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Coating Firm Built on Stolen Secrets?

Friday, March 16, 2012

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A leading manufacturer of patented epoxy spray systems for infrastructure repair is suing a young competitor, contending that the rival business was built on information stolen as a licensee.

 Danny Warren

 Warren Environmental

Danny Warren is the principal inventor behind Warren Environmental’s patented epoxy-based product line and spray systems.

The federal-court suit by Warren Environmental Inc. accuses Jon Fishback, of RedDog USA Inc., of sneaking into Warren’s Massachusetts warehouse in April 2010, copying down coatings formulas and, later, dismantling company equipment to create “knock-off” versions that became the basis of RedDog.

The suit was filed March 6 in U.S. District Court in Massachusetts by Warren, of Middleboro, MA, and its contractor subsidiary, A&W Maintenance Inc.

Warren, owned by Danny and Jane Warren, declined to comment on the lawsuit. Fishback did not respond to a request for comment.

Plumber or Coating Inventor?

The suit says Fishback, then a plumber with no coatings or infrastructure experience, met with the Warrens in April 2010 to discuss becoming a licensee of Warren Environmental.

 Warren Environmental Services

 Warren Environmental

Since the early 1980s, Warren Environmental Services has developed patented epoxies and processes for rehabilitation of pipes and manholes. This rehab project was conducted in Waltham, MA.

Warren manufactures and licenses proprietary spray systems and solvent-free, corrosion- and fire-resistant epoxies used in urban and industrial water facilities. Its products include the only single-coat epoxy of its kind specified by the U.S. Navy for certain applications, the suit says.

Company founder Danny Warren has also patented two spray systems for applying the company’s coatings—a system branded as the “Warren Environmental System.”

The suit says that two months before the licensing meeting, Josh Fishback—believed to be Jon’s brother—set up a company in Utah called Smart Services Inc. A third man, Steve Pierson, also of Utah, was also part of Smart Services.

Theft Alleged

Sometime during the April visit by Jon Fishback and Pierson to Warren’s facility, Fishback “snuck into” the warehouse “where 55-gallon drums of chemicals used to manufacture the Warren Environmental epoxies were stored,” according to the suit. The drums were labeled with exact chemical specifications along with supplier and manufacturer information.

“Fishback secretly copied the specifications contained on the labels posted on the 55-gallon drums,” the suit says. Later, back in his hotel room, Fishback “boasted” to Pierson “that he had stolen all the information he needed concerning the Warren Environmental products and that he and Pierson no longer needed Warren Environmental.”

Fishback then “tried to induce” Pierson and Smart Services “to join his conspiracy to copy” the products and compete with Warren, but Pierson refused, the suit says.

Trade Secrets

On April 10, 2010, Smart Services, Pierson and Fishback signed confidentiality and trade secret agreements with Warren.

On April 29, the suit says, Fishback formed another company, “ToGoFor Inc.,” described as a television production company. Six months later, that company would become RedDog USA (also known as RedDog Industries), selling epoxies and spray systems for wastewater systems.

 RedDog USA

 RedDog USA

Three months after starting a coatings company, former plumber Jon Fishback said he had formulated a coating similar to Warren Environmental’s—a coating that Warren had taken years to develop.

Meanwhile, on Aug. 18, Pierson and another man incorporated Smart Epoxy Lining LLC, which became a licensee of Warren that October. Jon Fishback was a shareholder in the company.

While a licensee, Fishback “was caught disassembling” one of Warren’s spray rigs, which was forbidden under the licensing agreement, the suit says. Fishback was also soliciting investors for his own business, the suit says.

Concerned that such actions could jeopardize the license with Warren, the suit says, Smart Epoxy voted Fishback out of the company in November.

New Name, New Company

In February 2011, ToGoFor changed its name to RedDog, advertising itself as a “high performance coatings manufacturer that specializes in 100% solids products with zero VOCs. We offer a full line of products to handle all water and waste-water infrastructure rehabilitation.” The coatings profile is identical to that of Warren’s products, which the suit says were developed over many years.

About the same time, Fishback submitted an epoxy that he had allegedly developed in about three months to a third-party lab for testing. The company’s products are called FlexCoat and ZyCoat.

‘As Good as Warren’s’

The suit says Fishback “repeatedly solicited” Smart Epoxy to give up its license with Warren and go with his less-expensive products. He also allegedly tried to obtain a gallon of another Warren epoxy from a long-time Warren supervisor, offering a position with RedDog in return, the suit says.

Fishback is also accused of soliciting and obtaining business “using a copy of the Warren Environmental spray system to spray apply defendant’s knock-off epoxy on a job….”

“In its solicitations, Fishback and RedDog often emphasize the fact that Fishback was a trained licensee of Warren Environmental and that its epoxy products are as good as Warrens’.”

“Fishback and RedDog are repeatedly using the good will and reputation of the Warren Companies in the industry to solicit sales of their copy-cat epoxy and copy-cat epoxy spray system.”

The eight–count suit alleges breach of the confidentiality and trade secret agreement, breach of the duty of good faith and fair dealing, interference with Warren’s license agreements, unfair and deceptive trade practices, theft of trade secrets, and other wrongdoing. The action seeks all sales and profits of RedDog and unspecified actual and compensatory damages.

No trial date has been set.

   

Tagged categories: Corrosion; Epoxy; Formulating; Paint application; Protective coatings; Spray systems; Wastewater Plants

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