Arbitrator awards $50 million to coffee company in patent dispute

Cooley LLP secured a multi-million-dollar arbitration award for a coffee company in a patent dispute with one of its co-founders.

The coffee extraction company, Javo Beverage Inc. claimed co-founder Stephen Corey violated his contractual obligations and used and disclosed Javo's confidential and proprietary information after he left to start a similar business.

Retired U.S. Magistrate Judge Jay C. Gandhi of JAMS awarded Javo $50 million on Oct. 28.

Corey patented specific extraction processes when he started Coffee Extraction Ventures Inc. Javo claimed it owned the processes and that Corey violated the contract he signed. Corey denied the charge, saying that the processes were already in the public domain.

Matters were further complicated when Javo, backed by a private equity fund, tried to sell the business. According to the arbitration document, there were interested buyers willing to pay more than $100 million for the company but the sales fell through when the patent dispute came to light.

Gandhi wrote that the damages are substantial, saying that Corey's legal stumbling "is coupled with poor timing and circumstances, but sufficient causation and approximation."

"[I]n text messages, Corey specifically sought out the dimensions of Javo's extraction vessels from its vendor," the order stated. "On the other hand, Corey possessed none to limited information on the development and testing of his supposedly 'new' technology."

Gandhi also awarded Javo full ownership of the patents. Cooley LLP represented Javo. Corey was represented by Garcia Rainey Blank & Bowerbank LLP.