New York judge denies arbitration request in $881m cannabinoid suit
A New York federal court has denied biotechnology company Amyris’ bid for arbitration in an $881 million trade secrets and patent infringement dispute with cannabis firm Lavvan.
Lavvan filed suit in the US District Court for the Southern District of New York in September 2020, accusing Amyris of trade secret misappropriation and patent infringement related to exclusive cannabinoid IP rights, and claiming it’s entitled to not less than $881 million in damages for the alleged conduct.
The companies had entered into a research, collaboration and licensing agreement (RCLA) in 2019. This gave Lavvan an “exclusive” license to all of Amyris’ cannabinoid IP, including necessary formation patents. According to Lavvan, the licensing agreement was exclusive “even as to Amyris”, imposing unspecified restrictions on how Amyris could use its own IP.
Following an announcement from Amyris’ chief operating officer Eduardo Alvarez that the company would begin “fermenting a cannabinoid within two weeks”, Lavvan took this as a breach of the RCLA and filed the lawsuit.
Amyris moved to compel arbitration or dismiss the suit in October.
It argued that the RCLA requires this case to be arbitrated as the agreement stated that questions around arbitrability be resolved by an arbitrator and that Lavvan had “mischaracterised” its IP infringement accusations.
However, the court shot down the request for arbitration, saying: “By the clear dictates of the RCLA, the parties must litigate, not arbitrate, intellectual property disputes. Because Lavvan has set forth two intellectual property claims, Amyris’s motion to compel arbitration is denied.”
The court also ruled that Lavvan provided “sufficient facts” to back up its trade secret misappropriation and patent infringement claims and denied the motion to dismiss.
Unauthorised commercialisation
In the initial complaint, Lavvan lists nine cannabinoid patents related to the formation of Acetyl-CoA and isopentenyl pyrophosphate that it accuses Amyris of infringing.
Lavvan claims that it “refused” to provide Amyris with the necessary information concerning its patented technology, but through an investigation arrived at the conclusion that Amyris “necessarily used” confidential information related to its patents for the development of its own cannabinoid products
“Amyris’s infringement was, and is, willful. As the owner of the patents, Amyris necessarily knew of their existence, and knew that it was infringing those patents—which were exclusively licensed to Lavvan,” the complaint said.
Lavvan claims that Amyris “disclosed or used” the information without Lavvan’s consent, failing to abide by an RCLA between the two companies.
“Amyris continues to misappropriate Lavvan’s proprietary information through its commercialization efforts. As a result of such misappropriation, Lavvan has suffered damages in an amount to be determined at trial,” Lavvan said.
