Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_04-cv-03843/USCOURTS-cand-5_04-cv-03843-38/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG

E-FILED on 11/5/07

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

MEMRY CORPORATION,

Plaintiff,

v.

KENTUCKY OIL TECHNOLOGY, N.V.,

PETER BESSELINK, MEMORY METALS

HOLLAND, B.V.,

Defendants.

No. C-04-03843 RMW

ORDER GRANTING STC'S MOTION FOR

PARTIAL SUMMARY JUDGMENT ON

KOT'S CLAIMS FOR UNFAIR

COMPETITION AND UNJUST

ENRICHMENT; GRANTING STC'S

MOTION FOR PARTIAL SUMMARY

JUDGMENT THAT KOT IS NOT ENTITLED

TO MONETARY RELIEF UNDER ANY OF

ITS CLAIMS AGAINST STC

[Re Docket No. 344, 362]

KENTUCKY OIL TECHNOLOGY, N.V.,

Counterclaimant,

v.

MEMRY CORPORATION and 

SCHLUMBERGER TECHNOLOGY

CORPORATION,

Counterdefendants.

On May 25, 2007, the court heard seven motions for partial summary judgment: two motions

filed by counterdefendant Memry Corporation ("Memry"); five motions filed by counterdefendant

Case 5:04-cv-03843-RMW Document 946 Filed 11/05/07 Page 1 of 15
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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 2

Schlumberger Technology Corporation ("STC"). Memry joined in STC's five motions. Because they

are factually related, this order addresses (1) STC's Motion for Partial Summary Judgment on KOT's

Claims for Unfair Competition and Unjust Enrichment and (2) STC's Motion for Partial Summary

Judgment That KOT is Not Entitled to Monetary Relief Under any of Its Claims Against STC. 

I. BACKGROUND

Defendant and counterclaimant Kentucky Oil Technology, N.V. ("KOT") claims that Peter

Besselink ("Besselink") is the inventor of "bistable" and "multistable" cells for use in expandable

structures. Declaration of Peter Besselink ("Besselink Decl.") ¶ 4. Together with proprietary cell

designs, know how and related analytical developments, this technology is known as "the Biflex

technology." 

Besselink filed U.S. provisional application Serial No. 60/036,359 on January 24, 1997,

describing and claiming the bistable and multistable cells for use in expandable structures for medical

and non-medical applications. Id. Besselink filed U.S. patent application Serial No, 09/012,843 ("the

'843 application") and PCT International Application PCT/US98/01310 ("the '01310 application") on

January 23, 1998, claiming the benefit of priority of the U.S. provisional patent application. Id. These

applications are known as "the Besselink applications." 

The Biflex technology and Besselink applications have been transferred through numerous

companies to KOT. KOT's predecessors-in-interest Memory Metals Holland ("MMH") and United

Stenting ("U.S. Inc.") entered into a Collaboration Agreement with Memry to scale up previouslydeveloped prototypes of stents, sharing with Memry information that KOT now asserts as trade secret.

Memry subsequently entered into a Development Agreement with STC to develop expandable sand

screens for oil wells that were based upon Besselink's Biflex technology ("STC sand screen project").

Declaration of Jeffrey Griffin ("Griffin Decl."), Ex. B, Development Agreement. KOT asserts that

Memry shared with STC confidential and trade secret information relating to the Biflex technology as

part of the STC sand screen project.

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 3

A. STC Sand Screen Project

Starting in November 1999, Craig Johnson of STC began to research possible alternative

approaches to expandable wellbore tubes that would fall outside the scope of a patented expandable sand

screen for oil wells. Declaration of Patrick Bixenman ("Bixenman Decl."), Ex. A; Declaration of Craig

Johnson ("Johnson Decl."), Ex. A. Johnson initially considered a medical stent-like device made of a

shape memory alloy ("SMA"), which led him to contact Memry, a company that was known to have

expertise in the field of SMAs. Memry suggested to STC that an article published by Besselink,

Wilfried van Moorleghem and Ton van Roermund disclosed medical stent designs that might be adapted

for use in a wellbore sand screen. 

When asked to provide samples of the medical stent prototypes, Besselink responded by

proposing that he and van Moorleghem team up with Memry to work on the project. He asked Memry

to propose terms for their participation in the project. Memry's then-Chief Scientist, Dr. L. MacDonald

Schetky, wrote to Besselink offering him a consultancy on the project to be paid from a portion of what

Memry would realize "in the event that the program progresses to commercialization." Decl. David

Moyer Decl. ("Moyer Decl."), Ex. P. Besselink did not pursue this opportunity.

STC entered into a Development Agreement with Memry, the stated purpose of which was to

"determine the feasibility of using bi-stable cell techniques and technology for creating expandable

conduits and other devices in wells." Griffin Decl., Ex. B. STC agreed to pay Memry on a consulting

basis and a 6.5% royalty for product sales after commercialization. Id. 

The Development Agreement contemplated that the parties would develop technology which

would have applicability in both the oil well and medical fields. Griffin Decl., Ex. B. It also

contemplated that STC and Memry would file patent applications related to the development project.

In 2000 and 2001, STC filed a number of patent applications for inventions related to applying the

Biflex technology in oil well applications. These patent applications have matured into numerous

patents that are assigned to STC. STC has never sued or threatened to sue any person or entity for

infringement of these patents. Griffin Decl. ¶ 10.

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 4

STC's development efforts continued through the end of 2003. In October 2003, STC conducted

a field test but the STC sand screen prototype was unable to achieve performance specifications for

collapse resistance set by STC's customer, BP. Hackworth Decl. ¶ 26. By the time of the third field

trial, STC had determined that the manufacturing cost of STC's sand screen prototype exceeded the

estimated costs of its three competitors, that the market demand for expandable sand screen was

lackluster and that the needs of STC's customers for an expandable sand screen did not outweigh the

additional research and development needed to continue the project. See Moyer Decl. Ex. GG; Moyer

Decl., Ex. CC, Dep. of Matthew Hackworth (Vol. II) at 171, 296. STC had also concluded that there

was "an unacceptable risk" that it would be accused of infringing patents held by Shell unless it

implemented a costly design-around. Griffin Decl. ¶ 23-24. In early 2004, STC began to consider

reselling an alternative expandable sand screen provided by Weatherford in light of the technical

difficulties with the STC sand screen project. Moyer Decl., Ex. CC, Dep. of Matthew Hackworth at

143:9-24; Hackworth Decl. ¶ 29. STC began negotiating to become a licensed reseller of Weatherford's

expandable screens outside the United States in February 2004. Hackworth Decl. ¶ 29, Ex. C. STC has

yet to sell any of Weatherford's expandable screens. Hackworth Decl. ¶ 29.

In October 2003, STC presented a paper at a meeting of the Society of Petroleum Engineers in

which it described its expandable bistable cell sand screen to oil industry representatives. The topic of

the paper was "the design, development and testing of an expandable sand screen using bistable cell

technology." Decl. of Jeffrey Wexler Supp. Opp'n to Mot. Summ. J. Re: Unfair Competition and Unjust

Enrichment Claims ("Wexler Decl. (unfair, unjust)"), Ex. E at 1. 

B. Transfer of the Biflex Technology

In 2000, United Stenting sold Besslink's bistable cell technology to Jomed N. V. for an up-front

payment of $10 million and running royalties of 5.5%. Wexler Decl., Ex. I, §§ 2.1, 2.2. Jomed entered

bankruptcy and its assets were transferred to Abbott. After KOT was formed, it acquired the rights

Jomed had acquired from United Stenting. It later transferred rights to medical applications of the

Biflex technology to Paragon for approximately $3 million.

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 5

C. KOT's Licensing Efforts

KOT purports to license Biflex technology for oil well exploration and production. It claims

to have had contact with four companies: Shell, Noble Drilling ("Noble"), Baker Oil Tools ("Baker"),

and Weatherford. KOT alleges that its efforts to license its technology have been blocked by the STC

patents and patent applications. 

In January 2004 met with Paul Schilte of Shell. Besselink did not make a proposal to Shell

following that meeting. Moyer Decl., Ex. D, Besselink Dep. (Vol. II) at 354:23-355:19. Besselink also

had a few conversations with Paul Metcalfe of Weatherford in Aberdeen and Rijswik. Moyer Decl., Ex.

C, Besselink Dep. (Vol. II) at 60:17-61:18. Besselink was not invited to present the technology to

Weatherford, but was told by Metcalfe that Weatherford was interested in the technology so long as he

could "solve some problems." Although Besselink was unable to elaborate as to what those problems

were, he indicated that Weatherford was aware of the STC patents and was concerned that Besselink

did not have a patent for the Biflex technology in the oil well industry. Moyer Decl., Ex. C, Besselink

Dep. (Vol. II) at 62:2-65:25. 

In 2004, Besselink met with Buddy King of Noble at an Expandable Technologies Forum after

which he sent an email to King suggesting setting up a meeting upon Besselink's visit to Houston in

2004. Moyer Decl., Ex. C, Besselink Dep. (Vol. II) at 66:13-67:12; id. Ex. II. The suggested meeting

was not scheduled because of a conflict, but Besselink did not follow up to reschedule because he was

sued by Memry around the time of his Houston trip and was too overwhelmed to reschedule. Moyer

Decl., Ex. C, Besselink Dep. (Vol. II) at 67:13-25.

KOT pitched the Biflex technology to Baker in April 2005 after Bennet Richard from Baker

contacted Besselink expressing an interest in Besselink's technology. Moyer Decl, Ex. W. Besselink

provided Baker with STC's 2003 paper from the Society of Petroleum Engineers Meeting ("the SPE

paper") to provide direction on cutting prototypes for testing. Moyer Decl., Ex. D at Besselink Dep.

(Vol. II) at 371:3-11; id., Ex. W. After receiving an email from Richard stating that the results of the

test were poor, Besselink had no further contact with Baker. Moyer Decl., Ex. D., Besselink Dep. (Vol.

II) at 370:8-14.

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 6

In June 2005, KOT assigned the rights in certain of KOT's technology for use in medical devices

to Paragon Intellectual Properties for 2.5 million Euros (approximately $3 million). Moyer Decl., Ex.

B, Besselink Dep. (Vol. II) at 418:10-21; Wexler Decl. (unfair, unjust), Ex. R at 1.

II. ANALYSIS

STC moves for partial summary judgment that KOT's counterclaim for unfair competition fails

because STC has not engaged in any marketplace misconduct, KOT is not a business competitor of STC

and KOT has not suffered any competitive injury. By the same motion, STC also asserts that KOT's

counterclaim for unjust enrichment fails because STC has not been enriched. STC argues in a second

motion that KOT is not entitled to monetary relief for KOT's claims for trade secret misappropriation,

correction of inventorship, unfair competition and unjust enrichment, because KOT has not suffered any

actual damages as a result of STC's alleged conduct. 

As KOT acknowledges, the court dismissed KOT's claim for correction of inventorship to the

extent it seeks compensatory damages in its April 8, 2005 Order, prior to the instant motion. The court

has since also granted summary judgment that KOT's claims for trade secret misappropriation against

STC and Memry are time-barred. Order Re: Memry and STC's Motions Re: KOT's Counterclaims for

Trade Secret Misappropriation and Breach of the Collaboration Agreement Based on Misuse of

Confidential Information. STC did not move for summary judgment that KOT is not entitled to

monetary damages as to claims for breach of contract. Therefore, STC's motion that KOT is not entitled

to monetary relief is limited to the question of whether KOT suffered any damages for purposes of its

unfair competition and unjust enrichment claims. As KOT points out in its opposition to both of STC's

motions, the motions for summary judgment are thus inextricably interwined and will be considered

together.

The court previously denied STC's motion to dismiss KOT's unfair competition and unjust

enrichment claims as preempted by federal law stating:

Like the doctors' claims in American Cyanamid V, KOT's unjust

enrichment and unfair competition causes of action allege that STC acted

improperly in the marketplace. Thus, KOT's claims go beyond mere

allegations that (1) STC acted improperly in front of the PTO or (2) KOT

is entitled to a patent-like right in the Besselink Applications. The SAC

alleges that STC (1) "clouded title to the inventions described in the

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 7

Besselink Applications and impeded [KOT's] ability to license those

applications to interested third parties in the field of oil exploration" and

(2) "received a benefit which [it] has unjustly retained at the expense of

[KOT]." SAC ¶¶ 74, 80. At oral argument KOT's counsel clarified that

KOT claims that (1) STC obtained patents based on information in the

Besselink Applications, (2) publicized its technology in the marketplace

but did not exploit it, and (3) thus controlled the market by dissuading

companies from licensing KOT's technology for fear of being sued for

infringement. Although STC's counsel correctly noted that the SAC does

not explicitly refer to this course of conduct, the court believes that its

references to "cloud[ing] title," impeding KOT's "ability to license," and

"unjustly retain[ing]" a benefit state claims for unfair competition and

unjust enrichment, especially when "construed in the light most favorable

to the non-moving party." Sanders v. Kennedy, 794 F.2d 478, 481 (9th

Cir. 1986).

July 14, 2005 Order Granting in Part and Denying in Part STC's Motion to Dismiss ("July 14, 2005

Order") at 5-6, Docket No. 83. 

STC now moves for summary judgment on KOT's unfair competition and unjust enrichment

claims on the basis that it has not engaged in any marketplace misconduct with respect to KOT because

it has not offered any goods for sale, has not asserted any of the patents it filed based on the Biflex

technology, and has not made any statements to KOT's prospective customers regarding any of STC's

patents. In opposition to STC's motion, referring to the July 14, 2005 Order, KOT argued, "Because

Kentucky Oil's claim is predicated upon the misuse of confidential information and trade secrets, this

case falls on the American Cyanamid VI side of the line." KOT's Opp'n to STC's Mot for Partial Summ.

J. re: Unfair Competition and Unjust Enrichment (emphasis added).

As the court also stated in the July 14, 2005 Order, "Based on Digital Envoy, and on the

reasoning set forth in the court's April 8, 2005 order, the court believes that the [California Uniform

Trade Secrets Act (CUTSA)] preempts KOT's unfair competition and unjust enrichment claims to the

extent that they allege that STC misused confidential information." July 14, 2005 Order at 3. KOT's

argument on opposition appears to assert that KOT bases its unfair competition and unjust enrichment

claims on the misuse of confidential information and trade secrets, thereby resulting in preemption for

the reasons set forth in this court's April 8, 2005 and July 14, 2005 orders. 

KOT's counsel clarified at the hearing on the matter that his argument in written opposition

mistakenly argued too far. KOT's counsel explained that he overreached his argument demonstrating

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 8

that KOT's unfair competition and unjust enrichment claims were not preempted by patent law,

inadvertently treading into the realm of trade secret law preemption previously determined by this

court's orders set forth above. He clarified that the basis of KOT's unfair competition and unjust

enrichment is not the misuse of confidential information or trade secrets, rather, as alleged, that STC

obtained patents using information that was published in the Besselink applications. SAC ¶¶ 70-75, 79-

80. 

KOT seeks damages, disgorgement of STC's unjust enrichment, and a reasonable royalty on its

unfair competition and unjust enrichment claims. All of KOT's purported damages are based upon a

"cloud on title" theory. It asserts that STC obtained patents based on information in the published

Besselink applications and publicized its technology in the marketplace without exploiting it, which (1)

deprived KOT of the opportunity to license its technology to other oilfield service companies by

dissuading these companies from licensing KOT's technology for fear of being sued for infringement

and (2) reduced the amount of money that KOT received when it sold the technology to Paragon for use

in medical applications. July 14, 2005 Order at 5-6, Opp'n to STC's Mot. Summ. J. re: No Monetary

Relief. The court previously stated that, "Like the doctors' claims in [Univ. of Colo Found., Inc. v. Am.

Cyanamid Co., 342 F.3d 1298 (Fed. Cir. 2003)], KOT's unjust enrichment and unfair competition causes

of action allege that STC acted improperly in the marketplace." July 14, 2005 Order at 5.

There is a difference between liberally construing allegations in a complaint for purposes of

stating a claim and adjudicating based on evidence presented on a motion for summary judgment. Now

viewing the lengths to which KOT has attempted to stretch its minimal case, the court feels that in

hindsight, even allowing KOT's pleadings to stand may have been overly generous. Between the

preemption of KOT's unfair competition and unjust enrichment claims under CUTSA and the

preemption of such claims under patent law, there is very little space in which KOT may operate to state

a claim for unfair competition and unjust enrichment based upon the factual allegations it has set forth.

Even assuming that there is theoretically some claim stated, there is no evidence to support any

loss by KOT or gain by STC. As to the loss by KOT, there is no evidence that the four potential

customers mentioned by KOT failed to do business with KOT because of anything done by STC. As

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 9

to gain by STC, there is no evidence that STC has ever produced a commercial product based on the

disputed technology, nor is there evidence that STC has communicated with companies KOT identifies

as its potential customers regarding the disputed technology or asserted or threatened to assert the

patents that serve as the basis for KOT's claims.

There is no dispute that STC has neither offered goods for sale embodying the disputed Biflex

technology nor asserted any of the patents it filed that are allegedly based on said technology. KOT has

not identified any direct statements made by STC to any of KOT's potential licensees. The only conduct

identified by KOT is the October 2003 publication of the SPE paper authored by participants in STC's

expandable sand screen research and development program. KOT asserts that the SPE paper "described

in considerable detail the development of the bistable cell geometry itself, strongly suggesting that the

technology described belongs to STC." Opp'n to STC's Mot. Summ. J. Re: No Monetary Relief at 5.

A. Unfair Competition

A claim for common law unfair competition in California has four elements: (1) a substantial

investment of "time, skill or money in developing its property;" (2) appropriation and use of the

property by another company at little or no cost; (3) the appropriation and use of the "property was

without the authorization or consent ...;" and (4) injury by the appropriation and use by the other

company. City Solutions, Inc. v. Clear Channel Communications, 365 F.3d 835, 842 (2004) (citing

Balboa Ins. Co. v. Trans Global Equities, 218 Cal. App. 3d 1327, 1342 (1990)). Under the common

law, "competitive injury originally composed an essential element of the tort of 'unfair competition."

Barquis v. Merchants Collection Ass'n of Oakland, Inc., 7 Cal. 3d 94, 109 (1972); cf. Bank of the West

v. Superior Court, 2 Cal. 4th 1254, 1264 (1992). 

STC first contends without citation to law that KOT is not a business competitor because it has

never produced a product, and has no employees or operational facilities. This argument has little merit,

particularly given that KOT has adduced evidence that it at least contacted four prospective customers

in the oil industry. 

STC next asserts that KOT has suffered no competitive injury caused by STC. STC argues that

the SPE paper could not have resulted in a competitive injury to KOT as a matter of law because the

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 10

SPE paper was published in October 2003 while KOT was not formed until December 2003 and did not

purchase the Besselink Applications from Abbott Laboratories until two months after the SPE paper was

published. According to STC, Besselink and van Moorleghem must have purchased the Besselink

Applications with full knowledge of the prior publication of the SPE paper and thus could have avoided

any competitive injury by not purchasing the Besselink applications. The court does not find this

argument to be persuasive. Although it has found that Besselink and van Moorleghem should have

known about the misappropriation of its trade secrets as of 1998 when Memry informed them that it was

going to utilize its Biflex technology, it is certainly possible that KOT was not initially aware of the

extent potential impact of the SPE paper on its future licensing efforts at the time it purchased the

Besselink applications.

 The court nevertheless finds that KOT has failed to adduce any evidence that it suffered

competitive injury due to STC's ownership of the STC Patents or the publication of the SPE paper. 

KOT asserts that it was unable to successfully license its technology to four companies: Shell,

Weatherford, Noble and Baker Oil Tools. The evidence on record does not support KOT's claim.

1. Baker

The undisputed evidence demonstrates that following Besselink's meeting with Bennet Richard

at Baker, Baker attempted to manufacture prototypes utilizing the SPE paper. Baker found the results

unsatisfactory:

Peter, one of my engineers copied the design per the Schlumberger paper you sent. We

then had several samples water jet cut. He did tensile and comprehensive loading on

those samples but were [sic] not satisfied with the poor results so we have since dropped

the project. I do not believe there is any interest in [Baker] at this time, but that is

always subject to change. I'll keep your card handy in the event our situation changes.

1/26/07 Moyer Decl. (docket no. 347), Ex. W. Baker's lack of interest is unrelated to STC, rather Baker

expressed its lack of interest after unsatisfactory results with samples based on the designs KOT

provided. KOT presents no evidence that the failure to license to Baker was due to anything other than

Baker's lack of satisfaction with the solution offered by KOT.

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 11

2. Noble

KOT failed to follow up with Noble. After meeting Buddy King of Noble at a conference in

Rijswijk, Besselink sent King an email seeking to set up a meeting for when Besselink was in Houston

in May 2004. Moyer Decl, Ex. C 66:22-67:12. King responded that he wanted to include his colleague,

Dr. Bill Maurer, in any meeting with Besselink, but that Maurer would be out of the country at the time

of Besselink's visit. Id. Besselink did not follow up with Noble after their e-mail exchange, purportedly

because he was sued by Memry:

Q: Did you send – after you were unable to meet with him during your 2004 trip, did you

send him any further communications?

A: I don't think so.

Q: Did you ever try to call him?

A: I don't think so.

Q: Why not?

A: I think – I think the situation changed drastically when I was there in Houston just

because suddenly everything changed, suddenly I was sued by Memry, and I was

overwhelmed about a lot of things. So I really had to think about what to do now, and

I think was not wise to go further in what I was doing at that moment. It was too much

at one moment.

Moyer Decl., Ex. C, 67:13-25. Besselink's testimony does not support the contention that Noble was

dissuaded from licensing the biflex technology because of anything that STC might have done, rather

it demonstrates that Besselink failed to follow up to reschedule a meeting with Noble, which resulted

in losing the opportunity to pitch the technology to Noble.

3. Shell

Besselink first met with Shell in January 2004. Prior to the meeting, at Shell's offices in Rijswik,

Paul Schilte of Shell sent an email to Besselink requesting discussion on the following topics: (1) an

overview of patents, (2) a status update of Besselink's activities in the area, (3) what advice had been

obtained by KOT's attorney, (4) KOT's provisional action plan, and (5) a proposal to Shell. Besselink

testified that he did not make a proposal to Shell. He and van Moorleghem were waiting for an

indication of Shell's interest before making a proposal. Moyer Decl., Ex. D. 354:23-355:19.

Apparently, that indication never occurred and KOT adduces no evidence as to why Shell and KOT did

not progress further in discussion. Therefore, there is also no evidence that STC's patents or the

publication of the SPE paper had any impact on KOT's licensing efforts to Shell.

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 12

4. Weatherford

Besselink apparently had a few conversations with Paul Metcalfe of Weatherford. Besselink met

Metcalfe at a presentation in Aberdeen. Moyer Decl., Ex. C, 60:17-18. Weatherford did not invite

Besselink to present his technology, but Besselink exchanged correspondence with Metcalfe. Besselink

asserts that Weatherford told him the company was interested in the technology so long as he could

"solve some things." Besselink was unable to articulate what "those things" were and his testimony was

wholly inconsistent as to whether STC was a topic of conversation with respect to Weatherford's interest

in the Biflex technology. Moyer Decl., Ex. C at 62-65. The evidence presented in support of KOT's

position consists solely of Besselink's convoluted testimony in which he initially asserts that

Weatherford expressed concern about STC's ownership in the Biflex technology, but then backs off to

say that he was unclear whether Weatherford mentioned STC at all. Id. at 63:14-21 ("I don't – I can't

tell you if he mentioned, yes or no, the word 'Schlumberger,' but it was very clear what we were talking

about, that's what I say. Like with Baker Oil. They were also interested. And they may not have said

you have to solve this and that with Schlumberger, but they may have said when you solve your

problems you are very welcome. So did they say it or did they not say it, I don't know. They may

have."). Not only is tthis testimony inadmissible as hearsay as to the reason Weatherford decided not

to work with Besselink, but the testimony on the whole is so clearly self-serving and vague that no jury

could reasonably conclude from this testimony that Weatherford was dissuaded from licensing the

technology from Besselink as a result of any ownership interest that was allegedly asserted by STC

through the publication of the SPE paper or the issuance of the STC patents.

5. Sale to Abbott 

KOT's contention that STC's behavior resulted in the decline in value of the Biflex technology

in the medical field is far-fetched. KOT asserts that after it purchased the rights to Besselink's bistable

technology from Abbott, it assigned to Paragon Intellectual Properties LLC rights in the technology for

medical applications for 2.5 million Euros, or approximately $3 million. In support of its theory, KOT

asserts that the expert testimony of Daniel Ingberman establishes that the price for the medical

application rights should have been $10 million. Wexler Decl., Ex. T. But KOT presents no evidence

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1 Ingberman's declaration states: "The counterclaimant was also likely harmed because

its ability to license outside the oil field applications (for example, in the medical field applications)

has likely been impaired by the alleged wrongful conduct. However, at this time I have not yet

found a basis to accurately estimate the degree to which the wrongful conduct (as compared to other

factors) has impaired the counterclaimant's licensing ability in the medical products arena. 

Therefore, in order to be conservative, I have not attempted to quantify this element of harm, other

than to note that it is likely to be less than $7 million (the difference between the $10 million upfront

fee specified in the Patent Assignment Agreement between United Stenting Inc./ Mr. Besselink/

Jomed and the roughly $3 million upfront fee established in the Paragon/Kentucky Oil agreement.

Wexler Decl. Opp'n Mot. Summ. J. KOT Not Entitled to Monetary Relief, Ex. T ¶¶ 11, 60.

ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 13

to suggest that any decline in value was in any way caused by STC.1 To prove it entitled to damages

for unfair competition and unjust enrichment, KOT is required to show a causal link between STC's

behavior and the damages suffered. See, e.g., Cal. Civ. Code § 3333 ("For the breach of an obligation

not arising from contract, the measure of damages . . . is the amount which will compensate for all the

detriment proximately caused thereby, whether it could have been anticipated or not"). Because KOT

has failed to adduce any evidence that any act of STC caused the alleged decline in value for the rights

sold to Paragon, STC is entitled to summary judgment on KOT's unfair competition and unjust

enrichment claims.

B. Unjust Enrichment

STC also argues that there is no evidence that STC has been unjustly enriched. The elements

of a claim for unjust enrichment are (1) receipt of a benefit and (2) unjust retention of the benefit at the

expense of another. Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000). The parties do not

dispute that STC has never licensed or offered to license any of the STC Patents or any other intellectual

property relating to its Expandable Sandscreen Project. KOT's argument that STC was unjustly enriched

because it never paid KOT for a license to the Biflex technology is circular, given that KOT does not

adduce evidence of any monetary profit as a result of having used the Biflex technology without paying

this license fee to KOT. Nor, as set forth above, has KOT adduced any evidence that others in the

industry would have taken a license under the Besselink Applications but for STC's publicly asserted

ownership of the patent rights in the STC Patents. Thus, STC was not enriched by "squeezing out" a

potential competitor.

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 14

III. ORDER

For the reasons set forth above, the court

1. Grants STC's motion for partial summary judgment on KOT's unfair competition and

unjust enrichment claims. 

2. Grants STC's motion for partial summary judgment that KOT is not entitled to monetary

relief under any of its claims against STC or Memry for its seventh counterclaim for

unfair competition, and its eighth counterclaim for unjust enrichment.

DATED: 11/5/07

RONALD M. WHYTE

United States District Judge

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ORDER GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON KOT'S CLAIMS FOR UNFAIR COMPETITION

AND UNJUST ENRICHMENT; GRANTING STC'S MOTION FOR PARTIAL SUMMARY JUDGMENT THAT KOT IS NOT

ENTITLED TO MONETARY RELIEF UNDER ANY OF ITS CLAIMS AGAINST STC—C-04-03843 RMW

MAG 15

Notice of this document has been electronically sent to:

Counsel for Memry:

Andrew C. Ryan ryan@cantorcolburn.com 

William J. Cass wcass@cantorcolburn.com 

Thomas Mango tmango@cantorcolburn.com 

Benjamin J. Holl benjamin.holl@dbr.com 

Charles A. Reid, III charles.reid@dbr.com 

Counsel for STC:

Nancy J. Geenen ngeenen@foleylaw.com 

David B. Moyer dmoyer@foley.com 

Kimberly K. Dodd kdodd@foley.com 

Counsel for KOT:

Michael H. Bierman mbierman@luce.com 

Nicola A. Pisano npisano@luce.com

Jeffrey David Wexler jwexler@luce.com 

Counsel are responsible for distributing copies of this document to co-counsel that have not registered

for e-filing under the court's CM/ECF program.

Dated: 11/5/07 /s/ MAG

Chambers of Judge Whyte

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