On June 20, 2011, the Adli Law Group, on behalf of Kaneka Corporation, released a letter to the marketplace referencing a complaint filed by Kaneka with the International Trade Commission (ITC) against Zhejiang Medicine Company and its subsidiary, ZMC-USA, as well as other manufacturers and distributors, alleging infringement of Kaneka’s U.S. Patent No. 7,910,340 (“340 patent”).
Kaneka was neither the first manufacturer of CoQ10 nor is it currently the largest producer of CoQ10. Kaneka is currently engaged in this patent litigation in two district courts as well as the aforementioned complaint filed with the ITC. Kaneka at no point mentions having specific knowledge of ZMC’s process in any of its allegations but instead bases its allegations on assumption and speculation.
The 340 patent is actually an evolution of a previous patent application (10500249). Kaneka prosecuted these applications for eight years until the USPTO finally allowed the 340 patent with the insertion of very specific and narrow limitations. The reason for the lengthy process in pursuing the previous, now abandoned, patent application was the USPTO’s understanding of the plethora of prior art and the long standing nature and various methods of producing CoQ10.
ZMC clearly does not infringe the narrowed claims provided in Kaneka’s 340 patent. It is for that reason that ZMC sued Kaneka for a declaratory judgment of non-infringement in Texas before Kaneka sued ZMC and other companies in California and at the ITC.
As previously reported by ZMC, this is a further attempt by Kaneka to, through force and unsubstantiated threats, regain the degree of control and profits it enjoyed a short five years ago. ZMC will, if necessary, provide evidence that Kaneka’s claims in the 340 patent are invalid and unenforceable.
By claiming that ZMC is distributing “infringing products” with no direct knowledge of the process used is irresponsible, false, defamatory and representative of a company which has but one product to offer the industry. Kaneka’s Annual Reports over the last several years have indicated their desire to be in the area of innovation of technology as defined by products such as SOLTILEX and other impressively forward thinking products. The Life Science Division is one of seven divisions within Kaneka and the only one to post a significant income decline in 2010 (down 23.5% v. 2009). The 2010 Kaneka annual report additionally states:
As a result of lower profitability from increasingly fierce competition, the book value of the functional foodstuffs production equipment and facilities of Kaneka Nutrients L.P. was reduced to its recoverable value, and a write-down of ¥423 million was accounted for as impairment loss.
The primary components of this amount were machinery and equipment of ¥291 million and buildings of ¥107 million. As the recoverable value is estimated at value in use, future cash flows have been discounted at a rate of 10%.
The statements and recent actions taken by Kaneka are clearly indicative of a company desperate to regain marketshare not through the offer of value of product but through the use of litigation and unsubstantiated threats. ZMC and ZMC-USA want to assure our customers that throughout this process, our customers remain our top priority and we will defend Kaneka’s lawsuits aggressively at the ITC and in District Court to prevent any actions from being taken against our customers.
ABOUT: Zhejiang Medicine Company (ZMC) is an active ingredient manufacturer of high quality pharmaceutical and nutraceutical ingredients improving the lives of the world's consumers since 1954. ZMC is staffed with over 4,000 employees globally and is an important production base of pharmaceutical drugs, Biotin, Vitamin A, Astaxanthin, Natural and Synthetic Vitamin E, Patented Lutein, Phytosterol, B-Carotene, Zeaxanthin, Patented Lycopene, and Coenzyme Q10. ZMC operates in North America as ZMC-USA from its office in The Woodlands, Texas. www.zmc-usa.com