In a ruling issued last week, U.S. District Judge Thomas Zilly dismissed with prejudice a case brought by battery startup Group14 Technologies alleging that a competitor illegally used its proprietary information in patent applications and to land investments.
Ruling from the U.S. District Court for the Western District of Washington, Zilly found that Group14 failed to identify any trade secrets that had been misused by the defendant, a company called Nexeon.
The judge also stated that the statute of limitations had expired for Group14’s claim that Nexeon had violated a non-disclosure agreement (NDA).
“Group14 has now had three or more bites at the proverbial apple, and the Court has been more than indulgent,” Zilly wrote in his decision, noting that the court “has devoted significant time, energy, and resources to this matter.”
“The Court now enters this even lengthier Order, being fully satisfied that Group14 has had ample opportunity to reveal its cards, but it has failed to do so either because it wishes to continue hiding them or because the cards have no showdown value,” Zilly said. “In moving for summary judgment, Nexeon has called Group14’s apparent bluff, and the moment has arrived for the Court to throw Group14’s hand into the muck.”
Group14 and Nexeon are both racing to produce silicon-carbon materials that significantly improve battery performance.
The companies are working on silicon-carbon scaffolds that replace traditional graphite anodes used in lithium batteries. The technology can power everything from consumer electronics to electric vehicles.
“This ruling is a complete vindication of Nexeon’s conduct, our integrity, and our position as a technological leader in the battery materials space,” Nexeon CEO Scott Brown said in a statement. “We have always operated with the highest standards of professionalism and transparency, and this decision confirms that we were on the right side of both the facts and the law.”
A Group14 spokesperson offered a response by email: “We strongly disagree with the court’s opinion and will consider all next options, including a plan to appeal.”
Following Group14’s original lawsuit, Nexeon filed counterclaims last year that were partially dismissed by the court.
Nexeon’s counterclaim alleging “tortious interference with business expectancy” is still before the court. The company asserts that Group14 was contacting its potential customers and demanding that they not do business with the company because of the allegations made in the 2022 suit.
Zilly gave the parties three weeks to meet, confer and file information on what additional discovery, if any, is required in the counterclaim case, how long the trial could last, proposed trial dates and other deadlines.
Group14 has operations in Washington and South Korea. Nexeon’s facilities are in the United Kingdom, Japan and South Korea.
Here’s a timeline of the situation so far:
- In 2015, Group14 spun out of the energy storage materials company EnerG2, which was itself a University of Washington spinoff founded in 2003. Nexeon launched in 2006.
- Group14 and Nexeon in 2016 began discussions about a potential partnership, and the companies signed mutual NDAs.
- Group14 shared information about its technology, and Nexeon offered to buy the company in late 2017. Group14 declined the offer, according to court documents, deeming it “far short” of the startup’s “long term value.”
- Nexeon sought to license Group14’s technology in 2018, but Group14 rejected that offer as well.
- In September 2019, Group14 said it learned of multiple patents filed by Nexeon, which Group14 claims included its technology.
- On Sept. 23, 2022, Group14 filed suit in district court; Nexeon filed its motion for dismissal on Dec. 28 of that year.
- In 2023, Nexeon filed a counterclaim alleging that Group14 interfered with its customers and damaged its business relationships.
- On Sept. 18, 2024, Judge Zilly dismissed Group14’s original lawsuit.
- A counterclaim by Nexeon is still pending.
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