GTAT reports settlement of trade secret suit
GT Advanced Technologies has ended four years of litigation against an Italian citizen and a California rival company with a confidential settlement approved Tuesday by a U.S. District Court judge in Concord.
The Nashua-based firm had charged that Poly Plant Project Inc. (PPP), its employee, Fabrizio Goi, and PPP Equipment Corp. (PPP E) of Burbank, Calif., misappropriated GTAT's trade secrets relating to its polysilicon reactor equipment.
The lawsuit relates to a 2006 deal in which GTAT -- then called GT Solar -- bought a 99-year exclusive license to design a "36-rod reactor" designed by Poly Engineering SrL, an Italian design firm. It contracted with VRV SpA -- where Goi was sales director -- to fabricate it in September of that year.
Goi said he visited GT Solar once in order to describe VRV's technology and production capacity and that he was involved in only limited discussions of the purchase agreement. There are, however, extensive emails that led a New Hampshire judge to rule that the case should go forward against him.
On March 31, 2008, Goi abruptly quit VRV, with no advance notice, forfeiting three months' salary to work for Poly Plant Project Inc. A few months later, according to the suit, PPP started marketing a 36-rod reactor, which GTAT claims was the same as GT Solar's.
PPP flatly denied that it took GTAT's technology and argued that the reactor isn't unique to GTAT.
Ironically, the settlement comes just as much of GTAT's solar business has dried up, causing GTAT to lay off a quarter of its workforce (including about 40 in New Hampshire) at the end of last month.
Last week, a quarterly earnings report detailed the company's troubles in greater detail.
The company earned a $2.3 million profit last quarter (2 cents a share), compared to $37 million during the same quarter in 2011. A big reason behind the decrease was a $10 million write-off, called a "contingent consideration expense," because of the drop in solar business and the value of a recently purchased solar company.
GTAT reported $110 million in revenue -- at the very low end of its guidance -- about half of the amount it brought in the same quarter a year earlier.
That entire drop can be blamed on slow sales in its solar business, particularly furnaces that produce the solar cells themselves. The firm's business that involves making furnaces that make the material for solar cells only declined slightly, but most of that was due to previous backlog.
GTAT did report it has a $1.5 billion backlog, but in a filing with the Securities and Exchange Commission said it did not expect that to increase.
Half of the backlog is now due to GTAT's sapphire business, verifying the company's decision to diversify beyond solar energy. Indeed, in the third quarter, $33 million of the new orders received by the company were due to the sapphire business, while only $16 million were related to solar equipment.
Still, the company does have $480 million in cash and equivalents and was able to increase its research and development spending for the quarter by nearly $4 million, to $18.8 million, as GTAT continues to try to diversify away from the solar sector.
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