Petroleum Analyzer Co. Lp v. Olstowski

• Decision Date: 15 July 2010
• Docket Number: NO. 01-09-00076-CV,Trial Court Case No. 2006-53995,01-09-00076-CV
• Citation: Petroleum Analyzer Co. v. Olstowski, NO. 01-09-00076-CV, Trial Court Case No. 2006-53995 (Tex. App. Jul 15, 2010)
• Parties: PETROLEUM ANALYZER COMPANY LP, Appellant v. FRANEK OLSTOWSKI, INDIVIDUALLY, AND DBA ATOMIC ANALYTICAL CONSULTING SERVICES AND ATOM INSTRUMENT CORPORATION, APPELLEES, Appellee
• Court: Texas Court of Appeals

PETROLEUM ANALYZER COMPANY LP, Appellant

v.FRANEK OLSTOWSKI, INDIVIDUALLY, AND DBA ATOMIC ANALYTICAL CONSULTING SERVICES AND ATOM INSTRUMENT CORPORATION, APPELLEES, Appellee

NO. 01-09-00076-CV

Trial Court Case No. 2006-53995

Court Of Appeals For The First District Of Texas

Opinion issued July 15, 2010.

On Appeal from the 269th District Court

Harris County, Texas

MEMORANDUM OPINION

Elsa Alcala Justice

Appellant, Petroleum Analyzer Company LP(PAC), files a motion for rehearing and a motion for en banc reconsideration of our memorandum opinion issued March 4, 2010 that upholds an arbitration award and final judgment in favor of appellee, Franek Olstowski, and a summary judgment in favor of appellee, Atom Instrument Corporation(Atom).Having received a response from Olstowski and Atom, we grant PAC's motion for rehearing and withdraw our March 4, 2010 memorandum opinion and judgment, and issue this memorandum opinion and judgment in their stead to clarify our analysis of one issue raised by PAC.Because we withdraw our March 4, 2010 opinion, PAC's motion for en banc reconsideration is rendered moot.SeeBrookshire Brothers, Inc. v. Smith, 176 S.W.3d 30, 33(Tex. App. Houston [1st Dist.]2004, pet. denied)(op. on reh'g)(noting that motion for en banc reconsideration becomes moot when motion for rehearing is granted and new opinion and judgment issue).Through its first, third, and fourth issues in its original appellant's brief, ¹ PAC contends the trial court erred when it granted Atom's no-evidence motion for summary judgment because (1)the trial court granted Atom's motion for summary judgment before Atom had filed an answer to PAC's original petition, (2) Atom's motion for summary judgment is "predicated solely on the doctrine of res judicata" and the trial court erred by granting a summary judgment based on an affirmative defense that was never pleaded, and (3) the lawsuit between PAC and Atom had been stayed by the trial court.In its second issue in its original appellant's brief, PAC contends the trial court erred when it granted attorney's fees to Atom in conjunction with granting Atom's summary judgment.In its fifth issue in its original appellant's brief, PAC argues that the trial court erred in granting Olstowski's motion to compel arbitration.In its sixth issue in its original appellant's brief, PAC contends the trial court erred in confirming and not vacating the arbitration award.

We affirm.

Background

This appeal arises from an ownership dispute as to certain patents and other intellectual property related to excimer lamp technology, and a dispute as to Olstowski's right to control the excimer lamp technology he designed while employed as a consultant for PAC and other companies.PAC contends Olstowski breached a consultant and non-disclosure agreement by applying for patents forthis technology and by sharing and attempting to sell the technology to PAC's competitors and customers.

In June 2001, Antek Instruments, L.P.(now owned by PAC) retained Olstowski as a consultant to provide "services for research, development and testing of products and/or technologies that may be incorporated into products or services provided by [Antek]."This arrangement was memorialized by a "Consultant Agreement" signed by Olstowski and Jay Szinyei, then Antek's Manager of Engineering.The Consultant Agreement expressly required that it may not be modified except by a writing signed by both parties.

Antek knew that, while Olstowski worked on projects for Antek, he was also a consultant for other companies that produced petroleum products.The Consultant Agreement, therefore, defined a non-exclusive relationship for Olstowski to provide personal services to Antek.Pursuant to the Consultant Agreement, "[a]ll [c]onfidential [i]nformation, technology, prototypes, and products developed by [Olstowski] while providing service for Antek [would] be the exclusive property of Antek."

According to Szinyei, the principal drafter of the Consultant Agreement, the agreement covered individual projects assigned to Olstowski by Antek.This limitation of the scope of the services enabled Antek to control the amount of timeexpended by Olstowski on projects and thereby control Antek's expenses.Thus, the Consultant Agreement required that Olstowski be assigned each consultant project.After being assigned a consultant project, any information, technology, prototypes, or products developed by Olstowski while providing such service then became the exclusive property of Antek.

In March 2002, Olstowski informed Szinyei about his idea to develop an excimer light source specifically intended to measure sulfur using ultraviolet (UV) fluorescence.Thereafter, Olstowski told Tom McMullen, Antek's president, and Szinyei about his idea.Antek did not want to assume the risk of investing its resources into the excimer technology, and decided that Olstowski could pursue the project on his own time.Antek informed Olstowski of this decision.Olstowski was also told that if he was successful in his research, Antek would be interested in talking with Olstowski about using the excimer technology in its equipment and requested "first dibs" on considering whether to license the technology.

The Consultant Agreement was never modified in writing and Olstowski was never assigned to work on excimer technology as an Antek or PAC project.Antek had specifically discussed modifying the consultant agreement through a "carve out" agreement that stated the excimer project was not being done pursuantto the Consultant Agreement; however, a "carve out" agreement never materialized.

By December 2002, Olstowski had developed the excimer technology.Although Olstowski developed the excimer technology on his own time and with his own money in his own laboratory, Olstowski performed tests and generated data on the excimer technology using PAC employees and equipment.

On December 27, 2002, in his own name and with his own lawyer, Olstowski filed a patent application titled "Excimer UV Fluorescence Detection."Olstowski then informed Antek that he had filed a patent application, and that Antek, as required by the 2001 Consultant Agreement, would need to sign a nondisclosure agreement with him before he would disclose his excimer technology to them.Antek did not object to Olstowski's filing of the patent application.

On January 28, 2003, Antek and Olstowski entered into a Mutual NonDisclosure Agreement (MNDA) for Olstowski to conduct a feasibility study to investigate the possibility of incorporating the Olstowski Excimer Technology into the Antek Technology, or to use the Olstowski Excimer Technology to develop new products for Antek.The MNDA states:

WHEREAS, OLSTOWSKI has developed technology using excimer lamps and can detect substances using excimer fluorescence (hereafter "Olstowski Technology"); andWHEREAS, ANTEK had developed products for detecting substances (hereafter "Antek Technology"), but has not developed and does not possess technology to detect substances using excimer fluorescence as embodied in the Olstowski Technology; and

WHEREAS, ANTEK is desirous to conduct a feasibility study in association with OLSTOWSKI to investigate the possibility of incorporating the Olstowski Technology into the Antek Technology, or to use the Olstowski Technology to develop new products (hereafter "Project").

If either Party brings an action to enforce the terms hereof, the prevailing Party in such action shall be entitled to reasonable attorney's fees....Any controversy or claim arising out of or relating to this Agreement will be submitted to final and binding arbitration with the American Arbitration Association in accordance with the Commercial Arbitration Rules.Judgment upon an award rendered by the arbitrator may be entered in and by any court having jurisdiction.

In the latter half of 2003, Antek and Olstowski negotiated a license agreement for Antek to license the excimer and related technology from Olstowski.Proposed licensing agreements were exchanged for over three years while Olstowski continued to work with PAC under the Consultant Agreement, MNDA, and later an additional Non-Disclosure/Non-Use Agreement (NDNUA).In 2004, Antek became a subsidiary of PAC.

In March 2005, PAC and Olstowski entered into the NDNUA, signed by PAC's president, McMullen.Under the NDNUA, Olstowski agreed to continue todisclose his excimer technology to PAC, and PAC, in turn, promised to keep the Olstowski Technology secret and promised not to use the Olstowski Technology.The NDNUA stated in part:

In order that we may be more free and open with you, it is necessary to have your promise that you and your employer, if any, will not use or divulge any confidential business information or proprietary designs, processes, algorithms, machines, drawings, technical information or trade secrets which may be provided you by Franek Olstowski for the particular field hereafter defined.[D]efining the field applicable to this Agreement... excimer lamps or the detection of substances using excimer fluorescence and the like.

This Agreement controls over any prior written agreements.

Any controversy or claim arising out of or relating to this Agreement will be submitted to final and binding arbitration with each party selecting an arbitrator, and the two party-appointed arbitrators selecting a neutral arbitrator.The arbitration shall be conducted under the Federal Arbitration Act because the parties agree that interstate commerce is affected, further the parties acquiesce to the jurisdiction of the U.S. District Courts and a judgment upon an award rendered by the arbitrators may be entered in and by the U.S. District court.

RECEIVING PARTY ACCEPTED AND AGREED TO:

Signature: s/ Thomas McMullen

Print Name: Thomas E. McMullen

Employer: PAC

Date: 14 May 2005

Olstowski provided confidential information to PAC pursuant to the NDNUA.

Eventually, the relationship between PAC and Olstowski soured and...