Cyanotech, Valensa Agree to Settle Long-Standing Patent Dispute

Cyanotech Corp., a developer of microalgae technology, has reached an agreement to resolve a long-running patent dispute with Valensa International and the University of Illinois Board of Trustees.

The parties have agreed to confidential terms of a settlement and anticipate filing a joint motion to dismiss a federal lawsuit and administrative proceeding by Dec. 1, according to a Nov. 13 regulatory filing.

In 2012, U.S. Nutraceuticals LLC (doing business as Valensa International) and the university trustees board sued Cyanotech and its subsidiary Nutrex Hawaii Inc., a provider of supplements, alleging infringement of patent 5,527,533.

The ‘533 patent is described as a method for ameliorating certain diseases, injuries or damage through the administration of astaxanthin, according to the Securities and Exchange Commission filing. Cyanotech, whose microalgae-derived products are produced on the Kona Coast of Hawaii, markets astaxanthin as a natural health supplement.

Cyanotech later petitioned the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) to review the patent’s validity. On Dec. 19, 2013, PTAB began an inter partes review of 18 of 27 claims within the patent, according to the filing.

Plaintiffs’ request for injunctive relief was recently rendered moot because the 18-year-old patent at issue expired on Oct. 27, 2014, according to regulatory filings.

The University of Illinois, which owned the patent, and Valensa, which licensed certain rights under it, alleged the patent method claims covered the manufacturing, marketing and sales of astaxanthin as a nutritional supplement, according to regulatory filings. Cyanotech denied the allegations and filed counterclaims in the federal lawsuit.

The parties invested a significant amount of time and resources litigating the case, with discovery on factual issues concluding in July. Last year, Cyanotech’s general and administrative expenses rose by UDS $666,000 or 17 percent, thanks in part to an increase in legal fees of $520,000, the company disclosed in a June 27, 2014 regulatory filing.

A trial in the U.S. District Court for the Middle District of Florida was scheduled for March 2, 2015, and the PTAB was expected to issue a ruling by Dec. 19, 2014.

Cyanotech and Valensa did not respond to requests for comment on the settlement.

For a detailed analysis of patent infringement issues, check out lawyer Rakesh Amin’s Oct. 2, 2014 article published in Natural Products INSIDER.