$6 Million Claim for Salmon Hatching Fluid

MANHATTAN (CN) - A skin care company demands $6 million from the Norwegian supplier of its prime ingredient - salmon hatching fluid - claiming the hatchery breached an exclusivity agreement by marketing its own products.

Restorsea sued Aqua Bio Technology, in Federal Court.

New York City-based Restorsea claims the skin-care benefits of salmon hatching fluid - a naturally occurring liquid that helps baby salmon escape from their eggs - were discovered by its CEO, Patricia Pao, when she toured Norway's largest salmon hatchery, Aqua Bio Technology ASA, during a 2010 business trip.

During the tour, Restorsea claims, Pao "noticed that the worker's hands, which were submerged in the hatchery's waters all day, appeared more youthful than their aged faces. This piqued Ms. Pa interest in the potential anti-aging capabilities of the enzyme found in those hatchery waters. ...

"As it turned out, the explanation for this phenomenon was in the hatching water itself. At birth, newly spawned salmon release a unique enzyme that dissolves the shell of their egg and allows them to break out of it. That enzyme has two components: a protein and an exfoliant. The protein attaches itself to dead skin cells (in this case, the salmon's egg shell) and acts as a marker for the exfoliant. The exfoliant then dissolves the dead skin marked by the protein. Once the marked dead skin cells of the egg shell are dissolved, the exfoliant turns itself off without injuring the newborn salmon, which can then swim away unharmed.

"Realizing that exposure to this enzyme is what made the hatchery's workers' skin look so much younger, Ms. Pao immediately saw the potential for translating the enzyme's unique properties to skincare products. A skincare product based on this enzyme would selectively exfoliate only dead skin cells while allowing live cells to flourish. In doing so, it would provide the same benefits as other leading anti-aging products, but without the harsh side effects that many of those products cause."

Aqua Bio Technology called its product Zonase X, but in March 2011 renamed it Aquabeautine XL "in a bid to reflect its newly proven anti-ageing qualities," according to Cosmetic Design - Europe magazine.

On its website and in its marketing materials, the defendant hatchery says, "The effects of Aquabeautine XL on human skin were discovered by coincidence. Salmon hatchery workers reported that their hands became soft after sorting salmon eggs despite the prolonged exposure to cold water. This piqued the interest of scientists at the University of Bergen and led to the discovery of unique proteases and proteins released in surrounding water when salmon eggs hatch."

It continues: "Aquabeautine XL is a patented protein solution derived from the hatching water of salmon roe or 'red caviar' as it is otherwise known."

In 2012, Restorsea and Aqua Bio Technology entered into two agreements: a Supply and License Agreement, and an Exclusivity Agreement, and soon Pao's company was selling two products created from the enzyme - Rejuvenating Day Cream and Revitalizing Eye Cream. Restorsea claims it has paid ABT $5.9 million for the exclusive rights to the fluid.

"Notwithstanding this express contractual obligation, ABT actively markets and sells to third parties two other products - which it calls 'Beauty Propelline' and 'Dermaclarine' - that, like Aquabeautine XL, are derived from the hatching water of Norwegian salmon," Restorsea says in the lawsuit. "On its website, ABT describes both Beauty Propelline and Dermaclarine as part of Bat's patented skin care actives extracted from Norwegian fresh water after salmons have hatched.'"

Restorsea claims these products violate the exclusivity agreement because - regardless of what they are named - they contain sufficient levels of the active ingredients found in Aquabeautine XL to be "within the ambit of the Exclusivity Agreement."

"After Restore's efforts to bring these breaches to Bat's attention fell on deaf ears, Restorsea commenced this action in order to hold ABT to its promises under the Exclusivity Agreement and to recover millions of dollars in damages it has suffered as a result of Bat's breaches to date," the complaint states.

ABT says on its website that it obtained a copy of Restore's complaint on Monday but had not yet been served.

"ABT believes the complaint is procedurally and substantively deficient and it intends to vigorously defend against Restore's allegations," the statement says.

Restorsea seeks compensatory damages and an order compelling ABT to honor its contractual obligations under the Exclusivity Agreement.

Restorsea is represented by David Flugman with Kirkland & Ellis in New York City.

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