SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 3, 1999
----------------
Insituform East, Incorporated
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-10800 52-0905854
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(Commission File Number) (IRS Employer Identification No.)
3421 Pennsy Drive, Landover, Maryland 20785
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone and fax numbers, including area code
(301) 386-4100 (tel)
(301) 386-2444 (fax)
(301) 773-4560 (24-hour public information Fax Vault System)
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None
(Former Name or Former Address, if
Changed Since Last Report)
<PAGE>
Item 5. Other Events.
See the press release of registrant dated December 9, 1999 and the
related lawsuit ("the Complaint"), Insituform Technologies, Inc., et. al. v.
Insitu, Inc. et. al., Case No. 3-99-1130, filed December 3, 1999 in the United
States District Court for the Middle District of Tennessee, both attached hereto
(the Complaint without exhibits).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INSITUFORM EAST, INCORPORATED
Date: December 10, 1999 By: /s/ Robert W. Erikson
------------------------------------
Robert W. Erikson
President
<PAGE>
PRESS RELEASE
For Immediate Release
INSITUFORM EAST AGAIN ASSAILED BY LICENSOR LITIGATION
LANDOVER, MD, December 9, 1999 - INSITUFORM EAST, INCORPORATED [NASDAQ:
INEI] (the "Company" or "East") reported that Insituform Technologies, Inc.
("ITI") and its Netherlands's affiliate filed a suit on December 3, 1999, in the
United States District Court for the Middle District of Tennessee, against East,
it's wholly-owned subsidiary Midsouth Partners ("MSP") and various East
affiliates. Among other things, the suit seeks declaratory judgments of the
Court to limit and restrain East and MSP from expanding the practice of their
various CIPP methods throughout the country because even alternative processes
would be "necessarily based on" the Insituform(R) process and potentially invade
"Insituform Owner Reserved Territories." Further, the ITI suit seeks to cancel
or set aside various provisions of the Midsouth Settlement Agreement executed
among the parties on July 20, 1999, and otherwise bring to litigation a number
of other disputes raised by ITI between the companies. No specific or estimated
damage amounts are delineated in the suit; however, unspecified damages are
sought.
Commenting on the newest lawsuit, the CEOC of East said, "This is the
second, surprise litigation launched against the Company by ITI this year, and
again appears targeted by ITI to usurp for itself both our legitimate
competitive rights as a licensee and also the rights acquired under settlement
by our subsidiary now directly in competition with ITI. It is sad that ITI seems
generally disposed to fight in courtrooms rather than the marketplace, but as a
defendant in an again unasked-for lawsuit the Company has no choice but to again
engage. We think ITI believes it can, by this type of action, unfairly control
further competition in an industry that has matured to substantial competition."
Insituform East, Incorporated and its subsidiaries are engaged in the
trenchless rehabilitation of underground sewers and other pipelines principally
using cured-in-place pipe ("CIPP") rehabilitation processes to produce a
shape-conforming "pipe-within-a-pipe." Since 1978, the Company has performed
work in six Mid-Atlantic states and the District of Columbia using the patented
Insituform process under territorially exclusive sublicense agreements.
Utilizing other trenchless CIPP processes, the Company's wholly-owned
subsidiary, Midsouth Partners, operates substantially without geographic or
product restriction. The Company's CIPP rehabilitation processes utilize custom
manufactured unwoven polyester fiber-felt tubing, with an elastomeric coating on
the exterior surface. The flat, pliable tube is later impregnated with a liquid
thermosetting resin and the resin-saturated material is inserted in the pipe
through an existing manhole or other access point. Using a temporary inversion
duct and cold water pressure, the material is turned inside out as it is forced
through the pipeline. When the inverted and inflated tube is fully extended, the
cold water within it is recirculated through a heat-exchange unit. The heated
water cures the thermosetting resin to form a new, hard, jointless, impact and
corrosion resistant cured-in-place pipe within the original pipe. Lateral or
side connections are then reopened by use of a remotely controlled cutting
device. The Company is certified to ISO 9001 quality standards for the design
and installation of its traditional Insituform process product line.
*****
CONTACT: ROBERT W. ERIKSON
President
(301) 386-4100
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
AT NASHVILLE
INSITUFORM TECHNOLOGIES, )
INC., and INSITUFORM (NETHERLANDS) )
B.V., a Netherlands corporation and also )
a Delaware domesticated corporation named )
INSITUFORM (NETHERLANDS) B.V., INC., )
)
Plaintiffs, )
)
vs. ) Civil Action No. 3-99 1130
)
INSITU, INC., MIDSOUTH PARTNERS, )
MIDSOUTH LLC, INSITUFORM )
EAST, INC., MID SOUTH PARTNERS, )
and MID SOUTH PARTNERS )
MANAGEMENT LLC, )
Defendants.
COMPLAINT
Plaintiffs Insituform Technologies, Inc. ("Insituform") and Insituform
(Netherlands) B.V. ("Insituform Netherlands"), for their complaint against
defendants Insitu, Inc. ("Insitu"), Midsouth Partners, Midsouth LLC, Insituform
East, Inc. ("East"), Mid South Partners, and Mid South Partners Management LLC
("Mid South Management"), state as follows:
PARTIES
1. Plaintiff Insituform is a corporation organized and existing under
the laws of the state of Delaware, having its principal place of business in
Chesterfield, Missouri.
2. Plaintiff Insituform Netherlands is a corporation organized and
existing under the laws of the Netherlands, having its principal place of
business in Rotterdam, the Netherlands, and is also a domesticated Delaware
corporation, named Insituform (Netherlands) B.V., Inc., with its principal place
of business in Chesterfield, Missouri.
3. Defendant Insitu is a corporation organized and existing under the
laws of the state of Delaware, having its principal place of business in
Landover, Maryland.
4. Defendant Midsouth LLC is a limited liability company organized and
existing under the laws of the state of Delaware, having its principal place of
business in Landover, Maryland.
5. Defendant Midsouth Partners is a general partnership organized and
existing under the laws of the state of Tennessee, having its principal place of
business in Landover, Maryland. Upon information and belief, Insitu and Midsouth
LLC are the general partners of Midsouth Partners.
6. Defendant Mid South Partners is a limited partnership organized and
existing under the laws of the state of Delaware. Based on information and
belief, Mid South Partners' principal place of business is in Landover,
Maryland.
7. Defendant Mid South Management is a limited liability company
organized and existing under the laws of the state of Delaware, having its
principal place of business in Landover, Maryland. Based on information and
belief, Mid South Management is the general partner of defendant Mid South
Partners.
8. Defendant East is a corporation organized and existing under the
laws of the state of Delaware, having its principal place of business in
Landover, Maryland.
JURISDICTION AND VENUE
9. This is an action for declaratory judgment pursuant to the Federal
Declaratory Judgment Act, 28 U.S.C. ss.ss. 2201 & 2202, for the purpose of
determining questions of actual controversy between the parties, as described
more fully below.
10. This Complaint sets forth causes of action arising under the
Lanham Act (15 U.S.C. ss.ss. 1051 et seq.), 35 U.S.C. ss. 271, and state law.
The Court has subject matter jurisdiction over the federal claims pursuant to 15
U.S.C. ss. 1121(a), 28 U.S.C. ss.ss. 1331 and 1338, and 35 U.S.C. ss.ss. 271 and
281. The state law claims arise out of the same nucleus of operative facts as
the federal claims and are within the Court's supplemental jurisdiction pursuant
to 28 U.S.C. ss. 1367 and 28 U.S.C. ss. 1338(b).
11. Venue is proper in this Court pursuant to 28 U.S.C.ss.1391(b) and
(c).
BACKGROUND FACTUAL ALLEGATIONS
12. The Insituform(R) Process for the rehabilitation of sewers,
pipelines, and other conduits utilizes a custom-manufactured tube, or liner,
made of a synthetic fiber. After the tube is saturated (i.e., impregnated) with
a thermosetting resin mixture, it is installed in the host pipe by various
processes and the resin is then hardened, usually by heating it by various
means, forming a new rigid pipe within a pipe. The Insituform(R) Process
encompasses the art described in a U.S. intellectual estate extending to some 63
United States patents and 11 registered trademarks, all owned by Insituform
Netherlands, as well as a great body of trade secret intellectual property
relating to installation and other techniques inherent in the intellectual
rights licensed to Insituform's licensees.
13. In 1980, Insituform's predecessor-in-interest obtained from
Insituform International, Inc., the predecessor-in-interest to Insituform
Netherlands, the exclusive rights to exploit and utilize the Insituform(R)
Process in the United States.(Note: 1) A true and accurate copy of the 1980
license and all relevant transfer documents are attached as Exhibit A.
Note: (1) Although there have been intervening changes from time to time in the
identity of the Insituform-controlled entity holding the exclusive U.S. rights,
Insituform itself now holds all such rights.
14. Under its license, Insituform is authorized to license and has
licensed (pursuant to "Insituform(R) Process Licenses") other entities to
practice the Insituform(R) Process in specified geographic territories within
the United States. At present, there are two such licensees: (i) East, which
holds rights (through six Insituform(R) Process Licenses) to territories
encompassing the northern three counties of Kentucky, all of Ohio, Pennsylvania,
Delaware, Maryland, West Virginia, Virginia, and the District of Columbia
("East's Territories"); and (ii) Insituform Metropolitan and its affiliates
(collectively, "Metropolitan"), which hold rights to the Insituform(R) Process
in New York and New Jersey. Insituform is the sole licensee in all states or
portions of states not licensed to East or Metropolitan (the "Insituform Owner
Reserved Territories").
FIRST CLAIM FOR RELIEF
(Declaration of Rights Under the Midsouth Settlement Agreement)
15. Plaintiffs incorporate herein by reference paragraphs 1 through 14
above.
16. In 1985, defendant Midsouth Partners was granted an Insituform(R)
Process License covering Tennessee, portions of Mississippi, and all but a small
portion of Kentucky.
17. Immediately prior to July 20, 1999, the partners in Midsouth
Partners were Insituform, defendant Insitu, and Insituform Southwest, Inc.
("Southwest"). On that date, Insituform and Southwest entered into an agreement
(the "Agreement" or the "Midsouth Settlement Agreement") with Insitu, Midsouth
Partners, Midsouth LLC, and East, whereby it was agreed that Insituform and
Southwest would withdraw from the partnership and the Insituform(R) Process
License granted to Midsouth Partners would be terminated. A true and accurate
copy of the Midsouth Settlement Agreement is attached as Exhibit B.
18. Although Midsouth Partners' License was terminated, paragraph 5(a)
of the Agreement permits Midsouth Partners, Insitu, and Midsouth LLC
(collectively, the "Midsouth Defendants") to continue to exploit the
Insituform(R) Process as it existed on July 20, 1999, the date of the Agreement
(i.e., without the incorporation of any subsequently occurring advances or
alterations in the process).
19. Nevertheless, the Agreement prohibits the Midsouth Defendants from
using the Insituform(R) trademark, service marks and trade names after July 20,
1999, except that the Midsouth Defendants were granted ninety days to remove
such marks and names from "vehicles, equipment, buildings, letterhead, business
cards, literature, and other materials." The ninety-day period began on July 20,
1999 and ended on October 18, 1999.
20. Pursuant to paragraph 5(c) of the Agreement, further use of the
Insituform(R) trademark or any derivative thereof by the Midsouth Defendants
after the expiration of the ninety-day period is deemed a noncurable breach of
the Agreement.
21. In the event of a noncurable breach, paragraph 5(c) authorizes
Insituform to immediately terminate the limited rights of the Midsouth
Defendants under paragraph 5(a) to exploit the Insituform(R) Process.
22. The Agreement constitutes a valid and enforceable contract, and
specifies that it is governed by Tennessee law.
23. Insituform has fully complied with the terms of the Agreement and
has fulfilled all of its obligations thereunder.
24. Based on information and belief, the Midsouth Defendants have
breached the Agreement by continuing to use, display and/or trade on the
Insituform(R) trademark after October 18, 1999. Such breaches are "noncurable"
under the plain language of paragraph 5(c) and, therefore, Insituform is
entitled to terminate, effective immediately, the Midsouth Defendants' limited
rights to continue to exploit the Insituform(R) Process.
25. Insituform has sustained injury and likely will sustain additional
injury as a result of the Midsouth Defendants' breaches of the Agreement.
26. The Midsouth Defendants have asserted, without basis, that any
breaches of the Agreement that may have occurred are curable under the terms of
the Agreement and have been cured. Therefore, the Midsouth Defendants contend
that Insituforrn is not authorized to terminate their limited rights under
paragraph 5(a) to continue to exploit the Insituform(R) Process.
27. As a result of these assertions, an actual controversy exists
between the parties with respect to these issues.
28. Insituform desires and intends to exercise its right under
paragraph 5(c) of the Agreement to terminate the Midsouth Defendants' rights
under paragraph 5(a) of the Agreement, and Insituform seeks a declaration of the
rights of the parties hereto to avoid the possible accrual of avoidable damages.
29. Additionally, if the Court finds that the Midsouth Defendants have
committed one or more noncurable breaches of the Agreement, Insituform would be
entitled to and thus requests damages in an amount to be proven at trial.
SECOND CLAIM FOR RELIEF
A. Declaration of Rights Under East's Insituform(R) Process Licenses
30. Plaintiffs incorporate herein by reference paragraphs 1 through 29
above.
31. Based on information and belief, East is currently exploiting or
planning to exploit the Insituform(R) Process and trade on the Insituform(R)
trademark in the Insituform Owner Reserved Territories.
32. East contends that its Insituform(R) Process Licenses permit it to
exploit the Insituform(R) Process and use the Insituform(R) trademark anywhere
in the United States without limitation except where there exist "independent
Insituform(R) sublicenses." (See the last sentence of the first paragraph under
the heading "Relationship with Insituform Technologies, Inc." on page 5 of
East's 1999 Form 10K, attached as Exhibit C).
33. Plaintiffs contend that East's Licenses do not permit East to
exploit the Insituform(R) Process or use the Insituform(R) trademark in the
Insituform Owner Reserved Territories and that, in doing so, East has breached
its Licenses, and violated Section 43 of the Lanham Act (15 U.S.C. ss. 1125), 35
U. S. C. ss. 271, and applicable state law.
34. East's assertion that its Licenses permit it to exploit the
Insituform(R) trademark and patents in the Insituform Owner Reserved Territories
is without basis in fact and an actual controversy exists between the parties.
Therefore, plaintiffs seek a determination of the rights of the parties hereto
with respect to these issues.
35. If the Court finds that East is violating its Licenses, plaintiffs
would be entitled to and thus seek injunctive relief as prayed for below on
grounds that plaintiffs are being irreparably harmed by and have no adequate
remedy at law for such violations,
B. Declaration That Neither East Nor Its Alter Egos Can Practice Other
CIPP Processes in the Insituform Owner Reserved Territories
36. If the Court determines that East's Licenses do not permit East to
exploit the Insituform(R) Process or use the Insituform(R) trademark in the
Insituform Owner Reserved Territories, plaintiffs further request that the Court
determine that East and the other defendants are prohibited from practicing
other cured-in-place pipeline rehabilitation techniques in the Insituform Owner
Reserved Territories on grounds that such activity, although ostensibly
legitimate, would in fact constitute unlawful exploitation of the Insituform(R)
Process.
37. Based on information and belief, Midsouth Partners, Insitu,
Midsouth LLC, Mid South Management, and Mid South Partners (collectively, the
"Alter Ego Defendants") are the alter egos of East. Insituform is informed and
believes that each of the Alter Ego Defendants is wholly-owned by East (either
directly or indirectly) and is controlled by the Chief Executive Officer
Committee (the "CEOC") of East.
38. The CEOC consists of East's chairman, president and other senior
management personnel. Based on information and belief, each of the members of
the CEOC occupies the same position with respect to the Alter Ego Defendants
and/or exercises the same administrative control and duties with respect to the
Alter Ego Defendants as they exercise with respect to East.
39. Insituform, or its predecessors-in-interest and their principals,
invented the trenchless pipeline rehabilitation technique now commonly referred
to as the cured-in-place pipeline rehabilitation technique ("CIPP"). All CIPP
techniques now commonly practiced in the United States are substantially
derivative of and based upon the Insituforrn(R) Process and involve
substantially the same technical process as described in paragraph 12 above.
What distinguishes the Insituform(R) Process as practiced by East under its
Insituform(R) Process Licenses from other CIPP processes is that East, its CEOC
and other personnel have years of practical experience in the Insituform(R)
Process as developed and refined by Insituform over the years, including trade
secret installation techniques developed by Insituform through its extensive
research and development department, which is unparalleled in the industry.
40. Based on information and belief, neither East nor any of the Alter
Ego Defendants has personnel trained in any CIPP process other than the
Insituform(R) Process. As a result, any work done by East and the Alter Ego
Defendants is necessarily based on the training, expertise and experience of the
CEOC and other personnel skilled in the Insituform(R) Process and any practice
of CIPP by them is the practice of the Insituform(R) Process.
41. Even with training in other CIPP processes, East and the Alter Ego
Defendants would not be able to practice such processes without in fact
unlawfally utilizing substantial proprietary components of the Insituform(R)
Process. They would inevitably utilize Insituform(R) trade secret technology
because, among other reasons, they would not be able to separate years of
Insituform(R) Process experience and trade secret transfers from general CIPP
process techniques.
42. Likewise, any attempt to utilize newly-hired employees to practice
such other CIPP processes, would, to the extent that such personnel are trained
and/or supervised by the CEOC or other pre-existing East personnel, ultimately
lead to the unlawful transfer to such new employees of Insituform(R) Process
trade secret techniques and technology.
43. Despite the foregoing, East asserts that it, either under its own
name or through its subsidiaries, may utilize "other trenchless CIPP processes"
to operate "substantially without geographic or product restriction" so long as
it does not use the name "Insituform(R)." (See the "About Insituform East"
paragraph on the inside cover of East's Form 10-K for 1999, attached as Exhibit
C).
44. Upon information and belief, East and the Alter Ego Defendants
intend to practice the Insituform(R) Process in this manner under the guise of a
look-a-like CIPP product called "MSP Liner."
45. An actual controversy exists between the parties with respect to
whether Midsouth Partners, Insitu, Midsouth LLC, Mid South Partners, and Mid
South Management are the alter egos of East, and the extent to which East and
the Alter Ego Defendants may exploit CIPP processes other than the Insituform(R)
Process in the Insituform Owner Reserved Territories. Therefore, plaintiffs seek
a declaration of the respective rights of the parties with respect to these
issues.
THIRD CLAIM FOR RELIEF
A. Alternative Relief: Declaration of Rights With Respect to Cross-Over
Royalties Under East's Insituform(R) Process Licenses
46. Plaintiffs incorporate herein by reference paragraphs 1 through 4
above.
47. If Insituform elects not to contest East's exploitation of the
Insituform(R) Process outside East's Territories, the Licenses require East to
pay the licensee of any territory outside East's Territories a percentage (12%)
of the gross contract price of all East installations utilizing the
Insituform(R) Process in such other licensee's territory (the "Cross-Over
Royalty"). Attached as Exhibit D is one of East's Insituform(R) Process
Licenses, as amended by letter of July 9, 1985. All six of East's Licenses
contain substantially the same language with respect to Cross-Over Royalties.
48. As described in paragraph 14 above, Insituform itself is a
licensee, possessing an Insituform(R) Process License for the entire United
States. Insituform is the sole licensee in the Insituform Owner Reserved
Territories.
49. In the alternative to the Second Claim for Relief hereunder,
Insituform and Insituform Netherlands contend that East cannot exploit the
Insituform(R) Process or use the Insituform(R) trademark in the Insituform Owner
Reserved Territories without payment to Insituform of the appropriate Cross-Over
Royalty.
50. East contends that its Licenses do not require payment of the
Cross-Over Royalty with respect to East operations in the Insituform Owner
Reserved Territories.
51. East's assertions with respect to the applicability of the
Cross-Over Royalty in this context are without basis and an actual controversy
exists between the parties. Therefore, Insituform and Insituform Netherlands
seek a determination of the rights of the parties hereto with respect to these
issues.
52. If the Court finds in favor of plaintiffs on this claim, Insituform
would be entitled to and thus seeks payment of any and all unpaid Cross-Over
Royalties owed in connection with East's operations in the Insituform Owner
Reserved Territories prior to the entry of judgment, plus interest.
B. Declaration That Neither East Nor Its Alter Egos Can Practice Other
CIPP Processes in the Insituform Owner Reserved Territories
Without Paying Cross-Over Royalties
53. If the Court finds that East cannot practice the Insituform(R)
Process in the Insituform Owner Reserved Territories without paying the
Cross-Over Royalty, plaintiffs seek a further declaration that neither East nor
the Alter Ego Defendants can practice other CIPP processes in the Insituform
Owner Reserved Territories without paying the Cross-Over Royalty.
54. As alleged above, any use by East or the Alter Ego Defendants of
another CIPP process would in fact be use of the Insituform(R) Process.
Accordingly, to the extent that such use occurs in the Insituform Owner Reserved
Territories and is not altogether prohibited, the Cross-Over Royalty would
apply.
FOURTH CLAIM FOR RELIEF
(Declaration of Rights Under the SAW Agreement)
55. Plaintiffs incorporate herein by reference paragraphs 1 to 54
above.
56. On August 4, 1980, Insituform entered into an agreement (the
"Agreement" or the "SAW Agreement") with SAW Associates ("SAW") in conjunction
with the introduction of the Insituform(R) Process into the United States. A
true and accurate copy of the SAW Agreement is attached as Exhibit E.
57. Under the Agreement, SAW agreed to recruit for Insituform potential
licensees of the Insituform(R) Process in exchange for compensation in the form
of quarterly payments equaling 1% of the total contract value of all contracts
produced by new licensees recruited by SAW for the first two years of the
license agreements, and 1/2 of 1% thereof each year thereafter.
58. The SAW Agreement provides that payments thereunder with respect to
any such licensee shall cease when the license agreement "ends through effluxion
of time or is terminated earlier."
59. In April 1981, SAW assigned its rights under the Agreement to East.
60. SAW was successful in recruiting two new Insituform(R) licensees
and certain affiliates thereof, including Insituform Southeast, Inc.
("Southeast"), which entered into a license with Insituform, as licensor,
permitting Southeast to practice the Insituform(R) Process, as licensee, in a
territory encompassing North Carolina, South Carolina, Georgia, and Alabama, and
ultimately Florida.
61. In April 1995, Southeast became an indirect, wholly-owned
subsidiary of Insituform Mid-America, Inc. ("Mid-America") as a result of
Mid-America's acquisition of Enviroq, the parent of Southeast.
62. In October 1995, Insituform succeeded to Mid-America's indirect
ownership of Southeast by acquiring Mid-America.
63. On December 31, 1998, Southeast, licensee, was merged into
Insituform, licensor, and Southeast ceased to exist as an identifiable entity.
64. As a result of the merger, Southeast's Insituform(R) Process
License was extinguished. Therefore, in accordance with the terms of the SAW
Agreement, Insituform informed East on October 11, 1999 that, effective as of
the second quarter of 1999, Insituform would cease making payments under the SAW
Agreement with respect to Southeast. A true and accurate copy of Insituform's
letter to East of October 11, 1999 is attached as Exhibit F.
65. East disputes Insituform's right to terminate payments under the
SAW Agreement with respect to Southeast.
66. East's assertion that Insituform is not entitled to terminate the
SAW payments is without basis and an actual controversy exists between the
parties with respect to this issue.
67. Insituform desires and intends to terminate payments to East under
the SAW Agreement as indicated above, and seeks a declaration of the rights of
the parties hereto to avoid the possible accrual of avoidable damages.
PRAYER FOR RELIEF
WHEREFORE, plaintiffs Insituform and Insituform Netherlands pray as
follows:
1. That the Court declare that the Midsouth Defendants have committed
one or more noncurable breaches of the Midsouth Settlement Agreement;
2. That the Court declare:
(a) That the rights granted by paragraph 5(a) of the Midsouth
Settlement Agreement, including the limited right of the Midsouth Defendants to
exploit the Insituform(R) Process, can be terminated and rendered null and void;
(b) That the limited right granted under paragraph 4 of the
Midsouth Settlement Agreement for the Midsouth Defendants to continue to use
certain tube labeled with the name "Insituform" can be terminated and rendered
null and void;
(c) That the right of the Midsouth Defendants to continue
buying tube from Insituform pursuant to paragraph 14 of the Midsouth Settlement
Agreement can be terminated and rendered null and void;
(d) That the right of East and its subsidiaries to perform
certain subcontract work for the Midsouth Defendants pursuant to paragraph 15 of
the Midsouth Settlement Agreement can be terminated and rendered null and void;
and
(e) That all other provisions of the Midsouth Settlement
Agreement remain in full force and effect;
3. That the Court award Insituform money damages in an amount to be
determined at trial for the Midsouth Defendants' breaches of the Midsouth
Settlement Agreement;
4. That the Court:
(a) Declare that East is not authorized under its Licenses to
exploit the Insituform(R) Process or use the Insituform(R) trademark in the
Insituform Owner Reserved Territories;
(b) Preliminarily and permanently enjoin and restrain East,
together with its agents, employees and any other persons or parties in active
consort or participation with East, from engaging in the following activities:
(i) Exploiting the Insituform(R) Process in any
Insituform Owner Reserved Territory; or
(ii) Using or otherwise infringing the Insituform(R)
trademark in any Insituform Owner Reserved Territory;
(c) Declare that Midsouth Partners, Insitu, Midsouth LLC,
Mid South Partners, and Mid South Management are the alter egos of East;
(d) Declare that East, the Alter Ego Defendants, and all other
entities controlled by East, are prohibited from practicing any other CIPP
process in the Insituform Owner Reserved Territories;
(e) Preliminarily and permanently enjoin and restrain East,
the Alter Ego Defendants, and any other entities controlled by East, from
practicing any other CIPP process in the Insituform Owner Reserved Territories;
(f) Preliminarily and permanently enjoin and restrain East,
together with its agents, employees and any other persons or parties in active
consort or participation with East, from forming or acquiring any entity for the
purpose of engaging in CIPP installations in the Insituform Owner Reserved
Territories, to the extent such entity or its employees are East personnel
and/or the CEOC, or are controlled by East personnel and/or the CEOC; and
(g) Preliminarily and permanently enjoin and restrain East,
together with its agents, employees and any other persons or parties in active
consort or participation with East, from trading on the Insituform(R) trademark
when promoting any other process, whether such process be CIPP or some other
process;
5. That, in the alternative, if East's Licenses do authorize it to
exploit the Insituform(R) Process and use the Insituform(R) trademark in the
Insituform Owner Reserved Territories, the Court:
(a) Declare that Insituform is entitled to receive appropriate
Cross-Over Royalties from East with respect to its operations in the Insituform
Owner Reserved Territories;
(b) Award Insituform money damages in the amount of any and
all unpaid Cross-Over Royalties generated in connection with East's operations
in the Insituform Owner Reserved Territories prior to the entry of judgment;
(c) Declare that Midsouth Partners, Insitu, Midsouth LLC
Mid South Partners, and Mid South Management are the alter egos of East; and
(d) Declare that East, the Alter Ego Defendants, and all other
entities controlled by East, are prohibited from exploiting other CIPP processes
in the Insituform Owner Reserved Territories without payment of the Cross-Over
Royalty to Insituform;
6. That the Court declare that East is due no further payments under
the SAW Agreement with respect to Insituform's practice of the Insituform(R)
Process in Southeast's former territory;
7. That plaintiffs be awarded interest and the costs of this cause,
including their reasonable attorneys fees and expenses, to the extent allowable
by statute, contract or applicable law; and
8. That plaintiffs be awarded all other and further relief, general and
special, at law or in equity, to which they may show themselves justly entitled.
THIS IS THE FIRST APPLICATION FOR EXTRAORDINARY
RELIEF IN THIS CAUSE.
Respectfully submitted,
/s/ J. Richard Lodge
-------------------------------
J. Richard Lodge (#2833)
L. Wearen Hughes (#5683)
BASS, BERRY & SIMS PLC
2700 First American Center
Nashville, Tennessee 37238-2700
(615) 742-6200
Attorneys for Plaintiffs Insituform
Technologies, Inc. and Insituform
(Netherlands) B.V.
#2070846
