Business competitor improperly transferred VSL#3® bacteria strains, court rules
ROME–(BUSINESS WIRE)–In the latest chapter in the ongoing business dispute between Actial Farmaceutica (the parent company of VSL Pharmaceutical or “VSL”) and its former CEO (now business competitor) Claudio De Simone, the Court of Rome has concluded that De Simone improperly transferred to himself bacterial strain accounts containing the eight bacterial strains included in the VSL#3® probiotic. On June 18, 2019, the Court of Rome issued a decision, civil case (no. 32618), confirming that Actial is and has been the rightful owner of eight DSMZ accounts containing the eight bacterial strains of VSL#3®.
In April 2011, Actial (formerly known as CD Investments S.r.l. or “CDI”) deposited and registered the constituent eight bacterial strains of VSL#3® with Leibniz Institute DSMZ-German Collection of Microorganisms and Cell Cultures GmbH located in Braunschweig, Germany (“DSMZ”). Each of the eight the bacterial strains were deposited into a separate account and assigned a specific DSM code.
Shortly before abruptly resigning as VSL’s Chairman and CEO, De Simone carefully orchestrated his departure by, among other things, plotting to interfere with VSL’s continuing supply of VSL#3® in the hope that he and his new company ExeGi Pharma LLC (“ExeGi”) would become the sole supplier of a competing high-potency probiotic product, Visbiome® in the United States. In furtherance of his plan, De Simone caused his friend and then-chairman of the CDI board, Carmelo Luigi Mento, to make an invalid transfer ownership of the DSMZ accounts from CDI to De Simone. Since 2016, the Visbiome® product packaging and marketing materials have prominently displayed and made reference to Actial’s DSM codes, improperly trading on property rights and assets that rightfully belonged to Actial.
After learning about De Simone’s improper transfer of the DSMZ accounts, Actial initiated a lawsuit in the Court of Rome to regain ownership, possession, and control of those accounts. On June 18, 2019, the court issued its decision finding that De Simone’s transfer of the strains and DSMZ accounts was invalid.
“This court decision provides not only vindication for Actial, but also reinforces the fact that the improper and self-serving tactics of Claudio De Simone were unlawful and will not be tolerated,” said Luca Guarna, CEO of Actial Farmaceutica. “We are grateful that the Court of Rome, like many other courts around the world, have recognized that De Simone’s conduct violated the rights of Actial.”
This ongoing business dispute has played out in other courts around the world. There have been several other important related decisions in favor of VSL#3® and against De Simone and his affiliated companies:
- On June 13, 2019, the Higher Regional Court in Hamburg, Germany, ruled in favor of VSL#3® European distributor Ferring Arzneimittel GmbH in a dispute with Microbiota GmbH, a distributor of a De Simone product, involving VSL#3® product statements and competition law issues. (Official file numbers: 3 U 143/18; 3 U 37/18; and 416 HKO 51/18.)
- On March 6, 2019, the Seoul Central District Court in South Korea found that companies selling De Simone products (Namu-Mulsan Co. and Bio-Eleven) violated VSL#3® intellectual property rights by using the trademark in connection to a “De Simone” product.
- On September 22, 2017, the Court of Lugano in Switzerland issued a preliminary injunction (file no: 10.2017.28) that prohibits Mendes SA, a company that sells De Simone products, from contacting Actial’s business partners and scientific advisors in an attempt to influence their thoughts or work regarding VSL#3® clinical studies. In an earlier court decision in Switzerland, the Court of Canton Ticino issued an order on December 23, 2014, that prohibits Mendes SA from use of the VSL#3® trademark.
- On December 2016, a criminal complaint was filed by CD Pharma India against former business directors and employees Claudio De Simone, Kanwaldeep Singh Chadha, Partha Dagupta, and Adiya Sahu. In response to the complaint, the Delhi Police have opened a First Information Report accusing the aforementioned people of fraud, forgery, and cheating.
“VSL#3® is available for purchase in the U.S. and many markets globally, and we remain committed to making the VSL#3® probiotic available to our dedicated customers and healthcare providers notwithstanding De Simone and ExeGi’s aggressive efforts to sell their competing, generic probiotic product,” Guarna stated.
Contacts
Joseph Weber, (202) 973-5342, jweber@levick.com