24 September 2008 - Tate & Lyle has said it will appeal a USITC ruling against the firm concerning a patent-infringement case on sucralose, the generic version of the sweetener Splenda.
Further to the news, Tate & Lyle’s shares yesterday closed down 46½p or 11 per cent at 369½p.
According to company investor information, sucralose accounted for about 20% of Tate & Lyle's adjusted operating profit in the year ended 31 March 2008. The sweetener generated GBP 148 million of sales for Tate & Lyle and an operating profit of 66 million during that same period.
Robert Gibber, General Counsel of Tate & Lyle, said: “This is a complex case involving a huge amount of in-depth technical analysis and debate between scientific experts. We would not have proceeded with an ITC case unless we believed we had adequate evidence to demonstrate that our patents are being infringed. We intend to petition for an appeal of the decision by the full Commission.”
Karl Kramer, President, Tate & Lyle Sucralose added: “Intellectual property is just one of a number of different layers of protection which define Tate & Lyle’s formidable competitive advantage in the global sucralose business … Our business is built upon long-standing relationships with some of the world’s leading food, beverage and pharmaceutical manufacturers, as well as the established SPLENDA® brand which is renowned as a high quality, reliable and trusted product in a number of markets.”
Generic sucralose manufacturers have welcomed the USITC decision.
Leading sucralose producer, Niutang of China, reacted by saying that during the ITC discovery process, which included a rigorous inspection of Niutang’s manufacturing facility and a 2-week hearing before the Administrative Law Judge in February, Niutang “decisively demonstrated that the process it has developed to manufacture sucralose does not violate any of the three patents in question. A fourth patent was voluntarily dismissed by Tate & Lyle before the hearing began”.
"We are very pleased that Judge Bullock has affirmed what we have said from the outset: that Niutang does not infringe any of the patents asserted by Tate & Lyle in this proceeding,” said Licheng Wang Jr., General Manager of Changzhou Niutang.
“We have always respected the intellectual property rights of other companies, and we have made significant investments in our own research, development and manufacturing processes. In fact, we have significantly expanded our capacity to produce sucralose to meet the rising demands of our customers.”
US producer, Heartland Sweeteners LLC, meanwhile, said that it was pleased with the decision, affirming its right to manufacture and market its products and compete fairly with Splenda.
Ted Gelov, Heartland's CEO, commented: "Heartland will continue to defend its ability to offer alternatives to consumers and will continue to oppose the efforts of Tate & Lyle to remove those alternatives from the market".
A binding final determination by the full six-person Commission is expected by January 2009. However, Niutang and Heartland Sweeteners both said that they are confident the entire Commission will confirm Judge Bullock’s ruling.
This latest USITC ruling could mean that more manufacturers may enter the sucralose market in competition with Tate & Lyle, said an Investec Securities analyst.
Numis analysts, however, said that the ruling could lead to overcapacity in the sucralose market as new entrants join.