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Vehicular Technologies Corp. vs. Titan Wheel International, Dyneer Corp. et al.


Misappropriation of Trade Secrets, Unfair Competition, Breach of Contract, and Fraud

Vehicular Technologies Corp. vs. Titan Wheel International, Dyneer Corp. et al.
Superior Court of the State of California, County of Los Angeles, Case No.BC263739

Counsel for Plaintiff: Fogel, Feldman, Ostrove, Ringler & Klevens
Expert for Plaintiff: Marc S. Margulis, C.F.A., A.S.A., M.B.A
Plaintiff Vehicular Technologies (dba PowerTrax) developed, manufactured and sold automotive differential products that greatly increase the drive wheel traction for vehicles in difficult terrain or weather conditions. PowerTrax’s principal product, the patented Lock-Right product, represented a breakthrough in the field of automatic positive locking differentials as it was the first such locker to achieve the combination of simplicity of design, ease of installation, durability and performance at a price attractive to off-road enthusiasts.

Defendant Dyneer (dba Tractech) was the market leader in aftermarket differential locker products. Tractech’s premier product, the Detroit Locker, had dominated the segment for decades at substantially higher selling prices.

In 1993, after the introduction and rapid market acclaim of the Lock-Right product line, Tractech attempted to acquire ownership of, or an exclusive license to, the Lock-Right products. During the course of negotiations with PowerTrax, Tractech requested certain confidential technical and market information from PowerTrax for which Tractech promised and represented that it would not use or disclose such information or copy the Lock-Right products. Subsequent to the disclosures, and in order to coerce PowerTrax into selling its products and technologies to Tractech, Tractech openly threatened to drive PowerTrax out of business. PowerTrax rejected Tractech’s inadequate proposal.

Having failed to acquire the Lock-Right products and losing sales to PowerTrax, Tractech proceeded to steal the technology, copy the Lock-Right trade dress, introduce virtually identical products into the market at lower prices, engage in marketing and advertising practices designed to undermine the market’s perception of Lock-Right’s reliability, and make false and disparaging statements about PowerTrax to PowerTrax’s distributors.

PowerTrax sued for misappropriation of trade secrets, unfair competition, breach of contract, fraud and promissory estoppel. PowerTrax had earlier sued Tractech for patent and trade dress infringement. In this earlier matter, the company lost an appeal of an adverse summary judgement by the lower court in a controversial ruling pertaining to the Doctrine of Equivalents.

Mr. Margulis testified in trial as to the lost profits sustained by PowerTrax as a consequence of Tractech’s acts. Mr. Margulis determined lost profits from 1996 through 2002, when PowerTrax’s assets were sold in a liquidating transaction. He also determined the hypothetical value of the company in 2002 “but for’ the damages sustained in the years prior to the company’s liquidation.

After a month-long trial, the jury found Defendants liable and awarded compensatory and punitive damages to the Plaintiff in the amount of $16.3 million.