Harcol Research, LLC – more patent trolling from The Newport Trial Group

Posted by on Nov 11, 2013 in Anthony Roberts, Featured, Legal Documents | 0 comments

1Patent Trolling is generally thought of as a very bad thing. It stifles innovation and creativity, while clogging up the legal system. At my last accounting, the biggest troll in the dietary supplement industry was Ron Kramer and Thermolife – this is kind of an *asterisk kind of thing because they actually sell some products in the category they’re trolling – however, they purchased numerous patents with the clear intent of trolling, and existed as a NPE (non practicing entity, the defnintion of a troll) with their D-Aspartic Acid patent (which has since been busted – after being found useless).

Legal representation for ThermoTroll has been The Newport Trial Group – and honestly, a few years back when they were filing class actions against the likes of BSN, for claiming to have ingredients that didn’t even exist, I was one of their biggest fans. Now, however, they are starting corporations with the express purpose of buying up patents to sue people – Tawnsaura Group is one such example, and more recently we have seen Harcol Research, LLC, emerge – and although it took quite a big of digging, it appears that this too is simply a front for Newport Trial.2

ThermoTroll has filed about 150 patent lawsuits at this point and this group of lawyers have formed not one, but two nonpracticing entities, with the obvious intent of filing lawsuits and never actually coming out with a product. In other words, they find out what patents have been sitting around, unenforced, and potentially being used in the supplement industry, and they buy the license for the patent. Then, without actually being a competitor, they sue everyone who (possibly) it can be argued is infringing on the patent. Of course, they immediately offer to settle before trial. The money they take from the supplement company they sue (either in the fees it takes to fight the lawsuit or the “licensing fee” they extort), is then added on to the cost to the consumer. That money doesn’t come from nowhere, and if you start seeing prices for your favorite supplements going up, this could be the reason.

Here’s how their latest shell game breaks down:

Harcol Research is a limited liability corporation registered in Nevada. Nevada allows a variety of ways to make your LLC somewhat anonymous, as do certain other states (Wyoming , etc…). Generally, when I research a corporation, Wyoming, Nevada, etc…are red flags. It’s an even bigger red flag when they purport to have a place of business that’s simply a PO box, and it’s in another state (*Harcol Research “operates” out of Texas, therefore it appears that this company has been operating out of Texas because statistically, that’s the most sympathetic location to file a patent lawsuit).

trolltexas

For whatever reason, they are also using another group of lawyers in Texas as part of their representation, so it wasn’t clear (at first) who was operating this company behind the scenes – but buried deep in one of their filings, I found the name of a Newport Trial lawyer listed as one of their attorneys:

tyler1

tyler

Still, being their legal representation doesn’t necessarily have anything to do with being part of the company itself…But as it turns out,  Harcol only lists one active officer, a Mr. Kalman Magyar:

officerEntity Details – Secretary of State, Nevada

Err…one company officer and he lives in Canada? You might recognize his name as one of MuscleTech’s former lawyers…or from the Newport Trial Group’s website:

kalman

So I’m not entirely sure about the motivation behind the shell game these guys are playing…

Effectual Knowledge Services, a patent litigation company, gives us some insight into how these lawsuits break down in September, versus the rest of the patent lawsuits filed in The United States – and shockingly, Thermolife and their lawyers are responsible for 60+ lawsuits that are now clogging the legal system (which you and I are paying for, through our taxes), with Thermolife having filed more patent lawsuits in September than anyone else in the country, and with Harcol accounting for the third most lawsuits in that month (click to enlarge):

lawsuitsThe sad thing is that this is easy to stop. Huge companies like GNC and Europa can simply refuse to sell products from trolls or products that require paying a licensing fee from them. Consumers can simply boycott Thermolife and any company licensing anything from them – and frankly, consumers can boycott Europa and GNC too, if they don’t like it. This problem can literally go away overnight if we want it to.

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Thermolife, Newport Trial Group, named as Patent Trolls in Newhope360.com article

Posted by on Aug 8, 2013 in Featured | 0 comments

Article from NewHope360.com:

Imagine you and your team catch rare earth metals fever. You pack for an ex­pedition, intent on driving the corporate flag into a barren parcel of land where your subterranean probes have discovered a rich vein that could be worth millions. You secure a deed for the land, but you post no sign or fence. Years later, unwary settlers make their homes on this unmarked territory and find those rare earth metals beneath. Cash flows. Businesses thrive. And then one day a wom­an in a fatal black suit delivers a sealed note to each of the land developers: “You are tres­passing on private property. Vacate by sun­down … or else!”

This land grab and eviction notice is not dissimilar from staking a patent claim on a novel, not-obvious invention. A deed is issued (the patent), but the land (the invention) can go unused for years. Only someone diligently searching land titles would find the “Private Property—Do Not Trespass” signs. Set up shop without a lease, and that woman in the black suit drops by to spoil the party.

Be prepared, be smart

Very few people take that virtual trek to the county courthouse and dust off those title records. Among the many entities and in­dividuals we have worked with in two-plus decades, only four performed a Freedom To Operate (FTO) analysis before launching their product. (Of these four, three are among the world’s largest consumer brands, and the other is a multi-decade dietary supplements brand). FTO is patent legalese indicating that, within defined geographic boundaries and in the context of your specific product, design or service, there are no patents (or patents pending) that could be viewed as overlapping with or very similar to your po­tential commercial offering. An insightful FTO “Opinion” can be performed by a pat­ent professional or skilled and savvy ama­teur, but an FTO opinion from an attorney at an intellectual property firm can exceed $10,000.

Many companies use the free Unit­ed States Patent & Trademark Office (USPTO) database (http://patft.uspto.gov/) to search patents and patent applications, but what if someone invented something painfully similar to your idea in Sweden 15 months earlier and filed an international PCT application that has not yet entered the national stage in the United States? It wouldn’t show in the USPTO database, although it would in a subscription data­base. The USPTO is but a starting place. A comprehensive FTO analysis is essential for any innovation- or invention-driven business, and yet it’s rarely brought up in natural product and dietary supplement industry boardrooms. Only in the past year have FTOs entered the conversation, due in part to a list of patent infringement law­suits growing longer than a mother-in-law’s memory.

Patent litigation is no stranger to the dietary supplement industry. The patent holder on a product as simple and almost ubiquitous as the Blender Bottle (US patent 6,379,032; Sundesa, LLC/Runaway Blue, LLC) sued a Canadian company (PerfectShakers. com, LLC) for infringement. What has surprised the industry is the number of lawsuits for largely unknown and unen­forced patents, often by plaintiffs with no competing product on the market—a non-practicing entity (NPE). An NPE is a hold­ing company whose sole business may be to file lawsuits with the hopes of extracting money from the patents, a practice known as patent trolling.

Patent trolling in dietary supplements has been raised to an art form by Tawn­saura Group, LLC and Thermolife, both represented by the Newport Trial Group in Newport Beach, Calif. Tawnsaura Group appears to have no business other than to sue on two patents claiming L-Citrulline (an amino acid popularized in sports nutri­tion and “nitric oxide” products). Tawnsau­ra Group is the assignee for 2 patents for L-Citrulline–US 5,684,471 and US 6,028,107. The inventor, Dr. William Howard Waugh, died in July 2012. One of us (Almada) at­tempted to work with Dr. Waugh via outli­censing in the early 2000s, but his patents were then licensed to Marlyn Nutraceuti­cals. Dr. Waugh’s estate assigned the rights to the Tawnsaura Group in mid-August 2012. Tawnsaura filed suit almost imme­diately on August 21, 2012 against Herb­alife, Guthy-Renker, BSN, USP Labs, Bodybuilding.com, Optimum Nutrition, NBTY, Woodbolt/Cellucor, VPX and dozens of other entities. Nearly one year later, the Tawnsaura Group is still adding defendants to its list of alleged infringers, with the most recent, GNC, added on June 20, 2013. It appears many defendants have settled with Tawnsaura Group, but the re­maining defendants continue to defend this litigation.

Thermolife filed a slurry of lawsuits for infringement of patents for: (1) D-Aspartic Acid; (2) “NO”/Arginine; and (3) Nitrated/ Nitrited Amino Acids (“Nitrated Aminos”). Thermolife has sued more than 25 supple­ment companies for alleged infringement of its D-Aspartic Acid patent, US 8,202,908 (‘908 patent), including GNC, Nutrex Re­search, and Allmax Nutrition. The USP­TO lists Patrick Arnold (the godfather of DMAA) as the inventor of the ‘908 patent and Thermolife as the assignee. It appears that many of the defendants have settled. Some of the remaining defendants in the D-Aspartic Acid are pursuing dismissal. Additionally, GNC and SNAC, led by Vic­tor Conte of the epic BALCO steroid case, have filed counterclaims seeking to invali­date the patent. Litigation is ongoing.

Stanford University is the owner of the NO/Arginine patents (US 6,646,006, 6,117,872, 5,891,459, and 7,452,916). These long dormant patents list John Cooke, MD, PhD ( formerly of Cooke Pharma, the company behind the failed HeartBar) as lead inventor. Thermolife is now the exclusive licensee (read: patent privateer, or enforcer) of the NO/Arginine patents and has taken up the charge, with Stan­ford University also likely benefitting from proceeds. Thermolife astutely saw the pat­ents’ utility and infringement, and secured a relationship as a patent privateer entity with the University to resuscitate their value. To date, Thermolife has sued over 25 supplement companies for infringement of the NO/Arginine patents in the South­ern District of California. BPI, Ultimate Nutrition, NBTY, Vitamin World, Force Factor and SNAC have all filed counter­claims to invalidate the NO/Arginine pat­ents. All American Pharmaceutical & Foods Corp (“All American EFX”) has sued Thermolife in the District of Montana for a declaration of non-infringement of the NO/Arginine patents, despite the earlier case in the Southern District of California, which will undoubtedly result in briefing on a Motion to Dismiss or Transfer if the case does not settle first. This litigation is in its very early stages.

The patents at issue in the Nitrated Ami­nos litigation include 8,034,836, 8,178,572, and 7,777,074 (additional Nitrated Aminos patent applications are pending with the USPTO). The inventors are Ron Kramer and Alexander Nikolaidis. Gaspari moved for reexamination of patent ‘074 with the USPTO in 2011. Reexamination of a pat­ent usually stays in district court, as it did in the litigation pending in the District of Arizona against VPX, Hi-Tech, and others. One of the defendants in a case pending in the Central District of California, Redefine Nutrition, LLC, filed a counterclaim for in­validation of the ‘836 patent.

The Nitrated Aminos patents have not resulted in numerous lawsuits yet, but the sword of Damocles hangs and the threat grows more imminent with each passing day. Cease and desist letters continue to be served. Once the ‘074 patent comes out of reexamination and/or other Nitrated Aminos patents are issued, lawsuits are likely.

A person or entity that holds rights to a patent(s) will often have a complaint sent to the defendant(s) with a demand letter laying out a settlement offer in lieu of liti­gation. A settlement is often couched in one of two ways—a lump sum for damages for past infringement, or a combined lump sum for both past infringement and a paid-up, royalty-free license. The latter option would allow the defendant to continue to utilize the invention, e.g. use a certain in­gredient and avoid reformulation. Regard­less of how the settlement is defined, many companies settle without a fight, as it is of­ten less expensive to pay now than spend money in a patent litigation lawsuit and risk potential damages.

Defense of patent infringement is expen­sive. According to a 2011 survey by the American Intellectual Property Owners Association, the average cost to defend a patent case is about $1 million when the amount at risk is less than $1 million, about $3 million when the risk is $1 million to $25 million, and about $6 million when over $25 million is at risk.

Companies in the Tawnsaura Group and Thermolife litigation have undoubtedly al­ready spent a substantial sum of money defending infringement actions and/or on attempts to invalidate the patents. Nearly all of these cases have been filed in the Central and Southern Districts of Califor­nia, where hourly rates for patent attor­neys can cost upwards of $1,200 per hour, with the average between $400-800, de­pending on whether the attorney is an as­sociate or partner. It’s easy to see how a case with damages less than $1 million can easily add up to $1 million in attorneys’ fees alone—not to mention the experts (one of us, Almada, charges $700/hour). It’s not surprising that many companies make a business decision to pay the plaintiff a sum that is far less than $1 million, yet still not a trivial sum of money.

NBJ Bottom Line

In the increasingly litigious dietary supplement industry, pay someone now for the commercial freedom of an FTO, rather than risking the economic and corporate evisceration later. A smart prospector looks for that “No Trespassing” sign before he digs his shovel into that barren plot of land.

This article originally appeared in NBJ’s June/July issue. The full issue is available for purchase here. Our thanks to Ms. Stump and Mr. Almada for their contribution to that issue.

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Progenex sued by Tawnsaura Group – sort of

Posted by on Oct 7, 2013 in Anthony Roberts, Legal Documents | 0 comments

If you’re a regular reader of this blog, you already know about the Tawnsaura Group as well as Progenex. Now it seems that the former is suing the latter, in a fight that we only wish both could lose. Sadly, Tawnsaura and Newport Trial have sued “Progenex, Inc.” of Florida, which is not the company “Progenex Dairy Bioactives,” who sell the product  (“Force“) named in the lawsuit. *Presumably Tawnsaura will find out that they’ve filed against the wrong “Progenex”, correct this mistake, and refile against the proper company, Progenex Dairy Bioactives (*and when I say “presumably” I mean they will certainly find out today, before end of business).

TawnsauraPGX

 

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Feeding Trolls = More Patent Lawsuits

Posted by on May 25, 2014 in Anthony Roberts | 0 comments

Just a brief note on patent trolls: Don’t feed them. Don’t pay their bullsh*t extortion demands. Because you know what happens when you do? They come back and get more and more money from you.

That’s what happened to MusclePharm when they paid a Plaintiff who alleged patent infringement for MusclePharm’s use of Citrulline Malate. At that point, the plaintiff (the group of lawyers running The Newport Trial Group) had filed against 70 different manufacturers of dietary supplements and sports nutrition products. MusclePharm settled with the plaintiff (under their name “Tawnsaura Group”) for $5,000.

Less than a year later, the same lawyers (under a different name, this time Harcol) sent written correspondence to MusclePharm alleging infringement of another patent by MusclePharm and was contemplating legal action against the Company. This time, MusclePharm paid them $65,000 in exchange for an exclusive, perpetual, irrevocable, fully-paid up, royalty free license. Then, in April of 2014, a case popped up on my radar (2:2014cv00291) where MusclePharm filed suit against Harcol, alleging breach of contract.

There’s a lesson here. Once you find yourself giving in to these kinds of demands, and paying “less than it would cost to fight” the lawsuit, you’re going to need to keep paying, and paying, and paying – because they’re going to keep knocking at your door and asking for more money.

 

 

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Patent Trolling the Nutritional Industry

Posted by on May 26, 2013 in Anthony Roberts, Featured | 0 comments

Patent trolling is a new phenomenon to the dietary supplement market, having only reared its ugly head over the past year or so. I first heard the term while researching The Tawnsaura Group, an NPE (Non-Practicing Entity), seemingly formed to license unenforced patents and file lawsuits against anyone who had been violating them. In this case, they went after everyone in the nutritional industry who’d been using L-citrulline:

Evil-Treasure-Trolls-500x352Tawnsaura group became the most recent member of the NPE group by firing a volley of 36 patent litigation cases in the last 2 weeks. All of the 36 cases were filed at the California Central District court and Newport Trial Group is representing the plaintiff. Tawnsaura is a company registered in Reno, Nevada with a declared business objective of licensing technology for generating revenues. At the heart of the litigation are 2 patents – US 5864471 and US 6028107 – falling in US patent classes 514/563. Two of these patents primarily relate with medicinal use of L-citrulline with/without other ingredients to act as a nutritional product which can be used to enhance physical performance.

Given the inventor of these patents Dr. William Howard Waugh passed away in July, 2012, it is interesting to note that his daughter transferred the assignment rights to Tawnsaura in mid August, 2012 which in turn filed 36 litigation cases in a fortnight starting 22nd August. Both of these patents do not have any backward patent citations, so it would be interesting to see how the litigation pans out.

They’re up to even more lawsuits now. Once they file, they immediately offer a settlement to the defendant, based on a tiered system decided by how large the company is. Therefore supplement companies will either have to defend the lawsuit or fork over some cash to continue using an tttroll3ingredient they’d been using for years. One way or another, the cost of the litigation or the cost of licensing the ingredient, needs to be factored into the final cost of manufacturing the product using it. So companies can either eat the increased cost, stop using the ingredient, or just charge the consumer more. What you, the consumer, get out of this, isn’t a new, unique, novel ingredient – but rather, your favorite product containing citrulline will now cost more to make (or whatever, it will now require a licensing fee or one time payment, blah blah blah – whatever the settlement is). Who do you think will foot that bill? Are patent trolls helping or hurting you as a consumer?

Remember, each dollar that a company spends fighting off a patent troll is a dollar less that they can put into research and development, sponsoring athletes, and purchasing high-quality ingredients. Everyone is hurt by this, from the athletes who make their living by endorsements to the consumer who wants cutting edge products. It hurts the industry from the top to the bottom.

A large percentage of companies just settle without going to trial, because it’s cheaper and they won’t be hit with a potentially huge judgment – but when they do go to trial, trolls lose most of the time. In 2011, patent trolling cost the economy $29 billion dollars, while 2013 data indicates that 56% of patent lawsuits are filed by trolls. A recently introduced Congressional bill seeks to help eliminate patent trolling, and Vermont has not only passed such a law, they’ve already filed a lawsuit against a troll.

Patent trolling is bad because it simply aims to make money for the troll without contributing anything useful or innovative to the industry. This Tawnsaura Group is basically the definition of a patent troll. They’re no strangers to the nutritional world either, as they have done a brisk business in class action supplement lawsuits over the past few years, as The Newport Trial GroupThis Document  shows the financial connection between Newport Trial and Tawnsaura, and specifically lawyer Scott Farrell.

as a result of this trolling, you may be paying more for your monthly stash if you patronize these companies (who Tawnsaura has named in patent suits):

 

  • Serious Nutrition Solutions, LLC
  • Vitacost.com, Inc.
  • Now Foods, Inc.
  • Montiff, Inc.
  • Nutrabulk, Inc.
  • Nutrabolics, Inc.
  • Swanson Health Products, Inc.
  • Solaray, Inc.
  • Supplement Direct Ventures, Inc.
  • Superior Nutraceuticals, Inc.
  • Dymatize Enterprises, LLC
  • AST Sports Science, Inc.
  • Twinlab Corporation
  • Natrol, Inc.
  • Ultimate Nutrition Products, Inc.
  • SAN Nutrition Corp.
  • Universal Nutrition, Inc.
  • MusclePharm Corporation
  • Infinite Labs, LLC
  • Fizogen Precision Technologies, Inc.
  • All American Pharmaceutical & Natural Foods Corporation
  • Driven Sports, Inc.
  • Anabolic Innovations, Inc.
  • Controlled Labs
  • Beverly International Nutrition, LLC
  • Betancourt Nutrition, Inc.
  • Cobra Labs Ltd.
  • EverNutrition, Inc.
  • Evogen, Inc.
  • Elements of Health Care, LLC
  • Epic Nutrition, Inc.
  • Ergogenix
  • Advanced Nutraceutical Engineers & Marketers, LLC
  • Core Nutritionals, LLC
  • Exclusive Nutrition Products, Inc.
  • Exclusive Supplements, Inc.
  • World Health Products, LLC
  • Get Fit Nutrition
  • Gamma Enterprises, LLC
  • Fahrenheit Group Corporation
  • Extreme V, Inc.
  • Isatori, Inc.
  • Isatori Technologies, Inc.
  • Isatori Technologies, LLC

KramerLiz12Even though The Tawnsaura Group (aka Newport Trial) likely has more active patent lawsuits in the nutritional industry than anyone, the trolling keeps rolling, because they also represent Thermolife and Ron Kramer - who are steadily closing the gap with lawsuits purchased and filed for D-Aspartic Acid (for which they are a NPE, as they don’t use it in any of their products), and arginine (purchased right before sending out a slew of legal missives and lawsuits). Do they even have products on the market anymore…? Or has Thermolife simply become a shell company who intends to earn money “in the nutritional industry” by suing companies who actually make products? While they may claim to be innovative, Thermolife’s actions in patent trolling are actually hurting the industry, by driving up manufacturing costs for dozens of companies,  and forcing them to fight lawsuits instead of investing those dollars into developing unique products, all without adding anything in the way of innovation.

 

 

 

 

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