Free Answer to Complaint - District Court of Delaware - Delaware

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UNITED STATES DISTRICT COURT DISTRICT OF DELAWARE REMY, INC., UNIT PARTS COMPANY, and WORLDWIDE AUTOMOTIVE, LLC, Plaintiffs, v. CIF LICENSING, LLC, D/B/A GE LICENSING, WELLS MANUFACTURING CORP., TADITEL US, INC., and WETHERILL ASSOCIATES, INC., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

C.A. No. 06-785-***

WELLS MANUFACTURING CORP., Counterclaimant, v. REMY, INC., Counterdefendant.

WELLS MANUFACTURING CORP., Third-Party Plaintiff, v. STMICROELECTRONICS, INC., Third-Party Defendant.

WELLS MANUFACTURING CORP.'S ANSWER, COUNTERCLAIMS, AND THIRD-PARTY COMPLAINT

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Defendant Wells Manufacturing Corp. ("Wells") hereby answers the Complaint of Plaintiffs Remy, Inc. ("Remy"), Unit Parts Company ("UPC"), and Worldwide Automotive, LLC ("Worldwide") as follows: ANSWER PARTIES, JURISDICTION AND VENUE 1. Wells is without knowledge or information sufficient to form a belief as to the

truth of the allegations of this paragraph, and the same are therefore DENIED. 2. Wells is without knowledge or information sufficient to form a belief as to the

truth of the allegations of this paragraph, and the same are therefore DENIED. 3. Wells is without knowledge or information sufficient to form a belief as to the

truth of the allegations of this paragraph, and the same are therefore DENIED. 4. Wells is without knowledge or information sufficient to form a belief as to the

truth of the allegations of this paragraph, and the same are therefore DENIED. 5. 6. ADMITTED. Wells is without knowledge or information sufficient to form a belief as to the

truth of the allegations of this paragraph, and the same are therefore DENIED. 7. Wells is without knowledge or information sufficient to form a belief as to the

truth of the allegations of this paragraph, and the same are therefore DENIED. 8. Wells admits that 28 U.S.C. §§ 1331, 1338(a), 1367(a), 2201(a), and 2202 apply

to give this Court subject matter jurisdiction over the claims of this action. Wells is without knowledge or information sufficient to form a belief as to the truth of the remaining allegations of this paragraph, and the same are therefore DENIED.

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9.

Wells does not contest venue in this District. Wells is without knowledge or

information sufficient to form a belief as to the truth of the remaining allegations of this paragraph, and the same are therefore DENIED. Count One: All Plaintiffs v. GE Licensing for Declaratory Judgment Paragraphs 10-17 are not directed to Wells, and therefore, no response is required. Count Two: Remy v. Wells for Indemnity 18. 19. 20. 21. DENIED. DENIED. DENIED. This is not an allegation; therefore, no response is required. Count Three: Remy, UPC, and Worldwide v. Taditel for Indemnity Paragraphs 22-25 are not directed to Wells, and therefore, no response is required. Count Four: UPC v. WAI for Indemnity Paragraphs 26-29 are not directed to Wells, and therefore, no response is required.

FIRST AFFIRMATIVE DEFENSE 1. Remy's Complaint fails to state a claim upon which relief may be granted. SECOND AFFIRMATIVE DEFENSE 2. Remy comes to this Court with unclean hands and/or acted in bad faith and therefore

is not entitled to legal or equitable relief. THIRD AFFIRMATIVE DEFENSE 3. if any. FOURTH AFFIRMATIVE DEFENSE Remy's claims are barred in whole or in part because it failed to mitigate its damages,

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4.

On information and belief, Remy knew of U.S. Patent No. 4,733,159 (hereinafter "the

`159 Patent") and induced Wells to become part of the supply chain for the voltage regulator part. Because Remy did not exercise reasonable care in communicating the existence of the `159 Patent or the existence of a claim against Remy by GE concerning the `159 Patent to Wells, Wells has suffered loss by justifiably relying on Remy's specifications and silence regarding any possible patent difficulties with the same. Remy therefore has unclean hands and/or acted in bad faith and is not entitled to legal or equitable relief. FIFTH AFFIRMATIVE DEFENSE 5. Remy's Purchase Order does not govern the rights and remedies of the parties

because it is ambiguous, unintelligible, unconscionable, and unenforceable as against public policy. SIXTH AFFIRMATIVE DEFENSE 6. The Uniform Commercial Code applies to require Remy to hold Wells harmless for

any infringement claim arising out of compliance with Remy's specifications. Remy is therefore not entitled to legal or equitable relief from Wells. SEVENTH AFFIRMATIVE DEFENSE 7. Remy did not inform Wells of GE Licensing's claim in a timely fashion to permit

Wells to avoid damages and/or further alleged infringement. Remy did not tender the indemnity claim for 8 months after receiving the cease and desist notice from GE, and Wells relied to its detriment on this failure. Remy therefore has unclean hands and/or acted in bad faith. It is inequitable for Remy to recover on its indemnity claim prior to its tender of the GE defense to Wells. Wells had no ability to cure or mitigate damages prior to Remy's tender. EIGHTH AFFIRMATIVE DEFENSE

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8.

Remy's claims asserted in the Complaint are barred by the doctrines of laches,

acquiescence, and/or estoppel. NINTH AFFIRMATIVE DEFENSE 9. Remy's claims are subject to indemnity and setoff.

TENTH AFFIRMATIVE DEFENSE 10. Remy's claims are properly directed to STMicroelectronics, Inc. with which Remy

has a contractual relationship and which is responsible for manufacturing and selling the allegedly infringing part to Remy via Wells. Remy is therefore entitled to no relief from Wells. ELEVENTH AFFIRMATIVE DEFENSE 11. Wells reserves the right to assert any additional applicable factual and legal defenses

following discovery and further investigation of this matter. WHEREFORE, Remy should take nothing from its Complaint, Remy should be denied all injunctive and other equitable relief in this action, Remy's Complaint should be dismissed with prejudice, and Wells should be compensated by Remy for the attorneys' fees, expenses, and costs that Wells has incurred as a result of this action.

COUNTERCLAIMS: WELLS V. REMY 1. Counterclaimant Wells Manufacturing Corp. is a Wisconsin corporation and has

its principal place of business at 26 South Brooke Street, Fond du Lac, Wisconsin 54936. 2. Upon information and belief, Counterdefendant Remy, Inc. is a Delaware

corporation and has its principal place of business at 2902 Enterprise Drive, Anderson, Indiana

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46013. Remy may be served with citation through its registered agent for service of process Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. 3. This Court has subject matter jurisdiction of this counterclaim under 28 U.S.C. §§

2201(a), 2202, 1332(a), and 1367(a). 4. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 because

Counterdefendant resides in this District. COUNT I: DECLARATORY JUDGMENT OF NO DUTY TO INDEMNIFY 5. Remy has asserted that Wells provided Remy with the voltage regulator for

certain automobile alternator products that GE Licensing has accused of infringing U.S. Patent No. 4,733,159, which voltage regulator is manufactured by STMicroelectronics, Inc. 6. Remy has asserted that Wells is obligated to defend Remy and to indemnify

Remy for any judgment entered against it with respect to the accused products that contain parts supplied by Wells but manufactured by STMicroelectronics pursuant to instructions and specifications provided by Remy. 7. Wells obtains the accused voltage regulators from STMicroelectronics and adds

protection circuitry thereto pursuant to specifications provided by Remy. The circuitry added by Wells pursuant to Remy's design specifications is not relevant to any claim of infringement made by GE Licensing against Remy. 8. Remy failed to tender its defense timely to Wells, waiting over eight months to

inform Wells of GE Licensing's claims against Remy. 9. Remy's Purchase Order terms do not apply to entitle Remy to indemnification

from Wells because the Purchase Order terms are ambiguous, unintelligible, and void.

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10.

The Uniform Commercial Code does not apply to permit Remy to receive

indemnification from Wells because Remy is obligated to indemnify and hold Wells harmless for any infringement claim arising out of compliance with Remy's specifications. 11. For at least these reasons, Wells denies that it is obligated to defend Remy or to

indemnify Remy for any judgment entered against it with respect to the accused products that contain parts supplied by Wells but manufactured by STMicroelectronics pursuant to instructions and specifications provided by Remy. 12. 13. Accordingly, there is a justiciable controversy between Wells and Remy. Wells is therefore entitled to a judgment from the Court pursuant to 28 U.S.C. §§

2201(a) and 2202 declaring that Wells is not obligated to defend Remy or to indemnify Remy for any judgment entered against Remy with respect to the accused products that contain parts supplied by Wells. 14. Wells is entitled to a judgment from the Court pursuant to 28 U.S.C. §§ 2201(a)

and 2202 declaring that Wells is not liable for any judgment against Remy with respect to the accused products. 15. Wells is also entitled to a judgment from the Court pursuant to 28 U.S.C. §§

2201(a) and 2202 declaring that Remy is not entitled to an award of attorneys' fees, costs, or any other relief requested by Remy against Wells. 16. Wells is entitled to an award of its attorneys' fees, expenses, and costs that Wells

has incurred as a result of this action.

COUNT II: DECLARATORY JUDGMENT OF INVALIDITY AND UNENFORCEABILITY OF REMY'S PURCHASE ORDER

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17.

Counterclaimant Wells incorporates by reference into Count II of its

Counterclaim the averments contained in paragraphs 1 through 16 of this Counterclaim. 18. Remy has asserted that, pursuant to the agreements between the parties, Wells is

obligated to defend Remy and to indemnify Remy for any judgment entered against it with respect to the accused products that contain parts supplied by Wells but manufactured by STMicroelectronics pursuant to instructions and specifications provided by Remy. 19. Upon information and belief, the agreement between the parties that Remy is

asserting applies to obligate Wells to indemnify Remy for the claims made against Remy by GE Licensing is Remy's Purchase Order Terms and Conditions for the Wells ASVR product (hereinafter "Remy's Purchase Order"). 20. follows: Seller agress [sic]; (a) to defend, hold harmless and indemnify Buyer, its successors and customers against all claims [sic] demands, losses, suits, damages, liability and expenses (including reasonable attorney fees) arising out of any suit, claim or action for actual or alleged direct or contributory infringement of, or inducement to infringe, any United States of [sic] foreign patent, trademark, copyright or mask work right by reason of the manufacture, use or sale of the goods or services ordered, including infringement arising out of compliance with specifications furnished by Buyer, or for actual or alleged misuse or misappropriation of a trade secret resulting directly or indirectly from Seller's actions; (b) to waive any claim against Buyer under the Uniform Commercial Code or otherwise, including any hold harmless or similar claim, in any way related to a claim asserted against Seller or Buyer for patent, trademark, copyright or mask work right infringement or the like, including claims arising out of compliance with specifications furnished by Buyer, and (c) to grant to Buyer a worlwide [sic], nonexclusive, royalty-free, irrevocable license to repair and have repaired, to reconstruct and have reconstructed the goods ordered hereunder. Seller assings [sic] to Buyer all right, title and interest in and to all trademarks, copyrights and mask work rights in any material created for Buyer under this order. Paragraph 14. Intellectual Property from Remy's Purchase Order states as

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21. as follows:

Paragraph 16. Indemnification from Remy's Purchase Order states in relevant part

*** In additions, [sic] Seller shall indemnify and hold Buyer harmless from and against any liability, claims, demands or expenses (including reasonable attorneys fees) arising out of or relating to (i) any actual or alleged deficiencies or defects in the goods, whether latent or patent, (ii) violation by Seller, the goods or the manufacture, possession, use or sale thereof, of any law, rule, regulation or governmental or administrative order, or (iii) any act or omission of Seller. 22. 23. Remy's Purchase Order is vague, ambiguous, and unintelligible. Remy's Purchase Order, if enforced as Remy requests, would permit Remy to

specify parts that it knew may infringe intellectual property rights of others, and with knowledge of a claim of infringement, with no risk to Remy if the intellectual property owners decided to enforce their rights against Remy. 24. Remy's attempt to collect for a liability incurred as the result of intentional and

bad faith conduct is void as against public policy. 25. The relevant provisions of Remy's Purchase Order are unconscionable and

therefore the Court should decline to enforce Remy's Purchase Order against Wells pursuant to Indiana Code ("IC") 26-1-2-302. 26. 27. Accordingly, there is a justiciable controversy between Wells and Remy. Wells is entitled to a judgment from the Court pursuant to 28 U.S.C. §§ 2201(a)

and 2202 declaring that Remy's Purchase Order is not enforceable against Wells. 28. Wells is entitled to a judgment from the Court pursuant to 28 U.S.C. §§ 2201(a)

and 2202 declaring that Wells is not liable for any judgment against Remy with respect to the accused products.

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29.

Wells is also entitled to a judgment from the Court pursuant to 28 U.S.C. §§

2201(a) and 2202 declaring that Remy is not entitled to an award of attorneys' fees, costs, or any other relief requested by Remy against Wells. 30. Wells is also entitled to an award of its attorneys' fees, expenses, and costs that

Wells has incurred as a result of this action.

PRAYER FOR RELIEF WHEREFORE, Counterclaimant requests that this Court enter: A. A declaratory judgment that Wells is not obligated to defend Remy or to

indemnify Remy for any judgment entered against Remy with respect to the accused products that contain parts supplied by Wells; B. A declaratory judgment that Wells is not liable for any judgment against Remy

with respect to the accused products; C. A declaratory judgment that Remy is not entitled to an award of attorneys' fees,

costs, or any other relief requested by Remy against Wells; D. Wells; E. An award of Wells's attorneys' fees, expenses, and costs that Wells has incurred A declaratory judgment that Remy's Purchase Order is not enforceable against

as a result of this action; and F. An award of such other and further relief as this Court may deem proper.

THIRD-PARTY COMPLAINT: WELLS v. STMICROELECTRONICS

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1.

Third-Party Plaintiff Wells Manufacturing Corp. is a Wisconsin corporation and

has its principal place of business at 26 South Brooke Street, Fond du Lac, Wisconsin 54936. 2. Upon information and belief, Third-Party Defendant STMicroelectronics, Inc.

("ST") is a Delaware corporation and has its principal place of business at 1310 Electronics Drive, Carrollton, Texas 75006. ST may be served with citation through its registered agent for service of process The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. 3. This Court has subject matter jurisdiction of this counterclaim under 28 U.S.C. §§

1332(a) and 1367(a). 4. this District. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 because ST resides in

COUNT I: INDEMNIFICATION 5. Remy has asserted that Wells provided Remy with the voltage regulator for

certain automobile alternator products that GE Licensing has accused of infringing U.S. Patent No. 4,733,159, which voltage regulator is manufactured by ST. 6. ST and Remy worked together to develop the accused voltage regulator prior to

involving Wells in the supply chain for the accused voltage regulator. 7. Wells obtains the accused voltage regulators from ST and adds protection

circuitry thereto pursuant to specifications provided by Remy. The circuitry added by Wells pursuant to Remy's design specifications is not relevant to any claim of infringement made by GE Licensing against Remy.

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8.

Wells's Purchase Order Terms and Conditions (hereinafter "Wells's Purchase

Order") and the Uniform Commercial Code provisions govern the relationship between Wells and ST. A true and accurate copy of Wells's Purchase Order is attached hereto as Exhibit A. 9. Paragraph 2. of Wells's Purchase Order confirms the manner in which ST may

accept Wells's terms and the consequences of doing so: This order is not binding until accepted by Buyer. The acceptance of this order will occur when an acknowledged copy of said order is executed by the Seller and has been returned and received by the Buyer. Seller shall not make any changes in the terms, conditions, prices and delivery dates of this order without first obtaining Buyer's written consent. Buyer shall have the right to schedule the dates of delivery for the parts and materials that are subject to this order. Buyer shall also have the right to make reasonable changes relating to the number of parts and materials subject to this order depending upon the manufacturing requirements of Buyer. In the event that Seller fails to give a written acknowledgment of this order as so provided above, any delivery made pursuant to this order shall constitute an acceptance of all the provisions of this order. 10. Paragraph 14. from Wells's Purchase Order states as follows:

Seller warrants that the articles described herein and the sale or use of them will not infringe any United States patent, trademark and copyright: the Seller covenants he will at Seller's own expense defend any suit which will be brought against Buyer, their successors and assigns or those using or selling Buyer's products for any alleged infringement of any patent [sic] trademark, and copyright by reason of the sale or use of any such article or material. Seller agrees that he will pay all judgments or costs recovered in any suits and will also reimburse Buyer for all expenses and losses incurred by Buyer as a result of said suit or legal action. 11. Paragraph 19. from Wells's Purchase Order states in relevant part as follows:

Seller warrants that it is currently in compliance with and will continue to comply with any and all applicable federal, state, and local laws and regulations which could impose liability upon Buyer as a result of any non-compliance on Seller's part. 12. Thus, ST is obligated to defend Wells and to indemnify Wells for any judgment

entered against Wells with respect to the accused products that contain parts supplied by ST.

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13.

Wells tendered its defense to and demanded indemnification from ST concerning

Remy's demand for indemnification for GE Licensing's claims against Remy. 14. Pursuant to IC 26-1-2-607, Wells tendered its defense to ST and gave ST the

opportunity to control any litigation that might ensue. 15. ST has thus far refused to indemnify Wells for Remy's indemnity claim against

Wells or to provide a defense for Wells concerning the same. 16. ST instead filed a declaratory judgment action in Texas State District Court, 134th

Judicial District, Dallas County, Texas, Cause No. 06-11257, on November 1, 2006, against Wells, Kimball International, Inc., Kimball Electronics, Inc., and, later, Wetherill Associates, Inc. This declaratory judgment action seeks a judgment that ST is not obligated to indemnify or defend any of the named defendants from claims arising from the infringement claims made by GE Licensing against Remy. All parties to that Texas action except Wetherill Associates, Inc. have answered and exchanged initial disclosures in that case, but no substantive actions have yet taken place. 17. Wells is therefore entitled to an order from the Court requiring ST to defend

Wells against any charge of infringement or indemnity claim with respect to the accused products. 18. Wells is also entitled to an order from the Court declaring that ST is liable for any

judgment against Wells with respect to the accused products. 19. this action. The Court should award Wells its attorneys' fees and costs incurred as a result of

COUNT II: BREACH OF CONTRACT

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20.

Third-Party Plaintiff Wells incorporates by reference into Count II of its third-

party Complaint the averments contained in paragraphs 1 through 19 of this third-party Complaint. 21. In the event that the `159 Patent is held to be valid and infringed by Remy, then

ST has breached the contract terms of Wells's Purchase Order by violating ST's warranty of no infringement made in paragraph 14. 22. In the event that the `159 Patent is held to be valid and infringed by Remy, then

ST has breached the contract terms of Wells's Purchase Order by violating ST's warranty that it is in compliance with all federal laws pursuant to paragraph 19. 23. ST has breached the contract terms of Wells's Purchase Order by refusing to

indemnify Wells as it agreed in paragraph 14. 24. As a direct and proximate result of ST's breach(es) of Wells's Purchase Order,

Wells has suffered and continues to suffer damage. 25. Upon information and belief, ST's activities were performed willfully, with full

knowledge of the `159 Patent and its implications to the accused products, and with knowledge of the damage that would come to Wells as a result of its involvement with ST and Remy concerning the accused products. 26. Wells is therefore entitled to an award of damages for its losses suffered as a

direct and proximate result of ST's breach of Wells's Purchase Order terms and conditions. 27. Wells is also entitled to an order from the Court requiring specific performance of

ST's indemnification obligations to defend Wells against any charge of infringement or indemnity claim with respect to the accused products.

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28. this action.

The Court should award Wells its attorneys' fees and costs incurred as a result of

PRAYER FOR RELIEF WHEREFORE, Third-Party Plaintiff Wells requests that this Court enter: A. A judgment requiring ST to defend Wells against any charge of infringement or

indemnity claim with respect to the accused products; B. An order declaring that ST is liable for any judgment against Wells with respect

to the accused products. C. An order requiring specific performance of ST's indemnification obligations to

defend Wells against any charge of infringement or indemnity claim with respect to the accused products. D. An award of damages to compensate Wells for its losses suffered as a direct and

proximate result of ST's breach of Wells's Purchase Order terms and conditions; E. An award of Wells's attorneys' fees, expenses, and costs that Wells has incurred

as a result of this action; and F. An award of such other and further relief as this Court may deem proper.

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Respectfully submitted, By: /s/ Jeffrey B. Bove Jeffrey B. Bove, Esquire (#998) Dana K. Hammond (#4869) CONNOLLY BOVE LODGE & HUTZ, LLP 1007 North Orange Street P.O. Box 2207 Wilmington, DE 19899 302-658-9141 Attorneys for Defendant, Counterclaimant, and Third-Party Plaintiff Wells Manufacturing Corp. DATED: April 30, 2007

OF COUNSEL: Holiday W. Banta WOODARD, EMHARDT, MORIARTY, MCNETT & HENRY LLP 111 Monument Circle, Suite 3700 Indianapolis, IN 46204-5137 317-634-3456

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CERTIFICATE OF SERVICE I hereby certify that on this 30th day of April, 2007, I electronically filed the foregoing WELLS MANUFACTURING CORP.'S ANSWER, COUNTERCLAIMS, AND THIRD PARTY COMPLAINT with the Clerk of the Court using CM/ECF to be served upon the below listed in the manner indicated: Via Hand Delivery Donald J. Detweiler Titania R. Mack GREENBERG TRAURIG, LLP The Nemours Building 1007 North Orange Street, Suite 1200 Wilmington, DE 19801 [email protected] Via Hand Delivery Steven J. Balick ASHBY & GEDDES 500 Delaware Avenue, 8th Floor Wilmington, DE 19801

Via Hand Delivery Thomas C. Grimm Morris, Nichols, Arsht & Tunnell 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899 [email protected]

OF COUNSEL: Holiday W. Banta WOODARD, EMHARDT, MORIARTY, MCNETT & HENRY LLP 111 Monument Circle, Suite 3700 Indianapolis, IN 46204-5137 317-634-3456

By: /s/ Jeffrey B. Bove Jeffrey B. Bove, Esquire (#998) Dana K. Hammond (#4869) CONNOLLY BOVE LODGE & HUTZ, LLP 1007 North Orange Street P.O. Box 2207 Wilmington, DE 19899 302-658-9141 Attorneys for Defendant, Counterclaimant, and Third-Party Plaintiff Wells Manufacturing Corp.

DATED: April 30, 2007
536075

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