Wilmington, Delaware: Indian chemical giant UPL Ltd. was defeated in court Friday by a small Philadelphia agrotech company that sued it for stealing its main trade secret — and the expert it hired to develop it.
A federal jury in Wilmington, Delaware, told UPL and its Decco unit to pay AgroFresh Solutions Inc. $31 million partly for infringing its patent on a technology that keeps apples fresh in storage after harvest. The award was less than a tenth of the $346.2 million AgroFresh had asked for.
AgroFresh is “pleased” with the verdict and “will petition the court for an award of up to three times its compensatory damages based on the findings by the jury of a willful infringement,” Chief Executive Officer Jordi Ferre said in a statement. The compensatory part of the award was $7 million.
Shares of AgroFresh rose 2.6% to close Monday’s session at $2.35. They surged 29%, to $3.03 as of 6:07 p.m. in New York, after the statement.
UPL, of Mumbai, said in a statement it’s disappointed in the verdict and will appeal. UPL shares closed down 0.5%.
The technology, called SmartFresh, centers on a synthetic compound that slows the ripening process. According to the lawsuit, the primary patent expired in 2015, the year AgroFresh was spun off from Dow Chemical Co. The spinoff sought damages for what the defendants did earlier.
That was to turn a tech whiz under exclusive contract with AgroFresh into a sort of double agent, it claimed, helping Decco sail past the sweat equity AgroFresh had poured into its largest source of revenue and develop a competing product called TruPick.
The jury rejected UPL and Decco’s contentions that the patent shouldn’t have been issued, as well as their argument that they had used public information to develop TruPick. It apparently found some merit in the defense’s description of the proposed damages as “astronomical.”
“Competition can be fierce, ladies and gentlemen, and it’s no different here,” Gerald Ivey, a lawyer for the defendants, said in his closing argument.
The technology behind a firm apple is sophisticated. The compound is extremely volatile in gas form, a major hurdle to its commercial use. AgroFresh researchers developed a way to stabilize the gas by trapping the molecules in various formulations. To treat produce, a trained applicator dissolves a pouch of powder or a tablet in water in an enclosed storage space with the fruit.
The global market for post-harvest treatment of produce will grow to $1.67 billion by 2022, from $1.17 billion in 2017, according to one forecast. A separate forecast, by the United Nations, puts the global population at about 9.7 billion by 2050, with 68% of it in urban areas, where most of the produce consumed would have to be shipped from farms.
During the harvest from August through October, MacGill told the court at the outset of the trial, growers place as many as 1.2 million apples in storage facilities the size of a high school gym. Thanks to SmartFresh, he said, more than eight billion pounds of apples have been sold as fresh, rather than processed.
To develop the product, AgroFresh sought the help of a food-science professor, according to court papers. UPL, which was interested in buying the company, had signed a nondisclosure agreement in September 2014 for access to its documents as part of the bidding process. The next month, it hired a former AgroFresh manager, who met with the professor, who then signed a confidentiality agreement with Decco and helped it develop TruPick, according to the filings.
The case is AgroFresh Inc. v. Essentiv LLC, 16-cv-662, U.S. District Court, District of Delaware (Wilmington).
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