Krill Patent Battle Rages On

LAVAL, Quebec and OSLO, NorwayThe tussle between krill oil supplement companies has hit a new gear, with a new report from Aker Biomarine on patent reexamination developments that appear to be going negatively for certain Neptune patent claims and with a new U.S. International Trade Commission (ITC) patent infringement case from Neptune Technologies & Bioressources aimed at Aker and several other krill producers.

Aker announced the reexamination by the USPTO of a key Neptune patent (No. 8,057,825) has resulted in an Action Closing Prosecution (ACP) decision after a detailed legal review of the patent file and information supplied by both parties. Neptune was awarded the patent in November 2011 for the use of krill extract in the treatment of cardiovascular disease, including reducing cholesterol, platelet adhesion and plaque formation. Aker immediately asked for reexamination of the patent, which USPTO agreed to in February 2012. According to Aker, the new USPTO reexamination decision concludes all 97 patent claims are not patentable. The next step is a round of comments from each party followed by a final office action.

"When scrutinizing the patentability of Neptune's patents during reexaminations and opposition proceedings, both the USPTO and the European Patent Office have, to date, consequently adopted Aker BioMarine's arguments for invalidity rather than Neptune's arguments for patentability, and this is yet another example of this so far unbroken trend," said Edvard Braekke, Aker BioMarine's attorney.

However, Tina Sampalis, M.D., Ph.D., chief global strategy officer at Neptune, had a different take. "The patent is not rejected," she assured, noting an ACP is "a very strong description of something that is not strong." She reiterated the ACP is a not a final office action, but is normal procedure for patent prosecution.

For Samplis, the unbroken trend is the cycle of patent examinations and reexaminations. "Since November 2009, we just had USPTO examining one patent after another," she said, noting Neptune has submitted everything required to USPTO, which believes the patents are valid. "Its a game that Aker plays. We are willing to play this game, and we are good at this."

There definitely has been a cyclical pattern of patent awards, lawsuits and reexaminations involving several krill companies.

In an effort to put a definitive stamp on this cycle of patents actions, Neptune reported Jan. 30, 2013, it had initiated a case with ITC alleging Aker, Schiff, Enzymotec and Rimfrost (a collaboration of Olympic Seafood and Pharmachem's Avoca Inc.) have engaged in unfair business practices by importing and selling krill oil and paste that infringe upon the claims of Neptune's U.S. Patent No. 8,278,351.

"They are directly or indirectly infringing on our patent and other patents, and we have based the ITC case on one of the strongest patents we have, which is the composition of matter patent," Sampalis said. She further explained Neptune always believed companies would be ethical and would respect the Neptune patents and the rights under those patents. "Unfortunately, particularly Aker, but the others as well, are not respecting our rights as the pioneers and market leaders in the krill oil industry," she lamented, adding Neptune created the krill oil industry and has been producing krill and securing patents for many years. "We submitted our patents back in early 2000 and 2001; we have the right to these patents in the world," she stated. "We tried with other means, however they dont seem to respect anything. So now we are vigorously enforcing our rights through the ITC."

Sampalis noted the USPTO continues to grant Neptune patents, despite all the legal wrangling. "This particular patent that is the subject of the ITC complaint was granted to us after the USPTO reviewed the whole reexamination case Aker had submitted," she noted. "The industry needs to know that we will defend our patents."

Henri Harland, CEO and president of Neptune, said the ITC is one of the fastest means for judicial resolution of a patent dispute in the United States and it has the power to issue broad and severe remedies. Sampalis called the ITC case a "nuclear strike" and said Neptune expects a quick, positive decisionthe company expects ITC to formally begin the case in the next month or two and offer a decision in about 15 to 18 months. "Then everyone will know who is the leader, who is the strong player, and whom they should be doing business with," she said.

"Neptune is taking a very aggressive approach with the ITC case to block all the other krill competitors from the market," said Eric Anderson, vice president of global marketing for Aker Biomarine, who noted the patent in this case is currently undergoing reexamination by USPTO.

Neptune was awarded the '351 patent in October 2012 as a continuation of its U.S. Patent No. 8,030,348 acquired about a year prior. Immediately following the awarding of each of these two patents, Neptune filed infringement lawsuits against Aker and other krill companiesAker's manufacturing partner Schiff Nutrition, Enzymotec and its distributor Azantis, and Mercolaand Aker filed a requests with USPTO for reexamination. USPTO agreed to reconsider the patent, and Aker and Schiff agreed with Neptune in February 2012 on a stay of the lawsuit until the patent office made its decision.

Anderson explained the patent awarding process is a closed loop system, in which third parties have no opportunity to respond until the patent is awarded. This is why Aker filed for reexamination immediately after the patents were given to Neptune. The requests were based on Aker's contention the compositions in the two patents (phospholipid composition containing the omega-3 fatty acids EPA and DHA) are not novel inventions, and the patents are invalid. "Neptune built a patent portfolio, but in filing for the patent, they didn't disclose all the existing art," he said. "We have provided the patent office with additional info that should have been supplied [by Neptune] initially."

Anderson noted the European Patent Office (EPO) revoked a previously awarded Neptune European patent (EP1417211B1) in late 2009, after a challenge from Aker and Enzymotec. The opposition centered on the notion the invention detailed in the patent was not repeatable; an independent lab preparing the patented invention could not detect the novel flavonoid cited in the patent.

Anderson stated Aker respects Neptune's right to operate in the market, but Aker has feels it has a duty to challenge patents that aren't valid. However, he said litigation is not necessary. "We don't use acetone extraction," he noted, referring to the process Neptune uses for its krill ingredients. "It is unfortunate there continues to be legal disputes, which creates unnecessary uncertainty and confusion in the market."

In a reversal of roles and hemispheres, Aker was awarded a standard Australian patent (No. AU2008231570) in January 2012 for the extraction from denatured krill of a krill composition containing astaxanthin, and Neptune asked the IP Australia to reexamine the patent, arguing the patent is invalid as its claims are not patentable. Aker reported in September 2012 that IP Australia had confirmed the validity and inventiveness of the '570 patent.

In November 2012, Neptune filed an opposition in Australia to Aker's patent for AU2008291978a new method for making krill mealsaying it had evidence the invention noted in the patent is neither inventive nor new. Then in December 2012, Neptune filed with Australian Federal Court for revocation of the '570 patent and several of Aker's innovation patents (2012101332, 2012101333, 2012101334 and 2012101335) on the basis the patents are invalid, noting Neptune marketed its krill oil many years before Aker filed for the patents.