Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
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`ESTTA Tracking number:
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`ESTTA734168
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`Filing date:
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`03/17/2016
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`Proceeding
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`92061257
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`Party
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`Correspondence
`Address
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`Defendant
`Heartland Energy Group, Ltd.
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`AMBER N DAVIS
`BEUSSE WOLTER SANKS & MAIRE PA
`390 N ORANGE AVENUE, SUITE 2500
`ORLANDO, FL 32801
`UNITED STATES
`adavis@iplawfl.com, kwimberly@iplawfl.com, bmahan@iplawfl.com
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`Submission
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`Filer's Name
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`Filer's e-mail
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`Signature
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`Date
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`Attachments
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`Other Motions/Papers
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`Amber N. Davis
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`adavis@bwsmiplaw.com, kwimberly@bwsmiplaw.com, bma-
`han@bwsmiplaw.com
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`/Amber N. Davis/
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`03/17/2016
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`Notice of Status and Motion to Suspend (031716)(Final).pdf(90011 bytes )
`EX A (Notice of Filing and Motion to Stay)(031716).pdf(2826373 bytes )
`EX B (Notice of Filing and Motion to Stay)(031716).pdf(111970 bytes )
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`

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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`TRADEMARK TRIAL AND APPEAL BOARD
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`FLUID ENERGY GROUP, LTD.,
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`
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`NOTICE OF STATUS OF ARBITRATION PROCEEDINGS
`AND FILING OF PARTIAL ARBITRATION AWARD
`AS TO PHASE ONE AND MOTION TO FURTHER SUSPEND PROCEEDINGS
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`COMES NOW, Registrant, HEARTLAND ENERGY GROUP, LTD., by and through its
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`
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`undersigned attorney and hereby advises the Trademark Trial and Appeal Board that the parties
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`received a Partial Arbitration Award on Phase One Issues on March 11, 2016. A copy of the
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`Partial Arbitration Award on Phase One Issues is attached hereto as Exhibit A.
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`The parties expect to commence proceedings relating to Phase Two of the arbitration
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`proceedings shortly. At issue in Phase Two is Registrant, HEARTLAND ENERGY GROUP,
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`LTD.’s Counterclaims (attached hereto as Exhibit B) against Petitioner, FLUID ENERGY
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`GROUP, LTD., which include a claim for trademark infringement of the ENVIRO-SYN mark
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`under 15 U.S.C. §1114. In addition, there is prior pending civil litigation involving the same
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`parties in the Court of Queen’s Bench of Alberta, Court File Number: 1401-09170.
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`As such, Registrant, HEARTLAND ENERGY GROUP, LTD. respectfully requests this
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`matter continue to be stayed until such time as Phase Two of the Arbitration between the parties
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`v.
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`HEARTLAND ENERGY GROUP, LTD.
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`Petitioner,
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`Registrant.
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`Cancellation No. 92061257
`Registration No. 4224628
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`/
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`herein is concluded, at which time the proceeding will resume and all dates will be reset. The
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`pending arbitration and the civil litigation proceeding involve many of the same issues as well as
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`trademark infringement for the same trademark as the one at issue in the above-referenced
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`cancellation proceeding, namely, ENVIRO-SYN. Petitioner has filed a Petition for Cancellation
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`of Registration No. 4,224,628 for the mark, ENVIRO-SYN. As stated above, HEG has filed
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`counterclaims in the pending ICC Action for infringement of the same ENVIRO-SYN
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`trademark, which is the subject of Fluid’s Petition for Cancellation.
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`The outcome of the ICC Action will, among other issues to be decided, determine
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`whether Registrant is the true and rightful owner of the mark and whether Petitioner has
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`infringed the mark sought to be cancelled, and thus will have a direct bearing on the issues
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`involved in the cancellation proceeding before the Board.
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`
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`Under 37 CFR §2.117(a), whenever it shall come to the attention of the Trademark Trial
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`and Appeal Board that a party or parties to a pending case are engaged in a civil action or
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`another Board proceeding which may have a bearing on the case, proceedings before the Board
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`may be suspended until termination of the civil action or other Board proceeding. Furthermore,
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`under 37 CFR §2.117(c), proceedings may also be suspended, for good cause, upon motion
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`approved by the Board. The Board has discretion to suspend a proceeding when a civil action is
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`pending between the parties. TBMP, § 510.02(a). See also, Argo & Company, Inc. v.
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`Carpetsheen Manufacturing, Inc., 1975 WL 21260, 187 U.S.P.Q. 366 (TTAB 1975).
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`
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`WHEREFORE, Registrant, Heartland Energy Group, Ltd. respectfully requests
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`suspension of the subject Cancellation Proceeding No. 92061257 until a decision is rendered in
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`2
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`Phase Two of the Arbitration Proceeding.
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`DATED this 17th day of March, 2016.
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`Respectfully Submitted,
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`BEUSSE WOLTER SANKS & MAIRE, PLLC
`390 North Orange Avenue, Suite 2500
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`Orlando, FL 32801
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`
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`Telephone: (407) 926-7700
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`
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`Email: adavis@bwsmiplaw.com
`Email: kwimberly@bwsmiplaw.com
`Attorneys for Registrant
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`/s/ Amber N. Davis
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`Amber N. Davis
`Florida Bar No.: 026628
`Kevin W. Wimberly
`Florida Bar No.: 057977
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`By:
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`CERTIFICATE OF SERVICE
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`I HEREBY CERTIFY that a true and correct copy of the foregoing has been mailed via
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`U.S. Mail and Electronic mail this 17th day of March, 2016 to: Benjamin Natter, Esquire,
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`NATTER & NATTER, 501 Fifth Avenue, Suite 808, New York, New York 10017.
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`_/s/ Amber N. Davis_____________ ______
`Attorney
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`3
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`
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`EXHIBIT “A”
`EXHIBIT “A”
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`

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`ICC Case No. 20282/RD
`
`IN THE MATTER OF THE
`
`ARBITRATION BETWEEN
`_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ . _ _ _ _ . _ _ ...
`
`... X
`
`1
`
`2.
`3.
`4
`
`FLUID ENERGY GROUP LTD.
`
`FLUID LUX S.A.R.L.,
`CLAY PURDY,
`DARREN THATCHER
`
`Claimants and
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`Counterclaim respondents,
`
`-against-
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`HEARTLAND ENERGY GROUP, LTD.,
`
`Respondent and
`Counterclaimant
`_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ..
`
`.
`... X
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`PARTIAL ARBITRATION AWARD
`
`ON PHASE ONE ISSUES
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`

`
`Table of Contents
`
`INTRODUCTION ................................................................................................................. ..3
`
`The Parties and Their Representatives ............................................................................................................... ..3
`
`The Arbitration Agreements, Place of Arbitration, and Applicable Substantive Law ....................................... ..4
`
`PROCEDURAL HISTORY ................................................................................................... ..6
`
`Commencement, Claims, and Motions .............................................................................................................. .. 6
`
`Confirmation of the Arbitrators .......................................................................................................................... .. 9
`
`Terms of Reference, Procedural Orders, and Preparation for Final Hearing on Phase One Issues .................. .. 10
`
`Final Hearing on Phase One Issues and Post—Hearing Proceedings ................................................................. .. 11
`
`THE PARTIES’ LEGAL CLAIMS AND RELIEF SOUGHT ............................................ ..13
`
`FACTS OF THE CASE ....................................................................................................... .. 15
`
`III.
`
`IV.
`
`Background and Initial Exposure to the Products ................................ ..; ......................................................... .. 15
`
`Discussions, Negotiations, and Initial Contracts .............................................................................................. .. 16
`
`Fluid Contracts with HEG ................................................................................................................................ .. 17
`
`The Parties’ Dispute Over Corrosiveness and Regulated Status Arises ........................................................... .. 19
`
`ISSUES TO BE DETERMINED ......................................................................................... .. 19
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`Fraudulent Inducement ..................................................................................................................................... ..20
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`Lack of Consideration ...................................................................................................................................... .. 28
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`Mutual Mistake ................................................................................................................................................ .. 30
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`Defenses and Relief to be Granted ................................................................................................................... .. 31
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`VI.
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`AWARD AND RELIEF GRANTED .................................................................................. ..32
`
`

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`PARTIAL AWARD
`
`ON PHASE ONE ISSUES
`
`I.
`
`INTRODUCTION
`
`A.
`
`The Parties and Their Representatives
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`1.
`
`2.
`
`The parties to the arbitration and their representatives are as follows:
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`The First Claimant is Fluid Energy Group Ltd. (“Fluid Energy”), a corporation
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`formed under the laws of Alberta, Canada. Fluid Energy’s address is I
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`214 11”‘ Avenue SE
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`Calgary, Alberta Canada T2G 0X8
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`3.
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`The Second Claimant is Fluid Lux S.A.R.L. (“Fluid Lux”), a limited liability
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`company formed under the laws of Luxembourg. Fluid Lux and Fluid Energy are referred to
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`collectively herein as “Fluid.” Fluid LuX’s address is
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`73 Cote d’Eich
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`L-1450 Luxembourg
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`4.
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`‘The Third Claimant (who has not asserted claims in this arbitration but has been
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`named as an additional counterclaim respondent) is Clay Purdy, an individual. Mr. Purdy’s
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`address is
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`c/o Torys, LLP
`1114 Avenue of the Americas, 23rd Floor
`New York, New York 10036-7703
`USA
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`5.
`
`The Fourth Claimant (who has not asserted claims in this arbitration but has been
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`named as an additional counterclaim respondent)
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`is Darren Thatcher, an individual. Mr.
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`Thatcher’s address is
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`

`
`c/o Torys, LLP
`1114 Avenue of the Americas, 23rd Floor
`New York, New York 10036-7703
`USA
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`6.
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`The Respondent/Counterclaimant
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`is Heartland Energy Group, Ltd.
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`(“HEG”), a
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`company formed under the laws of the Republic of Seychelles. HEG’s address is
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`Suite 15, 15‘ Floor Oliaji Trade Center
`Francis Street
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`Victoria, Mahe
`Seychelles
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`7.
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`The Claimants / Counterclaim Respondents are represented by:
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`David Wawro
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`Jaclyn Leader
`TORYS LLP
`1114 Avenue of the Americas, 23rd Floor
`New York, New York 10036
`
`Telephone: (212) 880-6288
`Facsimile:
`(212) 682-0200
`dwawro@torys.com
`jleader@torys.com
`
`8.
`
`The Respondent / Counterclaimant is represented by:
`
`Amber N. Davis
`
`Kevin W. Wimberly
`BEUSSE WOLTER SANKS & MAIRE, P.A.
`390 North Orange Avenue, Suite 2500
`Orlando, Florida 32801
`Telephone: (407) 926-7700
`Facsimile: (407) 926-7720
`adavis@iplawfl.com
`kwimberly@iplawfl.com
`
`B.
`
`The Arbitration Agreements, Place of Arbitration, and Applicable Substantive
`Law
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`9.
`
`This arbitration has been brought under identical arbitration clauses contained in (a)
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`a Manufacturing Agreement dated October 12, 2012 and amended and restated June 18, 2013
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`

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`between Fluid Energy and HEG (the “Fluid Energy—HEG Manufacturing Agreement”); (b) two
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`licensing agreements dated October 10, 2012 and amended and restated June 18, 2013 between
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`Fluid Energy and HEG (the “Fluid Energy-HEG 231B1 License Agreement” and the “Fluid
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`Energy—HEG 1021B1 License Agreement”, respectively); (c) a Manufacturing Agreement dated
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`October 10, 2012 and amended and restated June 18, 2013 between Fluid Lux and HEG (the
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`“Fluid Lux-HEG Manufacturing Agreement”); and (d) two licensing agreements dated October 10,
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`2012 and amended and restated June 18, 2013 between Fluid Lux and HEG (the “Fluid Lux-HEG
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`23lBl License Agreemen ” and the “Fluid Lux—HEG l02lBl License Agreement”, respectively)
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`(all of the foregoing being referred to collectively as the “Agreements”). The arbitration clauses of
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`each of the Agreements (in particular, § 16.1 of the Fluid Energy—HEG Manufacturing Agreement,
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`§ 21 of the Fluid Energy—HEG 231B1 License Agreement, § 21 of the Fluid Energy—HEG l02lBl
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`License Agreement, § 16.1 of the Fluid Lux-HEG Manufacturing Agreement, § 21 of the Fluid
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`Lux-HEG 23lBl License Agreement, and § 21 of the Fluid Lux-HEG 1021B1 License
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`Agreement) provide as follows:
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`All disputes arising out of or in connection with this Agreement shall
`be finally settled under the Rules of Conciliation and Arbitration of
`the International Chamber of Commerce (“ICC”) by three arbitrators
`appointed in accordance with said Rules.
`Any arbitration
`administered by the ICC shall be held in the ICC’s Florida, USA
`office, unless otherwise agreed by the Parties hereto. The award of
`the arbitrators shall be final and binding and may be confirmed and
`entered in any court, state or federal, having jurisdiction.
`The
`arbitration shall be conducted in the English language.
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`10.
`
`Accordingly,
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`this arbitration is conducted under the ICC Rules of Arbitration
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`(2012).
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`11.
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`By emails dated July 14, 2014, Claimants Fluid Energy and Fluid Lux, and
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`Respondent, confirmed to the ICC Secretariat that the place of arbitration is Orlando, Florida. On
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`

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`September 17, 2014, the Third and Fourth Claimants consented to Orlando, Florida as the place of
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`arbitration Without prejudice to their position on the issue ofj oinder.
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`12.
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`Section 16.3 of the Fluid Energy—HEG Manufacturing Agreement, §20 of the
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`Fluid Energy~HEG 23lB1 License Agreement, § 20 of the Fluid Energy—HEG 1021B1 License
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`Agreement, § 16.3 of the Fluid Lux-HEG Manufacturing Agreement, § 20 of the Fluid Lux-HEG
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`23lB1 License Agreement, and §2O of the Fluid LuX—HEG 1021B1 License Agreement each
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`provide that “This Agreement shall for all purposes be governed by and construed in accordance
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`with the laws of the State of Florida.” In addition, § 7.6 of the Fluid Energy-HEG Manufacturing
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`Agreement and § 7.6 of the Fluid Lux-HEG Manufacturing Agreement both provide that
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`“Notwithstanding any other term or condition of this Agreement, the United Nations Convention
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`on Contracts for the International Sale of Goods shall not apply to this Agreement.” Through their
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`agreement to the Terms of Reference, the parties confirmed their agreement (in paragraph 163 of
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`that document) that “all claims raised in this arbitration shall be governed by the substantive laws
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`of the State of Florida (or, Where applicable, United States federal statutory law, excluding the
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`Convention on Contracts for the International Sale of Goods) Without reference to the conflict of
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`laws principles of that jurisdiction.”
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`II.
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`PROCEDURAL HISTORY
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`A.
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`Commencement, Claims, and Motions
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`13.
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`This arbitration was commenced by Claimants Fluid Energy and Fluid Lux filing a
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`Request for Arbitration with the ICC International Court of Arbitration (“ICC Court”) on 28 May
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`2014.
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`14.
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`By letter dated 5 June 2014,
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`the Secretariat of the ICC Court notified the
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`Respondent of its receipt of the Request for Arbitration and sent a copy of the Request for
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`

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`Arbitration to the Respondent.
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`15.
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`On 23 July 2014, the Respondent submitted its Answer, Affirmative Defenses and
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`Counterclaim.
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`16.
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`The Request for Arbitration originally named two additional respondents, John
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`MacDonald and Stephen Rowley. On 23 July 2014, counsel for Respondents also filed a Motion to
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`Dismiss the arbitration with respect to Messrs. MacDonald and Rowley.
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`17.
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`On 8 August 2014, the Respondent submitted its Amended Counterclaim.
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`18.
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`On 13 August 2014, the Respondent also submitted a Request for Joinder of Messrs.
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`Purdy and Thatcher.
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`19.
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`On 19 August 2014, the Respondent submitted an Amended Request for Joinder of
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`Messrs. Purdy and Thatcher.
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`20.
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`On 28 August 2014, Claimants Fluid Energy and Fluid Lux submitted a Response
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`and Affirmative Defenses to the Amended Counterclaims, “on behalf of themselves and purported
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`Respondents Purdy and Thatcher.”
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`21.
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`Also on 28 August 2014, Claimants Fluid Energy and Fluid Lux consented to the
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`dismissal of Messrs. MacDonald and Rowley from the arbitration, Without prejudice to any claims
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`in any other forums.
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`22.
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`On 29 August 2014, Claimants submitted an Opposition to the Respondent’s 13
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`August 2014 Request for Joinder. The opposition raised matters pursuant to Article 6(3) of the
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`ICC Arbitration Rules, which were then referred to the ICC Court for resolution pursuant to Article
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`6(4).
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`23.
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`On 5 September 2014, Respondent submitted a Reply to the Affirmative Defenses
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`submitted by Claimants.
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`

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`24.
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`On 18 September 2014, the Secretariat notified the parties, inter alia, that the ICC
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`Court had determined, pursuant to Article 6(4) of the ICC Arbitration Rules, that the arbitration
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`would proceed with respect to Messrs. Purdy and Thatcher, and had confirmed Michael B. Chavies
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`and James V. Etscom as co-arbitrators.
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`25.
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`On 27 October 2014, the Secretariat notified the parties that the ICC Court had
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`appointed C. Ryan Reetz as president of the arbitral tribunal.
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`26.
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`On 28 October 2014, Respondent submitted a Verified Motion for Interim Measures
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`Pursuant to Rule 28 Barring Counterclaim Respondents from Pursuing Canadian Proceeding in
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`Contravention of Agreements.
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`27.
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`On 17 November 2014, Claimant submitted an Opposition to [Respondent’s]
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`Motion for Interim Measures.
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`28.
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`On 10 December 2014, Respondent submitted a Supplemental Memorandum
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`pertaining to the applicability of Chapter 684, Fla. Stat.
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`29.
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`On 15 December 2014, Claimants submitted an Amended Request for Arbitration, a
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`corrected Version of which was submitted by agreement on January 15, 2015.
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`30.
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`On 23 December 2014, Claimants filed their Supplemental Memorandum pertaining
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`to the applicability of Chapter 684, Fla. Stat.
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`31.
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`On 31 December 2014, Respondent filed its Answer and Affirmative Defenses to
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`Fluid’s Amended Request for Arbitration.
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`32.
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`On 31 December 2014, Respondent filed a Motion to Dismiss Claims II and III of
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`Fluid’s Amended Request for Arbitration.
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`33.
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`On January 19, 2015, Claimants submitted their Opposition to Respondent’s Motion
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`to Dismiss.
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`

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`34.
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`On January 20, 2015, Respondent submitted its Amended Answer and Affirmative
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`Defenses to Claimants’ Amended and Corrected Request for Arbitration.
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`35.
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`On April 3, 2015, Respondent/Counterclaimant submitted a Request for an Order
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`from the Tribunal Compelling the Production of Documents (“Motion to Compel Production”).
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`B.
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`Confirmation of the Arbitrators
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`36.
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`On 18 September 2014, the ICC Court confirmed the appointment of Michael B.
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`Chavies as co-arbitrator upon Claimants’ joint nomination, and confirmed the appointment of
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`James V. Etscorn as co—arbitrator upon Respondent’s nomination.
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`37.
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`Pursuant to the parties’ agreement, the co—arbitrators Were granted 30 days from the
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`date of their confirmation to jointly nominate the President of the Arbitral Tribunal. As the co-
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`arbitrators were not able to jointly nominate a President of the Arbitral Tribunal within the time
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`limit granted, the parties were informed that the ICC Court would appoint the President pursuant to
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`Article 12(5) of the Rules. By letter of 27 October 2014, the Secretariat of the ICC informed the
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`parties that the ICC Court had appointed C. Ryan Reetz as President of the Arbitral Tribunal upon
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`the United States National Committee’s proposal (per Article 13(3) of the Rules).
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`38.
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`The business addresses of the Tribunal in this case are:
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`Michael B. Chavies
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`Akerman LLP
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`One Southeast Third Avenue, 25th Floor
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`Miami, FL 33131 USA
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`James V. Etscorn
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`BakerHostetler
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`SunTrust Center, Suite 2300
`200 South Orange Avenue
`Orlando, FL 32801—3432 USA
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`C. Ryan Reetz
`BRYAN CAVE LLP
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`

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`200 S. Biscayne Blvd., Suite 400
`Miami, FL 33131 USA
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`C.
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`Terms of Reference, Procedural Orders, and Preparation for Final Hearing on
`Phase One Issues
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`39.
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`On December 8, 2014, the arbitral tribunal held a case management conference with
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`the parties in Orlando, Florida pursuant to Article 24(1) of the ICC Rules of Arbitration.
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`40.
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`Following further discussion with and input from the parties, the arbitral tribunal
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`finalized the Terms of Reference, which were signed by the parties and by the members of the
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`arbitral tribunal by February 17, 2015, and original exemplars of which were forwarded to the ICC
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`on March 2, 2015.
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`41.
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`On February 4, 2015, the arbitral tribunal issued Procedural Order No. 1 (dated as
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`of February 2, 2015), containing the provisional timetable for the matter pursuant to Article 24(2)
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`of the ICC Rules of Arbitration, the material terms of which had been agreed to by the parties. At
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`the joint request of the parties, Procedural Order No. 1 provided for the bifurcation of proceedings
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`in this matter as follows:
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`Phase One will consist of hearings and an award on Claimants’ claims for rescission
`and damages (Claims I-111) and Respondent’s defenses thereto if and to the extent
`the Claims 11 and III are not dismissed by the Tribunal. Phase Two will consist of
`hearings and an award on Respondent’s counterclaims and Claimants’ defenses
`thereto, which include additional Claims for patent invalidity (Claims lV—VI) if and
`to the extent any or all of the claims/counterclaims are not precluded by the award
`in Phase One.
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`(Procedural Order No. 1, 11 8).
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`42.
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`On February 12, 2015, the arbitral tribunal issued an Order on Counter—Claimant’s
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`Verified Motion for Interim Measures, resolving the October 28, 2014 motion.
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`43.
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`On February 26, 2015, the International Court of Arbitration fixed October 30, 2015
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`10
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`

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`as the time limit for rendering the arbitral award.
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`44.
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`On March 11, 2015, the arbitral tribunal issued an Order on Counter~Claimant’s
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`Motion to Dismiss Claims 11 and III of Claimants’ Amended Request for Arbitration, which denied
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`the motion, Without prejudice to any future motions.
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`45.
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`On April 13, 2015, following a telephonic hearing on that date, the arbitral tribunal
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`communicated to the parties its decision on Respondent’s Motion to Compel Production, which
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`decision was further memorialized in an Order on Counter~Claimant’s Request for an Order from
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`the Tribunal Compelling the Production of Documents, dated April 15, 2015.
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`46.
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`On April 30, 2015, the parties exchanged their initial pre-hearing submissions on
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`Phase One issues, and on May 15, 2015,
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`the parties exchanged their second pre-hearing
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`submissions on PhaseiOne issues. On June 19, 2015, the parties jointly submitted an agreed
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`chronology, agreed list of witnesses, agreed statement of facts, agreed statement of issues, and a
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`joint core bundle of documents.
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`47.
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`On July 13, 2015,
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`the parties submitted an updated list of exhibits,
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`including
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`updated copies of certain specified exhibits.
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`D.
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`Final Hearing on Phase One Issues and Posf—Hearing Proceedings
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`48.
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`The final hearing with respect to Phase One issues took place from July 20-24, 2015
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`at Florida A&M University College of Law, 201 Beggs Avenue, Orlando, Florida USA 32801.
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`The parties’ counsel and additional representatives (Messrs. MacDonald, Rowley, Purdy, and
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`Thatcher) attended the hearing.
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`49.
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`The following witnesses testified during the hearing, either in person or via
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`videoconference: Clay Purdy, Frank Homsby, Jon Garner, Darren Thatcher, Stephen Rowley,
`
`Dean Webster, Lucille Marie Drenth, Kevin O’Donoghue, John MacDonald, William Tandy
`
`ll
`
`

`
`Grubbs, Marshall Sklar, and Richard D. Connor, Jr.
`
`50.
`
`On August 24, 2015, both sides made post-hearing submissions consisting of
`
`findings of fact and conclusions of law.
`
`51.
`
`By e-mail dated September 2, 2015 , Respondent requested that the arbitral tribunal
`
`receive and consider additional evidence consisting of materials that had been sent by Fluid Energy
`
`to its shareholders (the “Supplemental Materials”).
`
`52.
`
`By letter dated September 8, 2015 , Claimants opposed Respondent’s request and
`
`requested that the arbitral tribunal decline to receive the Supplemental Materials.
`
`53.
`
`By letter dated September 10, 2015, Respondent submitted further argument in
`
`support of its request that the Supplemental Materials be received and considered.
`
`54.
`
`The arbitral tribunal has determined to consider the Supplemental Materials in
`
`connection with the Phase One issues, although consideration of those materials has not proved
`
`dispositive on any of the issues before the tribunal.
`
`5 5.
`
`On October 8, 2015, the International Court of Arbitration extended the time limit
`
`for rendering the award until November 30, 2015 .
`
`56.
`
`On October 23, 2015, the arbitral tribunal declared the proceedings to be closed
`
`with respect to the Phase One issues, and informed the parties and the ICC that it expected to
`
`submit its draft award by November 30, 2015.
`
`57.
`
`On November 5, 2015, the International Court of Arbitration extended the time limit
`
`for rendering the award until December 31, 2015.
`
`58.
`
`On December 3, 2015, the International Court of Arbitration extended the time limit
`
`for rendering the award until January 29, 2016.
`
`59.
`
`On December 13, 2015, the arbitral tribunal informed the parties and the ICC that it
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`expected to submit its draft award by January 10, 2016.
`
`60.
`
`On January 7, 2016, the International Court of Arbitration extended the time limit
`
`for rendering the award until February 29, 2016.
`
`61.
`
`On February 4, 2016, the International Court of Arbitration extended the time limit
`
`for rendering the award until March 31, 2016.
`
`III.
`
`THE PARTIES’ LEGAL CLAIMS AND RELIEF SOUGHT
`
`62.
`
`As is noted below in connection with Procedural Order No. 1, Claimants’ Claims IV
`
`through VI (relating to patent invalidity and to non-infringement) and Respondent’s claims (which
`
`include claims for breach of contract, for patent infringement, for trademark infringement and for
`
`unfair competition), have not been addressed by the parties or the tribunal in connection with Phase
`
`One of the arbitration.
`
`63.
`
`The claims at issue in Phase One are Claimants’ Claims I through III.
`
`In their first
`
`claim, Claimants seek rescission of the Agreements based on asserted misrepresentations in
`
`connection with the products that were the subject of the parties’ Agreements.
`
`(Amended Request
`
`for Arbitration W 39-44).
`
`64.
`
`In their second claim, Claimants seek rescission of the 23lBl License Agreements
`
`and related Manufacturing agreements for failure of consideration, on the ground that HEG
`
`provided no consideration for the 231Bl Licenses or the related Manufacturing Agreements.
`
`(Amended Request for Arbitration W 45-48).
`
`65.
`
`In their third claim, Claimants seek rescission of the 102Bl License Agreements
`
`and related Manufacturing Agreements for failure of consideration, on the ground that Respondent
`
`failed to license to Claimants certain specified patents (the ‘97l Patent, the ‘047 Patent, and the
`
`‘573 Patent), thus failing to grant sufficient rights to permit full exploitation of the technology that
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`13
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`was the subj ect of the 102B1 patent. (Amended Request for Arbitration W 49-57).
`
`66.
`
`In addition to denying each of the three claims at issue here, Respondent asserts
`
`twenty-three “affirmative defenses” to them, as follows: (1) failure to state a claim upon which
`
`relief may be granted, (2) failure to mitigate damages, (3) Claimants were aware of the products’
`
`corrosiveness, thus negating reliance on the alleged misrepresentations, (4) Florida’s economic loss
`
`rule, (5) estoppel, (6) laches, (7) unclean hands, (8) failure to plead fraud with particularity as
`
`required by Florida Rule of Civil Procedure l.120(b), (9) set off of damages due to Claimants’ own
`
`breaches, (10) the parol evidence rule, (11) Claimants’ prevention of Respondent’s performance,
`
`(12) Claimants’ alteration of the licensed products caused any non—conformance, (13) any damages
`
`were due to unrelated, pre-existing or subsequent conditions unrelated to Respondent’s conduct,
`
`(14) unavailability of attorneys’ fees, (15) unavailability of punitive damages, (16) lack of reliance
`
`by Claimants on any alleged fraudulent statements, (17) no damages resulted from products’
`
`alleged corrosiveness, (18) no damages resulted where any supposed misrepresentations with
`
`respect to regulated status for transportation purposes were unrelated to Claimants’ use of the
`
`licensed products “downhole” at drilling sites, (19) no damages resulted where end users perform
`
`their own testing and have never refused to use the license products based upon corrosiveness test
`
`results, (20) waiver, (21) failure to properly provide notice of non—conformity of the goods as
`
`required by Fla.Stat. 672.607, (22) consideration for the Agreements was provided because the
`
`exhibits in question were provided to and signed by the Claimants, and (23) consideration for the
`
`102B1 License Agreements and related Manufacturing Agreements was provided because the
`
`relevant license agreements do cover the ‘97l Patent,
`
`the ‘O47 Patent, and the ‘573 Patent.
`
`(Amended Answer and Affirmative Defenses to Amended and Corrected Request for Arbitration,
`
`pp. 11-14, 1111 1-23).
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`14
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`67.
`
`In addition to rescission of the Agreements, Claimants also seek (based upon the
`
`same claims and solely as additional remedies in connection with those same claims) restitution of
`
`certain sums paid pursuant to the Agreements (C$l,O32,302 less a set—off credit of US$222,560, as
`
`detailed in M 94-97 of Claimants’ August 24, 2015 Proposed Findings of Fact and Conclusions of
`
`Law), plus punitive damages, attorneys’ fees, and arbitration costs. Respondent seeks the denial of
`
`Claimants’ claims for relief, plus an award of attorneys’ fees, and arbitration costs.
`
`IV.
`
`FACTS OF THE CASE
`
`68.
`
`The following recitation of the facts is intended to give a general outline of the
`
`parties’ dispute as it concerns the Phase One issues, and does not purport to be a comprehensive
`
`restatement of all of the evidence received, or credited, by the arbitral tribunal. The arbitral
`
`tribunal’s specific findings with respect to contested facts, as they are material to the parties’
`
`claims and defenses, are discussed below in connection with the relevant aspects of the specific
`
`claims to which they pertain.
`
`A.
`
`Background and Initial Exposure to the Products
`
`69.
`
`The parties’ dispute relates to two types of HEG products, referred to as acid and
`
`caustic replacements, and their use in the oil and gas industry. (E. g., Terms of Reference (“TOR”)
`
`W 47-53, Exhibits X-107 to X-112).
`
`70.
`
`HEG’s President, John MacDonald, owns a chemical manufacturing company
`
`called Environmental Manufacturing Solutions, LLC (“EMS”). Mr. MacDonald also serves as the
`
`President of EMS. (Parties’ Agreed Statement of Facts (Phase 1) (“ASP”) M 7-8).
`
`71.
`
`Before HEG’s formation, Steve Rowley (now HEG’s Vice President) owned a
`
`business called Heartland Solutions, Inc.
`
`(“HSI”), which distributed EMS’s products to the
`
`concrete and oil and gas industries. HSI sold EMS’s Barracuda 10K product and Elevate products
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`15
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`

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`to the oil and gas industry, and renamed the products as Oil Safe® and Mud Safe®, respectively.
`
`(ASF W 6, 9).
`
`72.
`
`Fluid Energy’s President and Chief Operating Officer, Darren Thatcher, was
`
`employed by Mud Master Drilling Fluid Services (“Mud Master”) before joining Fluid Energy.
`
`Mr. Thatcher served as Mud Master’s Vice President of Operations and Technology.
`
`(ASF 111] 4-
`
`5).
`
`73.
`
`Mr. Thatcher learned about Oil Safe and Mud Safe when he worked for Mud
`
`Master, which was a sub-distributor for HIS in Canada. (ASF 11 10).
`
`74.
`
`While Working for Mud Master, Mr. Thatcher learned about the Oil Safe and Mud
`
`Safe products, and received various marketing and technical information about those products from
`
`Messrs. Rowley and/or MacDonald. (ASF W 10-11).
`
`75.
`
`In October 2011, Messrs. Thatcher and Rowley worked together on a hydraulic
`
`fracturing job for Mud Master in Turner Valley, Alberta, Canada, and used Oil Safe at that job.
`
`Although the parties dispute exactly What occurred in Turner Valley, Messrs. Thatcher and Rowley
`
`observed pitting or other damage to metal indicating that, at least under certain conditions, Oil Safe
`
`could be corrosive to that type of metal. The parties disagree on Whether the metal in question was
`
`steel or aluminum. (ASF 11 12; Hearing Transcript (“TL”) at 309-13, 417-20; Witness Statement of
`
`Dean Webster (“Webster WS”) 1111 17-25; first witness statement of Stephen Rowley (I Rowley
`
`WS”) 1111 17-19).
`
`B.
`
`Discussions, Negotiations, and Initial Contracts
`
`76.
`
`In December 2011, Fluid began discussions with Mr. Rowley regarding Fluid’s
`
`distributing Mr. MacDonald’s acid and caustic replacement products to the oil and gas industry.
`
`(ASF 1113).
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`16
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`

`
`77.
`
`In January 2012, Messrs. Thatcher and Purdy met with Messrs. MacDonald and
`
`Rowley in Melbourne, Florida to discuss entering into a relationship in which Fluid would
`
`distribute Mr. MacDonald’s products. (ASF 11 14).
`
`78.
`
`The initial relationship by w