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PDC Machs. Inc. v. Nel Hydrogen A/S

United States District Court for the Eastern District of Pennsylvania

June 15, 2018, Decided; June 15, 2018, Filed

CIVIL ACTION No. 17-5399

Opinion

MEMORANDUM

Juan R. Sánchez, J.

Plaintiff PDC Machines Inc. (PDC) brings claims pursuant to the federal Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836(b), and state law against Nel Hydrogen A/S (Nel), a longtime PDC customer, and Joshua Andrew Adams, a former PDC project engineer who is currently employed by Nel, arising out of Defendants' alleged misappropriation of PDC's trade secrets and other sensitive, confidential, and proprietary information relating to PDC's proprietary high pressure gas diaphragm compressor technology. Defendants have filed a partial motion to dismiss, seeking dismissal of five of the nine counts asserted in PDC's Complaint, including [*2]  the DTSA claim. PDC has agreed to withdraw one of the five counts, but otherwise opposes the motion. For the reasons set forth below, the motion to dismiss will be granted as to the withdrawn count and denied as to the remaining counts.

BACKGROUND

PDC is a technology design and manufacturing company that provides engineered solutions for the specialty gas and chemical processing industries worldwide. According to the Complaint, PDC has spent 40 years and millions of dollars developing its proprietary high pressure gas diaphragm technology, and is the only company in the world that has developed a commercially successful high pressure gas compressor using a diaphragm technology. In 2008, PDC entered into a contractual relationship with Nel, a "global, dedicated hydrogen company" based in Denmark, whereby PDC agreed to develop high pressure hydrogen gas diaphragm compressors for Nel. See Compl. ¶¶ 25-26. The parties' relationship was subject to a nondisclosure agreement (NDA) which prohibited Nel from engaging in any analysis, replication, or reverse-engineering of the PDC compressors. Pursuant to the NDA, PDC has shared many trade secrets with Nel, including customer versions of PDC's [*3]  proprietary computer software, schematic drawings, 3D models, calculations, descriptions of compressor features, technology and product performance data, and the PDC compressors themselves, which embody numerous trade secrets ascertainable only by reverse engineering or other analysis prohibited by the NDA. Adams has also been privy to PDC's trade secrets and other confidential and proprietary information, having been integrally involved in the research, development, and design of PDC's high pressure hydrogen diaphragm compressors as a PDC project engineer from October 2007 until June 2011. As part of his employment with PDC, Adams was subject to an NDA, which prohibits him from publishing, disclosing, disseminating, or using any of PDC's confidential information, including PDC's trade secrets, without PDC's express written consent.

PDC recently discovered that Adams is now working for Nel and that Nel has filed at least one patent application, on which Adams is listed as the inventor, claiming a high pressure diaphragm hydrogen compressor to be used in hydrogen refueling stations. The compressor described in Nel's patent application is the same as PDC's hydrogen gas diaphragm compressor [*4]  except for the shape of the gas chamber. Although the patent application does not disclose the confidential processes and know-how needed to design and operate a high pressure hydrogen diaphragm compressor suitable for use in industrial applications, PDC understands that Nel professes to have designed such a compressor and is seeking to market hydrogen fueling stations incorporating this technology to potential customers. PDC also understands that Defendants have attempted to recruit other PDC employees to work for Nel on its diaphragm compressor technology.

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2018 U.S. Dist. LEXIS 100506 *; 2018 WL 3008531

PDC MACHINES INC. v. NEL HYDROGEN A/S formerly known as H2 LOGIC A/S, et al.

Subsequent History: Motion denied by PDC Machs., Inc. v. Nel Hydrogen, 2018 U.S. Dist. LEXIS 142444 (E.D. Pa., Aug. 22, 2018)

CORE TERMS

trade secret, compressor, misappropriation, technology, diaphragm, hydrogen, malice, high pressure, conspiracy, alleges, motion to dismiss, injure, loyalty, patent application, confidential, station, breach of fiduciary duty, competitor, discovery, employees, Counts, rights, proprietary information, civil conspiracy, enactment date, fiduciary duty, customers

Civil Procedure, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Torts, Concerted Action, Civil Conspiracy, Elements, Business & Corporate Compliance, Contracts Law, Breach, Breach of Contract Actions, Procedural Matters, Labor & Employment Law, Employment Relationships, Fiduciary Responsibilities, Conditions & Terms, Trade Secrets & Unfair Competition, Noncompetition & Nondisclosure Agreements, Trade Secrets