Filed just weeks before the sale of Kenetech's power electronics technology is due to be considered at a bankruptcy court hearing, the suit seeks damages of at least $2 million. It was filed in the United States District Court in San Jose, California on November 4. Attorney Jim Burns, representing Kenetech Corp, James Eisen and possibly other defendants in the suit, vehemently denies the charges.
The lawsuit broadens the scope of the proceedings by naming Kenetech Corp as a defendant rather than its subsidiary Kenetech Windpower, which filed for bankruptcy protection in federal court. It was Kenetech Windpower that sued Enercon and New World Power Corp in the same San Jose court and that also filed a complaint with the US International Trade Commission (ITC). The ITC ruled that Enercon turbines infringed Kenetech's patent and banned them from the US, while the San Jose case has yet to be tried. Meantime, a bankruptcy court hearing into the possible sale of Kenetech's power electronics technology to Trace Technologies is scheduled for December 5.
Even in the litigious US a lawyer is seldom named in a complaint, especially one alleging "tortious abuse" of process. The suit blasts Kenetech Corp of ulterior motives in its patent case against Enercon and New World Power Corp. Enercon's suit alleges that all the defendants wilfully misrepresented and omitted facts "Éultimately precluding Plaintiff from competing in the United States market for wind turbines."
The suit also accuses Kenetech Corp, Eisen and Kenetech officers William Erdman and Bruce Carrier, of trying to gain an unfair and illegal competitive advantage in the global wind market by inflating prices for a patented power converter and by purposefully keeping Enercon out of the US while they established a strong domestic base. The complaint notes that some Kenetech Windpower employees, including Eisen, may also personally profit. Eisen is known from bankruptcy court documents to expect a large financial bonus if the sales of Kenetech patents exceed $2 million.
More specifically, the complaint accuses Kenetech and Eisen of misleading the US District Court and the ITC by insisting that Enercon turbines had been imported into the US and that the technology infringed Kenetech's patents when they knew that was not the case. It accuses Eisen and Erdman of misleading the ITC by hiding the fact that manufacture of the KVS-33 had already been halted and by not divulging that the turbine's power electronics tended to fail. In reality the "KVS-33 was an economic, technological and operational disasterÉ," the suit states.
It further alleges that Robert Zavadil of Electrotek -- which has collaborated with Kenetech for years on the KVS-33 and its power electronics -- knowingly misled the ITC on technical evidence by implying that he had been retained by Kenetech as an independent expert rather than as an employee of Electrotek.
Kenetech's attorney Burns responds strongly to these allegations. Claims of abuse of process at the ITC should be brought before the ITC, he says. "We don't view this [lawsuit] as serious." He also says Enercon made the same allegations at the ITC trial, but they were rejected. "We're astonished by the brazenness of thisÉ," he comments. Burns characterises Enercon's suit as "desperate and as quite possibly having an ulterior motiveÉ.Enercon has lost all the steps in this process."
Meanwhile, the "limited exclusion order" banning Enercon technology from the US became law when President Bill Clinton did not intervene in the ITC's decision by October 29. Enercon attorney Mary Helen Sears has promised to file an appeal within the 60 days allowed under US law.