A lawsuit challenging the University of Minnesota's exclusive licensing deal for its hot-selling SweeTango apple is ending with a victory for the school and the cooperative that markets the new variety nationwide, although more producers will be able to grow the fruit, representatives for both sides told The Associated Press on Monday.
The university awarded exclusive SweeTango rights to Pepin Heights Orchard in Lake City, which organized a cooperative of growers across the northern states and southern Canada to market the variety. More than a dozen other growers, mostly in Minnesota, sued last year, saying they were frozen out of a lucrative deal that unfairly denied them access to an apple developed by their own land-grant university.
The settlement obtained Monday by the AP, which still must be approved by a judge, would maintain the university's licensing agreement with the cooperative. It also would allow more Minnesota orchards to lease the trees that bear SweeTango apples and for the number of trees an orchard can grow to incrementally increase during the next five years.
The university's general counsel, Mark Rotenberg, called the settlement "an unqualified victory for the university and for folks who love SweeTango apples." He said it ensures the apples will be grown, harvested and shipped in ways that protect the quality for consumers.
Rotenberg said the case also reaffirms the school's ability to license a wide variety of intellectual property, such as medical breakthroughs and mining technology.
Dennis Courtier, owner of Pepin Heights Orchard, said his group had long been willing to allow more Minnesota orchards a bigger piece of the pie as long as they would abide by existing restrictions on growing and selling SweeTango apples.
Attorney Lisa Lamm Bachman said the growers who filed the lawsuit were "disappointed but moving forward." She said they made a business decision to settle rather than appeal a judge's February ruling that upheld the university's right to award the exclusive license.
"What's important here, what this lawsuit did do, is it did result in making more trees available for more apple growers throughout the state of Minnesota," Bachman said.
Assuming the judge signs off on the agreement, the lawsuit will be dismissed with prejudice, meaning it can't be filed again, and the growers who filed it will have to pay $25,000 in legal fees to Pepin Heights.
University of Minnesota hoped to build on the phenomenal success of its Honeycrisp apple when it awarded the exclusive rights for SweeTango. The ensuing lawsuit raised questions about how the university allows access to new varieties developed by its fruit breeding program, as well as other intellectual property, but also highlighted the school's need to maximize revenues from its innovations to make up for declining public research funding.
The Honeycrisp earned the university more than $8 million in royalties before its U.S. patent expired and the school is hoping for similar success with the SweeTango.
The SweeTango, in its third year of commercial release, is a cross between the Honeycrisp and another University of Minnesota variety, the Zestar. It's known for crisp juiciness and intense sweet-tart flavor with a note of fall spice.
Courtier said this year's production will be triple last year's, although he declined to disclose figures.
The settlement still requires approval from Hennepin County District Judge Lloyd Zimmerman. Bachman and Rotenberg said they expect the papers will be submitted to the judge for his formal signature this week.
Except for growers who belong to the cooperative, called Next Big Thing, the settlement allows only Minnesota orchards to be licensed to lease the Minneiska trees that grow the SweeTango-trademarked apples. The settlement raises the maximum number of Minneiska trees an orchard can grow from 1,000 in steps to 3,000 by 2017, with the total number of trees allowed them rising from 50,000 to 150,000 statewide.
Orchards outside the cooperative still will be limited to selling the apples at their own stands, at farmers markets and to local stores. But they still won't be allowed to pool crops to amass quantities large enough to interest wholesalers, which had been a key goal of the lawsuit.
The university and Next Big Thing say the restrictions are necessary to protect the SweeTango brand. Rotenberg noted that anyone can now grow Honeycrisp, which sometimes results in inferior fruit grown in unsuitable climates or soils reaching the market, hurting its public image. The licensing rules ensure the SweeTango "will be better managed and of uniformly higher quality," he said.