SAN DIEGO (CN) - A waste recycling company claims a rival is trying to eliminate competition and monopolize a multibillion-dollar market for "PSC conversion," which recycles garbage into useful materials.
Clean Conversion Technologies sued CleanTech Biofuels and Steve Vande Vegte, in Federal Court.
"This case arises from monopolistic and anti-competitive acts of the defendants, who conspired to completely eliminate competition in an emerging line of commerce for an important waste-recycling technology known as 'PSC conversion,'" the complaint states. "PSC conversion, or 'pressurized steam classification,' is a unique process whereby municipal waste, including household and commercial refuse, is recycled into useful material. PSC conversion is a patented process, which is the subject of two U.S. patents. Through a series of complex corporate transactions involving two mergers, a loan transaction, and manipulation of various patent licenses wherein the participant-conspirators were all promised a share of the illegal monopoly profits either by taking stock or other participating interest, the primary monopolist, CleanTech Biofuels, will, absent the intervention of this court, obtain the entire multibillion-dollar market for itself. If allowed to do so, defendants will substantially profit from the lack of competition in the marketplace. By this action Clean Conversion Technologies seeks compensatory damages, treble damages, and injunctive relief to put an end to defendant's anticompetitive and exclusionary conduct and their ongoing efforts to manipulate the market to exclude Clean Conversion Technologies."
In its 33-page complaint, Clean Conversion Technologies claims that in a "growing number of regional markets, there has been increased competition among established waste-removal firms and new entrants to provide recycling of contaminated waste."
Pressurized steam classification transforms the "great majority of contaminated waste into usable commercial products, including aluminum, other metals, paper, plastics, glass, and a sterile biomass that in turn can be transformed into corrugated medium, loss circulation materials, and other commercially useful items," according to the complaint.
CleanTech and the patent holders who previously controlled the patents "have entered into licensing agreements with only a handful of companies, and these licensing agreements are structured so that there can exist only a very small number of PSC firms," Clean Conversion says.
It claims that CleanTech acquired the two competing patents for PSC conversion "through a complex series of transactions involving Biomass North American Licensing, World Wide Waste, and licensees of certain PCS patents."
CleanTech's purchase of the patents from World Waste Technologies "was several multiples of the license fee it would be entitled to in 2012" from Clean Earth Solutions, which owned the master license agreement, the plaintiff says.
Clean Conversion claims CleanTech already had the ability to use PSC technology under the patents, and that there was no business reason to obtain the master license.
Clean Conversion says it was granted a nonexclusive license to use the patent by Clean Earth Solutions in 2010. It claims this caused the defendants "to step up their efforts to enact a scheme of strategic litigation, market manipulation, and back room agreements to manipulate CCT out of the market and disrupt the natural competition in the relevant market for PCS technology and services."
Defendant Steve Vande Vegte sued Clean Earth Solutions for $1.3 million in 2010 to "drive them out of business," causing the master license agreement to be sold in a legal foreclosure sale, according to the complaint.
Clean Conversion claims CleanTech promised its co-conspirators "a share in monopoly profits by granted co-conspirators options or warrants to acquire CleanTech stock, other financial incentives and making other back-room deals." Clean Conversion claims that Michael Eley, who developed one of the patents, told the defendants to "launch a conspiracy whereby CleanTech would declare the non-exclusive license in breach," after the legal foreclosure sale.
Clean Conversion claims a growing number of municipalities and waste-removal firms want to use PSC conversion. Those that use PSC conversion "are strongly disinclined or unwilling to use landfills or incinerators for at least some portion of their contaminated waste, and they are disinclined to use recycling methods ... that either cannot recycle contaminated waste or can only inefficiently recycle a small part of it in order to yield low-value materials or noxious refuse-derived fuel," according to the complaint.
CleanTech Biofuels seeks an injunction to stop the defendants from engaging in "further anticompetitive or monopolistic acts."
It is represented by James Peterson and Kevin Wheeler, with Higgs, Fletcher & Mack.
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