Back into the Cauldron: Patent Suit Renews Bitter Dispute Between Gasification Rivals Quantum Catalytics and Ze-gen
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hiring Eugene Berman, former in-house patent counsel for both Molten Metal and Quantum Catalytics. Quantum says Ze-gen also contracted with a consultant named Scott Fraser, who was part of a team at Houston engineering firm MPR Associates that had conducted a review of Texas Syngas’s technology. (Quantum is suing Fraser separately in Texas.)
Quantum’s broad lawsuit—which names Ze-gen investors Flagship Ventures and VantagePoint Venture Partners, partner company New Bedford Waste Services (which owns the waste transfer station where Ze-gen’s pilot plant is located), and even the company’s intellectual property counsel, David Judson, as co-defendants—also asserts that Ze-gen’s own patent applications are fraudulent, since they are allegedly based on Quantum’s intellectual property.
Pending a jury trial, in which Quantum says it would seek unspecified monetary damages, the complaint asks the court for a preliminary injunction preventing Ze-gen from infringing on its trade secrets and patented technologies.
A very different story, unsurprisingly, emerges from documents Ze-gen’s attorneys filed in the Texas case. But because Ze-gen’s ultimately successful motion to dismiss the Texas suit did not directly address the patent-infringement allegations, those documents may not provide much of a preview of Ze-gen’s defense strategy in the Massachusetts case.
The motion to dismiss the Texas suit, written by Judson, mainly argued that the federal courts in Texas lacked jurisdiction over the case, since Ze-gen is a Massachusetts company and Davis and the other defendants are Massachusetts residents. In passing—in a footnote, actually—Judson’s motion denied any infringement on Quantum’s patents. But in the course of presenting his argument about jurisdiction, Judson provided background information that challenges the validity of Quantum’s patents. Judson also described the licensing discussion between Preston and Davis as a “shakedown operation” against Ze-gen.
In early 2006, according to Ze-gen’s motion, Preston told Davis that Ze-gen would have to license Quantum’s technology if the company wanted to use liquid metal baths to recover syngas from waste. Davis did not agree that Ze-gen needed a license in order to proceed, but the two men pursued a discussion anyway. “The negotiations failed,” in the words of the motion.
Later that year, according to the motion, Ze-gen discovered that most of the patents that Quantum had sought to license were actually expired—not because they had run out, but because Quantum had failed to pay the required maintenance fees to the U.S. Patent and Trademark Office. “After Ze-gen came to understand the deceptive nature of the proposed license, it terminated all negotiations,” the motion stated.
The two companies didn’t communicate again until Quantum filed the Texas suit in August, 2007, according to Ze-gen. There’s nothing in Ze-gen’s filings from the Texas case pertaining to Quantum’s allegations about Gatto, Berman, or Fraser—but those allegations weren’t part of Quantum’s original complaint, which was far less detailed than the new Massachusetts complaint.
Judging from its strategy in Texas, Ze-gen might be expected to argue in the Massachusetts case that Quantum doesn’t legitimately own the allegedly infringed patents, or that the patents themselves are no longer in force. But Quantum’s Massachusetts complaint asserts pointedly that the 14 patents at issue are “valid and subsisting”—so the case might ultimately come down to complex questions about whether the technologies behind Ze-gen’s gasification facility are different from those originally patented by Molten Metal.
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