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Litigation
9 Months Ended
Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]  
Litigation

Note 3 – Litigation

 

The Company is engaged in various legal actions, claims and proceedings arising in the normal course of business, including claims related to breach of contracts, product liabilities and intellectual property matters resulting from the Company’s business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The following summaries highlight the current status of certain material commercial litigation in which the Company is involved.

 

D. Tawnsaura brought a class action complaint against the Company and 56 other retailers/distributors for infringement of a patented ingredient “Citrulline Malate”. This ingredient is utilized by the Company in certain of its product formulations. The court ordered the plaintiffs to resubmit their complaint and make it legally sufficient, which occurred on October 31, 2012. As result of two developments in this case; 1) the Court’s construction of the term “L-citrulline” (in the 107 patent) to include citrulline malate and 2) the defendants’ new assertion of “inequitable conduct stemming from the inventor’s withholding important prior art and other relevant information from disclosure to the PTO, the plaintiff has requested to the PTO an “ex parte reexamination” of the 107 patent. The Company and many of the other defendants are contesting the alleged patent position of the plaintiff; accordingly, all parties in this matter have filed a motion to stay the entire case until the PTO has ruled on the plaintiff’s request. The Company believes that there is a reasonable possibility, as defined by FASB ASC 450-20, of an unfavorable outcome. However, the range of any possible loss cannot be reasonably estimated as of the date of the financial statements.

 

Thermolife International, LLC brought a complaint against the Company and 44 other retailers/distributors for patent infringement for the use of certain ingredients in products to produce, improve, boost, and to enhance physical performance on April 16, 2013. These ingredients are utilized by the Company in certain of its product formulations. The Company and many of the other defendants are contesting the alleged patent position of the plaintiff. During September a settlement was reached between Thermolife and the company and a patent utilization arrangement was reached and the suit was dismissed.

 

On May 17, 2013 the Company received a demand letter from the Environmental Research Corporation requesting substantiation of compliance with the State of California’s Proposition 65 regulations for five of its products. In October, while the company was awaiting the results of the compliance testing, ERC contacted the company again requesting settlement to their demand letter. The Company is in communication with ERC and expects prompt resolution to this issue. The Company believes that there is a reasonable possibility, as defined by FASB ASC 450-20, of an unfavorable outcome. However, the range of any possible loss cannot be reasonably estimated as of the date of the financial statements.