ARC, Gupta fight back against GT Solar claims

Kedar Gupta, co-founder and former CEO of GT Solar International, charges in a countersuit filed last week in Nashua that he was told he faces being “hanged or crushed” in a nasty legal battle developing between his former firm and his current one, Advanced RenewableEnergy Co.GT Solar, which entered the LED field last July by acquiring Crystal Systems Inc. (CSI), previously charged in May that Gupta and Chandra Khattak (a former employee of CSI and GT Solar) colluded to steal CSI technology. But in its countersuit, ARC claims that its technology is different and superior, and that GT Solar was making “knowingly false and defamatory statements” in an attempt to “destroy ARC Energy”, as well as to retaliate against Khattak for demanding stock options.According to the ARC suit — which was filed in Hillsborough County Superior Court — GT Solar CEO Tom Gutierrez allegedly told Gupta in September 2010 that GT Solar’s board chairman wanted Gupta “either hanged or crushed,” and that Gutierrez would make everyone’s life a “living hell” if the Khattak option issue wasn’t resolved.The issue wasn’t resolved: Khattak filed his own suit in Superior Court over the stock options in October, claiming that he was owed 612,000 stock options worth millions of dollars.Gupta co-founded GT Solar in 1994, and led it as CEO until 2006, when he retired. But he was part of the group that controlled the Merrimack company even after it went public in 2008, and only finished selling off his holdings in September 2010.In 2007, Gupta had already founded ARC Energy – based in Nashua — to make equipment to create sapphire crystals used in LED lighting.GT Solar got into the LED field in July 2010 when it acquired CSI, which produced the crystals itself, and augmented the business by selling the furnaces that make them – putting it in direct competition with ARC.CSI employed Khattak from 1977 to 2006, during which time he rose to be CSI’s senior vice president and director of research and development.Gupta (then at GT Solar) hired Khattak as senior vice president of technology, with a separation agreement with a noncompete clause concerning CSI and allegedly (according to Khattak’s amended complaint filed in May) a promise for options amounting to 0.5 percent of the company’s stock at the time — a promise that was left out of the employment agreement but verified in an email, according to the countersuit.GT Solar charges that Khattak violated the noncompete clause by taking CSI’s exclusive technology developed with over 40 years of trial and error, to produce the crystals at low cost. Khattak, however, says he worked diligently at GT Solar, even though the company was refusing to grant him his options after the first third (306,000 in terms of today’s shares) were due in 2006.According to Khattak’s suit, he was terminated without cause on May 25, 2010, and escorted out of the building. When he later inquired about his options and severance, he was told – a week after GT Solar’s acquisition of CSI — that he had breached his confidentiality agreement by owning shares in two companies. CSI and ARC.Khattak contended that this wasn’t true, because GT Solar did not own CSI when he was terminated, and besides CSI was selling the crystals, while ARC was trying to sell the furnaces that made them.According to ARC’s filing, the companies’ technologies are different. The CSI-developed technology is based on an “a axis,” which is harder and more expenses to extract than the “c axis” cores used by ARC.Gupta filed a patent application in October 2009, months before GT Solar acquired CSI, the countersuit says.According to the countersuit, GT Solar’s CEO Gutierrez was “sympathetic” back in June 2010 when Gupta spoke to him about Khattak’s options, and Gutierrez said he would not constrain Khattak from working for ARC. Khattak left for ARC on July 8, three weeks before GT Solar acquired CSI. Gutierrez and Gupta met again on Aug. 1 to discuss options, and it was then – “for the first time” — that Gutierrez claimed that Khattak violated his noncompete agreement, the countersuit says.Then, on Aug. 6, GT Solar sent a letter accusing Gupta of using and disclosing trade secrets, but that letter “failed to provide any details or specifics whatsoever,” the countersuit says.GT Solar can’t respond to particulars in the litigation, said spokesman Jeff Nestel-Patt. “The whole point is that we must take steps to protect our intellectual property.” — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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