MGPI filed two lawsuits in the Kansas US District Court last month after Manildra announced that it would soon begin offering a new resistant wheat starch referred to as GemStar R70.
MGPI's complaint alleged that Manildra's actions infringe on a patent relating to food grade starches resistant to alpha-amylase degradation that has been exclusively licensed to MGPI.
MGPI sought an injunction and a triple damage award.
There are economic reasons why MGPI has been so keen to protect its resistant starch patent. Earlier this year the Kansas-based firm reporting earnings of $1.6 million, or 10 cents a share, down 19 percent from $2 million, or 12 cents a share, last year. Meanwhile, sales for the quarter totaled $71.2 million, down 5 percent from $75.2 million last year.
But the rise in sales of its resistant starches that began last quarter has continued.
"This is a very important patent to MGPI," said Ladd Seaberg, president and chief executive officer.
"We produce and market our MGPI FiberSym line of ingredients under it. We intend to protect our patent rights."
As part of the filing, Manildra and its parent have acknowledged the validity of a patent licensed to MGPI by KSURF and agreed not to "make, use, sell or import in the United States or Australia products based on the patent."
The settlement also states that Manildra must give MGPI certain intellectual property and equipment, inventory of certain resistant starch and other consideration in exchange for $950,000 in cash.
The settlement is still subject to court approval.