Jury: Michael Foods Infringed on Patents, Must Pay $5.8M

The company said that it is “surprised and disappointed with the jury’s verdict,” and it is considering an appeal.

Michael Foods, Inc., has been ordered to pay millions of dollars in damages after a jury found that it infringed on the patents of Lansing, Illinois-based National Pasteurized Eggs, Inc. (NPE).

In 2010, NPE sued Minnetonka-based Michael Foods in U.S. District Court in Wisconsin, alleging that Michael Foods and several of its subsidiaries—including Abbotsford Farms, Inc., and Crystal Farms Refrigerated Distribution Company, Inc.—infringed on NPE’s patents pertaining to pasteurized shell egg production.

NPE markets its pasteurized eggs under the Davidson Safest Choice brand. The company said in its lawsuit that it “spent significant effort and investment” educating consumers about the benefits of pasteurized eggs, and its patented pasteurization process helps eliminate the risk of Salmonella, even when eggs aren’t fully cooked. The company also claimed that its distinctive red “P” logo indicates to consumers that the eggs have been pasteurized by NPE.

NPE alleged that Michael Foods sold pasteurized eggs using a similar red “P” logo. Michael Foods’ eggs were of “substantially inferior quality” and sold at a lower price, causing confusion among consumers, NPE wrote in its lawsuit. Michael Foods also adjusted its pasteurization process in an attempt to produce pasteurized eggs “with better functionality,” a move that infringed on NPE’s patents, the company alleged.

The jury found that Michael Foods had in fact infringed on three of NPE’s patents and awarded NPE $5.8 million in damages, according to court documents filed Monday. The jury also determined that three of Michael Foods’ patents were invalid.

Michael Foods President and CEO James Dwyer, Jr., said in a statement that the company is “surprised and disappointed with the jury’s verdict.”

“Certainly, we would not have made minor changes to our processing parameters if we had believed that it would infringe [on] any patents,” Dwyer said.

Michael Foods said in a news release that it was the first company to produce and market pasteurized shell eggs. The recent verdict won’t affect its ability to continue selling those eggs, but Michael Foods will return to a processing system that it used prior to NPE’s lawsuit, the company said.

Michael Foods, which was represented by the Minneapolis office of Faegre Baker Daniels LLP, also said that it is mulling its legal options, including an appeal.

Michael Foods—which is among Minnesota’s 15-largest private companies based on revenue—processes and distributes eggs, cheese, potatoes, and other products. Its brands include Crystal Farms, Papetti’s, and Simply Potatoes, among others.