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Ethox sues Coke over barrier PET

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July 18, 2012

GREENVILLE, S.C. (July 18, 7:30 a.m. ET) — Ethox Chemicals LLC is suing Coca-Cola Co. for patent infringement, claiming that the beverage giant stole a molecule, PEM, designed to enhance the barrier properties of PET.

Ethox, a division of chemical manufacturer Piedmont Chemicals Inc., says that its molecule bis(2-phenoxyethyl)terephthalate, or PEM, can be used as a PET additive to reduce permeation, extend shelf-life and allow beer to be sold in plastic bottles.

In a suit filed June 19 with the U.S. District Court in Greenville, S.C., Ethox argues that Coke filed patents for two containers containing the additive, despite knowing that it had no rights to the molecule.

In its patent application, Coke neglected to name the additive’s inventor, Ethox senior research chemist James Tanner, with the “intent of misappropriating the PEM molecule for its own use,” the suit alleges.

According to the filing, Coke approached Ethox and research firm PolyTech Resources LLC in early 2009 about developing and assessing a genus of molecules designed to enhance the barrier properties of plastic bottles.

In August 2009, Tanner determined that commercially synthesizing Coke’s patented additive, bis(2-benzoyloxy)ethyl terephthalate or BPO1, was not economically feasible. In an email to T. Edwin Freeman, a member of Coke’s global innovation and research group, Tanner proposed the recently-developed PEM as an alternative.

Freeman expressed interest in the molecule and asked Ethox to send Coke a high-purity sample for testing. From September to November 2009, the parties corresponded about the material — at Freeman’s request, Ethox sent Coke two samples of PEM and offered estimated per-pound pricing.

“Upon information and belief, after Coca-Cola became aware of the unique and innovative qualities of PEM, Coca-Cola, by its representatives, decided to steal PEM for its own,” Ethox’s attorney wrote in the filing.

On Dec. 2, 2009, Coke filed two patents for polyester containers with enhanced gas-barrier properties. Both patents identified and claimed PEM, according to the suit.

In the suit, Ethox argues that Coke committed fraud and misappropriated trade secrets, among other charges.

The suit also claims that Coke violated the South Carolina Unfair Trade Practices Act.

The two parties attempted to settle the dispute out of court, but were unable to reach an agreement, said Philip Hirschhorn, an attorney for Ethox.

“We’re very surprised that a company like Coca-Cola would engage in the theft of a molecule of one of the companies that it’s working with,” he said. “I’d like to hope it’s an accident, but because of the circumstances it appears it’s not. It appears there’s intent behind it and that’s why a lawsuit had to be brought.”

Greenville-based Ethox is asking the court to require that Coke amend the patent to list Tanner as a co-inventor. The firm also is asking Coke to pay actual and exemplary damages, including the disgorgement of profits made from using PEM, and Ethox is seeking an injunction barring Coke from making, using, selling or importing PEM and other Ethox trade secrets.

Ethox has requested a jury trial.

On July 13, Coke was granted a 31-day extension. The Atlanta-based company has until Aug. 13 to respond to the suit.