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Apollo Metals, Ltd v. Electroplating Technologies

November 23, 2009

APOLLO METALS, LTD, PLAINTIFF
v.
ELECTROPLATING TECHNOLOGIES, LTD, DEFENDANT



The opinion of the court was delivered by: Stengel, J.

MEMORANDUM

Apollo Metals filed a complaint in this court seeking a fourfold declaratory judgment that (1) it had not breached an agreement it made with Electroplating Technologies; (2) it had not misappropriated certain proprietary information or trade secrets belonging to Electroplating Technologies; (3) Electroplating Technologies' patents were not infringed; and (4) Electroplating Technologies' patents were invalid and/or unenforceable. The defendant responded with several counterclaims against the plaintiff.

The defendant now moves for the dismissal of all claims and counterclaims here, so that the parties may initiate binding arbitration pursuant to a Patent, Technical Information and Technical Assistance Agreement ("Agreement") between the parties. To that end, the defendant has incorporated into its motion a covenant not to sue. For the following reasons, I will grant the motion to dismiss and compel arbitration.

I. BACKGROUND

The defendant is the owner of proprietary information and the Patents-in-Suits,*fn1 each of which concern various metal coating and surface treating technologies, such as brush plating, anodizing, and electroplating. Compl. ¶ 7. On November 1, 1995, the parties entered into the Agreement for the plaintiff to license exclusively the right to use and practice certain proprietary information and patents related to brass, copper, nickel, and nickel-chromium plating for the manufacture, use, and sale of certain products. Id. ¶ 8. The parties have since executed several amendments to this Agreement which included converting the exclusive license into a non-exclusive license. Id. The Agreement includes an arbitration clause, which has not been altered by these amendments.

On July 29, 2006, the plaintiff sent the defendant a letter consistent with the terms of the Agreement providing six months notice of its intent to terminate the Agreement regarding the defendant's non-brass plating technologies. The plaintiff was no longer using the defendant's licensed technology on those lines. Compl. ¶ 9. A month later, the defendant sent the plaintiff a letter accusing the plaintiff of improperly using the patents and proprietary information, but did not specifically identify which patents or what information. The letter also accused the plaintiff of breaching the Agreement and interfering with the defendant's business relations. Id. ¶ 10. The plaintiff denied the allegations in correspondence dated October 12, 2006. Id. ¶ 11. Two weeks later, the defendant reiterated the allegations and threatened to pursue all available remedies if left unresolved. Id. ¶ 12.

Because of these threats and the plaintiff's resultant apprehension, the plaintiff brought suit here seeking a declaratory judgment, specifically, that: (1) it had not breached the Agreement; (2) it had not misappropriated trade secrets or proprietary information; (3) it had not infringed the defendant's patents; and (4) that the defendant's patents are invalid and/or unenforceable. The defendant filed a counterclaim against the plaintiff which included several claims of: infringement of patents, some of which were part of the Agreement and others were not; breach of the Agreement by the plaintiff; and fraudulent misrepresentation. On two occasions, the defendant amended its counterclaim so that only the breach of contract claim remains.

As part of its motion to compel arbitration, the defendant made the following representations in what it refers to as a "Covenant Not To Sue:"

(1) The defendant will not sue the plaintiff on the basis of any of the Patents-in-Suit, as defined in the plaintiff's complaint, for any infringing acts taking place on or before the date of this motion;

(2) The defendant will not sue the plaintiff on the basis of any of the Patents-in-Suit for any acts that involve apparatuses or processes that were used by the plaintiff in its Bethlehem, Pennsylvania facility on or before the date of this motion;

(3) The defendant does not contend that the plaintiff's X19 or X23 electroplating lines, as presently configured, appropriate technology that is within the scope of any of the claims of the Patents-in-Suit.

II. DISCUSSION

A. Plaintiff's Counts III and IV

Count III seeks a declaration that the plaintiff has not directly infringed, induced the infringement of, or been a contributory infringer of any claim of the Patents-in-Suit. Compl. ¶ 23. Count IV seeks a declaration that the Patents-in-Suit are invalid and/or unenforceable for failure to comply with the requirements of Part II of Title 25 of the United States Code. Id. ¶ 25. For the ...


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