IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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MEDTECH PRODUCTS INC.,

Plaintiff,

v.

RANIR, LLC AND CVS PHARMACY,

INC.,

Defendants.

_____________________________________

MEDTECH PRODUCTS INC.,

Plaintiff,

v.

DENTEK ORAL CARE, INC.,

KELLY M. KAPLAN,

RAY DUANE, AND

C.D.S. ASSOCIATES, INC.

Defendants.

_____________________________________

MEDTECH PRODUCTS INC.,

Plaintiff,

v.

POWER PRODUCTS, INC.,

d/b/a/ SPLINTEK,

Defendant.

_____________________________________

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Civil Action No. 07 CV 3302 (KMK)(LMS)

ECF FILED

PLAINTIFF MEDTECH PRODUCTS INC.’S MEMORANDUM IN OPPOSITION TO

DEFENDANTS RAY DUANE’S AND C.D.S. ASSOCIATES, INC.’S MOTION TO

DISMISS THE SECOND AMENDED COMPLAINT AND FOR OTHER RELIEF

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TABLE OF CONTENTS Page No.

I. PROCEDURAL BACKGROUND......................................................................................1

II. INCORPORATION OF MEDTECH’S RESPONSE TO

KAPLAN/DENTEK MOTION TO DISMISS ....................................................................3

III. THE RELEVANT MOTION TO DISMISS STANDARD.................................................3

IV. ARGUMENT.......................................................................................................................4

A. THE CONSULTING AGREEMENT, BY ITS TERMS, WAS

NOT TERMINATED UPON THE SALE OF DENTAL

CONCEPTS TO MEDTECH. .................................................................................4

1. The Relevant Allegations Regarding the Non-Competition

and Non-Solicitation Terms of the September 30, 1999

Consulting Agreement. ................................................................................4

2. The Covenant Not to Compete and Non-Solicitation

Provisions Applied to C.D.S. and Ray Duane. ............................................6

B. THE GENERAL RELEASE DOES NOT SUPPLANT THE

PRIOR CONTRACTS BECAUSE THE PROVISIONS WORK IN

TANDEM. .............................................................................................................10

1. Additional Background on the Confidentiality Obligations

At Issue. .....................................................................................................10

2. CDS was not a Party to the General Release and, Therefore,

Its Confidentiality Obligations Are Governed by the

Consulting Agreement and Proprietary Information

Agreement..................................................................................................14

3. As to Mr. Duane, the Confidentiality Obligations of the

General Release Do Not Supersede the Confidentiality

Provisions of the Consulting Agreement and the

Proprietary Information and Inventions Agreements. ...............................14

C. THE TRADE SECRET CLAIMS ARE PROPERLY PLEADED........................17

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TABLE OF AUTHORTIES PAGE NO.

American Express Bank Ltd. v. Uniroyal, Inc., 164 A.D.2d 275, 277,

562 N.Y.S.2d 613, 614 (1st Dep’t

1990).....................................................................................................7,9

CreditSights, Inc. v. Ciasullo, No. 05 CV 9345 (DAB), 2007 WL 943352

(S.D.N.Y. March 29,

2007).....................................................................................................15

Globe Food Services Corp. v. Consolidated Edison Co. of New York, Inc.,

184 A.D.2d 278 (1st Dep’t

1992).....................................................................................................16

PaineWebber Inc. v. Bybyk 81 F.3d 1193, 1199 (2d Cir. 1996).........................................7

Tigue v. Commercial Life Ins. Co., 631 N.Y.S.2d 974, 975 (4th Dep’t 1995)..........................9

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Plaintiff Medtech Products Inc. (“Medtech”) respectfully submits this Memorandum in

Opposition to Defendants Ray Duane’s (“Mr. Duane”) and C.D.S. Associates, Inc.’s (“C.D.S.”)

Motion to Dismiss the Second Amended Complaint and For Other Relief (“Motion to Dismiss”)

and Memorandum in Support of the Motion to Dismiss (“Duane/C.D.S. Memorandum”).1 The

Duane/C.D.S. Memorandum adds little to an already over-crowded docket. With few

exceptions, the arguments were already set forth by the other defendants in this case, and were

extensively briefed by the parties. For the reasons set forth in this pleading, the Motion to

Dismiss should be DENIED.

I.

PROCEDURAL BACKGROUND

Currently, two other motions to dismiss are pending before this Court: [1] DenTek Oral

Care, Inc.’s (“DenTek”) Motion for (A) Partial Dismissal of the Second Amended Complaint

and (B) Entry of a Protective Order and Order Compelling Disclosure of Alleged Trade Secrets,

filed on November 21, 2007 (“DenTek’s Motion to Dismiss”) (Docket No. 109) and [2] Kelly M.

Kaplan’s (“Ms. Kaplan”) Motion to Dismiss and For Other Relief, filed on November 21, 2007

(“Kaplan’s Motion to Dismiss”) (Docket No. 104).

Medtech responded on December 7, 2007 to DenTek’s Motion to Dismiss and Kaplan’s

Motion to Dismiss (“Medtech’s Response to Kaplan/DenTek Motion to Dismiss”), and both

DenTek and Ms. Kaplan filed extensive reply briefs.

On November 19, 2007, Defendant Ray Duane, pro se, also filed a purported “motion to

dismiss” with this Court entitled: “Defendants Ray Duane and C.D.S. Associates, Inc. Moves the

Court to Dismiss and Sever Charges Brought by Plaintiff Medtech.” (“Duane First Motion to

1 Consistent with the Duane/C.D.S. Memorandum, Mr. Duane and C.D.S. are collectively referred to as the

“Duane Defendants”.

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Dismiss and Sever”). As explained in Medtech’s Response to Kaplan/DenTek Motions to

Dismiss, Medtech demonstrated that Mr. Duane’s pro se Motion to Dismiss and Sever raised

“issues of fact not appropriate for determination by means of a motion to dismiss.” (Medtech’s

Response to Kaplan/DenTek Motion to Dismiss at pp. 34-35.)

Mr. Duane also filed a separate motion on behalf of C.D.S. entitled: “C.D.S. Associates

Moves the Court to Dismiss and Sever Charges Brought by Plaintiff Medtech” (“C.D.S. First

Motion to Dismiss and Sever”). Medtech filed a Motion to Strike the C.D.S. First Motion to

Dismiss and Sever because a corporation cannot proceed pro se—a fact expressly communicated

to Mr. Duane. After appearing before this Court at the December 21, 2007 hearing, and after

being informed again that he could not appear pro se on behalf of C.D.S., Mr. Duane and C.D.S.

retained counsel.

After receiving leave at the February 14, 2008 hearing before this Court, Mr. Duane and

C.D.S. filed the instant Duane/C.D.S. Motion to Dismiss. Almost off-handedly, at the end of the

procedural section of the brief, the Duane/C.D.S. Memorandum announces that “[t]he previous

motions filed by Duane pro se are withdrawn.” (Duane/C.D.S. Mem. at p. 8.) Medtech does not

object to procedurally considering those motions withdrawn. However, to the extent that Mr.

Duane made factual statements in the Duane First Motion to Dismiss and Sever, those judicial

admissions/statements cannot be withdrawn by a single sentence in the instant motion.2

2

For instance, Mr. Duane pleaded: “Duane had NO WAY OF KNOWING about Medtech’s Maintaining it’s

[sic] so called ‘three-size platform’ strategy. Duane was NEVER privy to Medtech’s Marketing Strategy while

working for Medtech. He NEVER attended a Marketing Meeting at Medtech; he NEVER attended a Sales Meeting

at Medtech and indeed was NEVER even in the offices of Medtech during the transition period.” (Duane Motion to

Dismiss and Sever at p. 2) (emphasis in original).

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II.

INCORPORATION OF MEDTECH’S RESPONSE

TO KAPLAN/DENTEK MOTION TO DISMISS

Mr. Duane’s arguments are a familiar refrain. In the “Introduction,” Mr. Duane and

C.D.S. argue:

None of Medtech’s claim [sic.] can survive this motion to dismiss,

however, for any number of the following reasons described in

detail below: (a) by its terms, the non-compete clause in the

Consulting Agreement did not apply under the circumstances by

which the agreement was terminated; (b) the Consulting

Agreement, or at least its relevant provisions, was superseded by a

later agreement; (c) Medtech has failed to identify any information

that could reasonably qualify as a protectible trade secret.

(Duane/C.D.S. Memorandum at p. 1.) Although the first part is unique to Mr. Duane and C.D.S.,

because they are the only defendants subject to a non-competition/non-solicitation covenant, all

other arguments have already been responded to in detail in Medtech’s Response to

Kaplan/DenTek Motion to Dismiss at pages 4 through 35. To the extent that Mr. Duane and

C.D.S. simply incorporate arguments made by Defendants DenTek and Ms. Kaplan, or otherwise

reiterate the same arguments, Medtech incorporates the corresponding response from Medtech’s

Response to Kaplan/DenTek Motion to Dismiss and any applicable arguments from the Motion

to Strike.

III.

THE RELEVANT MOTION TO DISMISS STANDARD

The Duane Defendants reference the motion to dismiss standard of review in several

footnotes. (See Duane/C.D.S. Mem. at p. 2, n. 1, and p. 4, n. 3.) Medtech incorporates the

relevant standard as set forth in Medtech’s Response to Kaplan/DenTek Motion to Dismiss at

page 4.

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IV.

ARGUMENT

A. THE CONSULTING AGREEMENT, BY ITS TERMS, WAS NOT TERMINATED

UPON THE SALE OF DENTAL CONCEPTS TO MEDTECH.

1. The Relevant Allegations Regarding the Non-Competition and Non-Solicitation

Terms of the September 30, 1999 Consulting Agreement.

Mr. Duane and C.D.S. accurately set forth some of the facts pertaining to the analysis of

the Consulting Agreement as pleaded in Medtech’s Second Amended Complaint. (“SAC”,

Docket No. 66.) However, the language of the Consulting Agreement that is critical to an

analysis of the claims arising out of that contract is completely ignored by the Duane Defendants.

The entirety of the Consulting Agreement in both its structure and purpose revolved

around Mr. Duane. It was Mr. Duane, and his personal services as an independent contractor for

Dental Concepts, that were the catalyst for the September 30, 1999 Consulting Agreement with

the Duane Defendants. (SAC at Ex. A (at p. 1, ¶¶ 1 & 2, and p. 2, ¶ 4.) As set forth in the SAC:

The Consulting Agreement provides that CDS’s ‘services’ shall be

provided through Duane, the President of [CDS].’ (Ex. A [to the

SAC] at p. 1.) These ‘services’ were to ‘direct and supervise the

sales of [Dental Concepts’] products, subject to and under

supervision of [Dental Concepts’] President and its Board of

Managers.’ (Id. at ¶ 2(a).) Duane was required ‘to devote his

entire business time, energy and skill to such activities on behalf of

[Dental Concepts].” (Id. at p. 1, ¶ 2(b).)

(SAC ¶ 32.)

The Duane Defendants clearly knew Dental Concepts’ long-term intentions. The

Consulting Agreement clearly and expressly contemplated that Dental Concepts was being

structured for sale to a strategic acquirer. The terms of that contract provided the Duane

Defendants with a “transaction incentive for a profitable sale that was tied to the selling price” of

Dental Concepts. (SAC ¶¶ 35 & 36.) With that context, the Duane Defendants expressly agreed

that the Consulting Agreement “shall be binding upon and inure to the benefit of the respective

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heirs, personal representatives, successors and assign [sic.] of the parties hereto.”3(SAC at Ex.

A (at p. 7, ¶ 8) (emphasis added).) Medtech is the successor to Dental Concepts after acquiring

Dental Concepts in November 2005. (SAC ¶¶ 7, 71, & 80.)

The non-competition and non-solicitation provisions in paragraph 7 of the Consulting

Agreement set forth in great detail the post-termination duties of the Duane Defendants. (SAC at

Ex. A (at pp. 5-6, ¶ 7).) The express language of the Consulting Agreement provided for a

twenty-four (24) month covenant not to compete and non-solicitation provision that was

triggered “if such engagement is terminated by the Consultant or is terminated by the Company

for Just Cause.” (SAC ¶ 34 (emphasis added) and Ex. A at ¶ 7.) In this Motion to Dismiss, Mr.

Duane and C.D.S. seize on the language of Paragraph 6 of the Consulting Agreement that

provides that the Consulting Agreement “shall terminate” upon the occurrence of the following

event:

(vi) at the option of the Company, upon sale of the Company or of

substantially all its assets or business to a person or entity which is

not immediately prior thereto an Affiliate4of the Company.

(SAC at Ex. A (at pp. 3-5, ¶ 6(a)(vi) (emphasis added).

There are no allegations that the sale termination “option” was exercised by anyone. In

fact, the SAC includes the following relevant allegations:

[1] That “CDS and Duane continued consulting for Medtech through and including

February 2006. Duane stayed on board until Dental Concepts was completely

transitioned into Medtech,” (SAC ¶ 87 (emphasis added));

[2] That “CDS and Duane declined continued employment in a sales position that

was offered by Prestige,” (SAC ¶ 88 (emphasis added)); and

3 The only exception to this rule was that the Consulting Agreement was “personal to the Consultant

[C.D.S.].”

4 The term “Affiliate,” in the context of the Consulting Agreement, “shall refer to any entity which controls,

is controlled by, or is under common control with, the Company.” (SAC at Ex. A (at p. 2, ¶ 2(c)).)

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[3] That the only relevant contract executed in that context relating to the Consulting

Agreement was a General Release, in which Mr. Duane released any and all

claims against Dental Concepts (but did not include a reciprocal release or any

reference to any termination of the Consulting Agreement). (SAC ¶¶ 72-74, 78.)

Finally, the continued employment of Mr. Duane after the acquisition of Dental Concepts

by Medtech is clearly relevant to the Duane Defendants’ arguments here. The terms of the

covenant not to compete and the non-solicitation provisions are found in paragraph 7 of the

Consulting Agreement. The Duane Defendants include a block quote in their brief of

subparagraphs (a) and (b) of that section of the Consulting Agreement. However, the Duane

Defendants ignore the next provision, subparagraph (c), which is omitted from their quote.

Paragraph 7(c) of the Consulting Agreement states that that the covenant not to compete and

non-solicitation provisions “survive the termination or expiration of this [Consulting] Agreement

and/or the Term, irrespective of the reason therefor, including without limitation, under

circumstances in which the Consultant or Duane continues thereafter to be engaged by the

Company.” (SAC ¶ 92 (citing Ex. A ¶ 7(c)) (emphasis added).) Here, Duane did continue

thereafter to be engaged by the Company; therefore, the non-compete covenant and nonsolicitation provision survived.

2. The Covenant Not to Compete and Non-Solicitation Provisions Applied to

C.D.S. and Ray Duane.

The only argument offered by Mr. Duane and C.D.S. to avoid the non-competition and

non-solicitation provisions of the Consulting Agreement is that “the Duane Defendants were

terminated when their assignment was concluded pursuant to ¶ 6(a)(vi) of the Consulting

Agreement, which provides for termination of the Consulting Agreement upon the sale of the

company, as occurred when Dental Concepts was sold to Prestige.” (Duane/CDS Mem. at p.

10.) In other words, the Duane Defendants argue that the Consulting Agreement automatically

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terminated at the sale of Dental Concepts. This argument is wrong. That is neither what the

Consulting Agreement provides, nor what happened.

(a) The Consulting Agreement Only Terminates Upon Sale “At the Option of

the Company.”

The Consulting Agreement provides that that it could be terminated “at the option of the

Company, upon the sale of the Company . . . .” (SAC at Ex. A (at ¶ 6(a)(vi)) (emphasis added).)

The plain meaning of the term “at the option” implies a right to choose whether or not to

terminate the Consulting Agreement. See, e.g., Random House Webster’s Unabridged

Dictionary, 2d ed. (2001) (defining “option” as “the power or right of choosing” or “something

that may be or is chosen”); see also PaineWebber Inc. v. Bybyk 81 F.3d 1193, 1199 (2d Cir.

1996) (“In interpreting a contract, ‘[w]ords and phrases are given their plain meaning. Rather

than rewrite an unambiguous agreement, a court should enforce the plain meaning of that

agreement.’”) (quoting American Express Bank Ltd. v. Uniroyal, Inc., 164 A.D.2d 275, 277, 562

N.Y.S.2d 613, 614 (1st Dep't 1990), appeal denied, 77 N.Y.2d 807, 569 N.Y.S.2d 611, 572

N.E.2d 52 (1991)).5 There is no automatic termination of the Consulting Agreement upon the

sale of the company. Even though both parties knew that Dental Concepts would be sold, they

expressly did not provide for such an automatic termination, but, rather, gave the choice of

termination to the Company. Therefore, the Consulting Agreement did not automatically

terminate on the sale of the Company as the “option” was not exercised.

(b) There is No Factual Support for the Duane Defendants’ Claim that the

Consulting Agreement was Terminated.

Although the parties agreed that the Consulting Agreement could be terminated upon the

sale of Dental Concepts, nothing in the SAC states or implies that it was terminated by the

5

See SAC at Ex. A (at p. 7, ¶ 9 (“Law Governing. This Agreement shall be construed and governed in

accordance with the laws of the State of New York without regard to such state’s conflict of laws provisions.”).)

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Company. In fact, the only two paragraphs cited by the Duane Defendants in support of their

argument are Paragraphs 71 and 87 of the SAC, both of which lead to the opposite conclusion.

Those paragraphs provide in full:

Paragraph 71: “Prestige ultimately acquired Dental Concepts in

November 2005 for a transaction price of around $31 million.

Certain post-closing purchase price adjustments (largely due to the

issues with the balance sheet) were made to the escrowed funds for

the transaction that negatively affected Duane’s transaction

incentive bonus in the amount of $250,000.”

Paragraph 87: “CDS and Duane continued consulting for Medtech

through and including February 2006. Duane stayed on board until

Dental Concepts was completely transitioned into Medtech.”

(SAC ¶¶ 71 & 87.) There is nothing in these paragraphs that support Mr. Duane’s factual

conclusion that “the Duane Defendants were terminated when their assignment was concluded. .

. .” (Duane/CDS Mem. at p. 10.) In fact, the SAC plainly pleads both that Mr. Duane continued

to consult for Medtech after the acquisition, (SAC ¶¶ 71 & 87), and that Mr. Duane rejected a job

offer from Medtech. (SAC ¶ 88.)

There is plainly a factual question raised by the SAC. It was Mr. Duane who continued

to work for Medtech after the acquisition and it was Mr. Duane who ended the relationship by

refusing continued employment. There is unquestionably an issue of fact regarding whether Mr.

Duane terminated the Consulting Agreement and triggered the provisions of the non-compete

and non-solicitation clauses. The Duane Defendants have asked this Court to decide a key

factual question in their favor. They ask that this Court hold that it was Medtech (or Dental

Concepts) that terminated the Consulting Agreement without any legal support, or valid citation

to anything in the Complaint. This is clearly improper in the context of a motion to dismiss.

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(c) Mr. Duane’s Continued Employment Triggers Paragraph 7(c).

There is no support for Mr. Duane’s claims that he was “terminated” upon the sale of the

Company. Even assuming that he was, however, such termination would not provide him with a

basis for dismissal from this cause. Mr. Duane’s continued employment from the November

2005 acquisition, when he claims he was “terminated” upon sale, through February 2006, would

trigger the terms of paragraph 7(c) of the Consulting Agreement. Under the provision, the noncompetition and non-solicitation provisions “shall survive the termination or expiration of this

[Consulting] Agreement and/or the Term, irrespective of the reason therefor, including without

limitation, under circumstances in which the Consultant or Duane continues thereafter to be

engaged by the Company.” (SAC ¶ 92 (citing Ex. A ¶ 7(c)) (emphasis added).)

The effect of this provision is clear. If Mr. Duane continued to be employed after “the

termination or expiration” of the Consulting Agreement, which he was, the terms of Paragraph 7

“shall survive . . . irrespective of the reason” for the termination. That is what the contract says

and, under New York law, “‘[i]n interpreting a contract, the intent of the parties governs,’ and

therefore ‘[a] contract should be construed so as to give full meaning and effect to all of its

provisions.’” American Express Bank, 164 A.D.2d at 277; see also Tigue v. Commercial Life Ins.

Co., 631 N.Y.S.2d 974, 975 (4th Dep’t 1995) (“[T]he court must ascertain the intent of the

parties from the plain meaning of the language employed.”). The terms of Paragraph 7(c) simply

cannot be excised and ignored, as Mr. Duane would apparently have this Court do. The clear

effect of Paragraph 7(c) would cause the covenant not to compete and non-solicitation terms to

continue because Mr. Duane’s employment continued from November 2005 through February

2006.

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(d) The Language of the “Assignment” Provision Offers Furthers Support.

Finally, if the plain language and application of Paragraph 7 was not enough, the

absurdity of Mr. Duane’s position is revealed when it is considered in the light of the other

provisions of the Consulting Agreement. (See SAC at Ex. A (at p. 7, ¶ 8).) The Duane

Defendants agreed to an “Assignment” provision that stated that the Consulting Agreement

would be “binding upon and inure to the benefit of the . . . successors and assign [sic] of the

parties.” (Id. (emphasis added).) In other words, the parties contemplated that when the

inevitable sale of the company occurred, the Consulting Agreement would “inure to the benefit”

of the successor company. If the Duane Defendants’ argument was correct, and the Consulting

Agreement automatically terminated just because Dental Concepts was sold, the Assignment

provision would be a nullity. The Consulting Agreement would never inure to the benefit of a

“successor” because a “successor” would necessarily have triggered the automatic termination of

the Consulting Agreement. Following the Duane Defendants’ reasoning to its natural conclusion

demonstrates that such a reading cannot be what the parties intended.

In short, the Duane Defendants cannot escape the applicability of the non-competition

and non-solicitation clauses that they violated by working for DenTek and soliciting Kelly

Kaplan and others. The Motion to Dismiss should be denied on these grounds.

B. THE GENERAL RELEASE DOES NOT SUPPLANT THE PRIOR CONTRACTS

BECAUSE THE PROVISIONS WORK IN TANDEM.

1. Additional Background on the Confidentiality Obligations At Issue.

(a) The Consulting Agreement’s Confidentiality Obligations.

Mr. Duane was the Vice President of Sales of Dental Concepts. (SAC ¶ 7.) As such, Mr.

Duane had “substantial access to confidential and proprietary information regarding the

NIGHTGUARDTM dental protector device, as well as the other products of Dental Concepts.”

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(SAC ¶ 40.) Both the Consulting Agreement and an attachment thereto, imposed certain

confidentiality obligations on the Duane Defendants. First, the Consulting Agreement with the

Duane Defendants provided:

The Consultant and Duane shall execute and deliver to and for the

benefit of the Company an agreement substantially in the form of

Exhibit A [the Proprietary Information and Inventions Agreement]

hereto, pertaining, among other matters, to Proprietary Information

and Inventions (as such terms are defined in said Exhibit A) and

confidentiality obligations, the provisions of which shall be

deemed incorporated herein by reference as if set forth fully

herein.

* * *

Each of the Consultant and Duane acknowledges that the services

to be rendered by it and him are of a special, unique and

extraordinary character and, in connection with such services, it

and he will have access to confidential information vital to the

business of the Company and its Affiliates.

(SAC at Ex. A (at pp. 5-6, ¶¶ 7(a) and (d)).)

(b) The Proprietary Information and Inventions Agreement’s Broad and

Encompassing Confidentiality Obligations.

Moreover, the 5-page Proprietary Information and Inventions Agreement was signed on

September 30, 1999 and attached to the Consulting Agreement. That Proprietary Information

and Inventions Agreement was executed by both Mr. Duane and C.D.S. and sets forth a number

of provisions relating to the confidentiality obligations. These include:

 An acknowledgement of the Duane Defendants that the “engagement creates a

relationship of confidence and trust between [the Duane Defendants] and [Dental

Concepts] with respect to information . . . [a]pplicable to the business of the

Company . . . or [a]pplicable to the business of any client, distributor, supplier or

customer . . .,” (SAC at Ex. C (at p. 1, ¶ B));

 An acknowledgement of the Duane Defendants that Dental Concepts “possesses

information that has been acquired, created, discovered or developed, or has

otherwise become known to the Company . . . which information has commercial

value in the business in which the Company is engaged . . . .” (SAC at Ex. C (at p.

1, ¶ C));

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 A definition of “Proprietary Information” that “includes ‘Developments’ (as

herein defined), data, know-how, techniques, marketing plans and opportunities,

cost and pricing data, strategies, forecasts and customer lists. ‘Developments’

includes inventions, product designs, developments, improvements, discoveries,

trade secrets, technologies, processes, research, methods, formulae, uses of any of

the foregoing, computer software and programs (including source code and

related documentation), test and/or experimental data and results, specifications,

laboratory notebooks, drawings and technical information and materials,” (SAC at

Ex. C (at p. 1, ¶ C));

 An agreement that “All Proprietary Information shall be the sole property of the

Company and its assigns, and the Company and its assigns shall be the sole owner

of all patents, copyrights, trade secrets, trademarks, trade names and other rights

in connection therewith. [CDS, Duane and Kaplan] hereby assign to the Company

any and all rights which any of Obligors may have or acquire in any and all

Proprietary Information,” (SAC at Ex. C (at p. 2, ¶ 1));

 An agreement that “[a]t all times, both during Consultant’s engagement by the

Company and after its termination, [CDS, Duane and Kaplan] will keep in

confidence and trust all Proprietary Information, and will not use or disclose any

Proprietary Information without the written consent of the Company, except as

may be necessary in the ordinary course of performing Consultant’s duties as a

consultant to the Company. SINCE IT IS SOMETIMES DIFFICULT TO

SEPARATE PROPRIETARY INFORMATION FROM THAT WHICH IS NOT,

OBLIGORS WILL REGARD ALL INFORMATION GAINED OR

DEVELOPED AS A RESULT OF ANY ASSOCIATION WITH THE

COMPANY AS PROPRIETARY INFORMATION,” (SAC at Ex. C (at p. 2, ¶ 1)

(emphasis in original));

 An agreement to disclose any improvements “made or conceived or reduced to

practice or learned by [the Duane Defendants], either alone or jointly with others,

during the period of Consultant’s engagement by the Company which are related

to or useful in the business of the Company, or result from use of premises, or

property, equipment, facilities or funding [of Dental Concepts] (all said

improvements, processes, techniques, know-how, data and other Developments

shall be collectively called ‘Inventions’),” (SAC at Ex. C (at p. 2, ¶ 2));

 An agreement that all Inventions are the property of Dental Concepts, (SAC at

Ex. C (at p. 2, ¶ 3)); and

 An agreement that in the event of the termination of the engagement, “for any

reason, or any other time upon the Company’s request, [the Duane Defendants]

shall deliver to the Company all materials, samples, data, physical property,

memoranda, notes, records, customer mailing or contact lists and other documents

of any nature made or compiled by any of [the Duane Defendants] or made

available to any of [the Duane Defendants] pertaining to any work with or to the

business or affairs of the Company, all of which shall be deemed the property of

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the Company and [the Duane Defendants], upon such termination, shall not take

with them any documents, data or property or any description or any reproduction

of any of the foregoing containing or pertaining to any Proprietary Information

and/or Inventions,” (SAC at Ex. C (at p. 3, ¶ 5)).

In other words, the Proprietary Information and Inventions Agreement covered a broad range of

subjects, from acknowledgments that there was information to protect, to defining that

protectible information, to assigning ownership rights of existing and yet-to-be-created

information, to an agreement that on termination the information would be returned to Dental

Concepts. The Proprietary Information and Inventions Agreement ends with a provision that

“[t]his Agreement shall be binding upon [the Duane Defendants] and their respective heirs,

executors, successors, assigns and administrators, and shall inure to the benefit of the Company

and its successors and assigns.” (SAC at Ex. C (at p. 5, ¶ 9).)

(c) The Narrow Provisions of the General Release.

After the sale to Medtech, Mr. Duane executed a “General Release” in which he released

all claims against the Company and received his transaction incentive. (SAC at ¶¶ 72-74, 77, 80

& Ex. G.) The General Release covered any claim that Mr. Duane could have against Dental

Concepts, both known and unknown, relating to his association with the company. (SAC at Ex.

G. (at p. 1).) The General Release also contained the following clause:

Confidential Information. Employee [Duane] agrees that it will not

use, divulge, sell or deliver to or for any other person, firm or

corporation other than the Company [Dental Concepts] and its

respective subsidiaries, affiliates, successors and assigns any

confidential information and material (statistical or otherwise)

relating to the Company’s business, including, but not limited to,

confidential information and material concerning manufacturing,

distribution, marketing, sales, advertising, customers, employees,

suppliers, licensors, financial information, methods and processes

incident to the business, and any other secret or confidential

information. On or before the Effective Date, Employee will

surrender to the Company all lists, books and records of or in

connection with the Company’s business and all other property

belonging to the Company.

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(SAC at Ex. G (at p. 3, ¶ 7).) Accordingly, the only substance addressed in the General Release

relating to confidential information was that (1) Mr. Duane agreed to not “use, divulge, sell or

deliver to or for any person, firm or corporation other than” Dental Concepts any “confidential

information and material;” and (2) that Mr. Duane would “surrender to the Company all” such

information and property. The General Release contains an integration clause that states it is the

full agreement of the parties regarding “the subject matter hereof.”

2. CDS was not a Party to the General Release and, Therefore, Its Confidentiality

Obligations Are Governed by the Consulting Agreement and Proprietary

Information Agreement.

The Duane Defendants conclude that the confidentiality provisions in the Consulting

Agreement and the Proprietary Information Agreement were superseded by the General Release,

but they ignore an obvious fact: C.D.S. was not a party to the General Release. (SAC ¶ 78.) In

fact, Count IX of the SAC, which alleges a breach of the General Release, excludes C.D.S.

because it was never a party to that contract. (SAC ¶¶ 246-255.)6Therefore, in addressing the

issue of the General Release, there can be no doubt that the terms of the Consulting Agreement

and the Proprietary Information Agreement applied to the confidentiality obligations of C.D.S.

and, as to C.D.S., there is no valid basis offered to dismiss Count VIII.

3. As to Mr. Duane, the Confidentiality Obligations of the General Release Do Not

Supersede the Confidentiality Provisions of the Consulting Agreement and the

Proprietary Information and Inventions Agreements.

With broad and overreaching language, Mr. Duane claims that the General Release “is

the only surviving agreement between the parties governing Duane’s possession and use of

confidential information.” (Duane/CDS Mem. at p. 10.) First, Medtech has already briefed this

issue and argument in the context of Kaplan’s Motion to Dismiss. (See Medtech’s Resp. to

6 Alternatively, the Breach of the Consulting Agreement and Proprietary Information and Inventions

Agreement, Count VII of the SAC, was pleaded against both of the Duane Defendants. (SAC ¶¶ 229-238.)

Case 7:07-cv-03302-KMK-LMS Document 145 Filed 03/24/2008 Page 17 of 22
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Kaplan/DenTek Mot. to Dismiss at pp. 22-25.) Medtech incorporates that same argument here

as it is equally appropriate. It is telling that while Mr. Duane broadly claims that the General

Release had to supersede the other agreements, those agreements necessarily cover different

things because they include different parties. As CDS is not a party to the Release, Mr. Duane

overreaches in claiming that the Release supersedes the previous agreements.

One of the cases that Mr. Duane cites in support of his Motion to Dismiss actually

supports the distinctions and arguments previously made by Medtech. In CreditSights, Inc. v.

Ciasullo, No. 05 CV 9345 (DAB), 2007 WL 943352 (S.D.N.Y. Mar. 29, 2007), the Court

addressed a similar fact pattern in the context of a stock dispute. In CreditSights, the defendant

was one of three founders of CreditSights, and was an officer and director of the company. Id. at

*1. As part of the transaction founding the company, the defendant signed a Restricted Grant

Agreement that dictated the terms of his stock ownership and precluded the defendant from

transferring or pledging the stock. Id. at *2. In spite of the agreement not to, the defendant

subsequently pledged certain of his stock in the company. Id. at *3. After his stock pledge, the

defendant submitted a resignation letter and entered into a Separation Agreement and Voting

Agreement that transferred the voting rights in his shares. Id. at *4. The integration clause in the

Separation Agreement states that:

This agreement, together with the Voting Agreement and the

provisions of the Employment Agreement that by their terms

survive the termination thereof, constitute the entire agreement and

understanding between you and the Company regarding the subject

matter hereof, and supersedes all prior arrangements or discussions

relating to your employment with the Company or the termination

thereof.

Id. In the subsequent motion practice, like Duane has done here, “Defendant’s Motion to

Dismiss Plaintiff’s breach of contract claim challenge[d] the existence and enforceability of the

Restricted Grant Agreement; Defendant argue[d] that the subsequent Separation Agreement,

Case 7:07-cv-03302-KMK-LMS Document 145 Filed 03/24/2008 Page 18 of 22
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Voting Agreement and Restricted Grant Agreement all supersede the Restricted Grant

Agreement on which Plaintiff bases its action.” Id. at *5.

In denying the defendant’s motion to dismiss, the Court noted that a “subsequent contract

not pertaining to ‘precisely the same subject matter’ will not supersede an earlier contract unless

the subsequent contract has definitive language indicating it revokes, cancels or supersedes that

specific prior contract.” Id. at *6 (quoting Globe Food Services Corp. v. Consolidated Edison

Co. of New York, Inc., 184 A.D.2d 278 (1st Dep’t 1992)). The Court found that the defendant

had “overstate[d] his case by claiming that the ‘subject matter’ of the Restricted Grant

Agreement was also the subject matter of the Separation Agreement, Voting Agreement and

Amended Stockholders Agreement.” Id. at *6. Rather, the Court found that even though the

contracts all had “broadly associated subject matter in common,” the former agreements were not

superseded because certain rights and obligations were not covered in the later agreements. Id.

at *6-7. Rather, considering that rights could co-exist and work in tandem, the Court held that

Restricted Grant Agreement “survive[d]” the other contracts and denied the Motion to Dismiss.

Id. at *7-9.

In the present case, the General Release only covers use after employment and surrender

of what Mr. Duane has. It does not supersede in any way the vast majority of obligations

covered by the Consulting Agreement and the Proprietary Information and Inventions

Agreements, which include: (1) the acknowledgements in both contracts that Mr. Duane would

“have access to confidential information vital to the business of the Company and its Affiliates”

and that he had “relationship of trust” with respect to information; (2) the acknowledgement in

the Proprietary Information and Inventions Agreement that Dental Concepts possesses

information that “has commercial value in the business in which the Company is engaged;” (3)

Case 7:07-cv-03302-KMK-LMS Document 145 Filed 03/24/2008 Page 19 of 22
17

the definition of “Proprietary Information” that defines what the parties meant by that term; (4)

the provision detailing that “All Proprietary Information shall be the sole property of the

Company and its assigns, and the Company and its assigns” and that Mr. Duane assigned all his

rights to such information to the company; (5) Mr. Duane’s agreement to disclose any

improvements that are related or used or useful to Dental Concepts; (6) his agreement that all

Inventions are the property of Dental Concepts; and (7) his agreement to not take with him “any

documents, data or property or any description or any reproduction of any of the foregoing

containing or pertaining to any Proprietary Information and/or Inventions.”

C. THE TRADE SECRET CLAIMS ARE PROPERLY PLEADED.

Finally, as an aside, Mr. Duane makes a short argument claiming that Medtech has failed

to properly plead a protectible trade secret. This issue has already been extensively briefed.

Medtech adds this section only to respond to the purported list of trade secrets advanced by the

Duane Defendants. (Duane/C.D.S. Mem. at p. 9.) The Duane Defendants’ list ignores

Medtech’s February 8, 2008 list, contained in a letter to Judge Smith, which sets forth certain

types of information that are currently known and are at issue in this case. (2/8/2008 Ltr. from

Helton to Judge Smith at p. 5.) The Duane Defendants have eschewed Medtech’s actual list of

confidential information in favor of the contrived and incomplete list used by DenTek and Ms.

Kaplan in their earlier motions. By doing so, the Duane/CDS Memorandum shows that it is part

of a concerted effort to set up a trade secret strawman that they can tear down. In the context of

a motion to dismiss, such efforts add nothing of substance.

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CONCLUSION

For all the foregoing reasons, this Court should deny the C.D.S./Duane Motion to

Dismiss.

Dated: March 24, 2008

New York, New York

Respectfully submitted,

ALSTON & BIRD LLP

By: s/ Karl Geercken

Karl Geercken (KG 5897)

Amy Manning (AM 0338)

90 Park Avenue

New York, New York 10016-1387

(212) 210-9471 (phone)

(212) 210-9444 (facsimile)

karl.geercken@alston.com

amy.manning@alston.com

Todd R. David, GA BPR No. 206526

ALSTON & BIRD LLP

One Atlantic Center

1201 West Peachtree Street

Atlanta, Georgia 30309-3424

todd.david@alston.com

W. Edward Ramage, TN BPR No. 16261

BAKER, DONELSON, BEARMAN,

CALDWELL & BERKOWITZ, P.C.

Commerce Center, Suite 1000

211 Commerce Street

Nashville, Tennessee 37201

(615) 726-5600

eramage@bakerdonelson.com

Case 7:07-cv-03302-KMK-LMS Document 145 Filed 03/24/2008 Page 21 of 22
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Thomas O. Helton, TN BPR No. 01929

Micheline Kelly Johnson, TN BPR No. 13847

Clinton P. Sanko, TN BPR No. 23354

BAKER, DONELSON, BEARMAN,

CALDWELL & BERKOWITZ, P.C.

1800 Republic Centre

633 Chestnut Street

Chattanooga, Tennessee 37450-1800

(423) 756-2010

mjohnson@bakerdonelson.com

csanko@bakerdonelson.com

Attorneys for Plaintiff

Medtech Products Inc.

Case 7:07-cv-03302-KMK-LMS Document 145 Filed 03/24/2008 Page 22 of 22