SunOpta, Abengoa technology dispute enters arbitration

By Sarah Smith
A U.S. District Court judge has sent SunOpta Inc. and Abengoa Bioenergy to an arbitration panel to sort out their grievances over allegedly pirated technology. Meanwhile, the lawsuit filed by SunOpta under seal in January in a Missouri court has been stayed, pending the arbitration outcome.

Canada-based SunOpta, which has food-processing and biofuels divisions, sued Spanish ethanol giant Abengoa Bioenergy, accusing the defendant of appropriating SunOpta's biomass-to-ethanol technology without compensation, luring away its former process technology manager to induce him to reveal proprietary trade secrets and using replicas of the SunOpta technology in two Abengoa Bioenergy ethanol facilities.

Abengoa Bioenergy denied it had misappropriated the technology. It claimed SunOpta was trying to coerce settlement of the contractual disputes by filing the suit. The companies became involved in 2002 when they entered into negotiations regarding Abengoa Bioenergy'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, according to the Missouri judge's order. 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 that Abengoa Bioenergy received from the U.S. DOE. This agreement was intended to protect SunOpta's right to its existing and developing intellectual property, and trade secrets. In 2005, an Abengoa Bioenergy 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 additional equipment to Spain, and
Abengoa stopped payments on the system.

SunOpta said Abengoa Bioenergy subsequently used identical SunOpta technology in two U.S. ethanol plants and received its DOE grant based on SunOpta's replicated technology. It then filed the complaint and sought an injunction to stop Abengoa Bioenergy from using the technology. Abengoa Bioenergy denied all of the accusations.

Because the two companies included a binding arbitration clause into their contractual agreements, the Missouri 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 nonpublic forum. The Missouri judge will conduct a status conference in September.