Unfair trade case filed at ITC over BHB patent

By Hank Schultz contact

- Last updated on GMT

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Getty Images
An unfair trade case has been filed before the International Trade Commission over beta hydroxybutyrate (BHB), a popular ingredient in sports nutrition and weight management.

The case was filed by a company called New U Life Corporation.  Among the defendants are branded sports ingredient developer Compound Solutions, which has licensed a patent on its GoBHB ingredient.  Also named as defendants were Utah company Axcess Global Sciences and VNB Butyrate LLC.  The original patent was granted to Viktor Vlatakos in 2003.

The filing by New U Life in late July is asking the ITC, which is located in Washington, DC, to ban importation into the US of BHB products covered by the complaint that are marketed by the defendants. 

New U Life launched a BHB product in May of this year.  It claims its product is a “a proprietary mixture of four BHB salts and additional supplements, with the goal of achieving the full ketosis benefits ofBHB while minimizing undesirable side effects.”

Patents alleged to have been used in violation of anti trust laws

The company claims that the defendants are misusing their patents to try to corner the market in this hot growing area.  BHB supplementation has the goal of achieving the benefits of a ketogenic diet—the preferential burning of fat as fuel—without the difficult of maintaining the eating style’s strictures, which many consumers have difficulty doing. 

“Proposed Respondent Axcess Global, LLC has pursued a long-term strategy, in coordination with the other Proposed Respondents, to foreclose the emergence of competition in the exogenous BHB nutraceuticals market by misusing patents to exclude competitors from the market, thereby restraining competition and monopolizing the market,”​ the complaint alleges.

The word ‘proposed’ is important, because an initial filing before the ITC is a request for the commission to initiate an investigation of a complaint.  It’s somewhat analogous to trying to get the US Supreme Court to agree to take on a case, said patent law expert Kevin Bell, a principal in the Porzio, Bromberg and Newman law firm.

Bell said an ITC filing amounts to picking up a big hammer, but one you can only hit a few things with.  A successful ITC case would mean certain products would be excluded from import. But it doesn’t allow the successful filer to recover monetary damages.

Wielding the big hammer

“What I tell clients is that the ITC is like patent litigation on speed. It is three times as fast as regular patent litigation with twice as many rules. It is the ultimate hammer when it comes to enforcing unfair competition, but there are no monetary remedies,”​ Bell told NutraIngredients-USA.

There is a lot at stake, New U Life alleges.  Interest in ketogenic diets has been growing strongly and the past 18 months, consumer interest as measured by Google searches has shifted from ‘ketogenic diet’ to ‘BHB.’ Sales of the ingredient also expanded rapidly in 2018 and 2019, the company claims.

Bell said New U Life’s argument seems to be based on the relationships between the proposed respondents and how those resulted in the squelching of competition.  For example, the complaint alleges that another company called Pruvit had initiated a challenge to the Axcess patent, one that the ITC complaint alleges was likely to have resulted in invalidation of some of the patent claims.

But Pruvit agreed to drop its challenge in return for an exclusive license to sell the patented BHB ingredient in the multi level marketing channel. The ITC action cites a precedent from a 2013 US Supreme Court case in which the Court voiced anti trust concerns about such arrangements (FTC vs Actavius​).

Bell said one of the ways to win in an ITC case, or at least to clear the bar of getting the full commission to agree to start an investigation, is if the holders of the patents are using them to exclude competitors even if they have doubts about the legitimacy of the patents themselves.

“A patent gives you one right and one right only, and that is to exclude people,” Bell said. “In that there is an assumption of the validity of the patent.  One of the ways you can succeed is if you can prove the patent holder knew the patent was invalid,”​ Bell said.

“This is a bit different, because they are claiming through the various relationships and licenses that the patents are being used in violation of anti trust laws.  It’s a difficult argument to make to be honest,”​ he said.

Compound Solutions calls complaint frivolous

Not quite a year ago Compound Solutions filed its own patent action against an ingredient distributor and two contract manufacturers​ that it said were violated the goBHB patent, which Compound Solutions CEO told NutraIngredients-USA is one of the company’s best selling ingredients.

Titlow told NutraIngredients-USA that his company expects to prevail in the ITC case as well.

“The complaint lacks any merit.  We look forward to being exonerated by the ITC and will pursue sanctions against New U Life for its frivolous complaint,”​ he said.

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