Plant-based Meat Companies Feud Over Fermentation Tech

Plant-based meat makers The Better Meat Co. and Meati Foods (formally Emergy Inc.) are set to face off in court, with the two companies suing each other last month in the U.S. District Court of Eastern California over allegations of stealing confidential trade secrets and “tortious interference.”

What happened?

The dispute began in July 2021 when Meati learned Better Meat had received patents for fermentation technology used to make plant-based meat alternatives, which it claims was developed using stolen and confidential research findings. When Better Meat began soliciting funds for its Series A round later that year, Meati sent the company a letter threatening it with litigation. Better Meat then responded by filing a suit against Meati in December, alleging it had interfered in its capital raise by creating false accusations about its patented process.

Meati fought back ten days later, filing an 81-page complaint detailing The Better Meat Company’s co-founder Augustus (Gus) Patillo’s employment as a junior lab technician under the direction of Meati co-founders Drs. Tyler Huggins and Justin Whiteley, which began in May 2017. According to the complaint, Patillo signed an NDA prior to conducting any research and later received a fellowship to continue working under Drs. Huggins and Whiteley in the U.S. Department of Energy’s UChicago Argonne National Laboratory.

However, Better Meat alleges in its complaint that Patillo worked in the Argonne lab, but was not conducting research in regard to alternative meat proteins during that time under the direction of Drs. Huggins and Whiteley. Meati provided the court with a copy of the NDA along with emails between the two parties regarding Patillo’s employment and copies of dated research notes.

Meati alleges that Patillo, during his year-long stint working in the lab, conducted experiments that document the exact fermentation process – down to the specific particle sizes and water weights – later patented as Better Meat’s alt-protein product, Rhiza. The complaint states that Patillo “abruptly” ended his fellowship in May 2018, the same day Drs. Huggins and Whiteley denied his request to be named as a co-founder and one-third shareholder of Emergy Inc, which reorganized as Meati Foods in 2019.

Patillo went on to join Better Meat that same month and by early 2021, Better Meat’s co-founders launched Rhiza. In a LinkedIn post, Patillo stated that the company had been operating in “stealth mode” over the past three years to develop the product. Patillo had filed several patents naming himself as the inventor of the technology in September 2019; those patents were granted in July 2021.

What does this mean for the companies?

Relationships have been strained after lead investors in both companies became involved in the suit, according to the respective complaints, and future financing for the companies will likely be on hold while litigation proceeds. Only 13 minutes after Meati issued its formal letter threatening litigation, Paul Vronsky, a partner at BOND Capital and a lead investor in Meati, sent the following email to the unnamed, lead investor in Hormel-backed, Better Meat’s Series A round:

“I wanted to give you a heads up that one of our portfolio companies, Meati, is in a pretty significant trade secret and patent dispute with a company you might be evaluating, The Better Meat Co. I don’t know really more than that but as a matter of friendship and courtesy, I thought I would reach out and let you know. I’m happy to connect with your counsel if that is helpful”

The email, which was provided in Better Meat’s complaint, is the company’s key piece of evidence regarding the fundraising interference. Meati has countered with its own claims of alleged interference, arguing that the lawsuit filed by Better Meat has damaged its relationship with current and potential investors.

Additionally, the anticipated upcoming commercial launch of both their respective products may be delayed due to the financing disruptions caused by the legal dispute.

Meati closed a $50 million Series B round in July, bringing its total funding to $127 million to-date, and at the time of the announcement said it would use the additional funds to scale production and launch its products nationwide in 2022. The company could not be reached for comment at the time of publication.

The Better Meat Co., which opened its production facility in Sacramento last spring, told the Sacramento Business Journal in October that demand, in anticipation of its national launch, had already outpaced capacity and it was looking to build a larger facility. The company, which has previously raised $9.7 million in seed funding, began seeking investment a month later.

What’s next?

As of publication time, pretrial hearings regarding the complaint filed by Meati are scheduled to begin May 9, 2022. No significant action has occurred on behalf of the Better Meat complaint since its initial filing.

As the case proceeds, Meati is demanding that Better Meat and Patillo name Drs. Huggins and Whiteley as the exclusive inventors of the technology, according to the lawsuit. The company has also asked that the patent be reassigned to Emergy Inc. and that Better Meat compensate the company for damages caused by “actual loss and unjust enrichment.”

While Better Meat is also seeking compensation for damages caused by the dispute, the company is also asking that Meati acknowledge Patillo and Better Meat as the owner and inventor of the technology in dispute. According to a statement from a Better Meat spokesperson, the company’s stance has not changed following Meati’s subsequent filing, concluding that “we’re working hard to build a better future for our planet and will remain focused on doing just that.”