- Lawsuit claims Sexual Health Product Company Defrauded by Reckitt Benckiser for Over $150 million
LOS ANGELES, March 08, 2017 (GLOBE NEWSWIRE) -- Absorption Pharmaceuticals has filed a lawsuit in Federal District Court seeking over $150 million in damages and a halt to sales of K-Y Duration. The lawsuit is against British conglomerate Reckitt Benckiser Group Plc (LON:RB), the maker of household products such as French’s Mustard, Lysol, Mucinex, Air Wick, Woolite and K-Y.
The 32-page complaint alleges Reckitt Benckiser approached Absorption Pharmaceuticals in 2014 and engaged in a sham acquisition and ‘due diligence’ process to steal its proprietary information. Reckitt Benckiser then used the information it stole from Absorption to bring to market a product called K-Y Duration, which is a competitor to Absorption Pharmaceuticals’ popular product, Promescent®. Both Promescent® and Duration are sexual health sprays designed to help men who suffer from premature ejaculation, or PE. Promescent® was developed by prominent California urologist Dr. Ron Gilbert and continued to be marketed after his tragic death in 2013.
“This is a case about theft and fraud. For nearly two years, Reckitt Benckiser—part of a large and global conglomerate that owns such household brands as Lysol, Mucinex, Air Wick, Woolite, Durex, and K-Y—extracted a wealth of confidential sales, marketing, product, and manufacturing information about Absorption’s highly successful premature ejaculation (“PE”) product—Promescent®—under the guise that Reckitt Benckiser was considering acquiring Absorption. . . . Nonetheless, in September of 2016, Reckitt Benckiser launched its own competing PE product called Duration, and misappropriated the confidential sales, marketing, product, and manufacturing information that Absorption had shared. After developing its own product using Absorption’s confidential and proprietary information, Reckitt Benckiser broke off negotiations to purchase Absorption,” according to the Complaint.
“Reckitt Benckiser approached our company in 2014, expressing an interest in buying Absorption Pharmaceuticals,” said Jeff Abraham, Absorption Pharmaceuticals’ CEO who was also close friend and business partner to Dr. Gilbert. “We already had an exciting offer on the table valued at approximately $150 million for our business, but Reckitt Benckiser asked us to hold off because of its stated desire to acquire Absorption. At Reckitt Benckiser’s request, we shared our proprietary sales, marketing, and technical data as part of ‘due-diligence’ for Reckitt Benckiser’s supposed acquisition. We were shocked when we later learned the whole thing was a sham. As alleged in detail in our complaint, Reckitt Benckiser had never intended to buy our company. Instead, they intended to steal our proprietary information so they could launch a competing product using our marketing strategy and other trade secrets. Even worse, they have since set about to destroy Promescent® as a competitor by having our listing on Amazon.com hidden from the general public and stealing shelf space at key retailers.”
The Complaint alleges that when Reckitt Benckiser first approached Absorption Pharmaceuticals in 2014, Reckitt Benckiser stated it did not believe that a lidocaine-based PE spray could work or that the market for a PE spray was large enough to justify entry. Reckitt Benckiser had previously marketed a PE spray under its Durex label that was a failure and had written off the PE market.
The Complaint quotes an email from a Reckitt Benckiser executive who had tried samples of Promescent® provided by Absorption, as did other “very senior” colleagues. “IT REALLY WORKS,” the executive exclaimed in the email. The Complaint further alleges, also quoting from a Reckitt Benckiser executive’s email, that having satisfied itself of the efficacy of the product, Reckitt Benckiser identified assessing the potential size of the market as the “core exercise we need to run.”
According to the Complaint, Absorption proceeded to provide Reckitt Benckiser with confidential customer sales information, purchasing patterns, and other data that confirmed the enormous size of the market. After extracting these and other valuable trade secrets in an extended sham ‘due diligence’ process, Reckitt Benckiser broke off negotiations to purchase Absorption, claiming that an outside market study commissioned by Reckitt Benckiser showed the market was too small to justify entry.
Months later, Reckitt Benckiser launched its competing Duration product on an unprecedented scale, with a marketing campaign that was the largest in the history of its K-Y line of products.
This is not the first-time Reckitt Benckiser has come under scrutiny for its behavior. In 2016, 41 states (including California) and the District of Columbia, sued Reckitt Benckiser for fabricating safety claims to maintain its monopoly over Suboxone, a treatment for heroin and opioid addiction that has accounted for as much as 20-percent of Reckitt Benckiser’s global profits in recent years. The Colorado Attorney General, who is one of dozens of state Attorneys General suing Reckitt Benckiser in the lawsuit, accused the company of, “shamelessly preying on patients in need of help” and decried, “their unconscionable tactics.”
“This lawsuit is as much about ensuring Ron’s remarkable legacy, as it is about making sure that they never do this to anyone else,” said Abraham. “Giant companies like Reckitt Benckiser need to learn that they can’t swindle small companies out of their valuable proprietary information with false promises and lies.”
Among other relief, the Complaint seeks “compensatory damages in excess of $150 million, exemplary damages, attorneys’ fees, and an injunction that enjoins Reckitt Benckiser from, among other things, selling, distributing, marketing or otherwise commercially using its Duration product.”
The case was filed in federal District Court in Nevada, where Absorption Pharmaceuticals is headquartered. [Docket 2:17-cv-00513] To view a copy of the complaint, click here.
Editor’s note: Dr. Gilbert, 52, was shot and killed in a tragic case of mistaken identity on January 28, 2013, leaving behind a wife and two young sons. Elizabeth Gilbert remains a part owner of Absorption Pharmaceuticals, with Jeff Abraham, a close friend and business partner to Dr. Gilbert, now the company’s CEO.
About Absorption Pharmaceuticals
Absorption Pharmaceuticals is the maker of Promescent®, a lidocaine spray made with careful consideration for the people who use it. Promescent® is the only over-the-counter PE treatment option in North America whose efficacy has been clinically proven. Its revolutionary TargetZone® technology adheres to all regulations from the FDA placed on health products. This privately held company was founded in 2011 and has seen tremendous growth within the U.S. and internationally. Promescent® is now available through doctors’ offices, retailers, pharmacies and online at http://www.promescent.com. Promescent® is a registered trademark of Absorption Pharmaceuticals.
Contact: Eric W. Rose (805) 624-0572
