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

March 15, 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" or "defendant") moved for summary judgment in its favor and against plaintiff Opto Generic Devices, Inc.'s ("OGD" or "plaintiff"). Plaintiff opposed and defendant replied.

Air Products also moved to preclude the expert testimony of Timothy J. Garrison, Ph.D. ("Dr. Garrison"). Plaintiff opposed.

Oral argument was heard July 10, 2009, in Utica, New York. Decision was reserved.

II. BACKGROUND

The following facts are either undisputed or are viewed in the light most favorable to OGD, as must be done on a motion for summary judgment, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986). Additional background facts are set forth in a Memorandum-Decision and Order. Opto Generic Devices, Inc. v. Air Prods. & Chems., Inc., No. 6:08-CV-234, 2010 WL 454986 (N.D.N.Y. Feb. 2, 2010).

OGD developed and marketed devices that would be installed on equipment such as air conditioners in order to reduce the energy usage of the equipment. Its adaptive climate controller is called the "ACC-1." Plaintiff filed a patent application covering the ACC-1. However, a former employee, Andrew W. Olney ("Olney") allegedly had stolen plaintiff's proprietary information regarding the ACC-1 and also filed a patent application covering the device. When OGD discovered this, it sued Olney to protect its proprietary technology and obtain its rightful patent. Plaintiff pursued its ownership rights in the technology through the Olney litigation, rather than through an attack on Olney's patent application. A patent was issued to Olney, the '429 patent, covering the technology contained in the ACC-1.

Plaintiff and defendant negotiated for some months before entering into a contract under which Air Products would expand marketing for the ACC-1 and OGD would develop three new devices, upgrades to the ACC-1, about which more detail will follow. During the negotiations, Ormonde Durham III ("Durham"), the Chief Executive Officer and majority owner of OGD, told Paul Persico ("Persico") and other representatives of Air Products about the lawsuit against the former employee Olney. Sometime before plaintiff and defendant executed their contract, Durham told Persico that a preliminary injunction against Olney had been issued in that litigation. Eventually the Olney litigation settled resulting in a grant of sole ownership of the Olney patent to plaintiff.

OGD and Air Products executed their agreement ("the Contract") on April 13, 2007. (Second Am. Compl. Ex. A Doc. 45 (hereinafter "Contract").) Under the Contract, plaintiff was to "use [its] best efforts to undertake the development project and to achieve the objectives set forth in" an attached scope of work. Id. ¶ 3.1 (emphasis omitted). The parties were to meet at least monthly to review progress on the goals, priorities, milestones, and funding, which could be revised so that the objectives would be best accomplished. Id. ¶ 3.2. Defendant reserved the right to approve any revisions, and Persico was given authority to give approval for Air Products. Id. Again, OGD was to "use its best efforts to complete work... within the time allocations." Id. ¶ 3.3. Additionally, Air Products personnel were to make visits to plaintiff to review accomplishments, observe work, provide guidance, and provide technical assistance. Id. ¶¶ 3.4-3.5.

Under the Contract, plaintiff was to prosecute, to the extent specified, the patent application that it had filed covering the ACC-1. Further, plaintiff and defendant would jointly file, prosecute, issue, and maintain, as well as own, any patents derived from the development projects under the Contract. Id. ¶¶ 7.4, 6.1. Under Article 8 of the Contract, OGD granted certain commercial rights and licenses to Air Products to market and sell devices developed under the Contract. Id. Art. 8.

A scope of work was attached to the Contract setting forth objectives and milestones for each of the subprojects. As was contemplated by the Contract, a revised, more detailed, scope of work dated June 1, 2007, was executed on July 13, 2007. Id. Ex. B (hereinafter "Scope of Work"). The Scope of Work set forth detailed objectives for Project 1 ("P1") related to the new device that would alter the ACC-1 so that it could be used with voltages found in Europe and Asia in addition to the United States. The objectives were:

Deliver a version of ACC-1 (P1) capable of supporting the common distribution voltages found in Residential and Commercial applications in US, Europe and Asia.

Quantify the total system energy efficiency performance of the current ACC-1 and the P1 in Packaged Terminal Air Conditioning (PTAC) applications using a test methodology consistent with or equivalent to ISO New England's Manual for Measurement and Verification of Demand Reduction Value from Demand Resources ["ISO-NE M&V Manual"]. Quantify the total system energy efficiency performance of the current ACC-1 and the P1 in Portable and Trailer Mounted Packaged HVAC systems using a test methodology consistent with or equivalent to ISO New England's Manual for Measurement and Verification of Demand Reduction Value from Demand Resources.

Id. The milestones were that plaintiff and defendant would "sign off on P1 Engineering Specification" by June 11, 2007; complete ACC-1 baseline measurement and verification by September 14, 2007; complete development of P1 November 30, 2007; and "P1 Design Review and AP Acceptance" by December 5, 2007. Id. The second project, P2, provided for modification of the P1 device for use on all single phase power drivers. Id. P2 was to be completed by March 25, 2008, with periodic milestones before that date. Id. The third project, P3, involved development of a device for industrial applications to convert 480 volt motors to variable speed. Id. Its completion date was November 13, 2008, again with milestones periodically. Id.

Article 16 addressed warranties and representations. OGD warranted that it was the sole owner of the ACC-1 patent rights, and it had the full right to license such rights to Air Products. Id. ¶ 16.1. Further, both parties expressly disavowed any warranties or representations other than as set forth in the Contract. Id. ¶ 16.3. Both parties also made express disclaimers, an example of which provides that "any warranty or representation as to the validity ...


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