IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
21st CENTURY TECHNOLOGIES,
INC. and TRIDENT
TECHNOLOGIES, INC.,
Plaintiffs,
V. Civil Action No. 401-CV-0338-Y
DOUG SPRING and BUREN PALMER, II
Defendants.
PLAINTIFFS' COMPLAINT AND
APPLICATION FOR INJUNCTIVE RELIEF
Plaintiffs 21st Century Technologies, Inc. ("21st
Century") and Trident Technologies, Inc. ("Trident")
(collectively "Plaintiffs"), for their Complaint and
Application for Injunctive Relief against Defendants Doug
Spring ("Spring") and Buren Palmer, II ("Palmer")
(collectively "the Defendants"), allege and state as
follows:
PARTIES
1. Plaintiff 21st Century is a Nevada Corporation
with its principal place of business in Haltom City, Tarrant
County, Texas. 21st Century is therefore a citizen of Nevada
and Texas.
2. Plaintiff Trident is a wholly-owned subsidiary of
21st Century with its principal place of business in
Virginia Beach, Virginia and its manufacturing facility in
Fort Worth, Tarrant County, Texas. Trident is therefore a
citizen of Virginia and Texas.
3. Defendant Spring is an individual residing in
Denham Springs, Louisiana. Spring is amenable to the
jurisdiction of this Court and to service of process under
TEX. CIV. PRAC. & REM. CODE 17.041-045 (the "Texas Long-
Arm Statute"). At all times relevant to this action, Spring
conducted business in the State of Texas as provided in the
Texas Long-Arm Statute. Spring has committed torts in whole
or in part in Texas, as set out more fully in this
Complaint. Spring also contracted with 21st Century and
Trident and those agreements required Spring to perform his
obligations in whole or in part in Texas. This proceeding
arises out of the business done in Texas by Spring.
Accordingly, the Secretary of State of Texas is an agent for
service of process upon Spring. The Secretary of State of
Texas may forward the Citation and this Complaint to Spring
at his home or home office address, 10320 Lonepine Road,
Denham Springs, Louisiana.
4. Defendant Palmer is an individual residing in
Walker, Louisiana and is therefore a citizen of Louisiana.
Palmer is amenable to the jurisdiction of this Court and to
service of process under TEX. CIV. PRAC. & REM. CODE
17.041-045 (the "Texas Long-Arm Statute"). At all times
relevant to this action, Palmer conducted business in the
State of Texas as provided in the Texas Long-Arm Statute.
Palmer has committed torts in whole or in part in Texas, as
set out more fully in this Complaint. Palmer also contracted
with 21st Century and Trident and those agreements required
Palmer to perform his obligations in whole or in part in
Texas. This proceeding arises out of the business done in
Texas by Palmer. Accordingly, the Secretary of State of
Texas is an agent for service of process upon Palmer. The
Secretary of State of Texas may forward the Citation and
this Complaint to Palmer at his home or home office address.
12857 Elaine Drive, Walker, Louisiana 70785.
JURISDICTION AND VENUE
5. This Court has original subject matter
jurisdiction over this action because the amount in
controversy exceeds the sum or value of $75,000.00,
exclusive of interest and costs, and is between citizens of
different states. 28 U.S.C. 1332.
6. Venue is proper in this Court because a
substantial part of the events or omissions giving rise to
the claims asserted herein occurred in this district and
division. 28 U.S.C. 1391(a)(2).
7. The Defendants are subject to personal
jurisdiction at the time this action commenced in this
district and division. Accordingly, venue is proper in the
Northern District of Texas, Fort Worth Division under 28
U.S.C. 1391(c).
FACTS APPLICABLE TO ALL CAUSES OF ACTION
8. 21st Century is a publicly-traded technology
holding company. Continually expanding, 21st Century
currently has six active wholly-owned subsidiaries. One of
these subsidiaries is Trident.
9. Trident was formed by 21st Century in June 1995.
21st Century incorporated Trident for the purpose of
licensing an existing patent held by the Los Alamos National
Laboratory ('Los Alamos'). The patent described certain
magnet-controlled technology. Trident became the operating
company to develop modifications and/or improvements to the
patented technology licensed from Los Alamos, as well as to
manufacture, market and sell the enhanced technology.
10. In or about July 28, 1999, 21st Century employed
Doug Spring ('Spring') and Buren Palmer, II ('Palmer') to
serve as officers of Trident. Spring's and Palmer's
employment was memorialized in separate written agreements.
True and correct copies of the employment agreements are
attached hereto as Exhibit '1.' Under the terms of the
employment agreement executed by Spring, Spring agreed to
serve as President of Trident for a one-year term. He was
responsible for the marketing and product development of the
technologies licensed by Trident from Los Alamos. 21st
Century employed Palmer as the Senior Vice President of
Trident for a one-year term. Like Spring, Palmer was also
responsible for the marketing and product development of the
licensed technologies. Trident paid Spring and Palmer an
annual salary and issued 600,000 warrants to each individual
for 21st Century's stock for $.10 per share. Spring and
Palmer subsequently exercised these warrants. Spring
currently owns 700,000 shares of 21st Century common stock;
Palmer owns 600,000. 21st Century reposed special
confidence in Spring and Palmer and entrusted these
employees with Trident's most sensitive proprietary
information relating to the licensed technology.
11. At or about the time Spring became the President
of Trident, Spring was appointed as a Director of 21st
Century.
12. While Spring and Palmer served as officers,
Trident invested considerable energy in the research,
development, testing and manufacturing of improvements to
the licensed technology. These efforts resulted in the
development of the magnetic patch devices known as the
'SeaPatch' and 'ProMag' products. These devices are used to
stop leaks on such objects as ships, barges, storage tanks,
pipelines and railcars.
13. 21st Century's and Trident's proprietary
improvements to the licensed technology afford Trident a
competitive advantage in the marketplace because the
existing technology for patching leaks takes a greater
amount of time to install and therefore causes a greater
volume of leakage of substances potentially harmful to the
environment.
14. While in the course and scope of their duties,
Spring and Palmer worked on improvements to the licensed
technology. Additionally, Spring and Palmer, through outside
counsel retained and paid for by 21st Century, assisted with
the preparation of two provisional patent applications for
filing with the United States Patent Office relating to the
improved technology. The patent applications were filed on
July 3, 2000 and August 16, 2000. Spring and Palmer also
were intimately involved in developing and producing
marketing materials relating to the newly-developed
technologies. Trident compensated Spring and Palmer for
their technology development and marketing in the form of
salary and stock.
15. On several occasions, 21st Century requested that
Spring and Palmer sign a written agreement assigning all
intellectual property rights and designs, inventions and
trade secrets developed by or learned by Spring and Palmer
during their employment. A true and correct copy of one such
Assignment is attached hereto as Exhibit '2.' Despite
repeated demands for their execution of an assignment
agreement, neither Spring nor Palmer executed any
assignment.
16. As officers responsible for marketing and product
development of Trident's technology, Spring and Palmer were
also responsible for making sales calls and furnishing
Trident's financial information to 21st Century on a regular
basis. Although Spring and Palmer initially conducted these
activities to the satisfaction of Trident and 2l~~ Century,
Spring and Palmer ceased to make sales calls or provide
financial information commencing in approximately January
2001.
17. While serving as officers of Trident, both Spring
and Palmer regularly traveled to 21st Century's offices
located in Tarrant County, Texas for board meetings and to
provide status reports relating to Trident business. Spring
had to attend 21st Century's board meetings because he was a
Director. Additionally, Spring and Palmer made numerous
telephone calls on a weekly basis to 21st Century's offices
in Fort Worth, Texas to discuss business matters relating to
Trident's research, development and testing of the
technology improvements. Further, as discussed above,
Spring and Palmer mailed Trident's financial and other
proprietary information to 21st Century's offices in Tarrant
County, Texas so that 21st Century could monitor Trident's
activities.
18. After the preparation and filing of the patent
application, Spring and Palmer met with Alan Drake. Mr.
Drake is the managing partner of 21st Century Funding, L.P.
I and II. During their meeting with Mr. Drake, Spring and
Palmer represented that they had complete and unrestricted
rights to the technologies developed by Trident. According
to Spring and Palmer, their rights in the improved
technologies included unfettered ownership of the patent
application and the right to develop, market, sell, and
convey the improvements. Further, Spring and Palmer offered
to sell their alleged rights in the improved technologies,
as well as their combined ownership of 1,200,000 shares in
21st Century, to Drake for the purchase price of $5,000,000.
During their solicitation of Drake, Spring and Palmer
represented that they had previously met with persons and/or
entities on the 'East Coast' and had attempted to sell their
alleged rights to the technology and their 21st Century
shares for the purchase price of $10,000,000.
19. In an attempt to preclude Spring and Palmer from
wrongfully conveying the Trident technologies to anyone
else, Mr. Drake signed an 'Agreement To Sell Personal
Property' dated January 26, 2001 (the 'Agreement') which
purported to convey the Trident technologies and the
sellers' 21st Century stock. A true and correct copy of the
Agreement is attached hereto as Exhibit '3.'
20. After he signed the Agreement, Mr. Drake contacted
21st Century's Chief Executive Officer and President, Ken
Wilson. Mr. Drake relayed the discussions he had with Spring
and Palmer and provided a copy of the Agreement to Mr.
Wilson for his review.
21. After Mr. Drake informed Mr. Wilson of the
Agreement, Mr. Wilson subsequently flew to Baton Rouge,
Louisiana to personally meet with Spring and Palmer on March
2, 2001. During the meeting, Mr. Wilson advised Spring and
Palmer that they did not have any ownership interests in the
improved technologies and that all intellectual property
rights belonged to Trident and/or 21st Century.
Additionally, Mr. Wilson made repeated demands that they
cease and desist from attempting to solicit the sale of the
improved technologies to any person or entity, and again
insisted they assign the intellectual property rights to
Trident.
22. At that time, Spring gave Mr. Wilson two letters
dated March 2, 2001 resigning as President of Trident and as
a Director of 21st Century effective March 5, 2001. True and
correct copies of the letters dated March 2, 2001 are
attached hereto as Exhibit '4.' Palmer never formally
resigned as Senior Vice President of Trident. However, as a
result of his conduct, Trident requested Palmer's
resignation on March 16, 2001.
23. In an attempt to amicably resolve this dispute
without the need for court intervention, Mr. Wilson has had
numerous conversations with both Spring and Palmer. On April
20, 2001, Spring insisted in a telephone conversation with
Mr. Wilson that he and Palmer owned the enhanced
technologies developed at the expense of 21st Century and
Trident. Further, Spring stated that he and Palmer would
immediately commence to sell their alleged rights to the
enhanced technologies to third parties.
24. On April 25, 2001, five days after Mr. Wilson's
conversation with Spring and Palmer, 21st Century's and
Trident's counsel addressed a letter to Spring's and
Palmer's attorney, Jack E. Morris, Esq., summarizing 21st
Century's and Trident's rights to Trident's enhanced
technologies. A true and correct copy of the letter dated
April 25, 2001 is attached hereto as Exhibit 5.'
25. In response to the letter, Morris contacted
counsel for 21st Century by telephone on April 26, 2001.
Mr. Morris represented that Spring and Palmer maintained
that they own Trident's technologies and will resolve this
dispute upon payment of a substantial amount of money.
26. Both 21st Century and Trident will suffer
immediate and irreparable harm if Spring and Palmer are not
enjoined immediately from attempting to sell the enhanced
technologies to third parties. It is difficult for 21st
Century and Trident to calculate the value of the
proprietary `Seapatch' and 'ProMag' technologies, but the
bulk of Trident's net worth consists of the proprietary
technology relating to these two products. These magnetic
patch devices and related magnetic patch applications are
Trident's only products. Injunctive relief will therefore
assist Trident and 21st Century from losing its key
intellectual property. Additionally, immediate injunctive
relief is necessary to avoid any potential litigation that
might ensue between 21st Century, Trident and any third
party that might purchase the technology from Spring and
Palmer.
27. 21st Century and/or Trident are willing to post a
bond or cash deposit in an amount set by the Court which
shall be available to compensate Spring and/or Palmer in the
unlikely event it is found that a temporary restraining
order and/or preliminary injunctive relief was improvidently
issued.
FIRST CLAIM FOR RELIEF: BREACH OF CONTRACT
28. Plaintiffs incorporate and reallege paragraphs 1-
27 above as if fully set forth herein.
29. Spring and Palmer materially breached their
employment agreements by failing to make sales calls or
otherwise market Trident's technologies, failing to supply
financial information to 21st Century so that it could
monitor Trident's business activities, attempting to convey
Trident's technologies to persons and/or entities without
authorization, and refusing to assign to Plaintiffs any and
all inventions or other intellectual property developed
while serving as officers of Trident.
30. Spring's and Palmer's breaches of their respective
agreements have damaged Plaintiffs. Plaintiffs have
performed all conditions precedent to recovery under the
employment agreements. Therefore, Plaintiffs seek all
damages caused by these Defendants, including, but not
limited to, disgorgement of any proceeds received by Spring
and Palmer for their wrongful attempt to convey Trident's
enhanced technologies.
SECOND CLAIM FOR RELIEF: CONVERSION
31. Plaintiffs incorporate and reallege paragraphs 1-
30 above as if fully set forth herein.
32. Spring and Palmer wrongfully exercised dominion
and control over 21st Century's and/or Trident's
intellectual property rights in the enhanced technologies.
Additionally, these Defendants refused to return and/or
disclaim any rights to the improved technologies. As a
proximate result of Spring's and Palmer's conversion of
Trident's enhanced technologies, for which they are jointly
and severally liable, 21st Century and/or Trident have been
damaged.
33. Moreover, the aforementioned conduct of Spring and
Palmer in converting Plaintiffs' property was done with
malice, as that term is defined in Texas Civil Practice &
Remedies Code 41.001. Accordingly, Plaintiffs are entitled
to exemplary damages in an amount sufficient to punish
Spring and Palmer and deter similar conduct.
THIRD CLAIM FOR RELIEF: MISAPPROPRIATION OF TRADE SECRETS
34. Plaintiffs incorporate and reallege paragraphs 1-
33 above as if fully set forth herein.
35. Plaintiffs expended reasonable efforts to keep the
information relating to the enhanced technologies a secret.
This proprietary and confidential information relating to
the improved technologies derives independent economic value
from not being generally known to the public or to other
persons who can obtain economic value from its disclosure or
use.
36. Plaintiffs have taken reasonable efforts to
maintain the secrecy of this intellectual property. Spring
and Palmer misappropriated, through disclosure or use of the
information, inevitable or otherwise, all or substantial
portions of the proprietary information relating to the
enhanced technologies.
37. Spring's and Palmer's misappropriation is willful,
malicious and has caused Plaintiffs to suffer actual
damages. The Defendants' misappropriation violates Texas
common law. Spring and Palmer should be required to pay
Plaintiffs' actual damages, including, but not limited to,
disgorgement of any proceeds received related to the sale of
Trident's technologies.
38. Moreover, Spring's and Palmer's theft of
Plaintiffs' intellectual property was done with malice, as
that term is defined in Texas Civil Practice & Remedies Code
41.001. Accordingly, Plaintiffs are entitled to exemplary
damages against the Defendants in an amount sufficient to
punish Spring and Palmer and deter similar conduct.
FOURTH CLAIM FOR RELIEF: TEXAS THEFT LIABILITY ACT
39. Plaintiffs incorporate and reallege paragraphs 1-
38 above as if fully set forth herein.
40. Spring and Palmer unlawfully appropriated
Plaintiffs' intellectual property. These Defendants have
retained possession of Plaintiffs' intellectual property
despite demand for the return of the property.
41. Spring's and Palmer's unlawful appropriation of
Plaintiffs' intellectual property, for which they are
jointly and severally liable, has proximately caused damages
to Plaintiffs. Consequently, the Defendants are liable for
the damages resulting from the theft of Plaintiffs'
property.
42. Moreover, Plaintiffs are entitled to recover
additional damages from Spring and Palmer as allowed under
section 134.005 of the Texas Civil Practice and Remedies
Code.
FIFTH CLAIM FOR RELIEF: BREACH OF FIDUCIARY DUTY
43. Plaintiffs incorporate and reallege paragraphs 1-
42 above as if fully set forth herein.
44. At all times material to this civil action Spring
and Palmer were employed as corporate officers of Trident.
Further, Spring served as a director 21st Century.
45. Plaintiffs reposed a special confidence in Spring
and Palmer and entrusted these employees with their most
sensitive proprietary information. Indeed, the confidential
and proprietary information relating to the enhanced
technologies was the single most important asset of Trident.
46. Accordingly, Spring and Palmer owed fiduciary
duties to Plaintiffs. The Defendants breached their
fiduciary obligations by, inter alia:
a. refusing to assign to Trident any inventions and
other intellectual property which they developed
while officers of Trident;
b. failing to return confidential and proprietary
information upon termination of employment and in
response to demands for the return thereof;
c. disclosing Plaintiffs' trade secrets relating to
the enhanced technologies;
d. attempting to financially benefit by selling
Plaintiffs' intellectual property rights to third
parties without authorization;
e. failing to use reasonable efforts to provide
Plaintiffs information relevant to affairs
entrusted to Spring and Palmer and which
Plaintiffs would desire to receive; and
f. failing to conduct themselves with propriety such
that Spring and Palmer did not bring disrepute
upon Plaintiffs.
47. Spring's and Palmer's breaches of their fiduciary
obligations have caused Plaintiffs to suffer damages.
48. Moreover, the Defendants' breaches of their
fiduciary obligations causing Plaintiffs' damages resulted
from Spring's and Palmer's conscious indifference, gross
negligence, fraud or malicious conduct. Accordingly,
Plaintiffs seek exemplary damages for the Defendants'
breaches of their fiduciary obligations in an amount
sufficient to punish Spring and Palmer and deter similar
conduct.
SIXTH CLAIM FOR RELIEF: CIVIL CONSPIRACY
49. Plaintiffs incorporate and reallege paragraphs 1-48
above as if fully set forth herein.
50. Spring and Palmer conspired to conduct an
unauthorized and purported sale of Plaintiffs' intellectual
property for their own personal benefit. From the inception
of the agreement between the Defendants to commit the
unauthorized sale, it was Spring's and Palmer's intent to
cause injury to Plaintiffs.
51. Spring's and Buren's collaboration in attempting
to sell Plaintiffs' intellectual property has caused
Plaintiffs to suffer damages.
52. Moreover, Spring's and Palmer's conspiracy to harm
Plaintiffs was done with malice, as that term is defined in
Texas Civil Practice & Remedies Code 41.001. Accordingly,
Plaintiffs are entitled to exemplary damages in an amount
sufficient to punish the Defendants and deter similar
conduct.
SEVENTH CLAIM FOR RELIEF: ATTORNEYS' FEES
53. Plaintiffs incorporate and reallege paragraphs 1-
52 above as if fully set forth herein.
54. As a result of the Defendants breaches of their
respective employment agreements, as described herein,
Plaintiffs employed the undersigned attorneys to prosecute
this action. Plaintiffs agreed to pay a reasonable fee for
the services of the undersigned counsel.
55. Plaintiffs presented Spring and Buren with notice
of a claim under Tex. Civ. Prac. & Rem. Code 38.001, et
seq, and are therefore entitled to recover their reasonable
attorneys' fees incurred in presenting and prosecuting the
claims asserted herein. In the event of an appeal,
Plaintiffs will be entitled to their reasonable attorneys'
fees incurred in taking or defending such an appeal.
56. Additionally, Plaintiffs are entitled to recover
their reasonable attorneys' fees incurred in presenting and
prosecuting its claims against Spring and Palmer under
Chapter 134 of the Texas Civil Practice and Remedies Code.
In the event of an appeal, Plaintiffs will be entitled to
their reasonable attorneys' fees incurred in taking or
defending such an appeal.
APPLICATION FOR TEMPORARY RESTRAINING ORDER,
PRELIMINARY INJUNCTION & PERMANENT INJUNCTION
57. Plaintiffs incorporate and reallege paragraphs 1-
56 above as if fully set forth herein.
58. As indicated by the Declaration of Ken Wilson
filed in support of Plaintiffs' Application for Entry of
Temporary Restraining Order, Spring and Palmer threatened to
wrongfully sell Trident's magnetic patch technology as
recently as Friday, April 20, 2001. Spring and Palmer
continue to assert that they own the Trident magnetic patch
technologies and can freely assign this technology, which
constitutes the single most valuable asset of Trident, to
any third party. They further claim that the proceeds of any
such sale would belong to them. Temporary, preliminary, and
permanent injunctive relief will therefore be necessary to
prevent the Defendants' wrongful attempts to sell Trident's
proprietary technology.
59. 59. Because any such sale or attempted
sale will necessarily involve disclosure or use of Trident
proprietary technology, a temporary restraining order,
preliminary and permanent injunctive relief will also be
necessary to prevent the irreparable harm created by the
attempted sale and disclosure of Trident's valuable
proprietary technology. Monetary damages will be difficult
to calculate and will necessarily be an inadequate remedy.
60. Plaintiffs' separate Application for Entry of
Temporary Restraining Order establishes that (1) Plaintiffs
have a probable right of recovery of their claims against
the Defendants; (2) Plaintiffs will suffer immediate and
irreparable harm if Spring's and Palmer's conduct are not
restrained by a temporary restraining order, preliminary
injunction, and, ultimately, a permanent injunction; (3) the
threatened harm to Plaintiffs from the Defendants' conduct
outweighs any potential harm to the Defendants resulting
from the issuance of injunctive relief; (4) there is no
countervailing hardship upon Spring and Palmer as a result
of being restrained from what they are legally forbidden to
do; and (5) public policy favors the use of injunctive
relief to protect trade secrets and fair competition.
61. Plaintiffs are willing to post a bond or cash
deposit in an amount set by the Court which shall be
available to compensate Spring and Palmer in the unlikely
event it is found that the temporary restraining order and
preliminary injunction were improvidently issued.
62. Plaintiffs therefore seek a temporary restraining
order and preliminary injunction restraining Spring, Palmer,
their agents, and those persons in active concert or
participation with them from:
(a) transferring, disclosing or using Plaintiffs'
proprietary' information, products and
property, including Trident's magnetic patch
technologies, to any person or entity;
(b) attempting to transfer or disclose
Plaintiff's proprietary information, products
and property, including Trident's magnetic
patch technologies, to any person or entity;
(c) transferring, selling, otherwise conveying
Plaintiffs' products and property, including
Trident's magnetic patch technologies, to any
person or entity; and
(d) concealing, altering, removing or destroying
any documents concerning or relating to
Plaintiffs' magnetic patch technologies,
including without limitation, the patent
application, blueprints, diagrams, product
specifications, customer lists, marketing and
sales plans, financial information, and cost
and pricing information.
63. Plaintiffs further seek mandatory injunctive relief,
including a temporary, preliminary and permanent injunction
order requiring Spring, Palmer, their agents, and those
persons in active concert with them, to:
(a) execute an assignment agreement assigning to
Trident or 21st Century any and all
intellectual property rights relating to the
Trident magnetic patch technologies,
including any patents, patent applications,
or other property which Spring and Palmer
purport to own or control;
(b) return and place in to the registry of the
Court the $15,000 down payment received from
Alan Drake as consideration for the purported
sale of the Trident magnetic patch
technologies; and
(c) return all of the Plaintiffs' property within
the possession, custody or control of Spring
and Palmer to Trident and 21st Century.
64. Plaintiffs further pray that, following trial of this
case, a permanent injunction embodying the terms of the
temporary injunction order be entered.
PRAYER
WHEREFORE, Plaintiffs pray that Spring and Palmer be
cited to appear and answer, and that upon final hearing
Plaintiffs have judgment against these Defendants as
follows:
(1) for damages resulting from Spring's and
Palmer's breaches of the employment agreements as
set forth above;
(2) Plaintiffs' actual damages incurred as a
result of Spring's and/or Palmer's actions as
referenced above;
(3) exemplary damages against Spring and Palmer
as permitted by law;
(4) statutory damages against Spring and Palmer
as permitted by law;
(5) the entry of a temporary restraining order,
preliminary injunction and permanent injunction
restraining Spring, Palmer, their agents and those
persons in active concert with them, from:
(a) transferring, disclosing or using Plaintiffs'
proprietary information. products and
property, including Trident's magnetic patch
technologies, to any person or entity;
(b) attempting to transfer or disclose
Plaintiff's proprietary information, products
and property, including Trident's magnetic
patch technologies, to any person or entity;
(c) transferring, selling, using or otherwise
conveying Plaintiffs' products and property,
including Trident's magnetic patch
technologies, to any person or entity; and
(d) concealing, altering, removing or destroying
any documents concerning or relating to
Plaintiffs' magnetic patch technologies,
including without limitation, the patent
application, blueprints, diagrams, product
specifications, customer lists, marketing and
sales plans, financial information, and cost
and pricing information.
(6) the entry of a mandatory injunction,
including a temporary, preliminary and permanent
injunction order requiring Spring, Palmer, their
agents and those persons in active concert with
them, to:
(a) execute an assignment agreement assigning to
Trident or 21st Century any and all
intellectual property rights relating to the
Trident magnetic patch technologies,
including any patents, patent applications,
or other property which Spring and Palmer
purport to own or control;
(b) return and place in to the registry of the
Court the $15,000 down payment received from
Alan Drake as consideration for the purported
sale of the Trident magnetic patch
technologies; and
(c) return all of the Plaintiffs' property within
the possession, custody or control of Spring
and Palmer to Trident and 21st Century.
(7) attorneys' fees through trial and any appeal;
(8) prejudgment interest on all compensatory
damages awarded herein. and post-judgment interest
on all sums awarded herein, all at the rate
provided by law,
(9) Plaintiffs' costs of court; and
(10) for such other and further relief at law or
in equity, to which Plaintiffs may be entitled.
Respectfully submitted,
By: /s/ Mark D. Taylor
Mark D. Taylor
State Bar No.19713250
Clayton E. Bailey
State Bar No.00796151
BAKER & MCKENZIE
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Tel: 214/978-3000
Fax: 214/978-3099
ATTORNEYS FOR PLAINTIFFS
21st CENTURY TECHNOLOGIES
CORPORATION & TRIDENT
TECHNOLOGIES, INC.
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
21st CENTURY TECHNOLOGIES,
INC. and TRIDENT
TECHNOLOGIES, INC.,
Plaintiffs,
V.
Civil Action No. 401-
CV-0338-Y
DOUG SPRING and BUREN PALMER,
Defendants.
DECLARATION OF KEN WILSON
-
I, Ken Wilson, declare as follows:
1. "My name is Ken Wilson. I am the Chairman of the
Board, President, and Chief Executive Officer of 21st
Century Technologies, Inc. ('21st Century'). I am also a
Director of 21st Century's wholly-owned subsidiary, Trident
Technologies, Inc. ('Trident'). I have personal knowledge
of the matters set forth herein, and, if called as a
witness, I could and would testify competently thereto.
2. 21st Century is a Nevada corporation that has its
principal place of business and headquarters located at 5050
E. Belknap Street, Haltom City, Tarrant County, Texas 76117.
21st Century is a publicly-traded technology holding
company. Continually expanding, 21st Century currently has
six active wholly-owned subsidiaries. One of these
subsidiaries is Trident.
3. Trident was formed by 21st Century in June 1995.
21st Century incorporated Trident for the purpose of
licensing an existing patent held by the Los Alamos National
Laboratory ('Los Alamos'). The patent described certain
magnet-controlled technology. Trident became the operating
company to develop modifications and/or improvements to the
patented technology licensed from Los Alamos, as well as to
manufacture, market and sell the enhanced technology.
4. In or about July 28,1999, 21st Century employed
Doug Spring ('Spring') and Buren Palmer ('Palmer') to serve
as officers of Trident. Spring's and Palmer's employment
were memorialized in separate written agreements. True and
correct copies of the employment agreements are attached
hereto as Exhibit '1. Under the terms of the employment
agreement executed by Spring, Spring agreed to serve as
President of Trident for a one-year term. He was responsible
for the marketing and product development of the
technologies licensed by Trident from Los Alamos. 21st
Century employed Palmer as the Senior Vice President of
Trident for a one-year term. Like Spring, Palmer was also
responsible for the marketing and product development of the
licensed technologies. Trident paid Spring and Palmer an
annual salary and issued 600,000 warrants to each individual
for 21st Century's stock to each individual for $.10 per
share. Spring and Palmer subsequently exercised these
warrants. Spring currently owns 700,000 shares of 21st
Century common stock; Palmer owns 600,000. 21st Century
reposed special confidence in Spring and Palmer and
entrusted these employees with Trident's most sensitive
proprietary information relating to the licensed technology.
5. At or about the time Spring became the President
of Trident, Spring was appointed as a Director of 21st
Century.
6. While Spring and Palmer served as officers, 21st
Century (through Trident) and Trident invested considerable
energy in the research, development, testing and
manufacturing of improvements to the licensed technology.
These efforts resulted in the development of the magnetic
patch devices known as the 'SeaPatch' and ProMag' products.
These devices are used to stop leaks on such objects as
ships, barges, storage tanks, pipelines and railcars.
7. 21st Century's and Trident's proprietary
improvements to the licensed technology afford Trident a
competitive advantage in the marketplace because the
existing technology for patching leaks takes a greater
amount of time to install and therefore causes a greater
volume of leakage of substances potentially harmful to the
environment.
8. While in the course and scope of their duties,
Spring and Palmer worked on improvements to the licensed
technology. Additionally, Spring and Palmer, through outside
counsel retained and paid for by 21st Century, assisted with
the preparation of two provisional patent applications for
filing with the United States Patent Office relating to the
improved technology. The patent applications were filed on
July 3, 2000 and August 16, 2000. Spring and Palmer also
were intimately involved in developing and producing
marketing materials relating to the newly-developed
technologies. Trident compensated Spring and Palmer for
their technology development and marketing in the form of
salary and stock.
9. On several occasions, 21st Century requested that
Spring and Palmer sign a written agreement assigning all
intellectual property rights and designs, inventions and
trade secrets developed by or learned by Spring and Palmer
during their employment. A true and correct copy of one such
Assignment is attached hereto as Exhibit '2.' Despite
repeated demands for their execution of an assignment
agreement, neither Spring nor Palmer executed any
assignment.
10. While serving as officers of Trident, both Spring
and Palmer traveled to 21st Century's offices located in
Tarrant County, Texas at least once a month for board
meetings and to provide status reports relating to Trident
business. Spring had to attend 21st Century's board
meetings because he was a Director. Additionally. Spring and
Palmer made numerous telephone calls on a weekly basis to
21st Century's offices in Fort Worth, Texas to discuss
business matters relating to Trident's research, development
and testing of the technology improvements. Further, Spring
and Palmer mailed Trident's financial and other proprietary
information to 21st Century's offices in Tarrant County,
Texas so that 21st Century could monitor Trident's
activities.
11. Subsequent to the preparation and filing of the
patent application, Spring and Palmer met with Alan Drake.
Mr. Drake is the managing partner of 21st Century Funding,
L.P. I and II. During their meeting with Mr. Drake, Spring
and Palmer represented that they had complete and
unrestricted rights to the technologies developed by
Trident. According to Spring and Palmer, their rights in the
improved technologies included unfettered ownership of the
patent application and the right to develop, market, sell,
and convey the improvements. Further, Spring and Palmer
offered to sell their alleged rights in the improved
technologies, as well as their combined ownership of
1,200,000 free trading shares in 21st Century, to Drake for
the purchase price of $5,000,000. During their solicitation
of Drake, Spring and Palmer represented that they had
previously met with persons and/or entities on the 'East
Coast' and had attempted to sell their alleged rights to the
technology and their 21st Century shares for the purchase
price of $10,000,000.
12. In an attempt to preclude Spring and Palmer from
wrongfully conveying the Trident technologies to anyone
else, Mr. Drake signed an 'Agreement To Sell Personal
Property' dated January 26, 2001 (the 'Agreement') which
purported to convey the Trident technologies and the
sellers' 21st Century warrants. A true and correct copy of
the Agreement is attached hereto as Exhibit '3.'
13. After he signed the Agreement, Mr. Drake contacted
me. Mr. Drake relayed the discussions he had with Spring
and Palmer and provided a copy of the Agreement to me for my
review.
14. After Mr. Drake informed me of the Agreement, I
subsequently flew to Baton Rouge. Louisiana to personally
meet with Spring and Palmer on March 2, 2001, advised Spring
and Palmer that they did not have any ownership interests in
the improved technologies and that all intellectual property
rights belonged to Trident and/or 21st Century.
Additionally, I made repeated demands that they cease and
desist from attempting to solicit the sale of the improved
technologies to any person or entity, and again insisted
they assign the intellectual property rights to Trident.
15. At that time, Spring gave me two letters dated
March 2, 2001 resigning as President of Trident and as a
Director of 21st Century effective March 5, 2001. True and
correct copies of the letters dated March 2, 2001 are
attached hereto as Exhibit '4.' Palmer never formally
resigned as Senior Vice President of Trident. However, as a
result of his conduct, Trident requested Palmer's
resignation on March 16, 2001.
16. In an attempt to amicably resolve this dispute
without the need for court intervention, I have had numerous
conversations with both Spring and Palmer. On April 20,
2001, Spring insisted in a telephone conversation with me
that Palmer and he owned the enhanced technologies developed
at the expense of 21st Century and Trident. Further, Spring
stated that he and Palmer would immediately commence to sell
their alleged rights to the enhanced technologies to third
parties.
17. On April 25, 2001, five days after my conversation
with Spring, 21st Century's and Trident's counsel addressed
a letter to Spring's and Palmer's attorney, Jack E. Morris,
Esq., summarizing 21st Century's and Trident's rights to
Trident's enhanced technologies. A true and correct copy of
the letter dated April 25, 2001 is attached hereto as
Exhibit '5.'
18. In response to the letter, Morris contacted
counsel for 21st Century by telephone on April 26, 2001.
Mr. Morris represented that Spring and Palmer maintained
that they own Trident's technologies and will resolve this
dispute upon payment of a substantial amount of money.
19. Both 21st Century and Trident will suffer
immediate and irreparable harm if Spring and Palmer are not
enjoined immediately from attempting to sell the enhanced
technologies to third parties. It is difficult to calculate
the value of the proprietary 'SeaPatch' and 'ProMag'
technologies, but I can represent that the bulk of Trident's
net worth consists of the proprietary technology to these
two products. These magnetic patch devices and related
magnetic patch applications are Trident's only products.
Injunctive relief will therefore assist Trident and 21-"
Century from losing its key intellectual property.
Additionally, immediate injunctive relief is necessary to
avoid any potential litigation that might ensue between 21st
Century, Trident and any third party that might purchase the
technology from Spring and Palmer.
20. 21st Century and/or Trident are willing to post a
bond or cash deposit in an amount set by the Court which
shall be available to compensate Spring and/or Palmer in the
unlikely event it is found that a temporary restraining
order and/or preliminary injunctive relief was improvidently
issued.
21. I declare under penalty of perjury that the
foregoing is true and correct." Executed this 26th day
of April, 2001.
/s/ Ken Wilson
Ken Wilson
EXHIBIT 1 TO DECLARATION OF KEN WILSON
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made and entered
into as of July 28, 1999, by and between 21st CENTURY
TECHNOLOGIES, INC., a Nevada corporation (the "Company" )
and DOUG SPRING ("Spring") for and in consideration of the
mutual promises herein contained and for other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as
follows;
1. DUTIES. During the term of this Agreement,
Spring will be responsible for marketing and product
development of Trident Technologies Inc. ("Trident") as its
President.
2. TERM. The term of this Agreement shall be for a
term of One (1) year commencing as the date first written
above and renewable after the end of every year.
3. COMPENSATION.
(a) The Company will pay Spring a base salary of
$65,000 per year paid weekly subject to all
applicable federal and state withholding taxes and
other requirements.
(b) The Company will pay Spring a three percent (3%)
sales commission on goods sold by him payable at
the time of receipt of payment by the Company in
the following, increments: 1.5% in cash and 1.5%
in stock.
(C) The Company will issue to Spring 600,000 warrants
@ .10 per share.
4. EMPLOYEE BENEFITS.
The Company will provide Spring with such employee
benefits, including but not limited to, dental and medical,
as it provides to members of its Board of Directors.
5. TERMINATION. Tile Company may terminate Spring
for "Cause" (as hereinafter defined) . The term "Cause" as
used herein, shall mean a material breach of this Agreement
by Spring, an act of fraud, dishonesty or willful conduct
detrimental to the Company. Upon termination, the Company's
obligation to Spring shall cease. However, Spring will be
bound by the terms of a Confidentiality and Non-Disclosure
Agreement which must be entered into by him as a condition
of employment herein.
6 NOTICES. Any notices hereunder shall be made by
certified first class mail with return receipt requested to
the Company at its corporate headquarter address and to
Spring at his residence.
7. MISCELLANEOUS. If any part of this Agreement is
deemed to be invalid than the remaining parts of this
Agreement shall survive as if the invalid provision did not
exist.
8. LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas.
9- MODIFICATION. This Agreement may not be modified
except in writing signed by all of the parties.
10. COMPLETE AGREEMENT. This Agreement is the complete
agreement of the parties and supercedes and replaces any
and all oral and/or written understandings of the parties
if any.
ACCEPTED AND AGREED TO:
21st Century Technologies, Inc.
ACCEPTED AND AGREED
TO:
Doug Spring
BY: /s/Patricia Wilson BY:/s/Doug Spring
Patricia Wilson, President
DATED: July 28,1999 DATED: July
28, 1999
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made and entered
into as of July 28, 1999, by and between 21st CENTURY
TECHNOLOGIES, INC, a Nevada corporation (the "Company") and
BUREN PALMER ("Palmer") for and in consideration of the
mutual promises herein contained, and for other good and
valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as
follows:
1. DUTIES. During the term of this Agreement, Palmer
will be responsible for marketing and product development of
Trident Technologies Inc. ("Trident") as its Senior Vice
President.
2. TERM. The term of this Agreement shall be for a
term of One (1) year commencing as the date first written
above and renewable after the end of every year.
3. COMPENSATION.
(a) The Company will pay Palmer a base salary, of
$46,800 per year paid weekly subject to all
applicable federal and state withholding taxes
and other requirements.
(b) The Company will pay Palmer a three percent (3%)
sales commission on goods sold by him payable at
the time of receipt of payment by the Company in
the following increments: 1.5% in cash and 1.5%
in stock.
(c) The Company will issue to Palmer 600,000 warrants
@ .10 per share.
4. EMPLOYEE BENEFITS.
The company will provide Palmer with such employee
benefits including but not limited to, dental and medical,
as it provides to members of its Board of Directors.
5. TERMINATION. The Company may terminate Palmer
for "Cause" (as hereinafter defined). The term "Cause" as
used herein, shall mean a material breach of this Agreement
by Palmer, an act of fraud, dishonesty or willful conduct
detrimental to the Company. Upon termination, the Company's
obligation to Palmer shall cease. However, Palmer will be
bound by the terms of a Confidentiality and Non-Disclosure
Agreement which must be entered into by him as a condition
of employment herein.
6. NOTICES. Any notices hereunder shall be made by
certified first class mail with return receipt requested to
the Company at its corporate headquarter address and to
Palmer at his residence.
7. MISCELLANEOUS. If any part of this Agreement is
deemed to be invalid than the remaining parts of the
Agreement shall survive as if the invalid provision did not
exist.
B. LAW. This Agreement shall be construed in
accordance with the Laws of the State of Texas.
9. MODIFICATION. This Agreement may not be
modified except in writing signed by all of the parties.
10. COMPLETE AGREEMENT. This Agreement is the
complete agreement of the parties and supercedes and
replaces any and all oral and/or written understandings of
the parties if any.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
Buren Palmer
21st Century Technologies, Inc.
BY:/s/Patricia Wilson BY:/s/Buren T. Palmer II
Patricia Wilson, President
DATED: July 26, 1999
EXHIBIT 2 TO DECLARATION OF KEN WILSON
ASSIGNMENT
This Assignment is executed this________
_________________________________ day of 2001 by Douglas
Spring, hereinafter referred to as "Assignor."
Whereas, Assignor has been employed as an officer of
Trident Technologies, Inc., hereinafter referred to as
"Assignee", pursuant to an Employment Agreement with
Assignee's parent corporation, 21st Century Technologies,
Inc., hereinafter referred to as "21st Century" and has
additionally served as a Director of 21st Century; and
Whereas, while employed in such capacities Assignor
has developed intellectual properties, including new and
useful improvements in methods and apparatuses for rapidly
plugging leaks in containers which include, without
limitation, improvements which are the subject of currently
pending patent applications, and improvements which include
suction cup and adhesive technology ("the technology"); and
Whereas, Assignor recognizes that Assignee and 21st
Century have a legitimate interest and expectancy in all
such technology which was developed while Assignor was
employed as an officer, director or employee of Assignee
and/or 21st Century, and wishes to hereby assign any and all
rights to Assignee that he may have in the technology.
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby assigns to Assignee all of the technology,
and any and all intellectual properties created during the
term of Assignor's employment with Assignee and/or 21st
Century, including any patented material, patentable
material, copyrightable material, trademarks, and any and
all such similar inventions creations, or devices.
Assignor hereby relinquishes and grants to assignee
any and all rights, title and interest that he may have,
possess, or become legally entitled to, in the technology
and intellectual property herein covered.
This Assignment shall be construed in accordance with
the laws of the State of Texas.
In the event that litigation is commenced to enforce
any of the terms of this Agreement, the prevailing party
shall be entitled to recover from the other party all costs
associated with such litigation, including reasonable
attorneys' fees.
EXECUTED on the date first written above, by the
undersigned parties, who hereby acknowledge that they have
read and understand this document, and that they execute it
of their own free will.
______________________________________________
DOUGLAS SPRING, ASSIGNOR
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned
Notary Public,
by the said Douglas Spring on this the______ day of ,
2001, to
certify which witness my hand and seal of office.
_______________________________________________________
NOTARY PUBLIC STATE OF LOUISIANA
EXHIBIT 3 TO DECLARATION OF KEN WILSON
AGREEMENT TO SELL PERSONAL PROPERTY
JANUARY 26th, 2001
THUS DOCUMENT IS A PURCHASE AND SALES AGREEMENT BETWEEN
DOUGLAS SPRING OF DENHAM SPRINGS LOUISIANA AND BUREN PALMER
OF WALKER, LOUISIANA (SELLERS), AND ALLEN DRAKE OF VIRGINIA
BEACH, VIRGINIA (PURCHASER).
WHEREAS, DOUGLAS SPRING AND BUREN PALMER (SELLERS) REPRESENT
THAT THEY SHARE EQUALLY [N ALL RIGHTS TO THE "SEA PATCH" AND
"THE NON MAGNETIC ADHESIVE PATCHING SYSTEM"(THE
TECHNOLOGIES), AND
WHEREAS. DOUGLAS SPRING AND BUREN PALMER (SELLERS) REPRESENT
THAT THEY INTEND TO LEAVE THE EMPLOY OF TRIDENT TECHNOLOGIES
INC. DURING THE YEAR 2001 SO AS TO DEVELOP, OR SELL THE
TECHNOLOGIES, AND
WHEREAS, ALLEN DRAKE (THE PURCHASER) DID NOT SOLICIT THE
SELLERS SO AS TO ACQUIRE RIGHTS TO THE TECHNOLOGIES, AND
WHEREAS, ALLEN DRAKE (THE PURCHASER) UNDERSTANDS THE HIGH
LEVEL OF RESOLVE THAT THE SELLERS HAVE TO DEVELOP AND OR
SELL THE SEA TECHNOLOGIES, AND
WHEREAS, ALLEN DRAKE (THE PURCHASER) HAS PRIOR FINANCIAL
INTEREST IN THE PARENT COMPANY OF TRIDENT TECHNOLOGIES, AND
THUS HAS A PRIOR FINANCIAL INTEREST IN THE DEVELOPMENT OF
THESE TECHNOLOGIES, AND
WHEREAS. ALLEN DRAKE (THE PURCHASER) DESIRES TO PROTECT THE
FINANCIAL INTERESTS OF HIMSELF AND INVESTORS THAT HE
REPRESENTS, AND
WHEREAS, ALLEN DRAKE (THE PURCHASER) HAS TENDERED
CONSIDERATION IN THE AMOUNT OF $7,500 TO DOUGLAS SPRING, AND
$7,500 TO BUREN PALMER,
THE SELLERS AGREE TO SELL THE TECHNOLOGIES, AND THE BUYER
AGREES TO BUY THE DESCRIBED TECHNOLOGIES.
THE BUYER AGREES TO PAY TO THE SELLERS AND THE SELLERS AGREE
TO ACCEPT AS A TOTAL PURCHASE PRICE 5 MILLION DOLLARS,
PAYABLE AS FOLLOWS:
$15,000 PAYABLE ON JANUARY 26th, 2001
$985,000 PAYABLE ON MARCH 1st, 2001
$800,000 PAYABLE ON APRIL 1st, 2001
$800,000 PAYABLE ON MAY 1st, 2001
$800,000 PAYABLE ON JUNE 1st, 2001
$800,000 PAYABLE ON JULY 1st, 2001
$800,000 PAYABLE ON AUGUST 1st, 2001
THE SELLERS AGREE TO TRANSFER TO DRAKE, OR HIS DESIGNEES,
ALL RIGHTS, TO THE TECHNOLOGIES UPON FINAL PAYMENT
THE SELLERS AGREE TO DELIVER TO DRAKE, OR HIS DESIGNEES
1,200,000 FREE TRADING SHARES OF 2Ist CENTURY TECHNOLOGIES
ON OR BEFORE MARCH 1st, 2001.
THE SELLERS AGREE TO SHOW GOOD FAITH IN RESPONDING TO ANY
RESONABLE
REQUEST FOR INFORMATION ON THE TECHNOLOGIES TO DRAKE, OR HIS
DESIGNEES.
IN THE EVENT OF NON-PERFORMANCE BY ALLEN DRAKE(THE
PURCHASER), ALL RIGHTS
TO THE TECHNOLOGIES REVERT TO THE SELLERS, AND DRAKE WITH
THIS DOCUMENTS
COVENANTS TO DELIVER ON AUGUST 1, 2001, 1,200,000 FREE
TRADING SHARES OF 21st
CENTURY TECHNOLOGIES INC. TO THE SELLERS.
/s/ DOUGLAS SPRING /S/ ALLEN DRAKE
DOUGLAS SPRING (SELLER) ALLEN DRAKE (PURCHASER)
/S/ BUREN T. PALMER II
/S TODD RAWLINGS
BUREN PALMER (SELLERS TODD RAWLINGS (WITNESS)
EXHIBIT 4 TO DECLARATION OF KEN WILSON
March 2, 2001
Doug Spring
10320 Lonepine Road
Denham Springs, La. 70726
Ken Wilson
Chairrnan of the Board
21st Century Technologies Corp
2513 East Loop 820 North
Fort Worth, Texas 76118
Ken,
This letter is to inform you that I am resigning as
President of Trident Technologies Corporation effective
March 5, 2001.
I feel that my time at Trident has been well spent. We have
made a lot of progress, and I am leaving Trident at a time
when the company is at its strongest.
I fully intend to make the transition in such a way as to
benefit 21st Century and its shareholders however possible.
I wish nothing but the best for the company and I look
forward to seeing it thrive in the future.
Sincerely,
/s/ Doug Spring
Doug Spring
March 2, 2001
Doug Spring
10320 Lonepine Road
Denham Springs, La. 70726
Ken Wilson
Chairman of the Board
21st Century Technologies
2513 East Loop 820 North
Fort Worth, Texas 76118
Ken,
This letter is to serve as formal notification that I am
resigning as a member of the Board of Directors of 21st
Century Technologies as of March 5, 2001. I feel that my
time on the Board has been a tremendous learning experience,
and I am happy to know that I have been able to be somewhat
of a service to 21st Century, and its shareholders.
Sincerely,
/s/ Doug Spring
Doug Spring
EXHIBIT 5 TO DECLARATION OF KEN WILSON
(LETTERHEAD OF BAKER & MCKENZIE)
April 25, 2001
Jack E. Morris Via Facsinille (225)
768-7394
Attorney at Law
4051 Veterans Blvd.
Suite 208
Metairie, Louisiana 70002
Re: Case law describing the obligation of a corporate
officer or director to assign inventions to a corporation
Dear Mr. Morris:
This letter summarizes the cases supporting the
position that Messrs. Spring and Palmer are obliged to
assign their inventions to 21st Century. This position is
supported by either of two theories: i) Messrs. Spring and
Palmer are required to assign their inventions to 21st
Century because of their fiduciary duties owed to 21s!
Century and Trident Technologies; and ii) Messrs. Spring and
Palmer are obliged to assign their inventions to 21st
Century because they were hired to invent the Sea-Patch
technology.
OBLIGATION OF A FIDUCIARY TO ASSIGN INVENTIONS
A corporate officer or director is required to assign
inventions to a corporation as a result of his fiduciary
duty to the corporation. The leading case on this rule is
Davis V. Alwac Int'l, Inc., 369 S.W.2d 797 (Tex. Civ. App-
Beaumont 1963, writ refd n.r.e.). In Davis v.Alwac, Mr.
Davis was an officer and director of a corporation and was
also a co-inventor of several patent applications that were
pending before the U.S. Patent Office. Davis V. Alwac, 369
S.W.2d at 802. The patent applications related to
improvements in monorail equipment, which was the line of
business of the corporation. Id. At trial, Mr. Davis alleged
that he '~as under no obligation to assign the patent
applications to the corporation. The court was unpersuaded
by this argument:
[Mr. Davis'] name was listed on the applications
pending as a co-inventor. This was done while he
was serving as an officer and director of said
company. Having been so connected with the
company, he was in a fiduciary relationship with
it and should have exercised the utmost good faith
in all transactions touching his duties to it and
to its property. Among the obligations which
this fiduciary dutv imposes on Mr. Davis is the
one that anv inventions which he niav develop
while occupving such a position and which relate
to the occupation of the corporation must be
assigned to the corporation for its benefit.
Id. (emphasis added). This proposition has been widely
accepted in jurisdictions outside of Texas. See Kennedy y.
Wnght, 676 F. Supp. 888, 892 (C.D. Ill. 1988); Lefiell v.
US., 162 Ct. Cl. 865 (1963); Mechanical Plastics Corp. v.
Thaw, 197 U.S.P.Q. 651,654 (N.Y. Sup. Ct. 1977); and Paul C.
Van Slyke & Mark M. Friedman, Employer '5 Rights to
Inventions and Patents of Its Officers, Directors and
Employees, 18 ALPLA Q.J. 127, 147-54 (1990). Thus, case law
clearly dictates that Messrs. Spring and
Palmer are obliged to assign their patent applications to
2l~~ Century because of their fiduciary obligations as
officers and directors.
The employment agreements between Messrs. Spring and
Palmer and 21 Century state that they are governed by Texas
law. However, even if the agreements are governed by
another state's law, such as Louisiana, this will not affect
the obligation of a corporate officer or director to assign
the patent applications. Louisiana law states that officers
and directors are fiduciaries as to their corporations. and
are required to discharge the duties of their position in
good faith and "with the diligence, care, judgment and skill
which ordinarily prudent men would exercise under similar
circumstances in like positions." La. Rev. Stat. Ann
12:91; Riverciiy V. American Can Co., 600 F.Supp. 908, 922
(F. D. La. 1984). Accordingly, even if the fiduciary duties
of Messrs. Spring and Palmer are governed bv Louisiana law,
they will be required to assign the inventions to 21st
Century.
EMPLOYEES HIRED TO INVENT MUST ASSIGN INVENTIONS
The Supreme Court has recognized that when an
employee is hired to invent, the employee is obliged to
assign any patents that he develops during his employment to
the employer. See US. v. Dubilier Condenser Corp., 289 U.S.
178, 187 (1933) ("one employed to make an invention, who
succeeds, during his term of service, in accomplishing that
task, is bound to assign to his employer any patent
obtained. The reason is that he has only produced that which
he was employed to invent. His invention is the precise
subject of the contract of employment"). Because Messrs.
Spring and Palmer were hired for the purpose of developing
and marketing the Sea-Patch device, they are required to
assign any related patent applications to 21st Century.
This letter describes only some of the cases
related to the ownership of the patent applications by 21st
Century. This letter does not address any other legal
remedies or theories which may apply to Messrs. Spring and
Palmer's actions. Please call if you have any questions
regarding these cases.
Very truly yours,
/s/ Mark D. Taylor
Mark D. Taylor
cc: John G. Flaim (firm)