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Cyanotech
accusing Aquasearch
of trade theft

Cyanotech carpal tunnel trials ignites stock

By Russ Lynch
Star-Bulletin

The case between two Hawaii biotechnology companies over who stole what from whom will continue with a claim by Cyanotech Corp. that rival Kona microalgae grower Aquasearch Inc. stole Cyanotech's trade secrets.

Cyanotech has already lost on some key points of a federal court lawsuit brought by Aquasearch, which accused Cyanotech of stealing and using its patented technology.

But Cyanotech is pursuing its own claims against Aquasearch over a different set of trade secrets, Cyanotech executives said.

Aquasearch answered that Cyanotech was proved wrong in the recent court decisions and is still wrong.

The two companies, neighbors on the Kona Coast and both in the business of developing food and medicinal additives from microalgae, have been feuding over who owns the rights to technology since a joint venture to develop a new system was broken off in 1994.

U.S. Judge Alan Kay ruled in December that Cyanotech stole patented Aquasearch technology covering a closed-pipe system for breeding microalgae to make astaxanthin, a food additive primarily used to color the flesh of pond-raised salmon.

Last week, Kay refused to reconsider his decision, confirming his ruling that Aquasearch had a valid patent and that Cyanotech improperly took the plans and used them after the breakup of the joint venture.

But some points of the Aquasearch lawsuit have yet to be decided and one of them is a Cyanotech claim that Aquasearch did almost the same thing it had accused Cyanotech of doing.

The claim is that Aquasearch took and used Cyanotech's system for open-pond growth of microalgae.

Milton Yasunaga, an attorney for Aquasearch, said the open-pond technology was in the public domain years before Cyanotech started using it and therefore is open for anyone.

He said the two companies had agreed, when the joint venture broke up, that the closed-pipe technology belonged to Aquasearch and open-pond technology belonged to Cyanotech, but only in regard to technology that Cyanotech could show it had developed itself.

The technology Cyanotech is using was not privately developed, Yasunaga said.

"That's where we disagree," said Ron Scott, Cyanotech executive vice president for finance. "We have developed unique aspects of open-pond technology," he said. Scott said Cyanotech holds to its position that Aquasearch is using that technology.

For Aquasearch, Yasunaga said the Cyanotech claim came late in the case and Cyanotech has yet to produce proof to back up the claim.

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Cyanotech carpal tunnel
trials ignites stock

Star-Bulletin staff

Shares of Cyanotech Corp. closed at a 52-week high in heavy trading today after the company announced it has arranged for independent clinical testing of a product it believes will relieve symptoms of carpal tunnel syndrome.

The stock closed at $3.37-1/2, up $1.37-1/2, after earlier climbing as high as $4.82-1/2. More than 2 million shares were traded on the Nasdaq exchange, well above the daily average volume of 110,325 for the past six months.

Earlier today, the company said some 60 people will be enrolled at a research institution to undergo tests of its trade-mark natural astaxanthin product, BioAstin. The tests will last through the rest of this year. The clinical trial is being coordinated by Imaginutrition, a firm specializing in scientific validation of nutritional products.

Cyanotech and rival Aquasearch Inc. have both expressed high hopes for the human use of the astaxanthin they produce from microalgae grown in Kona ponds.

The product so far has mainly been used as a coloring agent in fish food.

Cyanotech hopes it will work as a diet supplement for humans, to alleviate the pain, numbness and tingling in the hands that result from carpal tunnel syndrome, a frequent cause of work disability.