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Opto Generic Devices, Inc. v. Air Products & Chemicals

February 2, 2010

OPTO GENERIC DEVICES, INC. PLAINTIFF,
v.
AIR PRODUCTS & CHEMICALS, INCORPORATED; DEFENDANT.



The opinion of the court was delivered by: David N. Hurd United States District Judge

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

Defendant Air Products & Chemicals, Incorporated ("Air Products") moved for partial summary judgment as to plaintiff Opto Generic Devices, Inc.'s ("OGD") claim for consequential damages. Plaintiff opposed and defendant replied. Oral argument was heard April 23, 2009, in Utica, New York. Decision was reserved.

Air Products subsequently filed a motion to preclude the expert testimony of Lawrence D. Copp ("Copp"). Any hearing regarding this motion was held in abeyance pending resolution of the motion for partial summary judgment.

II. BACKGROUND

The following facts are undisputed unless otherwise noted.

In April 2007, OGD entered into a contract with Air Products relating to OGD's development of energy-saving devices designed to be installed on certain equipment, such as air conditioners. The devices would cause the equipment on which it was installed to consume less peak power and operate in a more energy-efficient manner. Further, OGD would license related patent rights to Air Products. When the contract was executed OGD marketed its baseline motor-controlling device, the "ACC-1" adaptive climate controller, as having energy saving capability. According to OGD, the two objectives of the contract were to (1) expand OGD's marketing of the ACC-1; and (2) develop new products that would be upgrades of the ACC-1.

Under the contract, OGD would test and modify the ACC-1 using its best efforts to develop the three new variations of the ACC-1, designated by the parties as "sub-projects." Sub-project 1 ("P1") called for modification of the ACC-1 technology so that it could be used with European and Asian voltage requirements. Sub-project 2 ("P2") was to modify the P1 device to be suitable for operating all single phase power drivers. Sub-project 3 ("P3") contemplated development of a licensed product using adaptive controller technology for industrial applications using 480V, 40 am, 3 phase power drivers. Completed development of the projects would result in three new products having international application to larger and more powerful motors.

Under the contract, Air Products was to pay OGD a total of two million dollars ($2,000,000). Air Products paid OGD an immediate payment of $400,000 as consideration for certain commercial rights and licenses to sell P1 (non-exclusive license), P2 (exclusive license), and P3 (exclusive license only as to Air Products' facilities), as set forth in Article 8 of the contract. (Am. Compl. Ex. A Art. 4, Doc. No. 32.) Thus, the initial $400,000 payment was for license rights. Id. § 4.1. The remaining $1.6 million was to be paid for the development work (of technology that would be jointly owned by OGD and Air Products) consisting of eleven monthly progress payments. Id. § 4.2. Air Products made the following progress payments as called for in the contract: May 2007 $200,000; June 2007 $100,000; July 2007 $100,000; and August 2007 $100,000 for a total of $900,000. Air Products made no additional payments.

With respect to P1, Article 8 of the contract provided that the non-exclusive license would survive completion or termination of the contract if Air Products purchased at least 10,000 "licensed products" during the respective annual periods beginning April 1, 2009. Id. § 8.1.1. "Licensed product" is defined as a variable speed control apparatus designed to control the speed of specified alternating current motors, including components of such devices. Id. § 2.20. Article 8 provided for Air Products' purchase of licensed products at a discount purchase price during the time when it retained the non-exclusive license. Id. § 8.1.2. Article 8 also provided that if OGD was unwilling or unable to supply Air Products' requirements, then Air Products would have a royalty-bearing license to make or have made the licensed products. Id. § 8.1.4. Similar contract provisions apply with respect to P2 and P3 except that if the annual purchases during the specified periods are less than 10,000 the license reverts to a non-exclusive license.*fn1 Id. § 8.2-8.3

A Scope of Work incorporated into the contract set objectives and milestones for each of the sub-projects. Id. First Attachment Scope of Work April 10, 2007-Rev.2 (hereinafter "First Scope of Work"). A revised Scope of Work was executed by both parties in June 2007. Id. Ex. B First Attachment Scope of Work June 1, 2007-Rev. 5 (hereinafter "Second Scope of Work"). According to Air Products, one of the modifications was to remove marketing activities from the scope of the project regarding to P1. OGD disagrees and contends that the revision merely added details to the existing agreement, while keeping the original requirement that Air Products market all OGD's adaptive climate controller products (including ACC-1).

The contract permitted Air Products to visit OGD to review development accomplishments as well as provide guidance and technical assistance. Id. § 3.4. It also permitted Air Products to select personnel and consultants, subject to OGD's approval, to observe development work being done by OGD. Id. § 3.5.

III. STANDARD

Summary judgment must be granted when the pleadings, depositions, answers to interrogatories, admissions and affidavits show that there is no genuine issue as to any material fact, and that the moving party is entitled to summary judgment as a matter of law. Fed. R. Civ. P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10 (1986). The moving party carries the initial burden of demonstrating an absence of a genuine issue of material fact. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552 (1986). Facts, inferences therefrom, and ambiguities ...


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