresee very shortly down the road having a monograph (to standardize the ingredient),” he said.
“Today’s announcement follows the settlement of our patent disputes with Neptune and is reflective of our ability to work together strategically as new industry partners,” said David Peele, president of Rimfrost USA.
Aker stays the course
As for Norway-based Aker BioMarine, Neptune’s chief antagonist in the global patent struggle, the new developments won’t change its plan of action.
“We continue to believe that the claims are without merit with regard to Neptune’s patents and we will continue to defend ourselves in all jurisdictions that we need to. Aker will continue on the path we’re on,” said Todd Norton, vice president of business development for Aker.
When the Sherbrooke facility reenters the production scheme it will be devoted to producing Neptune’s premium grade krill oil, called NKO. By that point, the differing grades of omega-3 and phospholipid-rich krill will be having an impact in the marketplace, Timperio said, something he sees as good for Neptune.
“You do have a range of krill oil out there. The consumer will eventually be more astute as to what they are looking for. The level of education is growing,” he said.