U.S. ITC ends 'Botox brawl' in Medytox's favor, but reduces penalty

After a two-year investigation, the U.S. International Trade Commission has made a final determination in favor of Medytox in its high-profile “Botox brawl” with Daewoong Pharmaceutical.

The ruling is not a complete victory for Medytox, however, as Daewoong Pharmaceutical was ordered to halt exports to the United States for a duration of 21 months, instead of the 10 years suggested in the U.S. ITC’s initial determination in July.

The two companies are among Korea’s top three manufacturers of botulinum toxin. Popularly known by Dublin-based firm Allergan’s brand name, Botox, the substance paralyzes muscles and is frequently used by beauty surgeons to reduce wrinkles.

In January 2019, Medytox reported Daewoong Pharmaceutical to the U.S. government body alleging the smaller rival had misappropriated trade secrets, namely its botulinum toxin strains and manufacturing processes.

The ITC said in a Wednesday statement that it “finds that there is a violation of section 337,” which refers to "allegations of patent infringement [or] trademark infringement by imported goods."

But while the government body affirmed Daewoong’s misappropriation of Medytox’s manufacturing process, it “determined to reverse the [final initial determination]’s finding that a trade secret exists with respect to Medytox’s bacterial strain.”

According to both companies, the latter was the reason why Daewoong’s export ban was reduced to 21 months. The measure takes effect on the day of the final determination. The order was delivered immediately to the U.S. president who has 60 days to veto the decision.

Daewoong Pharmaceutical lauded the ITC’s ruling as a “virtual win,” saying the temporary measure will have minimal effect on its current business.

“Even if Nabota [Daewoong’s botulinum toxin brand] is suspended for sale in the United States, the market accounts for less than 2 percent of the company’s annual revenue,” Daewoong said in a Thursday statement. In the United States, Nabota is marketed under the name Jeuveau, and is also sold across Europe, Canada, Asia and South America.

The company said it will file an injunction against the 21-month ban and take the case to the U.S. Court of Appeals for the Federal Circuit, maintaining its original claim that there was no theft of trade secrets at all. Over the years, Daewoong has argued that Medytox’s manufacturing process was not specific to its rival but technology that had been disclosed in medical journals since the 1940s.

“The ITC’s ruling on misappropriation of manufacturing processes is a clear misjudgment,” the company said in a statement. “We will employ all legal measures to clarify the truth and will continue to expand Nabota’s global business, regardless of the ITC’s conclusion.”

On the other end, Medytox welcomed the U.S. ITC’s decision, saying it proved Daewoong’s guilt in stealing strains and manufacturing processes. The strains may not have been acknowledged as trade secrets, but the ruling still defies Daewoong’s claim to have discovered the strains on its own, it said.

“Now that the ruling proved Daewoong’s theft, the company should feel morally responsible for the false claims it gave to regulators and clients around the world,” Medytox said in a Thursday statement.

“As Daewoong’s crime was affirmed at the U.S. ITC court, we are confident the domestic court and prosecutors will reach the same conclusion.”

In 2016 shortly after Nabota’s release, Medytox filed lawsuits against Daewoong in Korea. Civil and criminal suits are still ongoing between the two companies.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]