WSU has filed a lawsuit ordering Phytelligence to cease growing its patented apple tree, despite retaining equity in the spinout.

Washington State University (WSU) is in a legal dispute with one of its spinouts, US-based agritech developer Phytelligence, over an alleged breach of licence, GeekWire reported on Tuesday.

The dispute relates to Phytelligence’s propagation licence for the WA 38 breed apple tree, branded Cosmic Crisp, which was first discovered by former WSU researcher Bruce Barritt in 1997.

WSU’s lawsuit alleges Phytelligence sold 135,000 Cosmic Crisp apple trees to local fruit grower Evans Fruit Company without first expanding its cultivation licence to cover commercial sale as well.

Phyelligence denies the accusation and has launched a suit of its own, arguing an option for the licence to be extended was frustrated by “substantial resistance” from WSU management. WSU has fielded a counter-claim demanding that Phytelligence ceases using the Cosmic Crisp trademark and WA 38 plant material.

Founded in 2012, Phytelligence’s business centres on a nutrient-dense cultivation process called Multiphy that uses micropropagation technology for yields up to five times as fast as traditional methods. WSU continues to hold an equity stake in Phytelligence.

The spinout received approximately $12m in a series B round in September 2017 backed by diversified media company Cowles, investment vehicle Avrio Capital and WRF Capital, the early-stage arm of commercialisation firm Washington Research Foundation.

WSU will argue it offered Phytelligence a route to commercial sales which involved partnering Proprietary Variety Management and Northwest Nursery Improvement Institute, the university’s commercial WA 38 distribution partners.

Phytelligence will say it had little success negotiating with either distribution partner.

Phil Weiler, vice-president of marketing and communications at WSU, told GeekWire: “We have tried very hard to make sure that they understood what their options were, and that they exercised an option that would make sure they were back in compliance with the agreement and to date they’ve chosen not to do that.”

Ken Hunt, chief executive of Phytelligence, said: “We recognise and value WSU’s broad and continuing support of Phytelligence; our concerns in this matter stem from the actions of a few individuals within the University.

“As such, concurrent to this legal filing, we are continuing to work directly with WSU to identify a mutually beneficial resolution.”