Complaint Review: Summit Nutritionals International Vs. Sioux Pharm Inc. - Sioux Center Iowa

 To The Honorable Judge of the Lisbon District Court

 

SUMMIT NUTRITIONAL INTERNATIONAL INC., branch in Portugal, Juristic Person

Number 980413672, with its domicile in

Lisbon, at Empreendimento Nova

Amoreiras – Palácio- 3ºpiso, secção 9, Rua

Artilharia 1, 71-77, 1250-038 Lisboa,

Portugal

 

Hereby commences non-typified interlocutory injunction proceedings against,

 SIOUX PHARM INC., an American company with its registered office in 121 19th Street SW Sioux Center, IA 51250, Iowa, United States of America  in the following terms and on the following grounds,

 1

 

The Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., is a

commercial company, with its registered office in New Jersey, USA, which, via

its branch in Portugal, is in the business of the commercialization in the

European Union of chondroitine sulphate with the brand name DROI-KON,

which it imports from the USA.

 

2

 

The product commercialized by the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC., is food grade chondroitine sulphate, which is subject to

a purity requirement that it must contain not less than 90% of chondroitine

sulphate. There is also pharmaceutical grade chondroitine sulphate on the

market, which must not only have the same minimum chondroitine sulphate

content, but is also required to comply with certain requirements of the USP

(USA Pharmacopeia). As clarified in the information attached as document no.1.

which contents are incorporated by this reference.

 

3

 

The Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., habitually

acquires the product it commercializes from the manufacturer EAGLE

LABORATORIES INC., whose plant is located in the State of IOWA in the USA.

 

4

 

The Respondent, SIOUX PHARM INC., is a commercial company with its

registered office in the said state of IOWA, which is in the business of the

manufacture and commercialization of pharmaceutical grade chondroitine

sulphate under the CHONDROPURE brand name, among other products.

 

5

 

Food grade chondroitine sulphate is commercialized in Europe at a price

between twenty and thirty euro/kilo, while the price of the pharmaceutical grade

product is more than one hundred euro/kilo.

 

6

 

The product commercialized by the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC., is submitted by it for analysis by laboratories accredited

by the FDA - Food and Drug Administration in the USA, and these analyses

have always shown the existence of at least 90% of chondroitine sulphate in the

samples, i.e., the product’s required purity level. Certificate of analysis, and

reports of 5 analysis referred in this certificate, are attached as document no.2

to 7, which contents are incorporated by this reference.

 

7

 

The Applicant’s clients in Europe, of which there are more than twenty, also

conduct analyses of samples of the product supplied by the Applicant SUMMIT

NUTRITIONALS INTERNATIONAL INC., at laboratories selected by them. As at

the date hereof, none of the said clients have complained regarding the purity of

the product and they have always expressed their total satisfaction with the

quality of the product supplied by the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC.

 

8

 

It is important to highlight that the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC., acquired from the extremely demanding “Better

Business Bureau Serving New Jersey”, the accreditation as a company that

uses business practices according to ethics in advertisement, in sales and in

commercial relationships with clients, as displayed in the certificate attached as

document no.8, which contents are incorporated by this reference.

 

9

 

It is noteworthy that the methods of analysis appropriate to the analysis of the

food grade product differ from those appropriate to the analysis of the

pharmaceutical grade product. Furthermore, if analysis methods appropriate to

the analysis of the pharmaceutical grade product are used to analyze the food

grade product, the results obtained can show a purity level which is less than

the required level.

 

10

 

In an industrial and commercial dispute with the Applicant's said supplier, the

Respondent, SIOUX PHARM INC., commenced legal proceedings in IOWA in

which it complains of acts of industrial espionage and of the adulteration of

chondroitine sulphate by EAGLE LABORATORIES INC., via the addition of

maltodextrin.

 

11

 

The Respondent, SIOUX PHARM INC., also claims in the said legal

proceedings that the Applicant, SUMMIT NUTRITIONALS INTERNATIONAL

INC., and another company, which is also a client of Eagle Laboratories,

together with latter have diluted chondroitine sulphate with maltodextrin. This

claim is manifestly untrue as the Respondent, SIOUX PHARM INC., is well

aware that the Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., is

not a manufacturer and that it merely commercializes the product it acquires

from manufacturers.

 

12

 

The Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., has no

reason to believe that its supplier EAGLE LABORATORIES INC. adulterates

the product, but can assert that even if its said supplier is guilty of the said

conduct, there is no adulteration of the product supplied to the Applicant,

SUMMIT NUTRITIONALS INTERNATIONAL INC., as is clear from the analyses

systematically carried out by both the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC., and its clients.

 

13

 

On the false assumption that the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC., commercialized an adulterated product and that it has

contributed to the said adulteration, the Respondent, SIOUX PHARM INC.,

accuses the Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., of

unfair competition and seeks that damages be awarded against the Applicant,

SUMMIT NUTRITIONALS INTERNATIONAL INC., with regard to the loss and

damage suffered by the Respondent, SIOUX PHARM INC., which loss and

damage it neither specifies not quantifies, and that the Applicant, SUMMIT

NUTRITIONALS INTERNATIONAL INC., be freezed from diluting chondroitine

sulphate and from distributing or selling diluted chondroitine sulphate, and

further that the Applicant’s business in competition with the Respondent, SIOUX PHARM INC., be restrained or suspended at least while the proceedings are

pending, which latter claim is manifestly excessive in the light of the facts

pleaded.

 

14

 

The Respondent’s latter claim is a clear illustration of its real objective, which is

to achieve a monopoly, or quasi-monopoly, in the market for the product in

question, reduced to pharmaceutical grade, which is something that a remedy,

which is merely corollary to the facts pleaded, i.e. that the Applicant, SUMMIT

NUTRITIONALS INTERNATIONAL INC., be restrained from commercializing

the adulterated product, would not permit it to achieve.

 

15

 

Given the fact that the Respondent, SIOUX PHARM INC., also commercializes

its product in the EU, the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC., has good reason to fear that the Respondent, SIOUX PHARM INC., which also has clients in this market, will seek to perturb the

activity of the Applicant’s branch in Portugal, via false statements intended to

discredit it, i.e. false descriptions of the quality of the product commercialized by

the Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., which

amounts to anti-competitive conduct that is contrary to the honest custom and

practice in any economic activity.

 

16

 

Given the great difference between the price of the product commercialized by

the Respondent, SIOUX PHARM INC., and the product commercialized by the

Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., it is easy to

comprehend the Respondent’s, SIOUX PHARM INC., interest in discrediting the

Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., or even in

eliminating companies from the market that supply a market segment with a

much lower prices, which will only have recourse to the Respondent’s, SIOUX PHARM INC., product, when the uses of the product or the requirements of the

end clients cannot at all be satisfied by the food grade product.

 

17

 

Furthermore, the Respondent’s, SIOUX PHARM INC., conduct is not limited to

this unfair competition, to which it has already had recourse in the legal

proceedings in IOWA. The Respondent’s, SIOUX PHARM INC., greed is such

that it adulterates its own product in order to increase its profits, not only by

increasing its sales through the elimination of the Applicant, SUMMIT

NUTRITIONALS INTERNATIONAL INC., from the market but also by reducing

its production costs by adulteration of the product.

 

18

 

The adulteration of the Respondent’s, SIOUX PHARM INC., product, for which

only the Respondent, SIOUX PHARM INC., can be responsible, was noted by

the Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., via an

analysis of the contents of a package clearly identified as Chondropure,

supplied by the Respondent, SIOUX PHARM INC..

 

19

 

This package was supplied by the Respondent, SIOUX PHARM INC., to a

company that is also a food grade client of the Applicant, SUMMIT

NUTRITIONALS INTERNATIONAL INC., and was made available by the said

company for analysis by the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC.

 

20

 

The analysis of the said product by an independent laboratory approved by the

FDA, showed that the product supplied by the Respondent, SIOUX PHARM INC., does not even comply with the requirements applicable to the food grade

product, as the chondroitine content of the product was only 24.90% and also

does not comply with other requirements applicable to the pharmaceutical

grade product, as result from the analysis report from the 4th March 2015, and

from the identification of the analyzed sample, which are attached as

documents no. 9 and no. 10 which contents are incorporated by reference.

 

21

 

By selling the said non-compliant product that lacks the required characteristics

and does not meet the expectations of the Respondent’s, SIOUX PHARM INC.,

clients and lacks the characteristics announced by the Respondent, SIOUX PHARM INC., it is also guilty of unfair competition on the grounds of false

description or incorrect indication of the product’s quality and use.

 

22

 

The Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., is entitled to

carry on its lawful and transparent economic activity in the European market in

fair competition with the other operators in this market and to be protected from

perturbations caused by operators that act in violation of the honest practices of

this business.

 

23

 

The Respondent’s, SIOUX PHARM INC., stigmatized conduct causes the

Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., to fear that it will

apply them in order to wrongfully interfere with and perturb its business in the

European market.

 

24

 

The Applicant’s fear is amply justified by the Respondent’s, SIOUX PHARM INC., said conduct and fully justifies the grant of appropriate interlocutory

injunctions in order to protect the Applicant’s threatened right.

 

25

 

In this case, the interlocutory injunctions sought are that the Respondent,

SIOUX PHARM INC., be restrained from making any statements likely to

discredit the Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., and

its product and that it be further restrained from introducing chondroitine

sulphate into the European market that does not comply fully with the purity

requirement of at least 90% of this product and that, in the case of

pharmaceutical grade chondroitine sulphate, which does not comply with the

other requirements applicable to that grade of product.

 

26

 

The risk of harm that the Applicant, SUMMIT NUTRITIONALS

INTERNATIONAL INC., seeks to prevent is the risk that the Respondent,

SIOUX PHARM INC., will cause irreparable harm, or harm that is difficult to

remedy, to it, by affecting its reputation for honesty and the reputation of its

product, by raising doubts as to the purity thereof, and that this will have an

inevitable effect on the Applicant’s clients and is likely to result in a drastic

reduction of its sales and in its replacement by competitors, which it would

subsequently be difficult, if not impossible, to dislodge.

 

27

 

The said risk is not specifically provided for in any of the interlocutory injunctions

typified in the law.

 

28

 

It is important to refer, due to the predictable behavior of the Respondent,

SIOUX PHARM INC., not granting the protective order, matters to the Applicant,

SUMMIT NUTRITIONALS INTERNATIONAL INC, who has always showed in its

behavior transparency, strictness and the following the rules and honest

practices of the branch of the commercial activity they are inserted, enormous

damages, leading to a sales reduction and damaging its credibility in the market.

 

29

 

On another hand, from the granting of the protective order, which will not be

more than demanding from the Respondent, SIOUX PHARM INC., acts

accordingly to the honest practices of the practiced activity, mainly by avoiding

the adulteration of the commercialized product, no damage, obviously can result

to the Respondent, SIOUX PHARM INC.

 

Accordingly and on such other grounds as this Honorable Court finds on its own motion, the Respondent, SIOUX PHARM INC.,  should be restrained from making any statements likely to discredit the Applicant, SUMMIT NUTRITIONALS INTERNATIONAL INC., and its product and be further restrained from introducing Chondroitine Sulphate into the European market that does not comply fully with the purity requirement of at least 90% of this product and, in the case of pharmaceutical grade chondroitine sulphate, which does not comply with the other requirements applicable to that grade of product.

The Applicant requests that this petition is served to the Defendant in the terms of the Hague Convention 15 November 1965 in order for the Defendant to oppose to this petition within the legal delay.

 

This protective order is requested as a preliminary to the action of

condemnation of the Respondent, SIOUX PHARM INC; in the same terms

requested in this petition.

 

Evidence:

 

Witness: Ana Santos, married, manager, with address at (((REDACTED)))

Lisboa, Portugal

 

The attorney

Henrique Abecasis