Tate left sour as US allows China to rip off Splenda

The setback for Tate, riven by profits warnings over the last two years, saw the shares fall further, off 9p to 280p and will once more pile the pressure on beleaguered chief executive Iain Ferguson.

Splenda, used to sweeten fizzy drinks such as Coca-Cola and Pepsi, is meant to secure Tate's future, made from the company's creation of sucralose and responsible for around a fifth of the group's profits.

But Tate's protection of its wonder sugar has been under attack by alleged patent pirates, Chinese manufacturers using the technology to create their own artificial sweeteners.

Attempts to stop the Chinese copycats has, however, spectacularly backfired.

Last year, an attempt to stop production at four Chinese manufacturers and halt sales through 18 distributors, in a case put before the International Trade Commission in Washington DC failed.

Tate had accused the Chinese of stealing Tate's technology in the manufacture of sucralose and infringing Tate's "multi-layered patent portfolio" aimed at protecting its interests.

It was further warned the Chinese copycats were attempting to flood the US market with low-quality sucralose.

That case was thrown out and Tate, which has already spent well in excess of GBP10 million in legal costs, was told by the ITC today that its appeal also failed.

Today's ruling fully upheld the ITC's previous decision and further ruled the latest judgment is a "binding and final determination".

Analysts have warned that failure in the case could see Tate's patent under more widespread attack.

It is also argued that Tate's profit margins from Splenda which have been running at as much as 45 percent will be slashed.

The Chinese manufacturers say they have made significant investment in their own research and development and manufacturing processes and are merely reacting to rising demand for non-natural sugar sweeteners.

Karl Kramer, head of Tate & Lyle's sucralose business said Tate had not yet ruled out appealing further through the US courts but that in any case the company is still at the forefront of the sweeteners market. Kramer said: "While this development is disappointing, intellectual property is just one of the many components which define Tate & Lyle's formidable competitive advantage in the global sucralose business.

"Our manufacturing facilities operate at a level of cost, efficiency and environmental stewardship surpassed by none, producing sucralose which meets the highest standards of quality, purity and hygiene.

"Our business is built upon long-standing relationships with some of the world's leading food, beverage and pharmaceutical manufacturers, as well as the established Splenda brand which is renowned as a high quality, reliable and trusted product in a number of markets."

BY THE NUMBERS

--65 percent: fall in the Tate & Lyle share price over 30 months

--45 percent: profit margins enjoyed on splenda

--20 percent: proportion of Tate & Lyle's profits from Splenda

To see more of the Evening Standard, or to subscribe to the newspaper, go to
http://www.thisislondon.co.uk. Copyright (c) 2009, Evening Standard, London
Distributed by McClatchy-Tribune Information Services. For reprints, email
tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax
to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave.,
Suite 303, Glenview, IL 60025, USA.

For full details on (TATYY) TATYY. (TATYY) has Short Term PowerRatings at TradingMarkets. Details on (TATYY) Short Term PowerRatings is available at This Link.