Hartalega bullish after Tillotson suit dismissal

Written by Tony C H Goh
Monday, 12 July 2010 11:10


KUALA LUMPUR: Following the dismissal of the patent infringement claims by Tillotson Corp in the United States, Hartalega Corp Bhd is optimistic that its key export market will continue to see significant growth as it reasserts its dominance in the US’ nitrile glove market.

Hartalega’s managing director Kuan Kam Hon said the glove maker expected to grow its nitrile glove market share in the US. It is now one of the dominant players with a 25% market share.

“The outlook for this year is good, and we have set an internal target of a 20% to 25% top-line growth and around 15% increase in bottom-line,” Kuan told The Edge Financial Daily.

Tillotson’s alleged nitrile glove patent infringement suit would have badly hit Hartalega, Malaysia’s largest nitrile glove maker, if the US party’s legal action had succeeded.

Nitrile gloves account for about 80% of Hartalega’s annual production of about five billion gloves.

More than 98% of its products are exported to 23 countries across five continents with the US taking up close to 70% of the total. Other significant markets include Brazil, Japan, Germany, Australia and Africa.

Nitrile or synthetic gloves are made from a crude oil by-product instead of natural rubber.

They are widely used in the medical and medicare industry as they do not cause allergic reactions, are powder free and do not have high-protein contents found in natural latex or rubber gloves.

To recap, in May 2007, Tillotson had filed the complaint against a total of 30 nitrile glove makers, including 12 from Malaysia, as well as Indonesia and other manufacturers and resellers in the US for alleged patent infringement.

The US firm claimed that Neil Tillotson and Luc DeBecker had developed and patented the nitrile glove technology for the company in 1990.

The Tillotson patent covers technology related to the production of a synthetic rubber glove that relaxes after being donned and comfortably conforms to contours of the wearer’s hand. The patent was reissued in 1997.

However, on Dec 14, 2009, the US Court of Appeals for the federal circuit had ruled that the Tillotson patent was invalid and upheld the decision by the US’ International Trade Commission (ITC) in January the same year.

Hartalega had on June 29 announced that the suits between Tillotson and the company, including its subsidiaries Hartalega Sdn Bhd and Pharmatex USA Inc, filed in the US District Court of Georgia on June 23, 2010, had reached a settlement whereby any and all claims by the parties against each other would be dismissed.

The world’s largest glove maker, Top Glove Corp Bhd, had also on July 6 announced that it had reached a settlement with Tillotson whereby all claims filed against its subsidiaries, Top Glove Sdn Bhd, TG Medical Sdn Bhd and TG Medical (USA) Inc were dismissed with each party to bear its own costs, expenses and legal fees.

According to Kuan, the dismissal of the patent infringement suit was on the ground that the company had broadened the scope of the alleged infringement, and thus invalidated its initial infringement claim.

However, it is believed that conditions for the settlements differ for individual companies as the motions for dismissal were filed separately. “With the dismissal of the suit by the ITC and settlements reached, it is safe to say that this episode is finally over,” said Kuan.

Most Malaysian glove manufacturers have a significant presence in the US market; with top players such as Kossan Rubber Industries Bhd, Top Glove and Supermax Corp Bhd being the largest original equipment manufacturers for gloves sold in the US, and also have representative and distribution offices across the country.

Hartalega rose five sen last Friday to close at RM8.15, while Top Glove ended 10 higher at RM13.80, Supermax closed eight sen higher at RM5.88 while Kossan was unchanged at RM7.64.



This article appeared in The Edge Financial Daily, July 12, 2010.