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Ordnance Technologies (North America) Inc. v. Raytheon Co.

United States District Court, D. Arizona

February 25, 2014

ORDNANCE TECHNOLOGIES (NORTH AMERICA) INC., Plaintiff,
v.
RAYTHEON COMPANY, Defendant. RAYTHEON COMPANY AND RAYTHEON MISSILE SYSTEMS, Counter Claimants,
v.
ORDNANCE TECHNOLOGIES (NORTH AMERICAN) INC., Counter Defendant.

ORDER

CINDY K. JORGENSON, District Judge.

Pending before the Court is Defendant's Motion for Summary Adjudication of the First, Second and Fourth Through Tenth Claims for Relief and/or For Partial Judgment on the Pleadings (Doc. 35). A response (Doc. 42) and a reply (Doc. 43) have been filed. Argument was presented to the Court on November 25, 2013.

Factual and Procedural Background

Ordnance Technologies (North America), Inc. (collectively, with it predecessor in interest Ordnance Technologies (UK) Limited, "Ordnance") alleges it owns the proprietary and intellectual rights ("Ordnance Trade Secrets") to the design of the Laser Multiple Warhead System ("LMWS"). Complaint (Doc. 1), p. 1-2. Ordnance alleges the LMWS is a:

competitively advantageous new technology because, among other things, LMWS: (1) is designed for the entire "soft/hard" target set; (2) significantly increases concrete penetration; (3) increases fragment performance; (4) increases blast overpressure; (5) increases fuzing performance; and (6) increases performance against soil overburdened hardened targets.

Id. at 3.

Ordnance also alleges that it worked with Raytheon Missile Systems (collectively, with Raytheon Company, "Raytheon"), beginning in the early 1990s, on Multi Warhead/Multi Mission Warhead programs. Ordnance invested considerable sums on the research and development on warhead design, modeling and business development with the understanding it would remain the Warhead System Design Authority on the Multi Warhead/Multi Mission Warhead programs and that any intellectual property rights it created would remain the property of Ordnance. However, by virtue of multiple agreements between Ordnance and Raytheon, Raytheon was, and is, knowledgeable about numerous aspects of Ordnance's business including trade secrets and that Raytheon was obligated to refrain from using and/or misappropriating Ordnance's trade secrets.

Ordnance further alleges that it and Raytheon entered into a Technical Assistance Agreement ("2002 TAA"), in which Raytheon agreed to provide Ordnance with technical data and defense services related to the integration of the LMWS for use in the Tactical Tomahawk Cruise Missile and agreed not to disclose or use any proprietary information belonging to Ordnance. Raytheon asserts it entered into the 2002 TAA for the purpose of seeking United States Department of State approval for Raytheon to share technical data with Ordnance for the purposes of complying with the International Traffic in Arms Regulations ("ITAR").

The 2002 TAA was amended in 2005 to include the parties' agreements that "(1) any manufacturing of the LMWS would only be completed by [Ordnance] subcontractors; (2) [Ordnance] held full ownership of the design and manufacturing rights of the LMWS; and (3) Raytheon would not disclose nor use any proprietary information belonging to [Ordnance]." Complaint, Doc. 1, p. 4. Raytheon asserts it entered into the amendment for the purpose of seeking United States Department of State approval for Raytheon to share technical data with Ordnance for purposes of complying with ITAR.

Ordnance alleges Raytheon began generating briefings using proprietary data owned by Ordnance without acknowledging Ordnance. In response to a query from Ordnance, Raytheon stated in November 2005 that it had not passed on any data and had not, nor was it going to, misappropriate Ordnance's trade secrets for Raytheon's use.

On December 10, 2008, the Naval Air Systems Command ("NAVAIR") issued a Presolicitation Notice announcing its intention to negotiate and award a Joint Capability Technology Demonstration ("JCTD") contract for Joint Multi-Effects Warhead System ("JMEWS") to Raytheon. Raytheon's Statement of Material Facts ("RSOF"), Ex. 1 (Doc. 37-1).

Ordnance alleges it learned in 2009 that Raytheon had entered into the JMEWS Project with the United States government to modify the Tactical Tomahawk Cruise Missile to enable it to a "multi-effects" system. Ordnance alleges, upon information and belief, that the JMEWS Project:

(1) is designed for the entire "soft/hard" target set; (2) significantly increases concrete penetration; (3) increases fragment performance; (4) increases blast overpressure; (5) increases fuzing performance; and (6) increases performance against soil overburdened hardened targets.

Complaint (Doc. 1), p. 5. Ordnance further alleges Raytheon currently unlawfully possesses and is using Ordnance Trade Secrets, has and will continue to access Ordnance Trade Secrets in connection with the JMEWS Project, and other third parties are acting in concert with Raytheon.

On January 19, 2009, Raytheon received a letter ("January 2009 Infringement Letter") from Ordnance regarding "Raytheon Missile System Company Infringement of Ordnance Technologies (NA), Inc. ([Ordnance]) proprietary warhead design for Tomahawk." RSOF, Ex. 2 (Doc. 37-2). The January 2009 Infringement Letter asserted that Ordnance "has strong and compelling evidence to support that the Raytheon Precision Strike Organization has infringed on our intellectual property rights and proprietary Tomahawk multi-effects warhead designs." Id.

Raytheon responded to Ordnance in letters dated March 9, 2009, and May 1, 2009. Approximately eleven months letter, Ordnance sent two more letters to Raytheon; the letters were dated April 2, 2010, and April 5, 2010. In its April 5, 2010, letter, Ordnance requested mediation of its claim by an independent agency. An April 29, 2010, letter from Raytheon suggested a meeting between counsel to discuss the allegations; Counsel for Raytheon requested counsel for Ordnance contact him to schedule a meeting. Representatives of Ordnance and Raytheon met in June 2010.

On May 18, 2012, Ordnance filed an action against Raytheon Company alleging claims of (Count 1) Statutory Misappropriation of Trade Secrets, (Count 2) Common Law Misappropriation of Trade Secrets, (Count 3) Breach of Contract, (Count 4) Breach of Implied Contract, (Count 5) Breach of Implied Covenant of Good Faith and Fair Dealing, (Count 6) Unjust Enrichment, (Count 7) Conversion, (Count 8) Interference with Contract or Business Expectancy, (Count 9) Unfair Competition, and (Count 10) a violation of the Lanham Act. Complaint (Doc. 1).

Raytheon filed an Answer and Counterclaim (Doc. 13) on September 13, 2012. Raytheon asserts that, during the course of their relationship with Ordnance, each shared information with the other (including proprietary information) under terms of confidentiality. However, Raytheon denies it has attempted to convert or manipulate Ordnance Trade Secrets for its own use. Raytheon's Answer included affirmative defenses of failure to state a cause of action, statute of limitations, independent development, ownership, laches, waiver/estoppel, acquiescence, and failure to mitigate. In its counterclaim, Raytheon asserts a Declaration of Ownership. In its October 9, 2012 Answer to Counterclaim (Doc. 18), Ordnance states ...


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