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Batteries/Legal Issues 051102
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 (Jan 2006)The United States  Department of Justice files lawsuit against, Lithium Power Technologies (LPT), Inc. and its  CEO  Mohammed Zafar A. Munshi under the False Claims Act.  Mr. Munshi is also the President and primary shareholder of the company.  By filing the complaint, the United States has joined in the lawsuit, initially filed under seal, by a whistle blower.

In the complaint filed on 10/13/05, the United States alleges that Munshi, through LPT, made false statements to the United States and engaged in a pattern of fraudulent conduct toward the United States Army, Air Force and NASA (National Aeronautics & Space Administration) .  The United States alleges that Munshi, without making proper  disclosures, submitted similar research proposals to different federal agencies, billed different federal agencies for the same work and research, billed federal agencies for work that it did not perform, and manipulated time sheets and research logs to bill time spent on commercial contracts to the United States.  

The investigation leading to the lawsuit began in the fall of 2002, when LPT’s former Vice President of Sales and Marketing, approached federal authorities and alleged that Mr. Munshi was defrauding the United States by submitting similar research proposals to different federal agencies and then billing these agencies for identical research, for research not performed, and for work done on commercial contracts.  

The United States alleges that as a result of Munshi’s alleged wrongful conduct, the United States paid LPT at least $2.0 million to which it was not entitled.  Through the suit, the United States is seeking damages and penalties totaling more than $5.0 million under the False Claims Act and other legal theories of recovery, including payment by mistake, unjust enrichment, and fraud.  

LPT  is in the business of designing and manufacturing advanced primary and rechargeable lithium-based power sources, electro chemical capacitors and co-polymer film capacitors for commercial and government applications.   (More information can be obtained at http://www.usdoj.gov/usao/txs/releases/October2005/051017-Munshi.htm)  
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 Spectrum Brands, formerly Rayovac Corporation, is confronted with several lawsuits.  Although the suits contain  several allegations, including insider trading, there is specific mention that facts about the Company’s battery business were not fully disclosed by corporate officials.  For example in the class action lawsuit filed by the Law Firm of Schiffrin & Barroway, LLP, it states that  “defendants had  materially overstated the demand for the Company’s core battery products” and “the Company inflated its earnings prior and post the United and Tetra acquisitions by stuffing its distribution channels with an excess supply of batteries.”   

Spectrum Brand (SPC) stock has slipped by almost 50 percent in the past three months.  Spectrum’s spokesperson Dave Dolittle  stated, “The company believes these lawsuits are baseless and without merit and we will vigorously oppose them in court.”
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 ECD (Energy Conversion Devices) Ovonics and COBASYS LLC, ECD’s manufacturing joint venture with ChevronTexaco Technology,  settle patent  infringement dispute with Matsushita Electric Industrial (MEI)  Co. Ltd,   Panasonic EV Energy (PEVE) Co., Ltd. and  Toyota Motor Corporation with respect to a patent infringement dispute involving Nickel-metal hydride batteries. Under the terms of the settlement, no party admitted any liability, and COBAYS and PEVE will cross license each other for current and future patents to avoid possible future litigation.  COBAYS and PEVE have agreed to a technical cooperation agreement  to advance the state-of-the-art Nickel-metal hydride batteries which are widely used in hybrid electric vehicles (HEVs).  (BD note: The “Once upon a time” story seems to have a “lived happily ever after” conclusion.  It is unfortunate, however, that this dispute could not have  been settled  many months ago so that money needed to litigate by both parties could not have been spent to advance the battery chemistry.)  
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 Midtronics files patent infringement suit against Actron Manufacturing Company.  The suit claims that an Actron product violates two patents that have been assigned to Midtronics in the area of battery testing .     

BD