Minsk, Belarus. November 29, 2007 -- A final decision was issued Sept. 20 in the arbitration between Polimaster, Ltd. (Polimaster)& Na&Se and RAE Systems, Inc. (RAE).
In that arbitration (Jams Arbitration No. 1110009296, Polimaster Ltd. and Na&Se Trading Co., Ltd. vs. Rae Systems Inc.), which was held near RAE's offices in California, Polimaster alleged that RAE's manufacturing of personal radiation monitors -- in its Shanghai facilities using the same technology which had been developed by Polimaster and used in its unique components-- violated the licensing agreement RAE had entered into in order to manufacture Polimaster's products. In addition, Polimaster alleged that RAE's actions had voided Polimaster's agreement to supply RAE with Polimaster's unique components for personal radiation detectors.
As the arbitrator found, RAE had determined that "Polimaster's personal radiation detectors were the best in their category," and had initially sought out a relationship with Polimaster based on this fact. In July 2002, Polimaster was approached by RAE System with a proposal to manufacture and market in the United States Polimaster's personal gamma radiation detectors PM1703M and gamma-neutron personal radiation detector PM1703GN under a license.
Prior to signing the agreement -- and in the course of dealing with Polimaster -- the executives of RAE on numerous occasions represented to Polimaster that RAE would not manufacture nor copy Polimaster's unique components. In January 2003, an agreement was signed pursuant to which RAE Systems was granted a license to manufacture these models and subsequently received technical documentation and training required to start the manufacturing process. Under the terms of the license agreement, Polimaster taught RAE's engineers how to assemble, operate, calibrate and test Polimaster's products. In 2003/04, RAE Systems was marketing these models under the license from Polimaster as Gamma-RAE and Neutron-RAE.
In 2004, Polimaster learned that RAE Systems was developing its proprietary personal radiation detectors and RAE later claimed that these instruments were developed based on their own independent efforts. In 2005, RAE Systems introduced these detectors as Gamma-RAE II and Neutron-RAE II. It was only after Polimaster's confidential information was provided to RAE that RAE began producing its own personal radiation detectors.
Polimaster was disappointed in and strongly disagrees with the arbitrator's determination that -- notwithstanding the license agreement in place -- RAE was legally permitted to reverse engineer Polimaster's technology and that RAE's conduct did not violate the parties' agreements or statutes prohibiting unfair trade practices. In addition, given the striking similarities between the internal radiation detection components in RAE's product and Polimaster's product, Polimaster does not agree with the arbitrator's conclusion that RAE developed its technology independent of Polimaster.
"We are disappointed with the arbitrator's decision," said Mr. Kurlovich, the general director of Polimaster Ltd. "In essence, such a decision condones the 'dual approach' allowing a licensee to conceal its true intentions, represent that the unique components won't be copied, and at the same time use the contractual arrangement as a 'trojan horse' to have the licensee's key developers learn all the 'tricks of the trade' from the licensor and then, by pure 'coincident,' have the same people 'independently develop' exactly the same key components. In our view, this just violates the very notion of fair dealing and the declared intents of the parties. In any event, Polimaster Ltd. will continue to actively protect its proprietary rights and unique radiation detection technologies, and we consider the current outcome of arbitration as a regretful case of misplaced justice."
Polimaster is currently pursuing its options to challenge the arbitrator's decision.
