IP Battle Between Indian and American Companies Ends With $38 Million Accord

One of the ugliest intellectual property battles on the Eastern District of Pennsylvanias docket has now settled for $38 million and an agreement between plaintiff Purolite Co. and defendant Thermax Inc. -- competing manufacturers of water purification products -- that they will now jointly own the trade secrets alleged to have been stolen.

In the suit, Purolite, based in Bala Cynwyd, Pa., claimed that Thermax, based in Pune, India, had hatched a scheme to steal and use Purolites trade secrets related to the development, production and sale of ion exchange resins.

Thermax allegedly set out to hire Purolite employees who knew or could access Purolites proprietary chemical technology and sales information. The workers would then accumulate valuable trade secrets, quit Purolite, and go to work for Thermax, bringing Purolites secrets with them, the suit said.

The settlement comes on the heels of a lengthy contempt hearing that led to findings by U.S. District Judge Cynthia M. Rufe that Thermax was in contempt of a 2005 stipulated injunction in which it promised to stop using Purolite manufacturing formulas and processes.

"Despite the stipulated temporary restraining order," Rufe wrote, "Thermax continued to manufacture products using Purolite formulas."

Rufe found that Thermax failed to comply with court orders handed down in May and September of 2005 relating to two of Purolites processes, but that it did comply with the orders as to a third process.

The rulings by Rufe substantially framed the issues for a trial that was set to begin March 1 and led to renewed settlement talks conducted by Senior U.S. District Judge Lowell A. Reed Jr.

Under the terms of the settlement, Thermax has agreed to pay $38 million to Purolite -- in four equal installments of $9.5 million -- by the end of 2010. Those payments effectively amount to a purchase of the trade secrets alleged to have been stolen because the two companies have now agreed they will be joint owners of the disputed intellectual property.

Purolite was represented by attorneys Joseph J. McGovern and Shari Shapiro of Obermayer Rebmann Maxwell & Hippel, along with Sidney L. Gold of Sidney L. Gold & Associates in Philadelphia and Jonathan E. Minsker of Kasowitz Benson Torres & Friedman in New York.

Thermax was represented by attorneys Grant Hanessian, David Zaslowsky and Jacob Max Kaplan of Baker & McKenzie in New York.

Shapiro declined to comment on behalf of Purolite except to say that the settlement was "a great result for our client." Hanessian could not be reached for a comment from Thermax.

Court records show that the case has been hard-fought from the outset.

In more than five years of litigation, the courts docket swelled to more than 600 entries, including several published opinions by Rufe.

Purolite, the trading name for Bro-Tech Corp., named as defendants three of Thermaxs high-ranking executives as well as the four former Purolite employees who left in 2005 to join Thermax.

The suit originally alleged 15 causes of action including claims under RICO and the Computer Fraud and Abuse Act, and state law claims of misappropriation of trade secrets under the Pennsylvania Uniform Trade Secrets Act.

Ultimately, Rufe significantly trimmed the suit in a summary judgment opinion that left the theft of trade secrets as the central claim in the case.

Along the way, Rufe was forced to tackle several novel legal questions.

In September 2007, one of the former Purolite employees, Narvinder Sachdev -- a chemical engineer who holds an MBA and who had worked for Purolite for 19 years -- asked for an anti-suit injunction to enjoin Purolite from pursuing an action against him in the High Court of Justice, Chancery Division, in England.

Rufe refused, saying the case law of the 3rd Circuit mandates a restrictive approach to enjoining foreign proceedings, and noting that she was confident that the High Court would respect her authority.

In December 2008, Rufe issued an opinion that focused on a complex dispute relating to electronic discovery and the application of the "clawback agreement" that outlined the protocol the parties were to follow when one party wanted to "claw back" a privileged or work product document that was erroneously produced to the other side.

In that ruling, Rufe sided with Thermax and concluded that Purolite "had an opportunity under the clawback agreement to object to defendants conduct with respect to the document, but that opportunity has now passed, and plaintiffs motion must be denied as untimely."

In March 2009, Thermax argued that the case should be tried without a jury because the only jury demand that was ever made was in Thermaxs counterclaims, which it had opted to .

Purolite disagreed, arguing that Thermaxs jury demand applied to all issues that were triable by a jury because Thermaxs counterclaims and Purolites legal claims concern the same issues.

The plaintiffs lawyers argued that Purolite had reasonably relied on Thermaxs jury demand and that, under federal law, a jury demand may not be withdrawn without the consent of all affected parties.

Rufe agreed, saying Purolite was entitled to rely on the demand, and Purolites consent is required if the jury demand is to be withdrawn.

By Shannon P. Duffy
Source: The Legal Intelligencer

Publicado por Abogados.com.ar 08:55 AM | 09 de marzo 2010 | No hay comentarios

Etiquetas: Business Law.Intelectual Property

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