Free Declaration - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ) ) Plaintiff and ) Counterclaim Defendant, ) ) v. ) C.A. No. 06-00764-GMS ) MAXWELL TECHNOLOGIES, INC., ) ) Defendant and ) Counterclaim Plaintiff. ) __________________________________________) NESSCAP CO., LTD.,

DECLARATION OF DR. RICHARD D. BALANSON

I, Richard D. Balanson, hereby declare as follows: 1. I am the President and CEO of Maxwell Technologies. I have personal

knowledge of the facts stated herein and, if called as a witness, I could and would testify competently as to them. 2. I received my Bachelor of Science in chemistry from UCLA and my

masters and doctoral degrees in chemistry from Harvard University. I joined Maxwell in 1999 as Corporate Vice President and President of the advanced energy products unit. In that role, I had primary responsibility for developing the company's new ultracapacitor line. I was promoted to President and CEO of Maxwell Technologies in 2003. Since that time, I have been responsible for oversight of all of Maxwell's product lines and overall management of the company. 3. Maxwell Technologies was founded in 1965 as Maxwell Laboratories,

and was originally a government contractor providing advanced physics, pulsed power,

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space effects analysis and other research and development services to the U.S. military and other government agencies. The company made its initial public stock offering in 1983, and became Maxwell Technologies in 1996. Beginning in the 1990s, the company began shifting its focus to commercial applications, and in 2001, it divested its government contracting business. Maxwell's headquarters and domestic manufacturing facilities are located in San Diego, CA. Maxwell also has office and manufacturing facilities in Rossens, Switzerland. Some of our Swiss employees, including Roland Gallay and Adrian Schneuwly, travel to Maxwell's San Diego headquarters approximately four times per year as part of their job responsibilities. 4. Maxwell designs and manufactures ultracapacitors, high-voltage grading

and coupling capacitors for electric utility infrastructure, and radiation-hardened microelectronics for space and military applications. Maxwell's primary focus is on its ultracapacitor business where it leads the United States in developing and manufacturing ultracapacitor products. An ultracapacitor is an alternative energy storage device with higher power than a conventional battery, and more energy than a conventional electrolytic capacitor. Ultracapacitors can provide quick bursts of high power, something traditional batteries do very inefficiently, and are often combined with traditional batteries to extend battery life. Ultracapacitors charge and discharge quickly, and are nearly maintenance free. In the market ultracapacitors are commonly referred to as supercapacitors, hypercapacitors, double layer capacitors (DLCs) and electric double layer capacitors (EDLCs). Maxwell sells its ultracapacitors under the BOOSTCAP® name. 5. Ultracapacitors have a broad range of commercial applications. Smaller

ultracapacitors can be used in consumer electronics, medical devices and power tools to provide a short burst of power that cannot be efficiently provided by a conventional battery. Medium-sized and larger ultracapacitors can be used in automotive subsystems, medical devices, wind turbines, and as a source of backup power. Maxwell currently
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makes and sells 29 different BOOSTCAP® ultracapacitor products in a range of sizes and modular configurations and has made and sold many more that are not currently on the market. Over the past three years, BOOSTCAP® ultracapacitor sales exceed $35 million. Maxwell has not sold any ultracapacitors in the State of Delaware. 6. Maxwell entered the ultracapacitor business in the early to mid-1990s.

The company has spent the past ten years, and more than $70 million, to build its ultracapacitor product line. In approximately 2000, we accelerated that investment and made the strategic decision to focus mainly on ultracapacitors. This decision was based on the large potential market we foresaw for these products, particularly in the transportation industry. Over the past ten years, the company has been continually pioneering advances in ultracapacitor technology, and has focused on obtaining intellectual property protection for its innovations. Maxwell is the assignee on approximately 34 U.S. patents related to ultracapacitors, with several dozen patents pending. Today, Maxwell is the United States' largest manufacturer and designer of ultracapacitor products. 7. Maxwell's line of ultracapacitor products were designed by various

scientist and engineers. Maxwell's ultracapacitor patents lists approximately 22 different inventors. Although many of these individuals remain with the company, a significant number of these inventors have retired, passed away, or left Maxwell for other reasons. Maxwell exercises no control over those inventors. 8. For example, Dr. Priya Bendale, who served as our Senior Director of

Research and Development, worked at Maxwell from 2000-2002 and is an inventor on at least four Maxwell patents related to ultracapacitor technology. Dr. Bendale was involved in the development and launch of a variety of Maxwell ultracapacitor products. Dr. Bendale left the company in September 2002 and now serves as the Vice President of Engineering at Interface Displays & Controls, Inc., a company located in San Diego County.
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9.

Similarly, C.J. Farahmandi, Maxwell's former Technical Director of

Research and Development, played a role in developing and bringing to market a variety of Maxwell ultracapacitor technologies. Mr. Farahmandi is a named inventor on at least fifteen Maxwell patents, some of which are cited by Maxwell as prior art in the Delaware litigation. Furthermore, Mr. Farahmandi was involved in the design and manufacture of a variety of ultracapacitor products, including products in Maxwell's BOOSTCAP® line. Mr. Farahmandi no longer works for Maxwell and is currently the President of Ionix Power Systems, LLC, a company located in San Diego County. 10. Among the former Maxwell employees knowledgeable of Maxwell's

products and patents, most still live in the San Diego area. I am not aware of any former Maxwell employees who live within the Court's "subpoena power," which I am told encompasses the entire State of Delaware and an additional 100-mile radius from Wilmington, Delaware. 11. While Maxwell sells products around the world and has established a

European facility in Rossens, Switzerland to service that market, some of its oldest customers are located in San Diego, the home to many of the companies who pioneered ultracapacitor use. For example, ISE Corporation, a maker of hybrid-electric drive systems for trucks and buses, is based in Poway, CA, a community in San Diego County. ISE began purchasing Maxwell's largest sized ultracapacitors in approximately 2000, and incorporates them into its drive systems. 12. Similarly, DIG Corp., a manufacturer of advanced irrigation systems, is

based in northern San Diego County. NessCap was recently able to secure a contract to supply ultracapacitors to DIG Corp. for incorporation into some of its irrigation products. 13. All of Maxwell's domestic research, development, management,

marketing, and manufacturing activities are based out of its San Diego headquarters, including production of the BOOSTCAP® line of products. Our corporate records are
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CERTIFICATE OF SERVICE I, Karen E. Keller, Esquire, hereby certify that on February 6, 2007, the foregoing document was electronically filed with the Clerk of the Court using CM/ECF which will send notification that such filing is available for viewing and downloading to the following counsel of record: Denise Seastone Kraft, Esquire EDWARDS ANGELL PALMER & DODGE LLP 919 North Market Street Suite 1500 Wilmington, DE 19801 [email protected] I further certify that on February 6, 2007, the foregoing document was served by hand delivery on the above-listed counsel of record and on the following non-registered participants in the manner indicated below: BY E-MAIL ON FEBRUARY 6, 2007AND FEDERAL EXPRESS ON FEBRUARY 7, 2007 George W. Neuner, Esquire Brian M. Gaff, Esquire EDWARDS ANGELL PALMER & DODGE LLP 101 Federal Street Boston, MA 02110

YOUNG CONAWAY STARGATT & TAYLOR, LLP /s/ Karen E. Keller Karen E. Keller (No. 4489) The Brandywine Building, 17th Floor 1000 West Street Wilmington, DE 19801 302-571-6600 [email protected]

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