Fipronil Litigation Update: Three Years and Counting

The ongoing litigation between two global chemical giants over the future of fipronil has entered its third year with each party declaring victory in individual skirmishes during the protracted legal proceedings, but neither company winning the war.

The latest development in this battle of attrition, which extends across multiple continents and numerous legal jurisdictions, came in late April when Makhteshim Agan of North America (MANA) and Control Solutions Inc. (CSI) notified the United States District Court for the Middle District of North Carolina that “due to a one-time human error” two lots of Taurus SC were not formulated with fipronil technical material made in accordance with MAI’s (Makhteshim Agan Group) proprietary production process referred to in Court documents as the “Currently Intended Process.”

Why is that significant? On March 20, MANA and CSI had just come off a dramatic victory at the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., which had affirmed an earlier ruling by U.S. District Judge William L. Osteen Jr., that said Taurus SC does not infringe on two of BASF’s patents, commonly referred to as the “perimeter use patents” (‘010 and ‘743).

“The Federal Circuit decision…finally puts to rest any question of whether the Taurus SC product infringes upon BASF or its patent holdings,” MAI and CSI said in a press release following the long-awaited decision.

“Throughout this case, MAI has maintained a corporate position and opinion that BASF’s claims have been without merit,” said Shaul Friedland, head of MAI’s Americas region. “MAI and CSI remained steadfast in their belief that the Court would deny the opposing side’s motions and appeals.”

On March 19, however, BASF filed a new patent infringement lawsuit against MANA, CSI and Do It Yourself Pest Control, Inc., in the U.S. District Court for the Northern District of Georgia, just 350 miles from the federal court in North Carolina that heard the earlier case. BASF claimed that products produced by MANA and CSI, and distributed by Do It Yourself Pest Control, violate a BASF manufacturing process patent (‘945).

According to the company, BASF tested products sold by Do It Yourself Pest Control that were labeled as Taurus SC, “testing that confirmed that these products were created using a process that is protected by the ‘945 BASF patent and that, pursuant to a court order issued on Oct. 27, 2010, MANA had agreed not to use in manufacturing of fipronil-based termiticides.”

At the time of the filing, Jan Buberl, director of specialty products, BASF North American Crop Protection, said, “Intellectual property is the cornerstone of our innovation-based marketplace. Improper activity that undermines patent protection laws is unfair to those who act properly and lawfully.”

Three days later, on March 22, MANA and CSI filed a contempt of court motion against BASF with the U.S. District Court for the Middle District of North Carolina, claiming the company violated an Oct. 27, 2010 Consent Judgment relating to the longstanding fipronil patent infringement case between the parties.

In a company press release dated March 27, MANA and CSI said “their process for manufacturing Fipronil has not changed since October 2010 and therefore still does not infringe any claim of BASF’s patent; therefore BASF’s claim has no merit.” 

At the time, CSI President Mark Boyd said the latest patent infringement lawsuit from BASF was “just another attempt to confuse the pest management industry. Once again, BASF’s most recent filing comes at the onset of the U.S. termite control season – which is a critical period for CSI’s sales of Taurus SC to licensed pest control applicators,” he said. “Trying to reopen the (manufacturing) process patent case that Makhteshim won two years ago is just a last ditch effort to keep the confusion going. It seems ironic that they (BASF) filed the lawsuit upon learning that they had lost the EP/LI lawsuit (exterior perimeter/localized interior treatment). The rodeo continues!”

Approximately one month later, however, MANA and CSI notified the U.S. District Court for the Middle District of North Carolina that due to “one-time human error” two lots of Taurus SC (#23569 and #23795) were not formulated with fipronil technical material made in accordance with a process known as the “Currently Intended Process,” prompting BASF to claim its position had been “publicly vindicated,” according to Buberl.

“BASF continues to assert that Makhteshim, CSI and their customers have infringed and continue to infringe BASF’s manufacturing patent on fipronil-based termiticides/insecticides,” he said. “Makhteshim’s admissions go a long way toward proving BASF’s claims in Georgia that Makhteshim, CSI and their customers imported, sold or offered for sale large quantities of infringing fipronil product.”

MANA claims the infringing products don’t represent large quantities of termiticide/insecticide, but “a single run” of Taurus SC at Makhteshim Agan Group’s subsidiary in Columbia, South America, and the company is taking remedial steps to remove any remaining inventory of the production run in question from the marketplace.

“Once we became aware of the identity of the accused lot, we promptly began an investigation to determine which batches of fipronil technical materials were used in the lot in question,” said Michal Arlosoroff, general counsel, Makhteshim Agan Industries. “As a result of the investigation, we identified the source of the fipronil technical materials and discovered the formulation mix-up that resulted in its erroneous shipment to the U.S.

“The alternate fipronil material was in stock at the Colombian facility, where it had been formulated exclusively for use in product destined for non-U.S. markets,” she said. “This was a unique occurrence, the result of a one-time human error.”

MAI’s Friedland added, “We have already verified that neither CSI nor we have any stock of product from the two lots in question. We have also asked our distributors who may still have inventory of the two lots to immediately return that product to CSI.”

Thus far, about 25 percent of the two lots have been returned to the company, according to Arlosoroff, “and we continue to determine if there is any remaining inventory that can be recalled. Our distributors and customers have been very appreciative of the way in which we quickly and openly communicated with them regarding this mistake. We have also made it clear that we will stand behind our customers in order to allow them to make reasonable business decisions without being harmed.”

Towards that end, the company says all future formulation of Taurus SC will be done at either the CSI facility in Texas, “which has been prepared to formulate Taurus since July 2012, or in Israel, at plants where no fipronil technical material is in its inventory, other than that made by the Currently Intended Process,” according to Arlosoroff.

Buberl said Makhteshim’s notification to the Court about the two lots of Taurus SC not formulated in the “Currently Intended Process” is an illustration of the company’s “failure to track material entering the U.S. or to insure that that material is entering the U.S. legally,” a charge MAI and CSI denies.

“MAI and CSI are committed to delivering effective and reliable products to customers, while ensuring a competitive marketplace. The fact is that, as soon as we confirmed that a limited amount of product was mistakenly formulated with the incorrect fipronil technical material and shipped to the U.S., we pro-actively notified the courts and made our findings public,” Arlosoroff said. “We believe that these actions are a testament to our commitment to transparency and truthfulness, and we are confident that our distributors recognize this.” In addition, she said, “Protocols to prevent this from happening again are already in place.”

Buberl, however, remains skeptical. He said Makhteshim’s admission that it began violating the Court’s order in March 2012 “is contrary to its numerous prior public statements that it only used a proprietary process for the manufacture of fipronil intended for use in the U.S.”

As a result, he said, “BASF is reviewing its further legal options in light of Makhteshim’s and CSI’s admissions,” meaning the industry – despite the recent U.S. Court of Appeals ruling – hasn’t seen the last of the litigation relating to this hotly contested issue, which has now lasted longer than both the Korean War and the War of 1812.

At press time, the date for a hearing on the contempt motion has not been set. For PCT’s ongoing coverage of the future of fipronil, visit www.pctonline.com.

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Transcript of File Notification
On April 22, Makhteshim Agan of North America (MANA) and Control Solutions Inc. (CSI) filed a notification in the United States District Court for the Middle District of North Carolina acknowledging that two lots of Taurus SC product were not formulated with fipronil technical material made in accordance with the “Currently Intended Process.” Click here for a complete transcript of the Notification document.

Below are a number of other documents and press releases relating to this long-running court case.

MANA/CSI Press Release About Notification

March 2013 Disposition

BASF March 2013 Press Release

MANA/CSI March 2013 Press Release