IPAC Wins Case Against Distributor

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Lubricant additive supplier IPAC said last week that it has won two arbitration decisions against a former distributor and a former employee for misappropriation of intellectual property.

The Dublin, California-based company won a $1.1 million judgement against Black Gold S.A.R.L. for misappropriating confidential IPAC information in order to develop and sell products that, in the words of an arbitrator, could be called knock-offs of IPACs. The former employee, Jeff Melendez, was ordered to pay $55,306 for his actions.

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In a Feb. 26 press release, IPAC said it still has a related arbitration case pending against Steven Plitt, another former IPAC employee. Along with Black Gold co-owner Lorenzo Napoleoni, Plitt co-founded PXL Chemicals, the company described as selling IPAC-like products.

Monaco-based Black Gold is contesting enforcement of the award against it in Monaco, and Napoleoni told Lube Report March 5 that his company still denies the allegations against it and that the arbitration ruling against it was unfairly reached. Plitt also denied retaining confidential IPAC information or using such information to make PXL products. Melendez could not be reached for comment.

IPAC manufactures and sells lubricant additive packages. According to court documents, it entered a sales representative agreement and an exclusive distributor agreement in 2016 for Black Gold to sell IPACs additives. In March of 2018, the companies agreed to terminate the sales agreement. Two months later, IPAC sued for arbitration, complaining that Black Gold had interfered with its contractual relations and misappropriated trade secrets by forming PXL with the help of a former IPAC employee.

In May of 2019, after a three-day hearing, arbitrator Mark C. Dosker found in IPACs favor after concluding that, while the agreements between Black Gold and IPAC were still in effect, Napoleoni discussed with two IPAC employees, Steven Plitt and Jeffrey Crow, the possibility of forming a company that would compete with IPAC. According to a Nov. 9, 2019 ruling by U.S. General District Court Judge Yvonne Gonzalez Rogers in the federal district court for the Northern District of California, Crow raised concerns that it would be difficult to form such a business without misusing confidential IPAC information, but Plitt and Napoleoni proceeded to form PXL.

Rogers ruling does not indicate whether these actions occurred before or after termination of the sales agreement, although it does state that terms of the agreement were in place.

The ruling notes that Dosker accepted testimony from an expert witness called by IPAC that PXLs products were so strikingly similar to IPACs products that they [could] be called knock-off products. Dosker also found that Plitt and Napoleoni formed PXL while possessing hundreds of documents with confidential IPAC information, including a password-protected document that Plitt emailed to himself detailing the identity, vendor, price and relative composition for each component in each of IPACs products.

Brad C. Weber, an attorney for Plitt, provided a statement saying in part, Mr. Plitt denies any wrongful retention of any confidential IPAC information. Further, no confidential IPAC information was used for the production of any PXL products.

Dosker ruled that Black Gold caused confidential IPAC information to be misappropriated to formulate, manufacture, market and sell PXL products and that this caused a decrease in IPAC sales. He ordered Black Gold to pay IPAC $687,703 in damages plus $406,000 in fees and arbitration costs.

Black Gold took the case to the U.S. district court, asking that the decision be vacated on multiple grounds: that the email Plitt allegedly sent to himself was not authenticated; that sufficient evidence of IPACs attorneys fees was not presented; and that Doskers findings were based in part on evidence that he gathered outside of the arbitration hearing.

Black Gold believes that [Dosker] acted in manifest disregard of the rules governing its jurisdiction, the burden of proof, the adversarial principle and violated the rules governing the freedom of trade, Napoleoni said in a written statement to Lube Report.

Rogers denied Black Golds opinion and confirmed Doskers award for IPAC.

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