Message: From Document 78 Filed 04/27/2007 - First Counterclaim
Your Vote:
Did you know?
You can earn activity points by filling your profile with information about yourself (what city you live in, your favorite team, blogs etc.)
FIRST COUNTERCLAIM
(Declaratory Judgment)
4. digEcor has alleged breaches of the 2002 NDA, the 2002 Agreement, the Purchase Order, and the DRM in this matter, and, in particular, claims e.Digital is precluded by those agreements from marketing or selling its eVU units in the aviation and other industries.
5. This Court, therefore, has jurisdiction over this compulsory declaratory judgment counterclaim under 28 U.S.C. §§ 1332, 1367, 2201, and Rule 13(a) of the Federal Rules of Civil Procedure.
6. The portions of the 2002 NDA that relate to the digEplayer, the eVU, and this litigation, including but not limited to the non-competition clause in paragraph 6 of the 2002 NDA, were superseded by the 2002 Agreement pursuant to, inter alia, paragraph Q of the 2002 Agreement that states that the 2002 Agreement “constitutes the entire understanding and agreement between the parties with respect to the transactions contemplated herein and supercedes any and all prior oral or written communications with respect to the subject matter herein,” because the “subject matter” of the 2002 Agreement was the development and manufacture of portable in-flight entertainment devices and other products, including but not limited to the digEplayer.
7. digEcor’s decision in October 2005 to select Triad Engineering and Wolf Electronics to design and manufacture a next generation player to replace the digEplayer was notice to e.Digital that digEcor did not intend to “proceed with the production of the designed product” pursuant to Section J2 of the 2002 Agreement thereby expressly granting e.Digital “free and unrestricted access to market the design” thereby negating any noncompetition prohibition of the 2002 NDA.
8. The 2002 Agreement expired by its terms on October 22, 2005, including any and all restrictions, if any, on e.Digital’s ability to develop, manufacture, market and sell in-flight entertainment devices, whether or not based on or derived from e.Digital’s prior designs in the digEplayer.
9. Although e.Digital granted to digEcor in the 2005 DRM an “exclusive license” to the “DRM technology” in the “aircraft industry,” that license was limited by the DRM, as explained in the Addendum One thereto, to the adaptation of Random Block Encoding (“RBE”) to the digEplayer.
10. e.Digital designed the eVU independently from the digEplayer, and the eVU does not use the DRM technology or RBE as defined by the DRM.
11. In any event, as further alleged above in response to digEcor’s Complaint, digEcor has breached the Purchase Order and DRM and, therefore, is not entitled to enforce the terms of those agreements.
12. e.Digital is not in breach of the 2002 NDA, the 2002 Agreement, the Purchase Order or the DRM.
13. Therefore, e.Digital is entitled to a declaration that:
(a) The 2002 NDA was superseded by the 2002 Agreement with regard to the digEplayer, the eVU and/or the subject of this litigation and, therefore, does not limit or bar e.Digital’s rights to or activities regarding the eVU or the digEplayer, and e.Digital is not in breach of that agreement by the design, manufacture, marketing or sale of the eVU;
(b) The selection of Triad Engineering and Wolf Electronics to manufacture a replacement player granted e.Digital free and unrestricted access to market the digEplayer design pursuant to the terms of the 2002 Agreement.
(c) The 2002 Agreement expired by its terms on October 22, 2005 and, therefore does not limit or bar e.Digital’s current rights to or activities regarding the eVU or the digEplayer, and e.Digital is not in breach of that agreement by the design, manufacture, marketing or sale of the eVU;
(d) Any grant to digEcor of an exclusive license under the DRM is limited to the “DRM technology” as defined in Addendum One to the DRM to mean RBE technology, and that the DRM does not limit or bar e.Digital’s rights to or activities regarding the eVU because the eVU does not use RBE, and, therefore, e.Digital is not in breach of paragraph 2 of the DRM;
(e) digEcor is in breach of the Purchase Order and DRM and, therefore, is not entitled to enforce any exclusive license granted to it in the DRM against e.Digital; and
(f) e.Digital is not in breach of the Purchase Order or the DRM.
14. e.Digital is entitled to an injunction barring digEcor and its agents from alleging, asserting, declaring or implying that e.Digital is in breach of the 2002 NDA, the 2002 Agreement, the Purchase Order, and/or the DRM in any way, or that e.Digital is limited in any way by those agreements, any other agreement between e.Digital and digEcor, or any other right of digEcor, from manufacturing, marketing or selling the eVU
Additional Background Facts for the Confidential Information Counterclaims
15. The 2002 Agreement provided a “framework” for the development of future products by e.Digital for digEcor, and, correspondingly, digEcor agreed to “keep in confidence and prevent the disclosure to any person or persons of all technical information and data . . . which is designated in writing. . . to be of a proprietary or confidential nature” in accordance with the terms of that agreement.
16. digEcor periodically received e.Digital confidential information regarding the digEplayer and improvements thereto, including software applications and source code, schematics, block diagrams, documentation (“white papers”), and ‘hands-on’ instruction, subject to the confidentiality protections of the 2002 Agreement.
17. In late 2004 and early 2005, digEcor desired to develop a next generation digital in-flight entertainment system in contrast with the existing hand-held digEplayer (hereinafter the “digEsystem” project or player, later marketed as the “digEplayer XT”), and hired DeCuir Inc., as its consultant and agent, to locate and work with engineering firms to design that product.
18. digEcor and DeCuir approached e.Digital to develop the next generation system. e.Digital held numerous technical discussions with digEcor and DeCuir, including a face-to-face meeting on January 5, 2005. DeCuir signed a non-disclosure agreement with e.Digital on or about January 4, 2005. During this time e.Digital and digEcor also entered into legal negotiations on a development and manufacturing agreement concerning this new player.
19. During these and subsequent technical discussions and legal negotiations, e.Digital provided proprietary and confidential information to digEcor and DeCuir, protected by the 2002 Agreement, including, but not limited to, the following information:
(a) Media Player Architecture/Block Diagram, dated December 29, 2004 Rev. A) of existing and upgraded DigEplayers, (hereinafter “e.Digital Block Diagrams”), marked “CONFIDENTIAL AND PROPRIETARY INFORMATION” and bearing a copyright notice on or before January 5, 2005.
(b) Schematics, bill of materials, and related technical documentation related to the next generation player project in or about January 2005.
(c) Other confidential technical information from e.Digital regarding the ongoing next generation player project during the first four to five months of 2005 (hereinafter “e.Digital’s Other Technical Information”).
20. However, negotiations for an agreement to have e.Digital develop the next generation player terminated in or about May 2005 so that digEcor and its agents were not authorized to use e.Digital’s confidential information in connection with digEcor’s next generation player project.
21. Later in 2005, again at digEcor’s request, e.Digital submitted a Request For Proposal for digEplayer Manufacturing (“RFP”) to various manufacturers, including Wolf Electronics (“Wolf”), to locate a new manufacturer for the digEplayer. Wolf signed a non-disclosure agreement with e.Digital on or about September 9, 2005.
22. The RFP included embedded .PDF files with photographs of the exterior and interior of the existing DigEplayer, budgetary costing and sourcing information for the digEplayer, a bill of material for the main board and the Ethernet daughter board, detailed drawings for fabrication of the Main PC board and Ethernet daughter PC boards, which provided Wolf with all information needed to manufacturer the existing digEplayer (including all design improvements to date).
23. The RFP and associated information was communicated under express written and oral understandings of confidentiality, including the 2002 Agreement, as well as circumstances implying a duty of confidentiality, including the following express alternative statements on such documentation: (a) Each page of the RFP (with included the embedded .PDF files) contained a copyright notice and a legend stating that “[t]his document contains Proprietary and Confidential disclosures of e.Digital. Reproduction or distribution in any form without permission is strictly prohibited.”
(b) The drawings within the RFP contained a legend noting that “PROPRIETARY RIGHTS Of e.DIGITAL CORPORATION are involved in the subject matter of this material and all manufacturing, reproduction, use and sales rights pertaining to such subject matter are expressly reserve. It is submitted in confidence for a specified purpose, and the recipient, by accepting this material, agrees that this material will not be used, copied or reproduced in whole or in part, nor its contents revealed in any manner, or to any person, except for the purpose delivered.”
24. The information described in the preceding paragraphs 15, 18, and 20 through 22 shall be collectively referred to as e.Digital’s confidential information.
25. Upon information and belief, digEcor and its agents, including DeCuir and Wolf, have disseminated and/or used e.Digital’s confidential information in connection with the development of digEcor’s next generation player (“digEplayer XT”) in violation of the 2002 Agreement, other written and oral agreements of confidentiality, and implied duties of confidentiality. e.Digital’s belief is based on information including, but not limited to, the following:
(a) DeCuir told e.Digital at or shortly after the meeting on January 5, 2005, with the knowledge and consent of digEcor that the Block Diagrams contained “a lot of . . . information we can use for the [XT] product spec[ification]” due later that month, which would result in “less testing to do to help us [DeCuir and digEcor] develop the new Product Specification” – other words, to accelerate development and introduction of the digEplayer XT;
(b) DeCuir told e.Digital at or shortly after the meeting on January 5, 2005, with the knowledge and consent of digEcor that e.Digital’s Block Diagrams “will be of great assistance in helping us [DeCuir and digEcor] to baseline the current product” – again to accelerate development and introduction of the digEplayer XT;
(c) In a press release dated May 25, 2006, digEcor admitted that development of the digEplayer XT was derived from and based on “the best features of the [digEplayer] 5500,” and e.Digital believes most or all of such best features were based on or constituted the confidential information or trade secrets of e.Digital;
(d) digEcor has touted various features of the digEplayer XT, such as the 10 hour battery life, as similar or identical to the digEplayer 5500, which features are based on e.Digital’s confidential information or trade secrets; and
(e) Given the timing of the digEplayer XT project, and the unquestioned access to and knowledge of digEcor and its agents (including DeCuir, the engineering firm selected by digEcor, and/or Wolf) of e.Digital’s confidential information and trade secrets, it is unlikely that digEcor and its agents did in fact, or could have, eliminated e.Digital’s confidential information from consideration or use during the development process of digEcor’s next generation player.
(Declaratory Judgment)
4. digEcor has alleged breaches of the 2002 NDA, the 2002 Agreement, the Purchase Order, and the DRM in this matter, and, in particular, claims e.Digital is precluded by those agreements from marketing or selling its eVU units in the aviation and other industries.
5. This Court, therefore, has jurisdiction over this compulsory declaratory judgment counterclaim under 28 U.S.C. §§ 1332, 1367, 2201, and Rule 13(a) of the Federal Rules of Civil Procedure.
6. The portions of the 2002 NDA that relate to the digEplayer, the eVU, and this litigation, including but not limited to the non-competition clause in paragraph 6 of the 2002 NDA, were superseded by the 2002 Agreement pursuant to, inter alia, paragraph Q of the 2002 Agreement that states that the 2002 Agreement “constitutes the entire understanding and agreement between the parties with respect to the transactions contemplated herein and supercedes any and all prior oral or written communications with respect to the subject matter herein,” because the “subject matter” of the 2002 Agreement was the development and manufacture of portable in-flight entertainment devices and other products, including but not limited to the digEplayer.
7. digEcor’s decision in October 2005 to select Triad Engineering and Wolf Electronics to design and manufacture a next generation player to replace the digEplayer was notice to e.Digital that digEcor did not intend to “proceed with the production of the designed product” pursuant to Section J2 of the 2002 Agreement thereby expressly granting e.Digital “free and unrestricted access to market the design” thereby negating any noncompetition prohibition of the 2002 NDA.
8. The 2002 Agreement expired by its terms on October 22, 2005, including any and all restrictions, if any, on e.Digital’s ability to develop, manufacture, market and sell in-flight entertainment devices, whether or not based on or derived from e.Digital’s prior designs in the digEplayer.
9. Although e.Digital granted to digEcor in the 2005 DRM an “exclusive license” to the “DRM technology” in the “aircraft industry,” that license was limited by the DRM, as explained in the Addendum One thereto, to the adaptation of Random Block Encoding (“RBE”) to the digEplayer.
10. e.Digital designed the eVU independently from the digEplayer, and the eVU does not use the DRM technology or RBE as defined by the DRM.
11. In any event, as further alleged above in response to digEcor’s Complaint, digEcor has breached the Purchase Order and DRM and, therefore, is not entitled to enforce the terms of those agreements.
12. e.Digital is not in breach of the 2002 NDA, the 2002 Agreement, the Purchase Order or the DRM.
13. Therefore, e.Digital is entitled to a declaration that:
(a) The 2002 NDA was superseded by the 2002 Agreement with regard to the digEplayer, the eVU and/or the subject of this litigation and, therefore, does not limit or bar e.Digital’s rights to or activities regarding the eVU or the digEplayer, and e.Digital is not in breach of that agreement by the design, manufacture, marketing or sale of the eVU;
(b) The selection of Triad Engineering and Wolf Electronics to manufacture a replacement player granted e.Digital free and unrestricted access to market the digEplayer design pursuant to the terms of the 2002 Agreement.
(c) The 2002 Agreement expired by its terms on October 22, 2005 and, therefore does not limit or bar e.Digital’s current rights to or activities regarding the eVU or the digEplayer, and e.Digital is not in breach of that agreement by the design, manufacture, marketing or sale of the eVU;
(d) Any grant to digEcor of an exclusive license under the DRM is limited to the “DRM technology” as defined in Addendum One to the DRM to mean RBE technology, and that the DRM does not limit or bar e.Digital’s rights to or activities regarding the eVU because the eVU does not use RBE, and, therefore, e.Digital is not in breach of paragraph 2 of the DRM;
(e) digEcor is in breach of the Purchase Order and DRM and, therefore, is not entitled to enforce any exclusive license granted to it in the DRM against e.Digital; and
(f) e.Digital is not in breach of the Purchase Order or the DRM.
14. e.Digital is entitled to an injunction barring digEcor and its agents from alleging, asserting, declaring or implying that e.Digital is in breach of the 2002 NDA, the 2002 Agreement, the Purchase Order, and/or the DRM in any way, or that e.Digital is limited in any way by those agreements, any other agreement between e.Digital and digEcor, or any other right of digEcor, from manufacturing, marketing or selling the eVU
Additional Background Facts for the Confidential Information Counterclaims
15. The 2002 Agreement provided a “framework” for the development of future products by e.Digital for digEcor, and, correspondingly, digEcor agreed to “keep in confidence and prevent the disclosure to any person or persons of all technical information and data . . . which is designated in writing. . . to be of a proprietary or confidential nature” in accordance with the terms of that agreement.
16. digEcor periodically received e.Digital confidential information regarding the digEplayer and improvements thereto, including software applications and source code, schematics, block diagrams, documentation (“white papers”), and ‘hands-on’ instruction, subject to the confidentiality protections of the 2002 Agreement.
17. In late 2004 and early 2005, digEcor desired to develop a next generation digital in-flight entertainment system in contrast with the existing hand-held digEplayer (hereinafter the “digEsystem” project or player, later marketed as the “digEplayer XT”), and hired DeCuir Inc., as its consultant and agent, to locate and work with engineering firms to design that product.
18. digEcor and DeCuir approached e.Digital to develop the next generation system. e.Digital held numerous technical discussions with digEcor and DeCuir, including a face-to-face meeting on January 5, 2005. DeCuir signed a non-disclosure agreement with e.Digital on or about January 4, 2005. During this time e.Digital and digEcor also entered into legal negotiations on a development and manufacturing agreement concerning this new player.
19. During these and subsequent technical discussions and legal negotiations, e.Digital provided proprietary and confidential information to digEcor and DeCuir, protected by the 2002 Agreement, including, but not limited to, the following information:
(a) Media Player Architecture/Block Diagram, dated December 29, 2004 Rev. A) of existing and upgraded DigEplayers, (hereinafter “e.Digital Block Diagrams”), marked “CONFIDENTIAL AND PROPRIETARY INFORMATION” and bearing a copyright notice on or before January 5, 2005.
(b) Schematics, bill of materials, and related technical documentation related to the next generation player project in or about January 2005.
(c) Other confidential technical information from e.Digital regarding the ongoing next generation player project during the first four to five months of 2005 (hereinafter “e.Digital’s Other Technical Information”).
20. However, negotiations for an agreement to have e.Digital develop the next generation player terminated in or about May 2005 so that digEcor and its agents were not authorized to use e.Digital’s confidential information in connection with digEcor’s next generation player project.
21. Later in 2005, again at digEcor’s request, e.Digital submitted a Request For Proposal for digEplayer Manufacturing (“RFP”) to various manufacturers, including Wolf Electronics (“Wolf”), to locate a new manufacturer for the digEplayer. Wolf signed a non-disclosure agreement with e.Digital on or about September 9, 2005.
22. The RFP included embedded .PDF files with photographs of the exterior and interior of the existing DigEplayer, budgetary costing and sourcing information for the digEplayer, a bill of material for the main board and the Ethernet daughter board, detailed drawings for fabrication of the Main PC board and Ethernet daughter PC boards, which provided Wolf with all information needed to manufacturer the existing digEplayer (including all design improvements to date).
23. The RFP and associated information was communicated under express written and oral understandings of confidentiality, including the 2002 Agreement, as well as circumstances implying a duty of confidentiality, including the following express alternative statements on such documentation: (a) Each page of the RFP (with included the embedded .PDF files) contained a copyright notice and a legend stating that “[t]his document contains Proprietary and Confidential disclosures of e.Digital. Reproduction or distribution in any form without permission is strictly prohibited.”
(b) The drawings within the RFP contained a legend noting that “PROPRIETARY RIGHTS Of e.DIGITAL CORPORATION are involved in the subject matter of this material and all manufacturing, reproduction, use and sales rights pertaining to such subject matter are expressly reserve. It is submitted in confidence for a specified purpose, and the recipient, by accepting this material, agrees that this material will not be used, copied or reproduced in whole or in part, nor its contents revealed in any manner, or to any person, except for the purpose delivered.”
24. The information described in the preceding paragraphs 15, 18, and 20 through 22 shall be collectively referred to as e.Digital’s confidential information.
25. Upon information and belief, digEcor and its agents, including DeCuir and Wolf, have disseminated and/or used e.Digital’s confidential information in connection with the development of digEcor’s next generation player (“digEplayer XT”) in violation of the 2002 Agreement, other written and oral agreements of confidentiality, and implied duties of confidentiality. e.Digital’s belief is based on information including, but not limited to, the following:
(a) DeCuir told e.Digital at or shortly after the meeting on January 5, 2005, with the knowledge and consent of digEcor that the Block Diagrams contained “a lot of . . . information we can use for the [XT] product spec[ification]” due later that month, which would result in “less testing to do to help us [DeCuir and digEcor] develop the new Product Specification” – other words, to accelerate development and introduction of the digEplayer XT;
(b) DeCuir told e.Digital at or shortly after the meeting on January 5, 2005, with the knowledge and consent of digEcor that e.Digital’s Block Diagrams “will be of great assistance in helping us [DeCuir and digEcor] to baseline the current product” – again to accelerate development and introduction of the digEplayer XT;
(c) In a press release dated May 25, 2006, digEcor admitted that development of the digEplayer XT was derived from and based on “the best features of the [digEplayer] 5500,” and e.Digital believes most or all of such best features were based on or constituted the confidential information or trade secrets of e.Digital;
(d) digEcor has touted various features of the digEplayer XT, such as the 10 hour battery life, as similar or identical to the digEplayer 5500, which features are based on e.Digital’s confidential information or trade secrets; and
(e) Given the timing of the digEplayer XT project, and the unquestioned access to and knowledge of digEcor and its agents (including DeCuir, the engineering firm selected by digEcor, and/or Wolf) of e.Digital’s confidential information and trade secrets, it is unlikely that digEcor and its agents did in fact, or could have, eliminated e.Digital’s confidential information from consideration or use during the development process of digEcor’s next generation player.
Loading...
Loading...
New Message
Please
login
to post a reply