A Columbia biotechnology company yesterday filed a $300 million federal lawsuit accusing agribusiness giant Archer Daniels Midland Inc. of stealing its secret formula for making a natural compound that turns pale-fleshed farm-raised salmon bright pink.
In the lawsuit, Igene Biotechnology Inc. said a former employee, who was arrested last month on theft charges, copied hundreds of pages of the company's trade secrets and gave the documents to ADM.
Igene's secrets are worth millions, the lawsuit contends, because the company has developed a new, cheaper method of producing a chemical needed to give the flesh of farm-raised salmon the same pink color as wild fish.
Wild salmon have reddish meat because they feed on tiny pink shrimplike crustaceans called krill. Salmon raised in underwater farms and fed artificial food develop pale flesh -- which consumer's don't recognize and won't buy -- unless their diet contains the chemical that produces the color.
An ADM official said the Decatur, Ill., company could not comment on the lawsuit because it had not yet received the document, which was filed Monday in U.S. District Court in Baltimore.
Howard County police said former Igene employee Ali Nikmehr of Owings Mills, Md., was arrested July 16 on two charges of theft after Igene officials alleged that Nikmehr had copied secret research and business records while working nights in the company's laboratory.
Nikmehr did not respond to two telephone messages requesting comment.
A police spokesperson said officers searched Nikmehr's apartment the day he was arrested and seized several confidential Igene documents, including records from the office of Igene President Stephen F. Hiu.
Police found some Igene documents in stamped envelopes bearing ADM address labels, said Igene attorney Kristan Peters-Hamlin of the law firm McGuire Woods Battle & Boothe. Police also found correspondence between Nikmehr and Charles Abbas, director of an ADM research laboratory. Abbas could not be reached for comment yesterday.
Peters-Hamlin said she interviewed Nikmehr before he was arrested and, "He said that Abbas wanted him to send him Igene's confidential business information and he sent the documents because he wanted a job at ADM."
According to the lawsuit, Igene has been working since the early 1980s to develop a more efficient method of producing the chemical needed to make farm-raised salmon pink. Called "astraxanthin," the compound is extracted from a yeast.
Igene is a tiny company, with fewer than a dozen employees. It has lost so much money pursuing the elusive salmon-coloring chemical that its stock now sells for only 13 cents a share.
But Igene not only has discovered how to make a stronger form of the compound, it also has found a way to make salmon absorb it more readily. In July, the company signed a contract with a Mexican chemical company, Fermic SA, to begin full-scale production of the product.
Previously, Igene negotiated for production of the chemical by ADM, one of the nation's largest agribusinesses with sales last year of $13 billion.
The talks with ADM ran into a snag in July 1995 when the Justice Department disclosed that it was conducting a criminal antitrust investigation of ADM's bio-products division. Last year the company pleaded guilty to two criminal charges and paid a $100 million fine for allegedly conspiring to control the market for animal feed additives.
The Igene lawsuit said the company was dealing with Mark E. Whitacre, an ADM executive who became a government informer and later was charged with fraud.
Igene contends that ADM reneged on a contract to use the company's method for producing the salmon food supplement. The lawsuit filed this week seeks $450,000 in damages for breach of contract over that dispute.
The big damages being sought in the case, however, are for the alleged theft of trade secrets. Igene contends that its process is worth as much as $100 million, and contends it is entitled to triple damages under federal law.
The lawsuit said that Igene officials became suspicious that company records were being leaked when an ADM official came up with copies of documents the company had not given him.
A few weeks ago, the company said, Igene's president left several documents spread out on his desk before quitting for the day. When he returned the next morning, the papers were all neatly stacked.
At that point, Igene officials called the police. Staff writer Amy Klein contributed to this report.