Splenda firm files claim of patent infringement

April 11, 2007|By Bloomberg News

NEW YORK -- Tate & Lyle PLC has filed a patent-infringement claim in the United States to protect Splenda, one of the sweeteners that accounted for about half of the company's revenue last year.

Tate, based in London, filed a case against three Chinese manufacturers and 18 importers and distributors, alleging theft of its manufacturing technology.

The complaint was registered Friday with the International Trade Commission in Washington.

The commission, whose purpose is to protect U.S. markets from unfair trade practices including patent infringement, can block imports if it decides in Tate's favor.

"It actively shows Tate & Lyle is determined to track down" manufacturers infringing on the patent, said David Hallam, an analyst at London-based Evolution Securities.

Splenda, a calorie-free sweetener made from sucralose, is used in more than 3,500 products, including Coca-Cola Co. and PepsiCo Inc. drinks.

Tate said last year that some Wal-Mart Stores Inc. outlets were selling a rival to Splenda known as Altern, which included an "active" ingredient made in China. Wal-Mart withdrew the alternative sweetener from sale.

Shares of Tate fell 3.5 pence, or 0.6 percent, to 593 pence ($11.69) in London. Earlier, they rose as much as 0.8 percent to 601.5 pence, the highest since Feb. 13. The stock has declined 23 percent this year on speculation that the company's profit for the 12 months that ended March 31 will fall short of analysts' estimates.

"Our sucralose-manufacturing technology is protected by a robust and sophisticated patent estate, which we will defend rigorously," Robert Gibber, Tate's general counsel, said yesterday.

Tate said in January that it would miss its annual profit-growth target because sales of Splenda to food and soft-drink companies haven't met expectations. Tate had a net loss of 30 million pounds ($58.47 million) in the fiscal year that ended March 31, 2006, on sales of 3.72 billion pounds ($7.25 billion).

The filing names the Chinese manufacturers Hebei Sukerui Science & Technology Co. Ltd., Changzhou Nuitang Chemical Plant Co. Ltd. and Guangdong Food Industry Institute. Tate filed against Hebei in U.S. District Court in Urbana, Ill., last year.

"This action follows the filing with the U.S. Federal District Court in May 2006, which so far has resulted in favorable settlements with three of the 10 defendants cited in that case," Gibber said.

"The route through the ITC is quicker than going through federal courts, and it can actually block the products," said Hallam, who has a "buy" recommendation on the stock.

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