moorhead et. al. v. vapor point llc. et. al
TRANSCRIPT
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION VAPOR POINT, L.L.C.; KEITH NATHAN;§ And KENNETH MATHESON § § Plaintiffs, § § v. § Civil Action No. 4:11-cv-04639 § ELLIOTT MOORHEAD and § Judge Vanessa Gilmore NANOVAPOR FUELS GROUP, INC., § § Defendants. § Jury Demand
DEFENDANT ELLIOTT MOORHEAD’S AND NANOVAPOR FUEL GROUP, INC.S ORIGINAL ANSWER AND ORIGINAL COUNTERCLAIM
COMES NOW, Defendant Elliott Moorhead (“Moorhead”) and NanoVapor Fuel Group
Inc.’s (“NanoVapor”) (collectively referred to as “Defendants”) and files this their Original
Answer to Plaintiffs’ Original Complaint, denying all of Vapor Point, L.L.C.’s (“VaporPoint”),
Keith Nathan’s (“Nathan”) and Kenneth Matheson’s (“Matheson”) (collectively referred to as
“Plaintiffs”) claims1, and files this their Original Counterclaim and complaining of Plaintiffs and
others as follows:
I. ORIGINAL ANSWER
1. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations contained in paragraph 1 of Plaintiffs’ Complaint and, therefore,
deny the same.
1 Each paragraph of Defendant’s Original Answer refers to the paragraph of the same number in Plaintiffs’ Original Complaint.
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2. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations contained in paragraph 2 of Plaintiffs’ Complaint and, therefore,
deny the same.
3. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations contained in paragraph 1 of Plaintiffs’ Complaint and, therefore,
deny the same.
4. Denied. Defendant Moorhead is a resident of the State of Maine and cannot be served in
California.
5. Admitted.
6. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations contained in paragraph 6 of Plaintiffs’ Complaint and, therefore,
deny the same.
7. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations contained in paragraph 7 of Plaintiffs’ Complaint and, therefore,
deny the same.
8. Denied.
9. Denied.
10. Denied.
11. Denied.
12. Denied.
13. Denied.
14. Denied.
15. Denied.
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16. Denied.
17. Admitted in as far as Gary Wilkinson (“Wilkinson”) of NanoVapor Fuels Group, Inc.
(“NanoVapor”) met Matheson in Dallas, Texas in July of 2007, but Wilkinson only
discussed using Matheson for further product development, as the absorption technology
developed by Defendant Moorhead was already commercially viable. In fact, Matheson
joined NanoVapor seven (7) months after Moorhead’s provisional patent application was
filed. Denied as to the reminder of the allegations.
18. Admitted in as far as Matheson was given a reciprocal confidentiality agreement
(“NDA”) with NanoVapor, which Matheson signed. Denied as to the remainder because
Wilkinson signed the NDA on July 11, 2007, and returned a copy to Matheson. (See
Exhibit 1, signed NDA).
19. Denied.
20. Denied.
21. Denied.
22. Denied.
23. Denied.
24. Denied. Barry Rabon’s baseless letter is dated January 17, 2008. (See Exhibit 8, letter
from Rabon to Moorhead). Edward’s Oliver’s baseless letter is dated April 7, 2008. (See
Exhibit 9, letter from Oliver to Wilkinson).
25. Denied. On December 21, 2007, Nathan sent an e-mail to Moorhead offering to license
Moorhead’s ‘416 Application and any patent that may issue therefrom. (See Exhibit 10,
December 21, 2007 e-mail from Nathan to Moorhead attaching a proposed license
agreement). However, after NanoVapor would not license its technology, Nathan,
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Matheson, Alford and St. Amant began anew company named VaporPoint, utilizing
technology, equipment, trade secrets, and the like from NanoVapor.
26. Admitted.
27. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations contained in paragraph 27 of Plaintiffs’ Complaint and, therefore,
deny the same. Nathan and Matheson had an obligation to assign all inventions to
NanoVapor during their respective employments with NanoVapor, which ended on or
about December 21, 2007.
28. No response is required.
29. Denied.
30. Denied.
31. Denied.
32. Denied.
33. Denied because Nathan and Matheson are not inventors of the claims of the ‘416
Application. Defendants’ counterclaim alleges that Matheson has acted with deceptive
intent with respect to US 7,740,816 (“the ‘816 patent,” attached as Exhibit 2) and US
7,803,337 (“the ‘337 patent,” attached as Exhibit 3) in not naming Moorhead as at least a
co-inventor, if not the sole inventor.
34. Admitted that Moorhead is the sole inventor of the claims of the 416 Application and the
claims of the ‘310 patent. Denied as to the remaining allegations.
35. Denied.
36. Denied.
37. No response is required.
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38. Denied in as far Nathan and Matheson invented anything. Nathan and Matheson were
under a duty to assign to NanoVapor anything they invented while employed at
NanoVapor. Admitted in as far as Nathan’s employment agreement offered Nathan
$250,000 of restricted common stock subject to a 2.5 year vesting period beginning May
1, 2007. (See, Exhibit 4, Nathan Employment Agreement, ¶7). However, as further
explained herein, Nathan materially breached the terms of his Employment Agreement
and failed to continue employment with NanoVapor for the vesting period. Admitted in
as far as Matheson’s employment agreement offered Matheson $200,000 of restricted
common stock subject to a 2.5 year vesting period beginning August 1, 2007. (See,
Exhibit 5, Matheson Employment Agreement, ¶7). However, as further explained herein,
Matheson materially breached the terms of his Employment Agreement and failed to
continue employment with NanoVapor for the vesting period.
39. Denied that Nathan and Matheson disclosed the Invention to Defendants and denied
because compensation was paid to both Nathan and Matheson. Nathan was compensated
for testing work he performed for NanoVapor on Moorhead’s invention, later issued as
US 7,727,310 (“the ‘310 patent”). (See Exhibit 6, check stubs from NanoVapor to
Nathan for wages). Matheson was compensated by NanoVapor through payment for
Matheson’s air travel to and from Hawaii and reimbursement of expenses. (See Exhibit
29, Expense Report of Matheson to NanoVapor).
40. Denied.
41. Denied.
42. Denied.
43. Denied.
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44. No response is required.
45. Admitted that Moorhead is the sole inventor of the claims of the ‘416 Application that
eventually issued as the ‘310 Patent. Denied that Nathan and Matheson were inventors of
any element of any claim of the ‘416 Application and the ‘310 Patent. Further denied
that Defendants Moorhead or NanoVapor concealed either of the ‘416 Application or the
assignment of the ‘310 Patent from Nathan and Matheson.
46. Denied.
47. Denied.
48. Denied. The filing of the ‘416 Application was discussed with Nathan on at least
December 22, 2006. (See Exhibit 7, December 22, 2006 e-mail from Moorhead to,
among others, Nathan).
49. Denied.
50. Denied.
51. Denied. Defendants disclosed all relevant information to both Nathan and Matheson.
Defendants are without knowledge or information sufficient to form a belief as to the
truth of the remaining allegations contained in paragraph 51 of Plaintiffs’ Complaint and,
therefore, deny the same.
52. Denied.
53. No response is required.
54. Denied that Plaintiffs have any rights in the ‘310 Patent, the Invention, or the proceeds
therefrom.
55. Denied.
56. No response is required.
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57. Admitted that NanoVapor’s ‘310 Patent is very valuable. Denied as to the remainder of
the allegations.
58. Denied.
59. Denied.
60. Denied.
61. Denied.
62. Denied.
63. No response is required.
64. Denied.
65. Denied.
66. Denied.
67. Denied.
68. No response is required.
69. Denied.
70. Denied.
71. Denied.
72. Denied.
II. GENERAL DENIAL
73. Pursuant to Rule 8(b)(3), of the Federal Rules of Civil Procedure, Defendants generally
deny all of Plaintiffs’ allegations contained in each paragraph.
III. AFFIRMATIVE DEFENSES
74. Defendants hereby incorporate paragraphs 1-73, as if fully set forth herein.
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75. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’
pleadings, Plaintiffs cannot prevail because Plaintiffs are barred by the doctrines of
laches and estoppel.
76. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’
pleadings, Plaintiffs cannot prevail because Defendants had a license through both
common law, the Shop Right Doctrine, and contract law, to practice any invention of
Plaintiffs, as Plaintiffs were employees of NanoVapor. Defendants do not admit that
Plaintiffs invented anything.
77. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’
pleadings, Plaintiffs cannot prevail because Defendants paid Plaintiffs for any invention
of Plaintiffs. Defendants do not admit that Plaintiffs invented anything.
78. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’
pleadings, Plaintiffs cannot prevail because the statute of limitations bars Plaintiffs’
claims, which claims would have accrued on or before December 22, 2006.
79. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’
pleadings, Plaintiffs cannot prevail because Plaintiffs waived any cause of action against
Defendants due at least to the length of time between when the alleged causes of action
accrued and when Plaintiffs filed suit.
80. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’
pleadings, Plaintiffs cannot prevail because of Plaintiffs’ fraud in alleging that Nathan
and/or Matheson are inventors of the ‘310 Patent.
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81. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’
pleadings, Plaintiffs cannot prevail because Plaintiffs’ actions were calculated to place
Wilkinson and/or Moorhead under duress.
IV. COUNTERCLAIM
COMES NOW Counter-plaintiffs NanoVapor Fuels Group, Inc. and Elliott Moorhead
and files this Counterclaim against Counter-defendants Vapor Point, L.L.C., Jeffrey St. Amant,
Don Alford, Keith Nathan, and Kenneth Matheson, seeking correction of inventorship for US
Patent Nos. 7,740,816 and 7,803,337 under 35 U.S.C. §256, and damages for patent
infringement, misappropriation of trade secrets, fraud, breach of a fiduciary duty, tortious
interference, tortious interference with prospective contractual relationship, breach of contract,
and unjust enrichment, showing this Court as follows:
A. Parties
82. Counter-plaintiff NanoVapor Fuels Group, Inc. (“NanoVapor”) is a corporation existing
under the laws of the State of Delaware and with a principal place of business at 18135
Delta Estates Court, Cypress, Texas 77429.
83. Counter-plaintiff Elliott Moorhead (“Moorhead”) is an individual and a resident of the
State of Maine.
84. Counter-defendant Vapor Point, L.L.C. (“VaporPoint”) is a limited liability company
organized under the laws of the State of Louisiana with its principal place of business at
1400 South 16th Street, LaPorte, Texas 77571. VaporPoint may be served with process
by serving its attorney Michael D. Pegues at Bracewell & Giuliani, LLP, 1445 Ross
Avenue, Suite 3800, Dallas, Texas 75202.
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85. Counter-defendant Jefferey St. Amant (“Amant”) is an individual and a resident of the
State of Texas. Amant may be served with process at his place of business at 1400 South
16th Street, LaPorte, Texas 77571.
86. Counter-defendant Don Alford (“Alford”) is an individual and a resident of the State of
Texas. Alford may be served with process at his place of business at 1400 South 16th
Street, LaPorte, Texas 77571.
87. Counter-defendant Kenneth Matheson (“Matheson”) is an individual and a resident of the
Kingdom of Jordan. Matheson may be served with process by serving his attorney
Michael D. Pegues at Bracewell & Giuliani, LLP, 1445 Ross Avenue, Suite 3800, Dallas,
Texas 75202.
88. Counter-defendant Keith Nathan (“Nathan”) is an individual and a resident of the State of
Texas. Nathan may be served with process by serving his attorney Michael D. Pegues at
Bracewell & Giuliani, LLP, 1445 Ross Avenue, Suite 3800, Dallas, Texas 75202.
B. Jurisdiction and Venue
89. This Court has jurisdiction over this action pursuant at least to 28 U.S.C. §§ 1331, 1338,
and 1367.
90. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b) and (c) and 28
U.S.C. § 1400(b).
C. Relevant Factual Background
91. NanoVapor is an industry leader in the field of Volatile Organic Compound
Containment. In 2006, NanoVapor products and processes included technologies for the
suppression of combustible and toxic gases in fuel storage and transfer operations, using
a specially designed Vapor Suppression System (VSS) to effectively control or nearly
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eliminate the creation of vapors during these processes. The VSS was solely developed
by Elliott Moorhead.
92. NanoVapor products and processes had wide degassing applicability in the fields of:
• Cleaning degassed tanks • Refilling of fuel tanks • Frac tanks & vacuum trucks • Oil field collection tanks • Floating roof storage tanks • Ship-to-shore terminals • Ship-to-ship transfer • Aviation • Military • Rail cars
93. Moorhead, in addition to being the Chief Executive Office of NanoVapor, is renowned in
his field as an expert with numerous publications and patents to his name.
94. Seeking to locate itself in the Houston marketplace, Moorhead contacted an old
acquaintance of his, Keith Nathan. In 2006, Nathan operated a warehouse in League
City, Texas, where he rehabilitated used heat exchangers. In September of 2006,
NanoVapor, through Moorhead, began further development of its suppression technology
in Nathan’s warehouse.
95. Moorhead previously met Nathan at an industry conference in circa. 2005. Nathan
disclosed to Moorhead that he worked for the Continuum Chemical Corporation and that
he was involved in a lawsuit with Continuum concerning various contract and tort causes
of action, including the misappropriation of Continuum’s trade secrets by Nathan.2
96. Nathan called Moorhead repeatedly over the next several months as the lawsuit against
him proceeded, disclosing all facts related to the lawsuit to Moorhead.
2 The lawsuit was filed by Continuum on or about April 21, 2004.
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97. To settle the lawsuit, in or about July of 2006, Nathan paid a monetary damage award to
Continuum and agreed that the technology in dispute was a trade secret of Continuum
and that he was prohibited from using the trade secret methods, processes and systems.
98. While the lawsuit was pending, Nathan opened the heat exchanger rehabilitation
warehouse in League City. While being somewhat wary of Nathan, given his legal
troubles, Moorhead sought the space at Nathan’s warehouse for NanoVapor in an effort
to expand the company.
99. However, even with the space in League City, Moorhead still needed testing assistance.
Therefore, reluctantly, Wilkinson engaged Nathan for the testing services. To protect
NanoVapor, Wilkinson had Nathan sign a Confidentiality Agreement, which was
executed by all parties on August 31, 2006. (See Exhibit 24, August 31, 2006 CDA
between Nathan and NanoVapor). In March of 2007, Wilkinson required Nathan to sign
the NanoVapor Prospective Hire Acknowledgement which affirmatively states that
Nathan will not use any property or trade secrets of his former employer while employed
at NanoVapor. (See Exhibit 25, Prospective New Hire Form with Nathan).
100. Over the next several months, NanoVapor provided significant funding to Nathan
to purchase equipment, such as tanks and supplies in October and December of 2006, for
the suppression technology. (See Exhibit 12, balance sheet for Nathan’s account).
101. In early December of 2006, Moorhead independently conceived of and reduced to
practice an absorption method for removing VOC’s from hydrocarbon tanks. Moorhead
memorialized his invention in provisional patent application 60/871,766, filed on
December 22, 2006, with the United States Patent and Trademark Office (“Moorhead’s
Provisional Patent Application”).
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102. During the drafting of Moorhead’s Provisional Patent Application, Moorhead met
with Nathan and others regarding the confidentiality of his invention. As well, both
potential investors and employees of NanoVapor were kept apprised of the progress of
Moorhead’s Provisional Patent Application. (See Exhibit 7).
103. On December 21, 2006, NanoVapor began to purchase supplies for further
developing the new process memorialized in Moorhead’s Provisional Patent Application.
(See Exhibit 28, NanoVapor Financial). Moorhead used Nathan’s technical skills solely
for testing of the new and improved processes and systems disclosed in Moorhead’s
Provisional Patent Application was filed.
104. In April of 2007, NanoVapor memorialized its employment of Nathan as the chief
Operating Officer. (See Exhibit 26, Employment Agreement with Nathan). However,
Nathan never signed the Agreement. Moreover, as Nathan was underutilized as An
employee at NanoVapor, he was only paid 40% of his salary. (See Exhibit 27, note from
Wilkinson to Nathan).
105. To help with the sales and marketing, NanoVapor hired Don Alford in April of
2007 as Vice President of Business Development. (See Exhibit 13, e-mail from Alford to
Wilkinson and Moorhead accepting position with NanoVapor). In June of 2007,
Wilkinson required Alford to sign the NanoVapor Prospective Hire Acknowledgement
which affirmatively states that Alford will not use any property or trade secrets of his
former employer while employed at NanoVapor. (See Exhibit 14, Prospective New Hire
Form with Alford).
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106. Alford’s employment began with NanoVapor on May 1, 2007. However, Alford
did not execute the Employment Agreement sent to him. (See Exhibit 15, Employment
Agreement with Alford).
107. Seeking to grow NanoVapor’s staff, Wilkinson met with Kenneth Matheson in
July of 2007 in Dallas, Texas. Matheson ran a company named Sabre Services in
Hawaii. While Sabre Services was involved in the same general field of technology as
NanoVapor, neither Sabre Services nor Matheson was working on the absorption process
developed by Moorhead prior to Matheson’s employment with NanoVapor. (See Exhibit
17, Sabre Service information sheet). After being shown the technology, Matheson was
excited to join the NanoVapor team, even commenting that Moorhead’s technology was
amazing. (See Exhibit 16, e-mail from Matheson to NanoVapor, 1st ¶).
108. Moorhead and Wilkinson hired Kenneth Matheson in August of 2007, to help
further refine the commercial embodiment of Moorhead’s invention.
109. In August of 2007, NanoVapor was quickly developing a commercially viable
embodiment of Moorhead’s invention that included numerous NanoVapor trade secrets.
Several venture capital and private equity companies began to court NanoVapor for a
capital infusion.
110. Upon information and belief, Nathan, Alford and Matheson also began to see the
value of NanoVapor and Moorhead’s technology and began a plot to steal the technology
and wreck NanoVapor’s business, business plans and marketing plans. However,
Moorhead and Wilkinson were unaware of the nefarious intentions of Nathan, Alford,
and Matheson.
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111. A final commercial embodiment was developed by Moorhead, Wilkinson,
Nathan, and Matheson in October of 2007. The product was finally ready to be sold in
the marketplace. (See Exhibit 18, pictures of commercial embodiment).
112. Discussions with the private equity firms were focused on a $5-10 million capital
investment resulting in a valuation of NanoVapor between $10 and $20 million. The
private equity firm’s due diligence included lengthy interviews with each of NanoVapor
executives, including Moorhead, Wilkinson, Nathan, Alford, and Matheson. During the
interviews, each of Nathan, Alford and Matheson held themselves out as employees of
NanoVapor.
113. Due to the sensitive nature of the negotiations and due diligence with the private
equity firm, it was decided that all communications, other than the personal interviews
would go through Wilkinson. Each of Wilkinson, Moorhead, Nathan, Matheson, and
Alford knew that it was vitally important that a cohesive management structure be
presented to the private equity firm.
114. One aspect of the due diligence by the private equity firm was process and system
testing. The private equity firm used Flint Hills for the testing. The results of the testing
showed that the processes and systems included in Moorhead’s Provisional Patent
Application produced efficiency ratings of 98%, exceeding everyone’s expectations.
(See Exhibit 1, Flint test results). Marvin Kirk of Flint Hills praised the results, clearly
voicing his opinion that the process worked. (See Exhibit 20, November 15, 2007, e-mail
from Kirk to Matheson).
115. On information and belief, Nathan, Alford and Matheson decided it was time to
act and steal the technology for their own purposes. Each of Matheson, Alford and
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Nathan contacted the private equity firm raising doubts about the technology and raising
doubts about the cohesiveness of the management team at NanoVapor.
116. When Alford presented his market size forecast to NanoVapor, on information
and belief, each of Alford, Matheson and Nathan intended to steal NanoVapor’s
technology and trade secrets in an attempt to usurp business opportunities with at least
ExxonMobil, Flint Hills Resources, Chevron, Marathon Petroleum, ConocoPhillips,
Valero, Citgo, Valero, Lubrizol, Total, BP, and others. (See Exhibit 21, Houston, market
size forecast).
117. As a last effort to ruin NanoVapor’s business opportunities, at the December
2007, TCEQ meeting, each of Alford, Matheson and Nathan informed Wilkinson that
they wanted twenty (20) percent equity stake each in NanoVapor. (See Exhibit 22, PDF
from December 2007 TCEQ Meeting). Wilkinson declined to extend the twenty (20)
percent equity stake in NanoVapor to each of Nathan, Matheson and Alford. On
December 21, 2007, each of Alford, Matheson and Nathan resigned from NanoVapor.
118. Immediately upon leaving, Alford, Matheson and Nathan formed VaporPoint to
directly compete with NanoVapor, using NanoVapor’s technology, trade secrets, and
equipment, including the frac tank scrubber at Proco. (See Exhibit 23, e-mail from
Matheson to Wilkinson acknowledging that VaporPoint took NanoVapor equipment).
D. Causes of Action
a. Count I, Correction of Inventorship For US Patent Nos. 7,740,816 (“The ‘816
Patent”) Under 35 U.S.C. §256
119. Counter-plaintiffs hereby incorporate paragraphs 1-118, as if fully set forth
herein.
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120. Moorhead made conceptual contributions to each of claims 1-8 of the ‘816 patent.
121. Upon information and belief, Moorhead was unintentionally left off of the ‘816
patent as an inventor of the claimed subject matter of claims 1-8.
122. Upon information and belief, Moorhead’s non-joinder was without deceptive
intent.
123. Moorhead is without knowledge or information sufficient to form a belief as to
whether St. Amant or Matheson are correctly named as inventors of the ‘816 patent.
124. As a result of being left off the inventorship of the ‘816 patent, Moorhead has
been damaged.
125. As a result of Moorhead being left off the inventorship of the ‘816 patent,
NanoVapor has been damaged and continues to suffer damages.
126. Pursuant to 35 U.S.C. §256, Moorhead seeks a Certificate of Correction naming
himself as an inventor of the ‘816 patent and providing for all other needed corrections of
inventorship.
b. Count II, Correction of Inventorship For US Patent Nos. 7,803,337 (“The
‘337 Patent”) Under 35 U.S.C. §256
127. Counter-plaintiffs hereby incorporate paragraphs 1-126, as if fully set forth
herein.
128. Moorhead made conceptual contributions to each of claims 1-9 of the ‘337 patent.
129. Upon information and belief, Moorhead was unintentionally left off of the ‘337
patent as an inventor of the claimed subject matter of claims 1-9.
130. Upon information and belief, Moorhead non-joinder was without deceptive intent.
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131. Moorhead is without knowledge or information sufficient to form a belief as to
whether St. Amant or Matheson are correctly named as inventors of the ‘337 patent.
132. As a result of being left off the inventorship of the ‘337 patent, Moorhead has
been damaged.
133. As a result of Moorhead being left off the inventorship of the ‘337 patent,
NanoVapor has been damaged and continues to suffer damages.
134. Pursuant to 35 U.S.C. §256, Moorhead seeks a Certificate of Correction naming
himself as an inventor of the ‘337 patent and providing for all other needed corrections of
inventorship.
c. Count III, Infringement of US 7,727,310
135. Counter-plaintiffs hereby incorporate paragraphs 1-134, as if fully set forth
herein.
136. On June 1, 2010, United States Patent No. 7,727,310 B1 (the “‘310 Patent”),
entitled “System and Method for Removing Volatile Vapors from Containers,” was duly
and legally issued by the United States Patent and Trademark Office. A true and correct
copy of the ‘310 Patent is attached as Exhibit 30 to this Complaint.
137. Counter-plaintiff NanoVapor is the assignee and owner of the right, title, and
interest in and to the ‘310 Patent, including the right to assert all causes of action arising
under said patent and the right to any remedies for infringement of it.
138. Without license or authorization, Counter-defendant VaporPoint is and has been
infringing the ‘310 Patent, in the United States, including in this district, by making,
using, selling, offering for sale or license, advertising and/or importing in the United
States, including within this judicial district, its products and services and using systems,
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methods and instrumentalities that embody the inventions claimed in the ‘310 Patent.
Such acts constitute infringement under at least 35 U.S.C. § 271(a). Among such
infringing products and services is the VaporPoint VaporLock process advertised at
www.vaporpoint.net.
139. NanoVapor has been damaged by VaporPoint’s infringing activities with respect
to the ‘310 patent and continues to suffer damages.
140. Counter-defendant’s infringement is willful and Counter-plaintiff is entitled to a
trebling of damages and attorneys’ fees.
d. Count IV, Misappropriation of Trade Secrets
141. Counter-plaintiffs hereby incorporate paragraphs 1-140, as if fully set forth
herein.
142. NanoVapor has developed and owns numerous trade secrets related to Volatile
Organic Compound Containment, including, without limitation, system plans, customer
lists, process diagrams, process characteristics, pricing lists, and the like.
143. NanoVapor took appropriate steps to keep such trade secrets as confidential
including, at least, but not limited to, making all employees sign confidentiality
agreements and contractual relationships.
144. Counter-defendants Alford, Matheson and Nathan obtained NanoVapor’s trade
secrets in violation of certain employment agreements and confidentiality agreements.
145. Counter-defendants Alford, Matheson and Nathan used NanoVapor’s trade
secrets, in at least, but not limited to, the formation and marketing of VaporPoint.
146. As a result of Counter-defendants Alford’s, Matheson’s and Nathan’s actions,
NanoVapor has been damaged and continues to suffer damage.
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147. NanoVapor is entitled to recover exemplary damages and court costs.
148. NanoVapor is entitled to injunctive relief based upon Counter-defendants
misappropriation of trade secrets.
e. Count V, Texas Theft Liability Act
149. Counter-plaintiffs hereby incorporate paragraphs 1-148, as if fully set forth
herein.
150. Counter-defendants Alford’s, Matheson’s, St. Amant’s and Nathan’s conduct
constitutes a violation of the Texas Theft Liability Act, TEX. CIV. P. & REM. CODE
§§134.001-134.005, as Counter-defendants Alford’s, Matheson’s, St. Amant’s and
Nathan’s conduct constitutes a theft and communication of trade secrets.
151. Counter-plaintiff NanoVapor has certain possessory rights to property,
specifically the above referenced trade secrets, stolen by Counter-defendants. With full
knowledge of Counter-plaintiffs’ superior possessory rights, Counter-defendants
unlawfully appropriated, secured, and stole the subject property.
152. By using NanoVapor’s technology, trade secrets, and equipment, including the
frac tank scrubber from Proco. Counter-defendants unlawfully appropriated Counter-
plaintiff NanoVapor’s property. Counter-defendants’ unlawful taking was accomplished
with the intent to deprive NanoVapor of its right in and to the property, and caused
NanoVapor to suffer damages as a result of the theft.
153. NanoVapor is entitled to its attorneys’ fees when it prevails on these claims.
f. Count VI, Fraud
154. Counter-plaintiffs hereby incorporate paragraphs 1-153, as if fully set forth
herein.
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155. Counter-defendants Alford, Nathan and Matheson made material representations
to NanoVapor concerning at least, but not limited to, their employment with NanoVapor
in that Counter-defendants intended to steal NanoVapor’s trade secrets, technology and
equipment. In fact, Nathan has a history of misappropriation of trade secrets.
156. The material representations made by Counter-defendants were known by
Counter-defendants to be false.
157. Counter-defendants intended for NanoVapor to rely upon and act upon the
misrepresentations by hiring Counter-defendants.
158. NanoVapor did in fact act upon and rely upon the misrepresentations and hired
Counter-defendants.
159. NanoVapor was injured by the misrepresentations both directly and
consequentially, including at least the lost private equity firm capital infusion.
160. In addition to actual and compensatory damages, NanoVapor is further entitled to
collect exemplary damages.
g. Count VII, Breach of Fiduciary Duty
161. Counter-plaintiffs hereby incorporate paragraphs 1-160, as if fully set forth
herein.
162. As Executives and corporate officers of NanoVapor, Matheson, Nathan and
Alford had a fiduciary duty to NanoVapor that included at least a duty not to compete
with NanoVapor, duty to act with candor toward NanoVapor, duty to refrain from self-
dealing, duty not to usurp NanoVapor’s business opportunities, duty not to steal
NanoVapor’s trade secrets, duty to act with fair and honest dealing, duty to act with
integrity, duty to fully disclose, duty of loyalty, and the like.
Case 4:11-cv-04639 Document 9 Filed in TXSD on 03/05/12 Page 21 of 26
163. Counter-defendants Matheson, Nathan and Alford breached one or more fiduciary
duties as disclosed herein.
164. NanoVapor is entitled to its actual damages, exemplary damages and for a
constructive trust on the assets of VaporPoint.
h. Count VIII, Tortious Interference With Business Relationships
165. Counter-plaintiffs hereby incorporate paragraphs 1-164, as if fully set forth
herein.
166. Counter-plaintiff NanoVapor had a valid contract with at least Otto Ewer of
Proco, and others.
167. Counter-defendants Alford, Nathan, St. Amant, and Matheson willfully and
intentionally interfered with the contract such that Otto Ewer will no longer do business
with NanoVapor and to such an extent that NanoVapor was deprived of their equipment.
168. Counter-defendants Alford’s, Nathan’s, St. Amant’s, and Matheson’s conduct
proximately caused Counter-plaintiff NanoVapor’s injuries.
169. NanoVapor incurred actual injury at least to the measure of the lost capital
infusion from the private equity firm.
170. NanoVapor is entitled to recover actual damages and exemplary damages.
i. Count IX, Tortious Interference With Prospective Business Relationships
171. Counter-plaintiffs hereby incorporate paragraphs 1-170, as if fully set forth
herein.
172. There was a reasonable probability that NanoVapor would have entered into a
business relationship with at least ExxonMobil, Flint Hills Resources, Chevron,
Case 4:11-cv-04639 Document 9 Filed in TXSD on 03/05/12 Page 22 of 26
Marathon Petroleum, ConocoPhillips, Valero, Citgo, Valero, Lubrizol, Total, BP, and
others.
173. Counter-defendants Alford, St. Amant, Matheson and Nathan intentionally
interfered with NanoVapor’s relationship with the prospective parties.
174. Counter-defendants Alford’s, St. Amant’s, Matheson’s and Nathan’s conduct was
independently tortious.
175. Counter-defendants Alford’s, Nathan’s, St. Amant’s, and Matheson’s conduct
proximately caused Counter-plaintiff NanoVapor’s injuries.
176. NanoVapor incurred actual injury at least to the measure of the lost capital
infusion from the private equity firm.
177. NanoVapor is entitled to recover actual damages and exemplary damages.
j. Count X, Breach of Contract
178. Counter-plaintiffs hereby incorporate paragraphs 1-177, as if fully set forth
herein.
179. NanoVapor entered into valid and binding contracts, namely confidentiality
agreements with Alford, Nathan and Matheson.
180. NanoVapor substantially performed its obligations under the contracts.
181. Counter-defendants Alford, Nathan and Matheson breached their terms of the
contracts by at least opening VaporPoint.
182. Counter-plaintiff is entitled to actual damages and its attorneys’ fee.
k. Count XI, Unjust Enrichment
183. Counter-plaintiffs hereby incorporate paragraphs 1-182, as if fully set forth
herein.
Case 4:11-cv-04639 Document 9 Filed in TXSD on 03/05/12 Page 23 of 26
184. Counter-defendants have retained, or are in the process of retaining, for their own
use and benefit, NanoVapor’s rights in and to the technology, trade secrets, and
equipment, including the frac tank scrubber at Proco, and any proceeds therefrom.
185. As a direct and proximate result of Defendants’ acts, Plaintiffs have been
damaged and Defendants have been unjustly enriched. If Defendants are allowed to
continue to retain rights in and to and/or practice the technology, trade secrets, and
equipment, including the frac tank scrubber at Proco, they will continue to be unjustly
enriched to the further detriment of NanoVapor.
186. Counter-defendants Alford’s, Nathan’s, St. Amant’s, and Matheson’s conduct
proximately caused Counter-plaintiff NanoVapor’s injuries.
187. NanoVapor incurred actual injury at least to the measure of the lost capital
infusion from the private equity firm.
188. NanoVapor is entitled to recover actual damages and exemplary damages.
V. PRAYER FOR RELIEF AND JURY DEMAND
WHEREFORE, PREMISES CONSIDERED, Moorhead and NanoVapor respectfully
pray that the Court render judgment that the Plaintiffs claims be denied, that a take-nothing
judgment be entered in favor of Defendant, Defendants recover their reasonable and necessary
attorneys' fees and court costs from Plaintiffs for defending these baseless allegations, and that
Defendants be awarded such other and further relief to which he may be justly entitled.
As Counter-plaintiffs, Moorhead and NanoVapor respectfully pray that the Court enter an
Order and Final Judgment, as follows:
a. An Order and Certificate correcting the inventorship of both the ‘816 patent and
the ‘337 patent by adding Elliott Moorhead as an inventor;
Case 4:11-cv-04639 Document 9 Filed in TXSD on 03/05/12 Page 24 of 26
b. Actual damages for VaporPoint’s infringing activities with respect to the ‘310
patent;
c. Trebling of damages and attorneys’ fees for VaporPoint’s willful infringement of
the ‘310 Patent;
d. Actual and exemplary damages for Counter-defendants misappropriation of trade
secrets;
e. injunctive relief based upon Counter-defendants misappropriation of trade secrets;
f. actual damages to compensate for Counter-defendants liability under the Texas
theft liability act and attorneys’ fees;
g. actual and exemplary damages to compensate for Counter-defendants liability for
fraud;
h. actual and exemplary damages to compensate for Counter-defendants liability for
breach of a fiduciary duty;
i. actual and exemplary damages to compensate for Counter-defendants liability for
tortious interference;
j. actual and exemplary damages to compensate for Counter-defendants liability for
tortious interference with prospective business relationships;
k. actual and attorneys’ fee to compensate for Counter-defendants breach of
contract;
l. actual and exemplary damages to compensate for Counter-defendants liability for
unjust enrichment; and,
m. Court costs; and,
n. All other relief in the law and equity for which Defendants/Counter-plaintiffs
Case 4:11-cv-04639 Document 9 Filed in TXSD on 03/05/12 Page 25 of 26
show themselves to be justly entitled.
Respectfully submitted, /s/ William P. Ramey, III William P. Ramey, III
Texas State Bar No. 24027643 Federal Bar No. 27206 [email protected] Ramey & Browning, PLLC 2200 North Loop West, Suite 106 Houston, Texas 77018 713-426-3923 (Telephone) 832-900-4941 (Facsimile)
Attorney for Defendants Elliott Moorhead and NanoVapor Fuels Group, Inc.
CERTIFICATE OF SERVICE
I hereby certify that on the 5th day March, 2012, a true and correct copy of the foregoing
has been served on all counsel of record listed below:
Michael D. Pegues Bracewell & Giuliani, LLP 1445 Ross Avenue, Suite 3800 Dallas, Texas 75202 Via ECF system Attorney for Plaintiffs
/s/ William P. Ramey, III
Case 4:11-cv-04639 Document 9 Filed in TXSD on 03/05/12 Page 26 of 26