sparkasse complaint

7/25/2019 Sparkasse Complaint

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Page 1 - COMPLAINTSCHWABE, WILLIAMSON & WYATT, P.C.

Attorneys at Law1211 SW 5th Ave., Suite 1900

Portland, OR 97204Telephone: 503.222.9981

Fax: 503.796.2900

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Darien S. Loiselle, OSB #925796Email: [email protected] Holmberg, OSB #082925Email: [email protected], WILLIAMSON & WYATT, P.C.

1211 SW 5th Ave., Suite 1900Portland, OR 97204Telephone: 503.222.9981Facsimile: 503.796.2900

Attorneys for Plaintiff SparkasseBregenz Bank AG

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

EUGENE DIVISION

SPARKASSE BREGENZ BANK, AG,

Plaintiff,

vs.

JC-BIOMETHANE, LLC; ESSENTIAL

CONSULTING OREGON LLC; and

DEAN FOOR,

Defendants.

Case No. 6:16-cv-1199

COMPLAINT

COMES NOW Sparkasse Bregenz Bank AG (Sparkasse or Plaintiff), and files this

Complaint against JC-Biomethane, LLC (JCB), Essential Consulting Oregon, LLC (ECO)

and Dean Foor (FOOR) (collectively, Defendants), showing the Court as follows:

INTRODUCTION

1. This is an action for copyright infringement, violations of the Digital Millennium

Copyright Act and Computer Fraud and Abuse Act, misappropriation of trade secrets,

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conversion, breach of contract, quantum meruit, and breach of duty of good faith and fair dealing

that arises from Entec Biogas GmbH (Entec)s agreement to engineer, procure, and

construction a bio-methane plant for JCB.

PARTIES

2. Entec is an Austrian corporation that specializes in the design and construction of

biogas fueled energy facilities.

3. Sparkasse Bregenz Bank AG is an Austrian bank that provided commercial loans

to Entec and which has taken an assignment of Entecs claims in this matter.

4. JC-Biomethane, LLC is a limited liability company organized under the laws of

the State of Oregon with its principal place of business in Junction City, Oregon. Service of

process on JCB may be obtained by serving its registered agent Mike Arnold, 401 East Tenth

Avenue, Suite 400, Eugene, OR 97401.

5. Essential Consulting Oregon, LLC is a limited liability company organized under

the laws of the State of Oregon with it principal place of business in Eugene, Oregon. Service of

process on ECO may be obtained by serving its registered agent Dean C. Foor, 1543 W. 24th

Place, Eugene, OR 97405.

6. FOOR is a resident of the state of Oregon, and at all relevant times was a member

of ECO. Upon information and belief, FOOR also served as the chief executive officer of JCB

until JCB fired him in or about June of 2014. Service of process on FOOR may be obtained by

serving him at his residence at 259 WALNUT DR S, MONMOUTH, OR 97361.

JURISDICTION AND VENUE

7. This Court has subject matter jurisdiction over this action pursuant to 15 U.S.C.

1121(a), 17 U.S.C. 501 and 28 U.S.C. 1331, 1338 and 1367.8. Venue is proper in this Court under 28 U.S.C. 1391(b)(1), as JCB and ECO

have their principal places of business located within this District, and FOOR resides within this

District.

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FACTUAL BACKGROUND

9. The averments set forth in Paragraphs 1 through 8 above are incorporated herein

by reference.

10. Prior to April 22, 2012, JCB decided to build a biogas energy facility in Junction

City, Oregon. Upon information and belief, JCB decided to use pre-consumer food waste as a

feedstock for the plant, so as to receive certain tax credits or other incentives or subsidies

available to users of that waste stream.

11. On or about April 22, 2012, JCB entered into an Engineering, Procurement and

Construction Agreement (EPC Contract) with Entec for the design, procurement, and

construction of the bio-energy facility in Junction City, Oregon (the Project). A true and

correct copy of the EPC Contract, without voluminous incorporated documents, is attached

hereto as Exhibit A.

12. Section 19 of the EPC Contract provides that [e]ntire drawings, sketches,

calculations, documents and information which have been and will be supplied (the

Documents) (herein Design Documents) are the intellectual property of [Entec] and will

remain in the copyright of [Entec]. [JCB] is allowed to use the [Design] Documents only with

written permission from [Entec].

13. Sparkasse provided loans to Entec for the design and construction of the Project.

14. Upon information and belief, after JCB entered the EPC Contract, JCB, acting

through ECO, FOOR, and/or other representatives, learned that the tax credit or subsidies for

users of pre-consumer food waste would not be available for the Project. As a result, JCB, acting

through ECO, FOOR, and/or other representatives, directed Entec to change the design of the

Project to use post-consumer food waste, instead of pre-consumer food waste, as the feedstockfor the Project, resulting in additional cost to Entec and delaying completion of the Project.

15. JCB, acting through ECO, FOOR and/or other representatives directed Entec to

make other changes in the design or construction of the Project, and JCB failed to timely pay

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Entec for work it performed, which resulted in additional costs to Entec and delayed completion

of the Project.

16. The Project began generating electrical power in the summer of 2013.

17. The Project achieved mechanical completion in the fall of 2013.

18. Entec substantially performed its obligations under the EPC Contract; however,

JCB has failed to pay Entec for the work it performed and for the additional costs caused by

JCBs breaches of the EPC Contract and its changes to Project.

19. Entec demanded payment from JCB of amounts due and owing under the EPC

Contract.

20. JCB has failed and refused to pay Entec the amounts that were due and owing to

Entec under the EPC Contract.

21. On or about January 23, 2013 Entec and Ormatic GmbH (Ormatic) entered into

a subcontract for the development and supply of a Software Program titled Automated Control

System Software for Junction City integrating a human-machine interface Human Machine

Interface (HMI) and Programmable Logic Controller (PLC) (collectively referred to as the

Software Program) to run the Project.

22. Ormatic prevented the modification or manipulation of the Software Program by

JCB and third-parties by creating access to the Software Program via a password known only to

a few developers at Ormatic. Neither Ormatic nor Entec provided the password to JCB, FOOR,

or ECB at any point in time.

23. In an email from FOOR to Stefan Schmoranzer of Ormatic dated February 12,

2014, FOOR indicates that JCB accessed the Software Program, albeit without the password or

authorization by Entec or Ormatic, when he writes, Further, the code is written in German-lish[sic] and in a manner to intentionally create dependency and with a multitude of relic code.

Email attached as Exhibit B.

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24. Upon information and belief, JCB, ECB, and FOOR accessed the Software

Program and modified or manipulated it (Unauthorized Modifications), causing damage to or

otherwise disabling parts of the Software Program.

25. JCBs failure to pay Entec for the installation of the Software Program, the

Unauthorized Modifications to the Software Program, and JCBs ongoing operation of the

Project and use of the Software Program without having paid Entec for a license to use the

Software Program, have damaged Entec in an amount exceeding $5,000.

26. Entec instituted an Austrian insolvency proceeding to liquidate its business, due in

full or in substantial part to JCBs refusal and failure to pay Entec amounts due under the EPC

Contract.

27. All conditions precedent to the filing of this action have occurred, have been

satisfied, and/or have been waived or excused.

FIRST CLAIM FOR RELIEF

(Copyright Infringement of the Software Program and Design Documents, 17 U.S.C. 501(a))

28. The averments set forth in Paragraphs 1 through 27 above are incorporated herein

by reference.

29. Ormatic is the author of the Software Program. Entec payed Ormatic for the right

to use the Software Program in connection with the Project, but Ormatic retained all copyrights

in the Software Program.

Without permission or license from Ormatic, Defendants prepared derivative works

within the United States based upon Ormatics copyrighted Software Program when they

modified the Software Program.

30. The conduct of Defendants constitutes copyright infringement in violation of 17U.S.C. 501.

31. Defendants wrongful conduct has deprived Entec of its goodwill and has caused

harm to Entec.

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32. Defendants acts of copyright infringement are continuing and have been

committed willfully with knowledge of Entecs rights in the Software Program and the Design

Documents.

33. Defendants infringed Entecs copyrights intentionally and with malice.

34. On April 15, 2016, Ormatic assigned its copyright in and the right to sue for past

infringement of the Software Program to Sparkasse.

35. On June 9, 2016, Sparkasse filed an application with the Register of Copyrights to

register the Software Program. A copy of the application is attached as Exhibit C.

36. Plaintiff has suffered damages as a proximate result of the infringements by

Defendants.

37. Plaintiff is entitled to recover from Defendants statutory damages, or the damages

it has suffered and any additional profits the Defendants obtained as a result of their wrongful

acts as hereinabove alleged pursuant to 17 U.S.C. 504.

SECOND CLAIM FOR RELIEF

(Circumvention of Copyright Protection Systems, 17 U.S.C. 1201(a))

38. The averments set forth in Paragraphs 1 through 27 are incorporated herein by

reference.

39. Ormatics copyrighted Software Program was password protected.

40. Neither Plaintiff, Ormatic, nor Entec provided Defendants with use of the

password to access the protected work at any point in time.

41. Without permission or license from Plaintiff, Ormatic, or Entec, Defendants

hacked into Entecs computer systems to access Ormatics Software Program and modify the

Software Program.42. The conduct of Defendants constitutes circumvention of copyright protections

systems in violation of 17 U.S.C. 1201(a).

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43. Defendants wrongful conduct has deprived Entec and Ormatic of its goodwill

and has caused harm to Entec and Ormatic.

44. Defendants circumvention of the copyright protection system of the Software

Program was committed willfully with knowledge of Entecs and Ormatics rights in and

protection of the Software Program.

45. Defendants circumvention of the copyright protection system of the Software

Program was committed intentionally and with malice.

46. Ormatic and Entec suffered damages as a proximate result of Defendants

circumvention of the copyright protection system, including the destruction of Entecs business.

47. On April 15, 2016, Ormatic assigned its copyright in and the right to sue for past

infringement of the Software Program to Sparkasse.

48. Plaintiff Sparkasse provided the commercial loans to Entec and has taken an

assignment of Entecs claims in this matter.

49. Plaintiff is entitled to recover from Defendants statutory damages, or the damages

Entec and Ormatic have suffered and any additional profits the Defendants obtained as a result of

their wrongful acts as hereinabove alleged pursuant to 17 U.S.C. 1203.

50. Additionally, Plaintiff requests this Court to provide for the recovery of costs

and/or award reasonable attorneys fees pursuant to 17 U.S.C. 1203(b)(4) and 17 U.S.C.

1203(b)(5).

THIRD CLAIM FOR RELIEF

(Computer Fraud and Abuse Act, 18 U.S.C. 1030, 1030(g))


reference.52. At all times relevant hereto, Entecs computer system was routinely involved in

sending and receiving electronic communications in interstate commerce. As such, Entecs

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computer system constitutes a protected computer within the meaning of 18 U.S.C.

1030(e)(2)(B).

53. Ormatics copyrighted Software Program was maintained on Entecs computer

system.

54. Defendants intentionally accessed Entecs protected computer system and used

such access to obtain information from Entecs protected computers that Defendants were not

entitled to obtain. Defendants access was without authorization or exceeded authorized

access, as that term is defined in 18 U.S.C. 1030(e)(6).

55. By their conduct, Defendants obtained information and caused loss to Entec and

Ormatic in violation of 18 U.S.C. 1030(a)(2)(C) and 1030(a)(5)(C).

56. Defendants recklessly caused damage to Entec and Ormatic in violation of 18

U.S.C. 1030(a)(5)(B) by modifying the Software Program.

57. As the direct result of the conduct of Defendants, Entec has incurred reasonable

costs to respond to the unauthorized access of its computer system and the theft of the

information thereon, to conduct a damage assessment, and other consequential damages and

losses incurred thereby, in an aggregate amount exceeding $5,000.



59. Pursuant to 18 U.S.C. 1030(g), Plaintiff is entitled to recover from the

Defendants the damages Entec has suffered, as well as gains, profits, advantages, and unjust

enrichment Defendants have obtained as a result of their wrongful acts as hereinabove alleged.

Plaintiff is presently unable to ascertain the full extent of these damages, gains, profits,

advantages, and unjust enrichment.

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FOURTH CLAIM FOR RELIEF

(Misappropriation of Trade Secrets, OR.REV.STAT. 646.461 646.475)


reference.

61. The Software Program itself and much of the content within the Software

Program is non-public information which derives actual or potential economic value from not

being generally known nor readily ascertainable by proper means by other persons who can

obtain economic value from its disclosure or use.

62. Entec took reasonable steps to protect the confidentiality of the Software Program

and much of the content within the Software Program, and treated such information as

confidential and proprietary.

63. The Software Program and much of the content within constitute trade secrets

under Oregon law.

64. Defendants misappropriated Entecs trade secrets by accessing, using, and/or

disclosing such trade secrets to an unauthorized person or persons.

65. Defendants acted with the intent to deprive Entec of the exclusive use of its trade

secrets, and/or to appropriate Entecs trade secrets to their own use or to the use of another.



67. By stealing Entecs trade secrets, Defendants have caused damage and loss to

Entec which damages and losses Plaintiff is entitled to recover. Defendants misappropriation of

Entecs trade secrets has been willful and malicious as a result of which, pursuant to OR.REV.

STAT. 646.465(3) and 646.467, Plaintiff is entitled to recover punitive damages in an amountequal to twice the award made pursuant to OR.REV.STAT. 646.465(1) and (2), and attorney fees

respectively.

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68. Plaintiff is also entitled to recover from Defendants the damages Entec suffered,

as well as the gains, profits, advantages, and unjust enrichment the Defendants have obtained as

a result of their wrongful acts as hereinabove alleged. Plaintiff is currently unable to ascertain

the full extent of these damages, gains, profits, advantages, and unjust enrichment.

69. Alternatively, if this Court finds that Plaintiffs damages or Defendants gains,

profits, advantages, and unjust enrichment are not adequately proven, Plaintiff is entitled to a

reasonable royalty pursuant to OR.REV.STAT. 646.463(2).

FIFTH CLAIM FOR RELIEF

(Conversion, 22AOFRESTATEMENT (SECOND)OF TORTS)


reference.

71. Entec is the owner of its Design Documents.



73. Sparkasse is the owner of the Software Program and the content within the

Software Program.

74. Defendants exercised dominion and control over Sparkasses property, including

the Design Documents and the Software Program, to the exclusion of, or inconsistent with,

Sparkasses rights.

75. Plaintiff has been damaged as a result of Defendants actions.

76. Plaintiff is entitled to recover from Defendants the damages it has suffered, as

well as the gains, profits, advantages, and unjust enrichment the Defendants have obtained as a

result of their wrongful acts as hereinabove alleged. Plaintiff is currently unable to ascertain thefull extent of these damages, gains, profits, advantages, and unjust enrichment.

77. Plaintiff respectfully requests that this Court also award reasonable attorneys fees

and costs incurred by Plaintiff in bringing this action.

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SIXTH CLAIM FOR RELIEF

(Breach of Contract)


reference.

79. JCB and Entec entered into the EPC Contract for the design and construction of

the Project.

80. JCB breached the EPC Contract when (1) JCB failed to pay Entec amounts owed

to Entec; (2) JCB used and/or allowed others to use the Design Documents without written

permission from Entec; (3) JCB made or allowed others to make the Unauthorized Modifications

to the Software; and (4) JCBs ongoing operation of the Project and use of the Software Program

without having paid Entec for a license to use the Software Program.



82. As a result of these breaches, Entec was damaged in an amount to be proven at

trial, including the destruction of Entecs business, plus additional damages to be proven at trial,

including interest, costs, and reasonable attorneys fees. Sparkasse is entitled to recover these

damages.

SEVENTH CLAIM FOR RELIEF

(Quantum Meruit)


reference.

84. Entec performed valuable services in designing and constructing the Project, at

the direction and request of JCB.85. JCB unjustly failed and refused to compensate Entec for the services it performed,

even though JCB knew that Entec expected compensation when it performed the services.

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87. As a result of the failure and refusal of JCB to compensate Entec, Entec has

suffered losses, costs, and damages in an amount to be proven at trial, plus interest, costs and

attorneys fees, to which Sparkasse is entitled.

EIGHTH CLAIM FOR RELIEF

(Breach of Duty of Good Faith and Fair Dealing)


reference.

89. JCB had a duty to Entec to perform and enforce the contract in good faith.

90. JCB breached this duty by, among other things, (1) making changes to the Project

without paying Entec for the cost of those changes; (2) asserting claims to Entecs copyrights

and other intellectual property; (3) claiming to have designed the plant even though Entec

designed most of the plant; (4) refusing to pay Entec amounts due to it; (5) making the

Unauthorized Modifications; (6) operating the Project and using of the Software Program

without having paid Entec for a license to use the Software Program; and (7) asserting inflated

and non-meritorious claims and set-offs against Entec and the amounts owed to Entec.



92. As a direct and proximate result of these breaches, Entec was damaged in an

amount to be proven at trial, including the destruction of its business, interest, costs, and

reasonable attorneys fees, to which Sparkasse is entitled.

WHEREFORE, Sparkasse prays that this Court grant judgment in its favor and againstthe Defendants:

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1. On Plaintiffs First Claim for Relief, in an amount to be proven at trial, plus

additional damages to be proven at trial totaling a minimum of $2,000,000, together with

interest, costs, and reasonable attorneys fees;

2. On Plaintiffs Second Claim for Relief, in an amount to be proven at trial, plus



3. On Plaintiffs Third Claim for Relief, in an amount to be proven at trial, plus



4. On Plaintiffs Fourth Claim for Relief, in an amount to be proven at trial, plus



5. On Plaintiffs Fifth Claim for Relief, in in an amount to be proven at trial, plus



6. On Plaintiffs Sixth Claim for Relief, in an amount to be proven at trial, plus



7. On Plaintiffs Seventh Claim for Relief, in an amount to be proven at trial, plus



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8. On Plaintiffs Eighth Claim for Relief, in an amount to be proven at trial, plus


interest, costs, and reasonable attorneys fees; and

9. Any other affirmative relief that the Court deems necessary and just.

Dated this 23rdday of June, 2016.

Respectfully submitted,

SCHWABE, WILLIAMSON & WYATT, P.C.

By: /s/ Stephanie HolmbergDarien S. Loiselle, OSB #925796

Stephanie Holmberg, OSB #082925Telephone: 503.222.9981Facsimile: 503.796.2900Of Attorneys for Plaintiff SparkasseBregenz Bank AG

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