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A company that holds patents on the freeze-dried açai berry is suing MonaVie, saying the nutritional fruit drink maker owes it tens of millions of dollars in royalties and that it has terminated their licensing agreement.
K2A LLC was formed by Alex Schauss and Kenneth Murdock, who claim in the lawsuit filed in U.S. District Court in Salt Lake City that MonAvie has failed to honor agreements to give them partial ownership of the company and hasn't paid 20 percent of revenue related to their patents.
Because of the alleged violations, K2A terminated their licensing agreement on Oct. 18, though MonaVie continues to sell products that infringe on the patents, the lawsuit says.
A MonaVie attorney said Friday the company is confident the dispute will be resolved in its favor.
"The same license agreement that K2A now claims to be breached, they said (in an official agreement) was in good standing two years into our partnership," said Graden Jackson, MonaVie general counsel, in a statement. "Since that time, there has been no change in how we have managed the relationship."
MonaVie, headquartered in South Jordan, has seen more than $2 billion worth of revenue since its signed the license agreement in July of 2006, the complaint says.
The lawsuit says Schauss and Murdock developed a method for freeze-drying the açai and related jucara berries of Brazil into a mixture with a high antioxidant value. In 2004, they met with owners of a new company called Monarch Health Sciences who were looking for a product to launch.
Monarch became MonaVie with a license for the K2A patents and a promise of 5 percent ownership and then 20 percent of revenue related to its multi-level marketing business that uses a network of independent distributors to whom it sells its products, principally fruit juice.
MonaVie also has falsely claimed its founders developed the patents, harming K2A's ability to license them to others, the lawsuit says.
MonaVie has not made any royalty payments since June of 2009 and not delivered the promised company shares, K2A claims, so it is asking the court to declare the licensing agreement has been terminated and to award it at least 10 percent of MonaVie's gross sales, plus triple damages.