By Will Nepper Managing Editor
Makhteshim Agan of North America (MANA) and Control Solutions Inc. (CSI) filed a notification April 22, 2013, in the U.S. District Court for the Middle District of North Carolina acknowledging that, “due to a one-time human error,” two lots of Taurus SC product — a fipronil-based termiticide/insecticide manufactured and marketed by Pasadena, Texas-based CSI — “were not formulated with fipronil technical material made in accordance with a process known as the ‘Currently Intended Process.’” The Notification was prompted by the filing of a patent infringement action by BASF in the U.S. District Court for the Middle District of Georgia, alleging that MANA and CSI were infringing one of its manufacturing patents.
CSI launched Taurus SC in June 2011, following U.S. Environmental Protection Agency (EPA) and court approval for the product’s sale in the U.S. MANA and CSI’s process for manufacturing fipronil uses the proprietary technology of their parent company, Makhteshim Agan Industries (MAI). The technology is the subject of the consent judgment court order from 2010 wherein BASF agreed the process doesn’t infringe the relevant asserted BASF patent. On March 19, 2013, the appeal court dismissed BASF’s appeal; thereby determining CSI’s Taurus SC label doesn’t infringe BASF’s use or application patents.
In a release from Makhteshim Agan Group, MANA and CSI state they recently became aware of the formulation mistake and moved quickly to audit all lots of the Taurus SC product. They allege that, with the exception of two lots from Colombia, the remaining lots were manufactured according to the currently intended process.
Michal Arlosoroff, senior vice president (SVP) and general counsel for MAI says once MAI became aware of the identity of the accused lot, it promptly began an investigation to determine which batches of fipronil technical materials were used in the lot in question. Arlosoroff says as soon as the company was able to confirm the facts the mistake was made, it informed the U.S. District Court of North Carolina in a notification filing.
“We did so in the interest of transparency and truthfulness,” she says. “It’s important to MAI that the facts were made known to the court about this one-time, inadvertent mistake.”
MAI claims the product of the two lots referred to in the court filing was formulated in the beginning of 2012 in a single run at Makhteshim Agan Group’s subsidiary in Colombia, South America. MAI alleges the Colombian manufacturing facility inadvertently formulated the Taurus SC with the incorrect fipronil technical material, which wasn’t intended for use in products destined for the U.S. market.
“We acknowledge this instance of human error, which occurred because of a temporary relocation of Taurus SC formulation production to Colombia, while our plant in Israel was dealing with a temporary manufacturing issue and before the start of CSI’s Texas production,” says Shaul Friedland, SVP and head of MAI’s Americas region. “We’ve already verified that neither CSI nor we have any stock of product from the two lots in question.”
On April 23, BASF released an official statement alleging MANA and CSI’s Court notification is admission that “it has violated the court’s consent judgment.”
“BASF is pleased Makhteshim Agan and CSI have admitted their violation of the North Carolina Federal Court’s consent order of October 2010, to which Makhteshim agreed after it was discovered that it intended to enter the U.S. market with fipronil-based termiticides and insecticides that infringed a BASF manufacturing patent,” says Jan Buberl, director of Specialty Products for BASF. “While BASF is pleased to see its position vindicated publicly, it continues to assert Makhteshim, CSI and their customers have infringed and continue to infringe BASF’s manufacturing patent on fipronil-based termiticides and insecticides.”
On March 19, BASF filed a lawsuit in the U.S. District Court for the Northern Georgia District of Georgia to recover claimed damages from Makhteshim, CSI and its distributor, alleging patent infringement.
Arlosoroff claims MAI since has conducted an audit on all Taurus SC lots and confirmed all other lots were manufactured with the correct material. The company is convinced the error in the formulation process was no more than a one-time, isolated event in the Colombia plant, says Arlosoroff, claiming the Colombian facility was being used only for a temporary period before the start of production at the company’s Texas facility. MAI claims no material for the U.S. was formulated in Colombia before or after that time.
Meanwhile, BASF claims Makhtehsim’s notification to the court exposes the company’s failure to track material entering the U.S. or ensure material is entering the U.S. legally.
“Makhteshim’s admission it began violating the court’s order in March 2012 is contrary to its numerous public statements it only used a proprietary process for the manufacture of fipronil intended for use in the U.S.,” Buberl says.
BASF also claims Makhtehsim’s court filing helps prove BASF’s claims made in Georgia that Makhteshim, CSI and their customers imported or sold large quantities of patent-infringing fipronil product. Arlosoroff, however, maintains the court filing does nothing to mar MAI’s and CSI’s credibility.
“On the contrary, it reinforces our credibility,” she says. “As soon as we confirmed a limited amount of product — two lots — was mistakenly formulated with the incorrect fipronil technical material and shipped to the U.S., we proactively notified the courts and customers, and made our findings public. These actions are a testament to our commitment to transparency and truthfulness, and we’re confident our distributors recognize this. We’ll stand behind our customers to allow them to make reasonable business decisions without being harmed.”
At press time, Buberl says BASF was in the process of “reviewing its further legal options in light of Makhteshim’s and CSI’s admissions.”