SunOpta, Abengoa technology dispute goes to arbitration

March 10, 2008

BY Sarah Smith

Web exclusive posted April 7, 2008 at 10:02 a.m. CST

A U.S. District Court judge has stayed allegations of misappropriating technology filed by SunOpta Inc. and sent the company, and its adversary, Spanish ethanol giant Abengoa Bioenergy, to an arbitration panel to air their grievances.

In January Canada-based SunOpta, which has a food processing division and a biofuels division, filed a sealed complaint against Abengoa Bioenergy in a Missouri federal court. SunOpta accused Abengoa of appropriating its biomass-to-ethanol technology without compensation, luring away its former process technology manager and inducing him to reveal proprietary trade secrets, as well as using replicas of the SunOpta technology in two Abengoa ethanol facilities.

Abengoa responded in February, denying it had misappropriated the technology. It claimed SunOpta was trying to coerce settlement of the contractual disputes by filing the suit. In 2002 the companies became involved when they entered into negotiations regarding Abengoa's potential use of SunOpta's fiber preparation and pretreatment technology, in which a unique steam explosion process developed by SunOpta converts biomass to cellulosic ethanol. They formalized this engineering and consulting agreement in January 2004, the judge's order says. SunOpta agreed to provide technical information for Abengoa to use in a cellulosic ethanol venture in Salamanca, Spain.

In April 2004 the parties entered into a separate technology agreement relating to a grant Abengoa received from the U.S. Department of Energy. This agreement was intended to protect SunOpta's right to its existing and developing intellectual property and trade secrets.

In 2005 an Abengoa subsidiary executed a contract to purchase a SunOpta filter preparation system for the Spanish plant. By 2007, the companies were disputing whether SunOpta had reneged on obligations to deliver equipment to Spain, and Abengoa stopped payments on the system.

In its complaint SunOpta claimed that Abengoa subsequently used identical SunOpta technology in two U.S. ethanol plants and received its DOE grant based on SunOpta's replicated technology. It filed the complaint, alleging numerous causes of action, and sought an injunction to stop Abengoa from using the technology. Abengoa denied all of the accusations.

Because the two companies included a binding arbitration clause into their contractual agreements, on March 20 a federal judge ordered them before an arbitration panel to settle the dispute. He refused to dismiss SunOpta's claims and its request for an injunction until arbitrators decide the issues in the case. The American Arbitration Association will sort out the parties' legal rights under their contracts in a non-public forum. The judge will conduct a status conference in September.

Neither company returned Ethanol Producer Magazine's calls for comments.

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