May 16, 2005

U.S. court rules in favour of Zenon in patent suit

In a decision handed down on May 5, the United States District Court for the Southern District of California ruled that Zenon Environmental's U.S. Patent No 6,620,319 (termed the '319 patent) continues to be presumed valid. The '319 patent, relating to membrane module construction, was subject of a patent infringement suit brought by Zenon against U.S. Filter in October 2003. The court's ruling in favour of Zenon strongly refutes all of U.S. Filter's contentions concerning validity of the patent.

Zenon's action claimed that U.S. Filter was infringing upon three Zenon-owned patents relating to water treatment, of which the '319 patent was the most important. In the course of the proceedings, U.S. Filter claimed, among other things, that the '319 patent was invalid. This allegation, if upheld by the court, would have affected other patents in the same patent family. The parties agreed to a bench trial on the issue of the validity of the '319 patent. The trial took place in San Diego in late April.

"The decision clears perhaps the single most significant hurdle in our path toward proving our claims and our request for an injunction to stop infringement by U.S. Filter. We respect the intellectual property rights of others and expect our principles to be reciprocated. We have a responsibility to our shareholders to press forward and prevent continued misappropriation of our rights. Furthermore, the court's decision is extremely clear and well reasoned," stated Zenon CEO Andrew Benedek.

The infringement of the '319 patent is no longer an immediate issue due to an adverse ruling made in November 2004, which Zenon intends to appeal). In January of this year, however, the company filed a further patent infringement action against U.S. Filter relating to its U.S. Patent No 6,682,652 (the '652 patent) which is part of the same family as the '319 patent.

The '652 patent is now the primary focus of Zenon's infringement action and this month's ruling by the U.S. court significantly strengthens the merits of that case, says the company. A full trial on the '652 patent is expected in 2006. Zenon was represented by DLA Piper Rudnick Gray Cary US LLP.

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