On September 21, 2016, Hi-Tech Pharmaceuticals, VPX Sports, and GNC won a major courtroom battle against ThermoLife International regarding an L-arginine patent, which has now been invalidated.
Further, since the “Plaintiffs’ pre-filing investigation was severely lacking, thus resulting in frivolous claims and the objective unreasonableness of certain infringement contentions” attorney’s fees have been awarded to Hi-Tech Pharmaceuticals on this case, although that’s likely to be appealed and motioned away before it’s paid anytime soon.
Normally, we don’t write about these patent cases, since they don’t have much to do with product quality, which is our primary concern for consumers. But this case was a bit more wild, and deserves some attention.
Before we get started, you can download the relevant court case documents below. Then, check out our finest Hi-Tech Pharma supplement prices and sign up for alerts so that you don’t miss price drops. Then we’ll get into details.
- Hi-Tech vs. ThermoLife ORDER (46 pages) – September 21, 2016
- Hi-Tech vs. ThermoLife: Order Terminating All Other Cases – September 27, 2016
- Hi-Tech vs. ThermoLife: Judgement – September 28, 2016
- Update: Motion for ThermoLife to Pay Attorney’s Fees of over $900,000 – October 12, 2016
- Update: Attorney’s Fees Awarded – April 4, 2017
- ThermoLife’s Motion for Reconsideration (this case is not over) – May 2, 2017
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Understand this Case from an IP Lawyer: Nick Gingo of Renner Otto Explains
Nick Gingo of Renner Otto in Cleveland, OH came on to our YouTube channel to explain how these cases work:
In short, this case is definitely not over though, so don’t expect Ron Kramer and ThermoLife to get the checkbook out too soon for Jared Wheat. As Nick mentions, it will almost positively be appealed, and right after recording this video, ThermoLife filed a Motion to Reconsider.
In March of 2013, ThermoLife filed suit against GNC and Myogenix Corp., claiming the companies were violating ThermoLife’s newly-acquired access to four L-arginine patents listed below (note that this is about the standard L-Arginine amino acid, not nitrate). Additional companies such as Hi-Tech Pharmaceuticals and VPX Sports were pulled in via subsequent filings.
The defendants waived their rights to have separate trials, consolidated their cases, and that’s when things got interesting. Essentially, these four companies were fighting for the rest of the supplement industry, as well as consumers’ access to low-cost general ingredients.
The patents, shown below, were not developed, filed, or even owned by ThermoLife. Instead, they belong to Stanford University, who licenses them to ThermoLife. It has been claimed that they were licenses for the sole purpose of litigation.
The four [former] patents involved
- Patent No 6,646,006 – “Enhancement of vascular function by modulation of endogenous nitric oxide production or activity”. Filed on February 1, 2002
- Patent No 6,117,872 – “Enhancement of exercise performance by augmenting endogenous nitric oxide production or activity”. Filed on June 23, 1998
- Patent No 5,891,459 – “Enhancement of vascular function by modulation of endogenous nitric oxide production or activity”. Filed on November 9, 1995
- Patent No 7,452,916 – “Enhancement of vascular function by modulation of endogenous nitric oxide production or activity”. Filed on December 22, 2004
The 46-page PDF (first one in the list) shows that the courts put together an extremely knowledgeable understanding of the biomechanics behind L-Arginine and the body’s nitric oxide pathways, thanks to the expert witnesses of both sides. One major question is whether or not such patents are valid — and “obviousness” and prior art came into serious play during this case.
After ten grueling days in court, the Honorable Janis Sammartino determined that all four patents are invalid due to the obviousness of the mechanisms involved with L-arginine and nitric oxide pathways — anyone with relevant degrees would have know how this L-arginine works. Additionally, there were earlier studies showing that the effects of L-arginine had already been seen, but perhaps not fully understood (such studies stated that “further research is required”). It was argued whether or not that research was constituted as prior art.
Ultimately, after much expert witness testimony from both sides, the judge ordered all four patents to be invalid, and issued further orders to terminate all remaining cases regarding these patents and immediately move to judgment (as seen in the other PDFs listed above). A major win for GNC, Hi-Tech Pharma, VPX, and quite frankly, the industry at large.
The first case to make it to actual court
One thing that’s noteworthy about this case is that it actually made it to court — normally such cases get dismissed at an earlier stage — or everyone settles out of court (“ransom” might be a better word, though).
Earlier in June, Judge Sammartino denied GNC’s request to dismiss the suit. GNC argued that United Therapeutics had previously licensed the same patents, and tried to contact them in 2001 for the same reasons. They never sued, however. GNC hoped this would help get the case dismissed, but it did not — it had to be battled in court — but the judge did set a limit on damages available. Such damages were not required, as ThermoLife lost their case (and their Stanford patents).
We are told Hi-Tech spent over three years fighting this case, paying an amount of legal fees we can’t even imagine.
Jared Wheat of Hi-Tech Pharma stated the following:
We are incredibly pleased with the decision from Judge Sammartino and further suggest that the only way to deal with the current patent troll crisis is for corporations NOT to capitulate but rather to join together with other companies, combine resources and fight the trolls with all of the mechanisms available in the USPTO and judicial systems. This is precisely how this tremendous victory was achieved – great teamwork from a group of highly skilled team players supported by corporations committed to the fight.
— Jared Wheat, Hi-Tech Pharmaceuticals
It has become clear to us that Jared Wheat and Hi-Tech Pharmaceuticals are attempting to become the “Lee Cheng / NewEgg of the Supplement Industry” — NewEgg is a computer electronics e-commerce store that has made it very public that they will brutally and unapologetically fight every software patent troll that dares to cross their path.[5,6]
Reaching Ron Kramer Quote from ThermoLife
We reached Ron Kramer for a quote for his side of the story, but he has asked us to wait a day. We will update this post when it is delivered.
Can this be re-filed?
We are told no – this case is OVER. According to Hi-Tech Pharmaceuticals, the case had ten days in trial in San Diego, and is now done and over.
Hi-Tech Pharma products potentially affected
Hi-Tech’s products that would have been affected by this, had ThermoLife won, are:
- APS Mesomorph (rated the best pre workout supplement on PricePlow!)
- N.O. Overload
- Stamina Rx, and
To name a few. Even though L-Arginine isn’t the key ingredient in APS Mesomorph, you know we would have not been thrilled if that needed to get reformulated. Not the case, thankfully!
Update October 12, 2016: Hi-Tech Files Motion for Attorney’s Fees
What nobody knows is how long and how costly these cases are — this is why so few companies can afford to fight them — legal fees are downright monumental. Sadly, that’s what leads many companies to settle with the patent owners, which Jared Wheat calls “paying the ransom”.
But now that Hi-Tech Pharma has won the case, they’ve filed a motion to recover attorney’s fees from ThermoLife. You can download the PDF here, which actually contains a great summary of the case, but the juicy new stuff is all the way at the bottom:
…To that end, Hi-Tech has filed the current Motion in accordance with the requirements set forth in Federal Rule of Civil Procedure 54(d)(2)(B), [Hi-Tech Pharmaceuticals is] hereby requesting that it recover $913,370.006 in attorney fees and $25,071.46 in expenses.
It is Hi-Tech Pharma’s hope that “this will embolden other supplement companies to fight versus pay the ransom.”
Taking it case by case
Ultimately, we need to take these patents on a case-by-case basis. If you come up with a brand new supplement extraction method, for instance, you definitely deserve some time to work with it and license it exclusively so that you can recoup your R&D costs.
However, the courts seemed to be reasonable on this one — licensing a patent on a generic amino acid ingredient originally “discovered” for use in 1993 has seemingly met its end-of-life per the courts.
But when we have to examine everything case-by-case, you get a system ripe for abuse.
The problem with abuse in the system is growing — and you’re paying for it
As taxpayers, we have to take issue with the way this system has gotten so out of control. Who do you think is paying for the judge’s salary? The bailiff’s? The courtroom maintenance, staff, IT and infrastructure support, and other various proceedings?
It’s not ThermoLife. It’s not Hi-Tech either.
It’s you and me, the American taxpayer.
As we’ve seen time and time again, the more laws you create, the more they’re abused, and the more maintenance and upkeep they require from taxpayers. It’s great business for lawyers and government bureaucrats, but a miserable situation for taxpayers and product manufacturers alike. It’s the same situation with the FDA’s new NDI Draft Guidance.
At some point in time, shouldn’t a patent stop being enforceable? Why must the industry spend seemingly millions of dollars arguing over a 1993 “discovery”, over 20 years later?
We’re not talking about some hot new ingredient with an extraction technique that took years of R&D. We’re talking about L-Arginine, a naturally-occurring amino acid that has been understood for dozens of years.
A report published by the Practicing Law Institute, frivolous patent litigation costs U.S. businesses approximately $29 billion a year in direct costs and $80 billion in indirect costs.
In 2013, President Obama even acknowledged the problem, stating that patent trolls “essentially leverage and hijack” patents originally issued to others in an effort to “extort” money through litigation. He continued, “They don’t actually produce anything themselves,” Obama said. “They are essentially trying to leverage and hijack somebody else’s idea and see if they can extort some money out of them.”
Unsurprisingly, it was all talk and no walk, since nothing has been done. Meanwhile, costs continue to mount for consumers, taxpayers, and manufacturing businesses with absolutely no end in sight.
It’s even worse in the Software Patent world
Of greater alarm to us at PricePlow is the number of patents in the software industry.
Reports indicate in the high-tech sector that 90 percent of tech patent cases are filed by “patent trolls” – companies who are not practicing entities but acquire or license patents for the sole purpose of lawsuits. That number is increasing, too — it was just 85% a year ago and 82.5% in 2014.
This is why the aforementioned fight that NewEgg has taken to has been so important to software developers like ourselves and e-commerce websites.
But as wild as the software problem is, ThermoLife is right up there with the best of them — a 2014 Reuters article titled “Big jump in U.S. patent infringement cases in 2013 despite reform: experts” stated that,
“The top three [patent assertion entities] were Melvino and ArrivalStar; Wyncomm; and Thermolife International. Each filed more than 100 infringement lawsuits, Lex Machina found.”
— Reuters [emphasis ours]
So welcome to the big leagues, boys and girls. At this time, consumers and smaller manufacturers should take the time to thank Jared Wheat and Hi-Tech Pharmaceuticals, at least for fighting this particular case.
In the end, things are simply out of control, but such is America in 2016. We believe that this was a good win for the industry and consumers at large. However, we’ll continue to look at each case objectively, and we’ll continue to fight for lower-cost access to high-quality and healthy supplements whenever legally and responsibly possible.
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- Patent No.: 6,646,006 – “Enhancement of vascular function by modulation of endogenous nitric oxide production or activity”. Filed on February 1, 2002
- Patent No.: 6,117,872 – “Enhancement of exercise performance by augmenting endogenous nitric oxide production or activity”. Filed on June 23, 1998
- Patent No.: 5,891,459 – “Enhancement of vascular function by modulation of endogenous nitric oxide production or activity”. Filed on November 9, 1995
- Patent No.: 7,452,916 – “Enhancement of vascular function by modulation of endogenous nitric oxide production or activity”. Filed on December 22, 2004
- “How Newegg’s Lee Cheng Declared War On Patent Trolling”; Law360com; 2016. http://www.law360.com/articles/784539/how-newegg-s-lee-cheng-declared-war-on-patent-trolling
- Mullin J. Newegg sues patent troll that dropped its case. Ars Technica. 2016; http://arstechnica.com/tech-policy/2016/01/newegg-sues-patent-troll-that-dropped-its-case/
- Bessen, James E. and Meurer, Michael J., “The Direct Costs from NPE Disputes” (June 28, 2012). 99 Cornell L. Rev. 387 (2014); Boston Univ. School of Law, Law and Economics Research Paper No. 12-34; http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2091210
- Bessen, James E. and Meurer, Michael J. and Ford, Jennifer Laurissa, The Private and Social Costs of Patent Trolls (September 19, 2011). Boston Univ. School of Law, Law and Economics Research Paper No. 11-45.
- A. Obama Acknowledges Patent Troll Problem [w/ Transcript] – Patent Progress. Patent Progress. 2013; http://www.patentprogress.org/2013/02/14/obama-acknowledges-patent-troll-problem-w-transcript/
- Mullin J.; “Patent troll lawsuits head toward all-time high”; Ars Technica; 2015; http://arstechnica.com/tech-policy/2015/07/patent-troll-lawsuits-head-towards-all-time-high/
- “Big jump in U.S. patent infringement cases in 2013 despite reform: experts”; Reuters; 2016; http://www.reuters.com/article/us-usa-patents-lawsuits-idUSBREA4C0U120140513
- PRNewswire; “Hi-Tech Pharmaceuticals Wins Almost $1 Million in Legal Fees From Thermolife and Stanford After Winning Major Patent Case”; April 10, 2017; http://www.prnewswire.com/news-releases/hi-tech-pharmaceuticals-wins-almost-1-million-in-legal-fees-from-thermolife-and-stanford-after-winning-major-patent-case-300436949.html