Huge claim submitted for damages too

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An amended complaint asking for at least $8 million in damages has been filed against Kenetech Corp and some of its senior officers by the German turbine manufacturer Enercon GmbH. The previous complaint in the same case, filed on November 4, 1996, also in the US District Court in San Jose, specified only compensatory damages of $2 million for losses sustained (Windpower Monthly, December 1996). Now "treble damages" for antitrust injuries and legal fees are also being sought, in addition to the $2 million in compensation.

The amended document contains far more detail of the lawsuit, which now alleges damages were caused by anti-trust violations, patent misuse and malicious institution and maintenance of frivolous claims for relief. Previously, damages were sought for the catch-all phrase "tortious abuse."

Significantly, the amended version also drops two defendants, Bruce Carrier of Kenetech Windpower and Robert Zavadil of Electrotek. Still named, however, are William Erdman, formerly a vice president of Kenetech Windpower, the subsidiary of Kenetech Corp now in bankruptcy, James Eisen, the general counsel of Kenetech, Electrotek Concepts Inc and Kenetech Corp. The complaint also specifically asks for a judgement holding Eisen and Kenetech Corp jointly liable for damages for "knowing and malicious institution."

The amended suit is the latest salvo in the Enercon-Kenetech battle. In January 1995 Kenetech Windpower sued Enercon and New World Power Corp in the same federal court for alleged infringement of its technology patents, a case yet to be heard. It also successfully filed a complaint against the two parties with the US International Trade Commission (ITC), which banned the Enercon E-40 turbine from the United States on the grounds that its power-electronics infringed a Kenetech patent.

But it was Enercon's counter suit filed in November that broadened the scope of the court proceedings by naming Kenetech Corp, not the bankrupt Kenetech Windpower, and individual defendants too. It accused Kenetech of trying to gain an unfair competitive advantage and of trying to monopolise the wind market, in part by shutting Enercon out of the US and by thus artificially inflating prices of its patented power converter globally.

Meantime, sale of Kenetech's power electronics patent to Trace Technologies Inc, financially backed by Zond, has been approved by Kenetech's bankruptcy court, although as of February 25 it had gone through, according to Zond's Hap Boyd. "We expect it to happen shortly," he said. The proposed sale included indemnification of much of the legal expenses in the Enercon-Kenetech federal lawsuit. Enercon's complaint also maintains that Zond Energy Systems will then buy the package from Trace, which Boyd basically confirmed. "We will have the rights to the power electronics for wind energy," he said.

The amended suit claims that Enercon's direct drive variable speed turbine is "entirely different" -- it is characterised by its use of an essentially synchronous modified ring generator and does not need gears, a gear box or gear train, as does Kenetech's KVS-33. Enercon says it did not secure patents for its technology but instead relied upon trade secret law to protect itself and its products. Enercon was targeted, it says, simply because it has the most advanced wind technology anywhere.

Enercon states that it had tried to establish assembly of the turbines in the US, to make them competitive enough to be supplied to New World for its contract with Texas Utilities (TU), a contract that -- Enercon says -- allowed New World and TU to substitute another turbine if they both agreed. But it asserts the defendants, Kenetech and Eisen, knew, or should have known, that no E-40 units had been brought into the US, especially as they had taken an extensive deposition from Enercon's managing director Aloys Wobben.

Enercon alleges that Kenetech and other defendants, including Erdman and Electrotek, knowingly and wilfully duped the ITC into erroneously believing that Kenetech's patents covered the entire Enercon wind turbine -- the up-tower turbine and the power converter. Enercon also alleges that Kenetech hid its financial problems from the ITC during the commission's probe, misused the legal system to try and get secret information about Enercon's up-tower components, and later publicised the ITC's ban to try and scare off Enercon clients.

Enercon suggests Kenetech may have hoped to get secret information during the ITC probe -- to include in one of Kenetech's own patent applications -- and that Kenetech also hoped a favourable ITC ruling would dispel bad publicity about the "catastrophic failure of the KVS-33." (Enercon alleges that Kenetech was in fact in such trouble, it was losing about $400,000 daily throughout 1995). And Enercon alleges that Kenetech used information from a meeting in March 1995 between Wobben and top Kenetech officials, purportedly regarding a possible settlement of the dispute, to further its own arguments against Enercon.

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