Company uses another's technology to design competing product: Breach of promise: Financial losses: Verdict: Punitive damages

Law Reporter, Dec 2003

COMMERCIAL LITIGATION

Vehicular Techs. Corp. v. Titan Wheel Int'l, Cal., Los Angeles County Super. Ct., No. BC 263 739, June 10, 2003.

Vehicular Technologies Corporation (VTC) developed a differential locker device for use in automobiles. At the time VTC introduced die locker, Titan Wheel International had dominated the market for differential lockers for decades. VTC's product created competition for Titan's product.

Titan and VTC agreed that VTC would share its locker technology with Titan, and Titan, in return, would not copy the locker device or use VTC's technical information in the future. Two years later, after the companies had failed to come to terms on a cooperation agreement, Titan allegedly began to sell-through one of its divisions-a de vice that was a copy of VTC's locker. Titan also allegedly artificially depressed the price of the device.

VTC suffered lost profits estimated at $14 million. Because VTC was forced to design and produce alternative lockers-and incurred costs in doing so before it had recouped the costs of producing the initial locker-VTC suffered further financial losses of about $4 million.

VTC sued Titan. Plaintiff alleged breach of contract, misappropriation of trade secrets, and intentional and negligent misrepresentation.

Defendant contended that there was no promise, or, in the alternative, no consideration to support a promise, and denied that it had copied plaintiff's device. Defendant also contended that plaintiff's losses were due to the facts that it was a start-up company and was undercapitalized, and due to ineffective management. Defendant denied responsibility for sales of the competing product for more than one year, because defendant sold the division that marketed the lockers a year after the division began marketing them.

A jury awarded plaintiff $16.30 million. The award includes $2.5 million in punitive damages.

Defendant reportedly plans to move for a new trial.

Plaintiff's expert witnesses were Marc Margulis, accounting/acquisition and merger/business valuation, Century City, Cal.; Wesley J. Schultz, automotive engineering, Laguna Woods, Cal.; and Jerry King, automotive transmissions, Anaheim, Cal.

Defendant's experts were Robert V. Equals, accounting, Los Angeles, Cal.; and Alvin Lowi, design engineering, Long Beach, Cal.

Plaintiff's Counsel

* Jerome L. Ringler, Santa Monica, Cal.

Robert M. Turner, Santa Monica, Cal.