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Legal dispute buds between competitors in aeroponics industry

By Andrew Thomason | Jan 27, 2014

A public spat between two companies in the aeroponics industry has grown into a more than $8 million federal lawsuit.

FarmedHere filed a lawsuit Jan. 17 in Chicago's federal court against Just Greens, doing business as Aero Farm Systems, claiming its competitor has tried to take credit for its achievements.

FarmedHere and Aero Farm Systems, otherwise known as AeroFarms, both work in the industry of aeroponics, also known as vertical farming. Aeroponics takes the concept of hydroponics, growing plants in water as a substrate, one step further by growing plants in a mist of water and nutrients.

According to the suit, FarmedHere was started in 2011 by Jolanta Hardej and Steve Denenberg in a 10,000-square-foot facility in Flanagan Ill. and then acquired a 90,000-square-foot warehouse in Bedford Park, Ill.

FarmedHere, which claims to have the country's largest vertical indoor farm, grows mostly organic greens, and sells to local distributors and grocery stores, including Whole Foods.

AeroFarms is a New York-based company that focuses on the design and manufacture of aeroponics systems.

Paul Hardej, now vice president of production and development for FarmedHere, visited AeroFarms in 2010, when he was asked to sign a nondisclosure agreement before touring its New York facility.

The suit states that Hardej, the ex-husband of FarmedHere co-founder Jolanta Hardej, signed the agreement under his former real estate company, Laurel Park LLC.

Following the tour and some further discussions, AeroFarms' founder Paul Hardwood convinced Paul Hardej to sell AeroFarms' setups in the Chicagoland region. Paul Hardej signed a distribution agreement under a not-yet-formed company called Citiponic LLC.

Unable to meet sales quotas, allegedly because of high costs and difficulty of operating the setups, the suit alleges that Paul Hardej ended his distribution agreement about a year after signing it.

AeroFarms, according to the suit, began the legal tussle in 2012 by sending FarmedHere cease and desist letters based on the non-disclosure agreement Paul Hardej signed before working for FarmedHere. It also served FarmHere with a notice of arbitration in New York in late 2013 for breach of the non-disclosure agreement and patent infringement.

FarmedHere, however, claims in its recently-filed suit that AeroFarms didn't get any patent regarding aeroponics until 2013, several years after FarmedHere began its operation.

Leading up to the recent legal disagreements, AeroFarms claimed responsibility for FarmedHere's aeroponics farm, according to the complaint that outlines several occasions in which Hardwood talks about AeroFarms having a 90,000-square-foot aeroponics facility in Chicago.

"FarmedHere has the only 90,000 square foot aeroponics farm in Chicago, Illinois. AeroFarms therefore misrepresented the FarmedHere aeroponics farm as its own," FarmedHere asserts in its suit.

FarmedHere contends this alleged misrepresentation violates the federal Lanham Act, otherwise known as the Trademark Act, and cost it at least $8 million in potential outside investments.

"Because AeroFarms has taken credit for what FarmedHere has achieved, AeroFarms has been able to capture investment capital based on FarmedHere's accomplishments," the suit states.

FarmedHere is asking for damages of at least $8 million, plus interest, on the allegedly lost investments.

The plaintiff company also contends that AeroFarms violated the Illinois Uniform Deceptive Trade Practices Act by confusing the public about the connection between FarmedHere and AeroFarms.

On that claim, FarmedHere is asking that the court grant a permanent injunction preventing AeroFarms from claiming it had a hand in its success.

In addition, FarmedHere is asking that AeroFarms' complaint against it regarding patent violations be declared invalid.

FarmedHere is being represented by attorneys Michael Delrahim and Shelley Smith of Brown, Udell, Pomerantz & Delrahim in Chicago.

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