Fighting food waste is a big problem with a big business opportunity for the growing number of companies trying to reduce it. Whenever there’s big money to be made, lawsuits are sure to follow. Sure enough, yesterday Zest Labs and its parent company, Ecoark Holdings, sued Walmart for $2 billion over Walmart’s Eden technology, which aims to reduce food waste by improving the shelf life of produce (hat tip to Silicon Valley Business Journal).
As we’ve written before: “Zest Labs offers Zest Fresh, a sensor-based logistics system to measure produce freshness. Zest Fresh assigns each pallet of produce an individual code that marks product type and data related to its exposure to the elements which would impact its spoilage. That information is uploaded to the company’s proprietary cloud where the data can presumably be tracked by anyone in the value chain from farm to distributor.”
According to Zest, the company met with Walmart in 2015 to demonstrate its technology for the retail giant, and from Zest Labs’ lawsuit announcement: “During this time, Zest Labs’ proprietary information and trade secrets were shared with Walmart, including members of Walmart’s executive leadership team.”
In March of this year, Walmart announced its Eden technology. The company said it monitored food freshness, and was developed over a six month period, starting with a company hackathon. From a Walmart blog post announcing that technology: “Eden’s suite of apps helps Walmart associates better monitor and care for fresh fruits and vegetables that are waiting to be shipped from distribution centers to stores. That could mean more efficiently ripening bananas, predicting the shelf life of tomatoes while they’re still on the vine, or prioritizing the flow of green grocery items from the back of the store to the shelf.”
Part of Walmart’s approach, the company told Business Insider at the time, was the use of tracking devices on cases of produce.
Zest believes similarities between the two are not coincidental. Again, from the Zest Labs lawsuit announcement:
“This concern led to the action we have taken today, which was to file a lawsuit with the federal district court in Arkansas claiming that Walmart has violated the Arkansas Trade Secrets Act and the federal Defend Trade Secrets Act. In addition, we are also filing claims for unfair competition, unjust enrichment, breach of the covenant of good faith and fair dealing, conversion and fraud. We believe strongly in the need to protect our intellectual property, recognizing the importance of preserving the value to our shareholders and customers. We are asking the court for over $2 billion in damages, based in part on Walmart’s claim in their March 1, 2018 announcement that Eden will provide that measure of benefit to Walmart over the next five years.”
The grocery sector is ripe (sorry) with competition. Giants like Walmart, Amazon, Kroger and more are fighting each other for your food dollars. Any edge in reducing costs from food waste or extending shelf life of produce is worth a lot of money to companies at that scale. Just last month, Costco started using Zest’s technology for its produce. And elsewhere in the fight against food waste, yesterday Apeel raised $70 million for its plant-based peels that prevent food degradation.
For those wanting more information on the lawsuit, the case is Zest Labs, Inc., et. al. v Walmart, Inc., case number 4:18-cv-500-JM, in the United States District Court for the Eastern District of Arkansas, Western Division.