An East Hartford manufacturer that won what’s considered to be among the largest trade-secret judgments in Connecticut history is hoping for an encore.
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An East Hartford manufacturer that won what's considered to be among the largest trade-secret judgments in Connecticut history is hoping for an encore.
Dur-A-Flex, which makes flooring systems and polymer components for commercial and industrial customers at its Goodwin Street plant, has been engaged for four years in a bitter lawsuit against a former employee and a number of his alleged new employers and customers, alleging that its trade secrets have been pilfered, costing it market share, competitive advantage and revenue.
The lawsuit in Hartford Superior Court has reached the trial phase, a proceeding that could take months due to the complexity and technical nature of the claims.
Meanwhile, several defendants' attorneys say Dur-A-Flex is overreaching and trying to restrict competition.
Dur-A-Flex made headlines in 2010 when it won a $43.7 million judgement against Bethany-based Laticrete, a competitor it sued and accused of stealing trade secrets related to a colored-sand product.
In its latest lawsuit, which was filed in March 2014, Dur-A-Flex accuses its former research chemist, Samet Dy, of violating his non-compete agreement and using the company's intellectual property, such as certain secret chemical formulas, to develop similar flooring products for competitors.
Several companies launched competing products not long after retaining Dy's services, the 26-count suit states.
Also named as defendants are Dy's nephew Auttdomm “Josh” Dy, a UConn-trained chemist who once interned under his uncle at Dur-A-Flex, and six companies and related executives that Dur-A-Flex claims the Dys assisted in developing competing products using its trade secrets.
The other defendants include: A&E ProCoat, formed by Samet Dy in his garage in Glastonbury around the time he resigned from Dur-A-Flex; ProRez Performance Resins and Coatings and Durafloor, both also based in Glastonbury and both formed by another defendant Steven Lipman, who was also a former Dura-A-Flex employee and personal friend of Samet Dy, according to court records; Wisconsin-based flooring maker Indue Sales & Services Inc.; Rocky Hill-based Merrifield Paint Co.; and Litchfield-based Engineered Coatings Inc. and its vice president, Christopher Krone.
Dur-A-Flex is seeking a permanent injunction, profits derived from the sale of any misappropriated products, as well as compensatory and punitive damages.
The defendants have denied the allegations, according to court records. A bench trial began in February before Judge Thomas Moukawsher, with the next trial date set for mid-May.
The court has deemed the suit to be “complex litigation,” a status typically assigned to cases with numerous litigants, intricate legal claims and the potential for large damages, according to the Connecticut Legal Branch.
Some of the legal questions Moukawsher is tasked with parsing include: If Dur-A-Flex has protectable trade secrets; whether Samet Dy's non-compete agreement with Dur-A-Flex is enforceable and whether he breached it; whether Samet and Josh Dy disclosed trade secrets in violation of state law; whether the defendant companies knowingly used those secrets; and if defendants engaged in a conspiracy to acquire the secrets.
Competing products crop up
During his time at Dur-A-Flex, Samet Dy helped develop a floor coating called Poly-Crete as well as other key products, the lawsuit says.
The company says it invested more than $2 million over seven years to develop its array of cement-like urethane, epoxy, polyurethane and dual-cure polyaspartic flooring products, the formulas for which were kept under lock and key, accessible only to certain personnel, including Samet Dy.
Exactly which formulas are at the heart of the lawsuit is not clearly laid out in public court documents. Judge Moukawsher approved an order that would close the courtroom when certain sensitive materials are being discussed and seal portions of the record. At a hearing this month that was not closed to the public, attorneys were still hashing out ground rules for sharing notebooks containing chemistry formulas.
The suit claims Samet Dy became “increasingly dissatisfied with the direction in which management was taking the company and increasingly angrier about the manner in which the company treated him.”
The complaint doesn't provide further details about the nature of the disagreement.
Shortly before resigning from Dur-A-Flex in 2013, Dy formed A&E ProCoat, which was created with “the intent to enter the same marketplace” as Dur-A-Flex, the lawsuit alleges.
A&E ProCoat sold infringing products to Dur-A-Flex customers, court records said.
Assisted by his nephew, Samet Dy developed several flooring products — Epi-Thane, Eco-Krete and Am-Poxy — that Dur-A-Flex says were made using its proprietary formulas or methods.
The suit says Samet Dy then provided certain processes, products and formulas to a number of companies — Merrifield Paint Co., ProRez, Durafloor and Engineered Coatings — that had reason to believe they were receiving a competitor's intellectual property, the lawsuit alleges.
Engineered Coatings had previously been a Dur-A-Flex customer, but stopped buying their products after working with the Dys as well as other defendants, the complaint says.
Samet Dy's attorney, who also represents Josh Dy, did not respond to a request for comment. Dur-A-Flex's attorney, Rogin Nassau's Lawrence Rosenthal, declined comment for this story.
Jonathan M. Shapiro, an attorney for Engineered Coatings, Krone, Durafloor, ProRez and Lipman, said his clients deny the allegations.
“The claims have no merit,” Shapiro told HBJ. “This is simply an attempt to restrict lawful competition.”
Meanwhile, Merrifield Paint Co. also introduced competing products after working with the Dys, the suit says.
An attorney for Merrifield did not respond to a request for comment.
Samet Dy later became a consultant for Indue, which Dur-A-Flex says previously had a chemist who tried unsuccessfully to develop a competing urethane cement flooring product. Indue, however, launched “Indue-Crete” not long after Samet Dy began working with the company, the suit said.
“Despite never having formulated and marketed its own competing product previously, Indue is now marketing and selling competing products in Connecticut, as well as nationwide,” the suit says. “ … Samet was able to provide Indue with a viable starting formulation in just a few months following the execution of his consulting agreement, which Indue began marketing and selling shortly thereafter.”
Halloran & Sage's Joseph G. Fortner Jr., who is representing Indue, told HBJ his client “strongly denies” Dur-A-Flex's accusations and believes it will be vindicated in court.
“We believe that the claims asserted have no merit and that their trade-secret claims are overstated,” Fortner said, characterizing Dur-A-Flex's suit as “anti-competitive.”
