SABINSA CORPORATION V. HERBAKRAFT, INC., et al
OPINION. Signed by Judge Robert B. Kugler on 6/27/2017. (dmr)
NOT FOR PUBLICATION
(Doc. No. 38)
THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
HERBAKRAFT, INC., and
PRAKRUTI PRODUCTS PVT. LTD. ,
KUGLER, United States District Judge:
Civil Action No: 1:14‐cv‐04738 RBK‐KMW
Plaintiff Sabinsa Corporation (“Sabinsa”) filed a Motion to Reopen Action and Enforce
Settlement (Doc. 38) (“this Motion”) of an agreement (Doc. 39‐2) (“the Agreement”) executed on 7
January 2015 with Defendant Prakruti Products (“Prakruti”) settling a patent infringement action.
Sabinsa contends that, by selling certain products to third parties, Prakuti has breached the
Agreement, and seeks liquidated damages under the Agreement and enforcement of payment.
Sabinsa argues that Prakruti’s breach arises because proper interpretation of the term
“Accused Product” as defined in the Agreement encompasses Prakruti’s Current Product and therefore
sales of the Current Product justify enforcement of the liquidated damages provision.
In the alternative, Sabinsa requests limited discovery to determine the similarity between
Prakruti’s Current Product compared with its Accused Product.
For the reasons set forth below, Sabinsa’s Motion to Reopen Action and Enforce Settlement is
GRANTED in part for the purpose of conducting limited discovery to determine if Prakruti has breached
the Agreement and DENIED in part for the purpose of enforcing the Agreement before such limited
Facts and Background:
In March 2014, Sabinsa sued Defendants (hereinafter “Prakruti”) in this court ( Doc. 1) (“the
patent action”), alleging that a Prakuti product infringed U.S. Pat. No. 5,861,415 (“the ‘415 patent”),
which has 17 claims that relate to curcuminoids, components found in turmeric rhizomes. Claims 1 – 16
recite certain methods, including methods of isolating curcuminoids from turmeric rhizomes and
methods of administering curcuminoid compounds. Only claim 17 recites a composition that comprises
defined amounts of different curcumin compounds prepared by a defined process, and is therefore a
On 7 January 2015, the parties executed the Agreement by which the parties contracted,
among other things, that: Sabinsa would not sue Prakruti for any sales of Accused Products before the
Agreement execution date in exchange for which Prakruti would sell only to Sabinsa any of its Accused
Products until after the patent’s expiration. Prakruti agreed to immediately cease all sales worldwide of
Accused Products to any entity other than Sabinsa. Also, in ¶5 of the Agreement, Prakruti admitted
that the ‘415 Patent was valid and enforceable.
The Agreement at ¶1.6 expressly defines Accused Product(s) as “any product(s) derived from
the Curcuma longa plant that contains curcuminoid compositions/products as enabled, described and
claimed in the ‘415 Patent, including such Curcuma longa (Turmeric) product offered for sale by
Prakruti”. In addition, the Agreement provides at ¶3.3 a “liquidated damage penalty” in the amount of
ten thousand U.S. dollars ($10,000.00) for each kilogram of Accused Product that Prakruti sells or offers
after the Agreement execution date.
On 20 March 2015, this court entered a final consent judgment (Doc. 37) in which the parties
stipulated to, among other things, that this court has jurisdiction over issues related to the patent
action, and thus, continuing jurisdiction over the Agreement.
On 28 October 2016, Sabinsa filed this Motion (Docs. 38‐39), contending Prakruti breached the
Agreement by selling to third parties (not Sabinsa) over 5,000 kilograms of the Accused Product after
the Agreement execution date and calculating that Prakruti owes almost $56 million dollars in
liquidated damages under the Agreement. Sabinsa’s primary contention was that resolution of this
motion entailed, not patent infringement issues, but only contract interpretation. Accordingly,
Sabinsa offered little discussion of how Prakruti’s current sales infringed the claims of the ‘415 patent.
On 5 December 2016, Prakruti replied (Doc. 54), asserting that Prakruti’s Current Product sold
to third parties cannot be the same as the Accused Product since the Current Product was not made by
all the steps of claim 17, the sole product by process claim. Therefore, the Current Product could not
and did not breach the Agreement. Prakruti also argues in the alternative that even if these sales were
deemed to violate the Agreement, the liquidated damages provision is unenforceable. Included are the
Declaration of M.R. Shetty, the Chairman of Prakruti, and Exhibits that detail the steps of Prakruti’s
various manufacturing processes before and after the Agreement execution date.
On 12 December 2016, Sabinsa answered (Doc. 57), asserting that the Agreement precludes
Prakruti from selling the same products it sold before as well as products that fall within any of the 17
claims of the ‘415 Patent. Sabinsa argues Prakruti’s change of extraction solvent (from ethyl acetate to
ethyl alcohol) to make the Current Product(and so as to design around claim 17) cannot avoid
infringement as step b of claim 17 recites “a solvent” and not any particular solvents.
In addressing Prakruti’s argument of the unreasonableness of the liquidated damages
provision, Sabinsa emphasizes ¶9.3 of the Agreement, which states the parties represent herein that
each fully understood the terms of the Agreement and each believes it is a fair and reasonable
resolution of the patent infringement issues. Sabinsa also sought limited discovery from Prakruti, if the
court could not determine whether Prakruti’s Current Product is the same as the Accused Product,
On 16 December 2016, Prakruti requested under Local Rule 7.1(d) (6) leave to file a sur‐reply
because Sabinsa’s response had raised for the first time patent infringement issues, which Prakruti
wanted to rebut.1 In its sur‐reply (Docs. 61‐62), Prakruti’s asserts its change of solvent is not, as Sabinsa
argues, the design‐around element that avoids infringement of claims 17 but that non‐infringement of
claim 17 depends on its non‐practice of all steps in that product by process claim.
The issue here is whether the Current Product that Prakruti sells to third parties after the
Agreement execution date is within/outside the definition of Accused Product, as defined in the
Agreement and intended by the parties.
The court acknowledges its jurisdiction over this matter. Thompson v City of Atlantic City, 190
N.J. 359, 379 (2007) citing Kokkonen v. Guardian Life Ins. Co. of Am.., 511 U.S. 375, 378‐382, 114 S.Ct. 1673,
1675‐1677, 128 L.Ed. 391, 397‐398 makes clear that ¶2 of the Final Consent Judgment (Doc. 36‐1) and ¶6 of
In the Order accompanying this Opinion, this court has granted Prakruti’s request to file a sur‐reply and has considered
Prakruti’s arguments therein.
the Agreement gave this court continuing jurisdiction over the infringement action and the Agreement,
As a form of contract, a settlement agreement and allegations of its breach are governed by
New Jersey contract law. Pascarella v. Bruck, 190 N.J. Super. 118, 124‐125, 462 A.2d 186
(App.Div.1983); Natale v. E. Coast Salon Servs., Inc., Civ. A. No. 13–1254 (NLH), 2016 WL 659722, at *2,
*3 (D.N.J. Feb. 17, 2016); Payer v. Berrones, Civ. A. No. 12–1704 (RMB), 2015 WL 4715953, at *2 (D.N.J.
Aug. 7, 2015); Thorner v. Sony Computer Entm’t Am. LLC, Civ. A. No. 09–1894 (MLC), 2013 WL
1145200, at *4 (D.N.J. Mar. 18, 2013); See Plymouth Mut. Life Ins. Co. v. Illinois Mid–continent Life Ins.
Co., 378 F.2d 389, 391 (3d Cir. 1967).
Whether Prakruti has breached the Agreement depends on an analysis of whether the Current
Product falls within the Agreement’s definition of Accused Product, which reads:
“Accused Product(s)” means any product(s) derived from the Curcuma longa plant that contains
curcuminoids composition/product as enabled, described, and claimed by the ‘415 Patent, including
such Curcuma longa (Turmeric) product offered for sale by Prakruti.
On its face, this definition has two separate prongs: 1) curcuminoid‐containing products claimed
by the ‘415 patent; and 2) such Curcuma longa (turmeric) product offered for sale by Prakruti.
The parties’ submissions have discussed in detail prong 1, whether and how Current Product
avoids/infringes the claims of the ‘415 patent. The parties have not clarified prong 2, and specifically,
whether and how the Current Product is the same as/different from the defined Curcuma longa (Turmeric)
product that had been sold by Prakruti before the execution of the Agreement.
In different terms, what is needed is a demonstration of: (1) how Prakruti Current Product sold to
third parties specifically compares with prong 2 of the Accused Product definition, as intended by the
parties at the execution of the Agreement; (2) how Prakruti’s Current Product falls within or outside the
Accused Product definition, again as intended by the parties at the time of the execution of the
Agreement; and (3) how the limited discovery granted herein has achieved this demonstration.
The court therefore grants plaintiff’s request for discovery of information held by or available to
defendants, limited to demonstrating the above three points and tailored to achieving such
s/ Robert B. Kugler
ROBERT B. KUGLER
United State District Judge
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