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Forrester Environmental Services, Inc. and Keith E. v. Wheelabrator Technologies

August 15, 2012

FORRESTER ENVIRONMENTAL SERVICES, INC. AND KEITH E. FORRESTER
v.
WHEELABRATOR TECHNOLOGIES, INC.



The opinion of the court was delivered by: Joseph N. Laplante United States District Judge

FINDINGS OF FACT AND RULINGS OF LAW

The plaintiffs, Keith Forrester and his company, Forrester Environmental Services, Inc., have sued defendant Wheelabrator Technologies, Inc., alleging that Wheelabrator interfered with plaintiffs' business relationship with a Taiwanese company, Kobin Environmental Enterprise, by falsely claiming ownership of the U.S. patent rights to plaintiffs' intellectual property, among other things. Because the plaintiffs' right to relief necessarily depends on the resolution of substantial questions of federal patent law, this court has jurisdiction pursuant to 28 U.S.C. §§ 1331 (federal question) and 1338 (patent). See U.S. Valves, Inc. v. Dray, 212 F.3d 1368, 1372 (Fed. Cir. 2000).

The court previously granted summary judgment in favor of Wheelabrator on one of plaintiffs' claims--for trade secret misappropriation in violation of the Uniform Trade Secrets Act, N.H. Rev. Stat. Ann. § 350-B--but denied Wheelabrator's motion as to plaintiffs' remaining claims. Those claims are: (1) unfair or deceptive trade practices in violation of the Consumer Protection Act, N.H. Rev. Stat. Ann. § 358-A, (2) tortious interference with contractual relationship, and (3) tortious interference with prospective advantage. Forrester Envtl.

Servs., Inc. v. Wheelabrator Techs., Inc., 2011 DNH 212. Among other things, the court concluded that a genuine issue of material fact existed as to when plaintiffs first discovered (or should have discovered) Wheelabrator's alleged misconduct, the event that started the running of the limitations period under the so-called "discovery rule." Id. at 22-26.

Because the New Hampshire Supreme Court has held that the facts surrounding the application of the statute of limitations, and, concomitantly, the discovery rule, are to be decided by the court rather than the jury, see Keshishian v. CMC Radiologists, 142 N.H. 168, 179-80 (1997), this court conducted an evidentiary hearing on the limited issue of whether some or all of plaintiffs' claims are time-barred. Each of the parties submitted a set of proposed findings and rulings. With the assistance of these materials, the court makes the findings of fact and rulings of law set forth herein. See Fed. R. Civ. P. 52(a). As explained in detail below, the court finds that, with the exception of misrepresentations Wheelabrator allegedly made to Kobin on or around June 14, 2007, plaintiffs "[d]iscovered, or in the exercise of reasonable diligence should have discovered," N.H. Rev. Stat. Ann. § 508:4, Wheelabrator's alleged misconduct and its causal connection to their damages no later than January 19, 2007. Because this action was not filed until February 23, 2010, the court concludes that the three-year statute of limitations bars plaintiffs' claims, except to the extent they are premised upon the alleged June 14, 2007 misrepresentations.

Findings of Fact

I. Relationship between the parties

1. Plaintiff Keith Forrester is a former employee of Wheelabrator Environmental Systems, the predecessor to defendant Wheelabrator Technologies, Inc. When Forrester's employment with Wheelabrator ended in 1992, he formed his own company, plaintiff Forrester Environmental Systems, Inc. ("FESI").

2. Both Wheelabrator and FESI provide goods and services related to the use of phosphates to stabilize heavy metals in incinerator ash and other industrial waste. Wheelabrator refers to its proprietary treatments as WES-PHix, while FESI refers to its treatments as FESI-BOND.

3. Dating back nearly to the founding of FESI in 1992, Forrester and Wheelabrator have regularly quarreled over both the scope of their respective patent and intellectual property rights and alleged interference with one another's customers. Or, as Forrester testified, he and Wheelabrator have had "a fundamental disagreement" regarding the scope of Wheelabrator's patents and intellectual property rights for "a long time."

4. In July 1998, Forrester wrote to Wheelabrator claiming that one of its employees, Mark Lyons, had made false statements to a customer which had "caused severe damage to [FESI's] business." Exh. I.

5. In March 1999, FESI and Wheelabrator were competing for the business of at least two potential customers. During the course of negotiations with these potential customers, Forrester came into the possession of letters Wheelabrator had sent them. See Exhs. J-K.

6. Forrester testified that, in his opinion, these letters misrepresented the scope of Wheelabrator's intellectual property rights. Specifically, he testified that he believed Wheelabrator overstated its patent rights by representing that "the use of phosphate to treat [incinerator] ash, either alone or in combination with any other chemical agent(s), is covered by Wheelabrator's patents" in a March 17, 1999 letter to Robert R. Becker of HDR Engineering, Inc. Forrester further testified that he believed Wheelabrator overstated its patent rights by representing that "the use of any form of water soluble phosphate to treat wire chopping waste, either alone or in combination with any other chemical agent(s), would infringe [Wheelabrator's U.S. Patent No. 5,430,233 (the "'233 Patent")]." This statement appeared in Wheelabrator's March 28, 1999 letter to Martin S. Rifkin of OmniSource Corp.

7. In May 2000, Forrester and Wheelabrator again butted heads. Wheelabrator's general counsel wrote to FESI expressing concern that FESI "may be offering to treat waste from metal reclamation processes with triple super phosphate," a treatment that he viewed as "rais[ing] a possible concern with respect to" the '233 Patent. Exh. L. Forrester responded in August of that year, stating that he did "not agree with [Wheelabrator's] broad interpretation" of its patent but confirming that FESI was "not offering technology as allowed under [the '233 Patent]." Exh. M.

II. Plaintiffs' relationship with Kobin

8. The parties' squabbles over customer relationships and intellectual property intensified in the mid-2000s.

9. In August 2004, FESI entered into a chemical supply agreement with Kobin Environmental Enterprise Co., Ltd., a Taiwanese waste treatment company. See Exh. 2. At that time, Kobin had sublicensed the right to use WES-PHix to treat incinerator ash at its Taipei facility from Wheelabrator's Taiwanese licensee, Bio-Max Environmental Engineering Company, Ltd.

10. Forrester had heard from FESI's representative for Taiwan, Hangshin Shih, that Kobin was dissatisfied with WES-PHix due in part to an unpleasant odor that it produced. Forrester believed he could achieve the same results without an odor. He initially discussed two possible treatments with Kobin: one using triple super phosphate, or "TSP," and one using dicalcium phosphate dihydrate powder, or "DCPDHP."

11. The following month, an outside attorney for Wheelabrator wrote to Forrester expressing concern that, among other things, FESI was "offering to the waste industry a process or processes for the treatment of wastes similar to those" embodied in Wheelabrator's patents, and identified the use of TSP as a method "fully disclosed in Wheelabrator's patents." Exh. P. The letter suggested that Forrester compare the claims of Wheelabrator's patents "to the processes you are offering to the waste-to-energy and other industries," invited him to contact Wheelabrator to discuss licensing WES-PHix, and asked that he provide "details of your treatment process(es) and their relevance to the Wheelabrator patents." Id. The letter also contained a veiled threat of possible litigation against Forrester and FESI. Forrester promptly responded to this letter, disputing Wheelabrator's interpretation of the scope of its patents. See Exh. Q.

12. Neither of these letters specifically referenced either party's business relationship with Kobin. While these exchanges were taking place, however, FESI and Kobin were developing their business relationship pursuant to the August 2004 chemical supply agreement. Wheelabrator either knew of or suspected the existence of this relationship. Forrester testified that beginning some time in 2004, he learned from Kobin that Wheelabrator had been telling Kobin that it owned patent rights that, in his opinion, it did not own. Forrester continued to hear these reports from Kobin throughout the remainder of FESI's relationship with the company.

13. After conducting initial testing to identify a chemical treatment that would satisfy Kobin's requirements, FESI began selling Kobin DCPDHP on a regular basis beginning in April 2005. Forrester testified that he believed that the use of DCPDHP to treat Kobin's incinerator ash did not infringe upon any of Wheelabrator's patents, because DCPDHP's water solubility was below that specified in those patents. In fact, Forrester testified that because his method of treatment was "dry"--i.e., did not require the addition of any water--it was altogether different from Wheelabrator's method.

14. Nevertheless, on April 5, 2005, an outside attorney for Wheelabrator wrote to FESI accusing it of "engag[ing] in activities to interfere with contractual and other advantageous relationships of [Wheelabrator] with . . . KuoBin Ceramic Ind. Co., Ltd."*fn1 Exh. W. The attorney also charged that FESI had been "utilizing technical information that [Wheelabrator] believes is owned by and proprietary to [Wheelabrator]." Id. The letter demanded that FESI "immediately cease and desist the aforementioned activities." Id. Forrester's response denied that FESI had engaged in any unlawful practices or that it had infringed Wheelabrator's patents. See Exh. X.

15. In May 2005, Forrester countered Wheelabrator's accusations of misconduct with a letter to Wheelabrator's outside attorney in which he accused Wheelabrator of engaging in misconduct of its own. See Exh. BB. In particular, the letter stated:

It has come to our attention that [Wheelabrator] has provided misinformation relating to FESI-BOND technology to its licensee in Taiwan, and disparaged FESI and myself. These actions by [Wheelabrator] are . . . in violation of US law regarding commercial and personal defamation. . . .

We request that [Wheelabrator] cease providing any opinions or comments to licensees regarding FESI-BOND technology that are not supported by peer reviewed published data or [the] FESI website and FESI marketing documents. FESI is prepared to file actions against [Wheelabrator] and seek treble and punitive damages for all losses associated with these marketing tactics allowed and supported by [Wheelabrator], if these illegal [Wheelabrator] communications result in FESI project losses or continue.

Id.

16. Forrester testified that he wrote this letter after Kobin informed him of Wheelabrator's claim that FESI did not have experience with bottom ash stabilization in the United States. ...


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