© 2016 The Texas Lawbook.
By Jeff Bounds
(May 16) – A Houston-based trial team at Winston & Strawn has engineered a huge victory for a small Pacific Northwest firm against food giant Mars, Inc. in a patent battle about pet treats.
A Tyler jury on May 6 handed True Science Holdings a take-nothing defense verdict in Mars’ claims that the Eagle, Idaho-based firm’s Minties infringe a pair of its patents, which cover compositions of treats that freshen animals’ breath.
Mars, which is based in McLean, Virginia., had sought $13.6 million in damages.
Perhaps more significantly for what Forbes calls America’s seventh-largest company, the two-man, six-woman jury invalidated all seven claims in the two patents that Mars claimed 250-employee True Science had infringed. Claims are the elements of an invention that a patent owner can exclude others from using in their products without authorization.
Although John Keville, managing partner of Winston’s Houston office, led True Science’s legal charge, he is quick to credit the work of two of the firm’s other Bayou City attorneys, associate Erin C. Villasenor and partner Dustin Edwards.
Another defendant in the case, Plano’s Natural Polymer International Corp., settled with Mars prior to trial. The company’s lead attorney, Eric Albritton of Longview’s Albritton Law firm, could not be reached.
It’s not yet clear what Mars might do about the jury’s decision, which followed two hours of deliberations and a five-day trial.
“We are disappointed with the jury’s verdict and are considering our next steps,” said Jam Stewart, director – corporate communications at Mars.
In addition to dealing with possible post-trial motions or appeals, the Winston team is also juggling defending True Science from Mars’ infringement suits in federal district courts in Nashville and Norfolk, Virginia. The Virginia case is set for trial in September, while the Nashville case has yet to receive a trial date.
PET FOOD FROM MARS: Although Mars Inc. is best known for candy brands like Milky Way, Snickers and M&M’s, the biggest revenue generator among its six divisions is Mars Petcare, which produces billion-dollar products like Iams and Whiskas.
Here is a closer look at the company that Forbes ranked No. 7 on its most recent list of America’s largest private companies:
Mars Inc.
• Headquarters: McLean, Va.
• Revenue: $33 billion
• Employees: 75,000
Mars Petcare:
• World headquarters: Brussels, Belgium
• Worldwide employment: 35,000
• U.S. headquarters (Mars Petcare US): Franklin, Tenn.
• Employment: More than 3,500
• Manufacturing facilities in U.S.: 20
• Number of brands: 41
• Billion-dollar brands: Pedigree, Iams, Whiskas, Royal Canin, Banfield
Source: Mars Inc., Mars Petcare
A Mars subsidiary, Mars Petcare US, sells two items in America, Breathbuster and Dentastix, that compete with True Science’s Minties among products that freshen animals’ breath. Mars Petcare is also a plaintiff in the Tyler case.
Another rival to Minties comes from Mars’s Nutro Company subsidiary, which sells Greenies food products.
“True Science believes that Mars was upset that True Science was selling a product competitive to Greenies – which does not practice the patents in suit – and with True Science’s comparative advertising,” Villasenor said. Here: 3 – Erin Villasenor
Packaging Changed During Litigation
The trial produced a number of curious revelations about Mars. Among them:
• Label switch-eroo: During the court case, Mars changed the packaging on its Dentastix products to call them “snack food for dogs,” rather than “treats for dogs,” according to Edwards. One of True Science’s defenses was that it sold “treats” (which have less nutritional value) rather than “food” (which are designed to sustain the animal.)
BEFORE AND AFTER: These images from a trial exhibit show that Mars Inc. changed packaging on its Dentastix product after suing Idaho’s True Science for patent infringement.
On the left is an example of a Dentastix package that calls the product “treats for dogs.” On the right is a Dentastix package from after Mars sued True Science in 2013. It calls the product “snack food for dogs.”
The question of whether products like Dentastix were “treats” or “foods” was central to Mars’s infringement contentions, which a Tyler jury rejected on May 6.
Source: Court records
• Documents contradict expert: Mars produced an expert, George Fahey, who testified that pet treats are the same as pet food. But his views contradicted company documents that showed Mars itself had distinguished between treats and food as far back as 1998. Keville got Fahey, a professor emeritus at the University of Illinois at Urbana-Champaign, to admit that the jury should believe the viewpoint that Mars had expressed in its documents, rather than his opinion.
• “Inaccurate representations” to USPTO: Winston & Strawn attorneys presented evidence that Mars had made several inaccurate representations to the U.S. Patent and Trademark Office when it was applying for the two patents that it was suing about. Those representations centered on previous inventions that were covered by two pre-existing patents, one that Mars owned, the other assigned to Nabisco, Winston & Strawn attorneys say.
MARKET BREAKDOWN: A subsidiary of Mars Inc. is the largest player in the domestic market for pet food and treats. Here is a look at how the U.S. industry shapes up and Mars’s role in it.
Pet food production in America in 2015:
– Revenue: $24.9 billion
– Profit: $1.3 billion
– Annual growth, 2010-15: 1.9 percent
– Annual growth, 2015-20: 1.2 percent
– Businesses: 244
Products segmentation:
– Dry dog food: 43.0 percent
– Dry cat food: 17.8 percent
– Dog treats: 13.1 percent
– Web cat food: 12.1 percent
– Web dog food: 11.2 percent
– Cat treats: 2.8 percent
Mars Petcare (U.S. operations only):
– Market share: 24.0 percent (No. 1)
– 2015 revenue: $5.97 billion
– Growth over 2014: 8.9 percent
– 2015 operating income: $1.08 billion
– Growth over 2014: 10.7 percent
Note: All numbers for Mars are estimates, as is the business is privately held. Estimates for Mars Petcare are only for U.S. sales of wet and dry food and treats for dogs and cats. These estimates do not include sales of these products in foreign countries, nor revenue from Mars’s Banfield Pet Hospital chain.
Source: “Pet Food Production in the U.S.,” IBISWorld Industry Report, Dec. 2015
Juries More Willing to Invalidate?
Juries in the Eastern District of Texas have been more willing in recent years to invalidate claims in a plaintiff’s patent, according to Michael Smith, a Marshall-based partner at Siebman, Burg, Phillips & Smith.
“What we’ve seen more is that when a plaintiff loses the jury on infringement, they lose them on invalidity,” he said.
In 2013, for instance, the most common verdict in East Texas patent suits involved plaintiffs getting all claims invalidated that they had maintained were infringed, along with losing on every infringement claim they had made, Smith said.
Eastern District juries do not favor plaintiffs or defendants, Smith added, noting that by his count, the defense generally wins roughly half the time in patent suits.
“The juries do have a disposition on property rights,” he added. “We try to persuade them, ‘This is really an issue about property rights.’ Sometimes the plaintiff does it more effectively, sometimes the defendant.”
Case numbers:
Mars Inc. and Mars Petcare US, Inc. v TruRX LLC, True Science Holdings, LLC and Natural Polymer International Corporation
– Eastern District of Texas, Tyler division
– 6:13-cv-526-RWS-KNM
Mars Inc. vs. TruRX LLC, True Science Holdings LLC and HBH Enterprises, dba Ballard Manufacturing
– Middle District of Tennessee, Nashville division
– 3:14-cv-00611
Mars Inc. and Mars Petcare US Inc. vs. True Science Holdings LLC, TruRX LLC, M&C USA LLC, and Mark and Chappell Ltd.
– Eastern District of Virginia, Norfolk division
– 2:14-cv-00477
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