The suit, filed in US District Court for the Southern District of California seeks to “stop Creative from intentionally and improperly trying to mislead NAI's actual and potential customers and wrongfully interfering with NAI's CarnoSyn beta-alanine business.”
Beta-alanine is a popular ingredient in sports nutrition formulations. NAI, based in San Marcos, CA, says that CarnoSyn is a naturally occurring beta amino acid essential for the synthesis of muscle carnosine, which acts as a buffer, delaying the onset of muscle fatigue and failure. NAI, which is primarily a contract manufacturer and which had licensed CarnoSyn to a partner and has now taken over the direct sale and district, said that the ingredient is backed by 15 studies which show, among other things, that supplementing the body’s beta-alanine stores increased muscle buffering capacity and resulted in greater physical working capacity, enhanced endurance and delayed fatigue. NAI also owns a portfolio of 14 patents on CarnoSyn in the United States and 20 in other countries.
The complaint alleges that, on or about September 5, 2015, Creative, based in Scott City, MO, and which sells generic beta alanine, sent an Internet communication to customers and potential customers of beta-alanine making numerous false and misleading statements regarding Creative's own generic beta-alanine, NAI, CarnoSyn brand beta-alanine, and NAI's intellectual property rights. Creative, according to the complaint, engaged in unfair competition, false advertising, trade libel and product disparagement, and intentional interference with NAI's business – all designed to improperly boost its sales and intentionally interfere with NAI's expanding CarnoSyn business.
Hefty legal fees
"NAI has invested significant time and money to build, promote and expand this business and we will pursue all appropriate legal avenues to protect our CarnoSyn beta alanine brand and intellectual property rights,” said Mark A. LeDoux, NAI's CEO and board chairman.
NAI has seen significant growth in its CarnoSyn business after the supply of the ingredient was interrupted by the 2011 earthquake in Japan. NAI recorded beta-alanine raw material sales and royalty and licensing income as a component of revenue in the amount of $4.8 million during fiscal 2013 and $5.4 million during fiscal 2014. NAI recorded net sales of $62.8 million in 2013 and $72.9 million in 2014.
In addition to growing its CarnoSyn business, NAI has also vigorously defended its intellectual property suite surrounding the ingredient, which it says gives it the rights to beta alanine when used in a dietary supplement. In a sector rife with generic ingredients and me-too products, NAI spent a combined $4.5 million in legal fees in 2013 and 2014 defending the brand. “Our ability to maintain or further increase our beta alanine royalty and licensing revenue will depend in large part on our ability to maintain our patent rights,” the company said it its most recent annual report.
NAI previously sued DNP International Co., Inc., a generic beta alanine supplier, for unfair competition and related claims. As a result of the suit, DNP and its affiliates exited the betaalanine business.