Biomin America to press on in alleged trade secret violation case, settles with US government over Cuban sales

By Jane Byrne contact

- Last updated on GMT

© GettyImages/Comstock
© GettyImages/Comstock

Related tags: Biomin, Phileo Lesaffre, Yeast, Mycotoxin, court

A Kansas federal district court ruled that Biomin did not have a case in a trade secrets dispute between it and Lesaffre.

However Biomin told FeedNavigator that it would not be commenting on that ruling or on ongoing litigation. "The recent federal court decision was procedural and not based on the merits of the case. The litigation is ongoing."

Biomin America Inc. a producer of feed additives, part of the Austrian agricultural holding company Erber Group, had alleged that its two former employees who took on similar roles at Lesaffre Yeast Corp., solicited Biomin employees and customers, using confidential information and trade secrets, to market Lesaffre’s products, as first reported by Bloomberg Law​.

Biomin alleged that two of Lesaffre Phileo’s yeast-based products, SafWall and SafMannan, directly compete with its Biofix and Poultry Star products.

The Kansas federal district court judge dismissed misappropriation claims​ arguing that Biomin had not demonstrated a link between two former employees’ knowledge of purported secrets and any improper use.

Selling competing product at lower price is not misappropriation, and the claims around trade secrets were conclusory, lacking in evidence, the US court concluded.

The court found that Biomin had “not met its burden to present facts and evidence showing a likelihood”​ that the former employees - a sales director and account manager - had breached their contractual obligations around proprietary information, confidentiality, and non-solicitation, in their original employment agreements with Biomin America.

Biomin America is based in Overland Park, Kansas. It develops and delivers feed additives for livestock including poultry, swine, ruminants and aquaculture. It is considered a market leader in mycotoxin risk management products and solutions as well as salmonella control products and solutions. Biomin’s products include Biofix, a feed additive that claims to counteract secondary metabolic products of molds present on almost all agricultural commodities and Poultry Star, which, among other things, claims to promote beneficial gut microbiota and a reduction in bacteria such as salmonella and E. coli in multiple species of poultry.

Lesaffre, with operations in Wisconsin, manufacturers and sell yeast products. It supplies yeast to the baking industry and also operates a Phileo business unit that supplies yeast to the agricultural industry to be used in feed additives for various animals.

Biomin in settlement with US Dept of Treasury over Cuban sales 

In another legal case involving Biomin America Inc, the company reached a settlement​ with the US Department of the Treasury's Office of Foreign Assets Control (OFAC).

On May 6, OFAC announced that Biomin America had paid US$257,862 to settle its potential civil liability for apparent violations of the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR).

“Specifically, between the approximate dates of July 2012 and September 2017, Biomin America and its owned or controlled foreign entities engaged in a total of 30 sales of agricultural commodities produced outside the United States to Alfarma SA in Cuba without authorization from OFAC, which resulted in 44 apparent violations of the CACR.

“Biomin America could potentially have availed itself of such authorization but failed to take the steps necessary to do so. Instead, Biomin America developed a transaction structure that it incorrectly determined would be consistent with US sanctions requirements," ​reported OFAC.

In a statement on that case, Biomin said the settlement was initiated by it as a voluntary act of self-disclosure to address a potential compliance issue regarding transactions with the company based in Cuba. The company said it does not dispute the published enforcement information. 

“Biomin is a globally acting company that takes regulatory compliance in every jurisdiction in which we operate seriously,”​ said Simon Walley, president of Biomin America. 

The company outlined how it conducts internal and external audits to ensure compliant business processes.

Biomin America's management took proactive measures to work with OFAC once potential issues were identified, it continued.

“As soon as we discovered this issue, we conducted a thorough and complete internal review, notified OFAC and took corrective actions,”​ commented Walley. “This was a technical violation that came about due to lack of poor initial advice that could have been managed by requesting an export license under a feed exemption.”  

Biomin stressed how OFAC itself noted that this is “a non-egregious case" ​and that had the company sought the appropriate advice and took the necessary steps to authorize these transactions there would have most likely been no breach of the regulations.

"OFAC’s own enforcement information cites a number of mitigating factors which highlight the voluntary, transparent and well-organized manner that Biomin took to address this issue directly that, according to OFAC, are reflected in the settlement amount."

The company said it has recently taken a series of measures to reinforce compliance. ​It has also developed formal written policies and procedures to prevent sales to or for unauthorized destinations, parties, or activities.

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