A federal judge dismissed Delaware-based Natural Chemistry’s claim that a competing producer could not sell a particular product because of an agreement with the previous owner. The U.S. District Court for the Middle District of Florida recently ruled in favor of the defendant, Pure Planet of Fairview, Texas, in a case that involved two companies at odds over the formula of a phosphate remover.
The case originated in 2009, when Natural Chemistry made patent-infringement claims against Orenda Technologies, a small Arizona pool chemical manufacturer. Natural Chemistry argued that Orenda’s product, CV-700, contained lanthanum sulfate, and was therefore too similar to its product, PHOSFree. The parties settled out of court, with Orenda’s then-president Richard Kersey agreeing to cease selling the formula.
Shortly after, Kersey sold Orenda’s assets to Pure Planet, based in McKinney, Texas. Pure Planet’s owner, Harold Evans, continued to sell CV-700 under the Orenda trademark. Natural Chemistry then filed another infringement complaint in 2013.
Pure Planet filed a counterclaim alleging that Natural Chemistry falsely labeled its products “Made in the USA,” believing that much of the manufacturing was done in Canada. Natural Chemistry changed the label in response, according to a statement from Pure Planet.
Natural Chemistry continued to pursue the case, arguing that when Evans bought the assets, Pure Planet became bound by the settlement agreement with Orenda.
However, the defendant countered that Evans assumed the infringement matter was settled when he bought the assets and that those legal obligations didn’t apply to his company. Ultimately, the court agreed and issued Pure Planet a summary judgment, by which a court can rule without a trial if it finds that the undisputed facts of the case fall clearly in the defendant’s favor.
In its Order for Summary Judgment, the court stated: “Contrary to Plaintiff’s argument, an asset purchaser does not impliedly assume contractual obligations simply by being aware of the corporation’s prior obligations. … Here, the asset purchase agreement expressly disclaims successor liability.”
A Natural Chemistry attorney did not return a request for comment.