ALLENTOWN – A federal judge has granted a stay to arbitration proceedings between a small Pennsylvania chemical company and a pair of domestic and international competitors the former says conspired to steal patented technology it created – technology which could later be used to generate solar energy.
PPT Research, Inc. of Allentown first filed suit in the U.S. District Court for the Eastern District of Pennsylvania on June 5 versus Solvay USA, Inc. of Princeton, N.J. and Rhodia Operations S.A.S., of France.
PPT said it spent years and millions of dollars to develop the LVS micro-gel particle slurry suspension system (MGP Technology), which consists of a water-based formula used in the process of cutting solar wafers, which, in turn, are used to manufacture the solar cells for solar panels.
“Under a technology licensing agreement, PPT licensed the MGP Technology to Solvay for use in China and South Korea, in exchange for a modest royalty fee of 7 percent. PPT accepted this small royalty fee to gain access to the lucrative China solar market, with which Solvay purported to have extensive ties. PPT (and Solvay) knew that PPT’s MGP Technology would be worth hundreds of millions of dollars once it was successfully commercialized in China,” per the lawsuit.
Solvay is said to have wanted the MGP Technology, but did not want to pay for it. Allegedly, it created a plan hinged on discrediting the technology and secretly filing a fraudulent patent application to disrupt and de-value PPT’s existing intellectual property and patents/active applications.
“Solvay intentionally deviated from PPT’s patented technology, training, S.O.P.s, recommendations and directions in tests with China based solar wafer manufacturers to ensure that the tests would fail,” the suit said.
“The culmination of the plan involved coercing PPT into agreeing to allow Solvay to patent the Solvay solution in Solvay’s own name. Rather than focusing its efforts on commercializing PPT’s technology, Solvay spent the next five months (from November 2015 to April 2016) lying to PPT in an effort to co-opt PPT’s valuable technology.”
The suit stated PPT later learned when it saw the Solvay-filed patent application, for the first time in April 2018, that its technology solution was anything but “independent." Solvay’s solution was instead derived from PPT work product shared with Solvay, and was a derivative of PPT’s patented technology and confidential intellectual property, the suit said.
Although Solvay was successful in misappropriating PPT’s MGP technology, the lawsuit says it ultimately failed in its efforts to commercialize the technology in China. This was due to another new technology, diamond wire slicing (DWS), taking the lead in the Chinese market and superseding PPT’s technology, the suit said.
The suit said if not for “Solvay’s breaches of contract and scheme to steal PPT’s trade secrets, PPT’s technology would have been the prominent technology in the Asian market, not the competing technology that now exists.”
“Solvay’s conduct was and is a substantial factor in PPT losing out on a lucrative business opportunity with production revenue that easily would have exceeded $100 million annually,” the suit stated.
UPDATE
On July 2, Solvay filed a motion to compel arbitration and dismiss the complaint, or alternatively, stay the proceedings.
“In its lawsuit, PPT alleges that Solvay breached the Reciprocal Confidentiality Agreement and the Technology License Agreement through Solvay’s own development of technology and Solvay’s filing of a patent application that allegedly disclosed PPT’s confidential proprietary trade secret information. In filing this complaint, PPT ignored the clear arbitration agreements expressly set forth in the RCA and TLA,” the motion stated.
“PPT’s complaint is silent regarding its disregard for the arbitration clauses and PPT’s agreement to arbitrate. Nowhere does PPT’s complaint contend that the arbitration clauses are unenforceable or unconscionable. Because PPT cannot avoid the terms of its arbitration agreements, Solvay moves to compel arbitration and dismiss the complaint, or in the alternative, compel arbitration and stay proceedings pending conclusion of arbitration.”
PPT then filed an emergency motion to stay arbitration on July 29, relating to a separate proceeding the parties are involved with in the International Chamber of Commerce International Court of Arbitration.
On Aug. 10, the Court granted the motion to stay.
“Upon review of plaintiff’s emergency motion for stay of arbitration, and after argument with counsel on Aug. 5, 2020, it is hereby ordered as follows: 1) Plaintiff’s emergency motion for stay is granted; 2) The arbitration proceeding between the parties currently pending before the International Chamber of Commerce International Court of Arbitration is stayed pending further order of this Court; and 3) Oral argument shall be held on defendants’ pending motions to compel arbitration on Aug. 31, 2020, at 2:00 p.m. via video,” U.S. District Court for the Eastern District of Pennsylvania Judge Jeffrey L. Schmehl said.
For counts of misappropriation of trade secrets and injunctive relief under both the U.S. Defend Trade Secrets Act and Pennsylvania Uniform Trade Secrets Act, in addition to breach of contract, the plaintiff is seeking both preliminary and permanent injunctions preventing the defendants from disseminating or utilizing PPT’s trade secrets, requiring the immediate return of all copies of the proprietary trade secret information from defendants, plus compensatory damages, consequential damages, exemplary damages, and reasonable attorney’s fees and costs, plus such other relief as this Court deems equitable.
The plaintiff is represented by Justin E. Proper and Natalie Molz of White & Williams in Philadelphia, plus Sanford J. Piltch of the Law Offices of Sanford J. Piltch, in Allentown.
The defendants are represented by Rebekah B. Kcehowski and Randall E. Kay of Jones Day, in Pittsburgh and San Diego.
U.S. District Court for the Eastern District of Pennsylvania case 5:20-cv-02645
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com