Free Amended Answer to Complaint - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Case No. 02-cv-0311-RPM-BNB CLIMAX MOLYBDENUM COMPANY, Plaintiff, vs. MOLYCHEM LLC, Defendant, vs. PHELPS DODGE CORPORATION, Additional Party on Counterclaim.

SECOND AMENDED ANSWER AND COUNTERCLAIMS

Defendant Molychem, L.L.C. ("Molychem" or "Defendant"), by its attorneys Hart & Trinen, LLP and Ramon L. Pizarro, answers plaintiff Climax Molybdenum Company's ("Climax") second amended complaint ("the SAC"), and counterclaims against Climax and additional party Phelps Dodge Corporation (Phelps Dodge), as follows: I. ANSWER A. (As to the Specific Allegations) 1. Defendant admits that this is an action against it for patent infringement relating to

Molychem's sale of Ammonium Octamolybdate ("AOM"). All other allegations set forth in

EXHIBIT "A"

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paragraph 1 of the SAC are denied. 2. Defendant admits that Climax is a leading producer of AOM in the United States and

that, through its then-parent company, Climax has obtained patents for certain variations of AOM. Defendant is without information to form a belief as to the truth or accuracy of other allegations set forth in Paragraph 2 of the SAC, and therefore denies those allegations.

3.

The allegations of paragraph 3 of the SAC are denied.

4.

Defendant is without information to form a belief as to the truth or accuracy of the

allegations set forth in Paragraph 4 of the SAC, and therefore denies them.

5.

Molychem admits that it is a limited liability company organized and existing under

the laws of the State of Illinois, with its principal place of business at 2625 Sewell Street, Rockford, Illinois. Molychem has a sales office in this judicial district. All other allegations in paragraph 5 of the SAC not specifically admitted are denied.

6.

Molychem admits that Thiede is the managing member of Molychem, and that he has

a residence address of 1560 Hidden Creek Lane, Belvidere, IL. Molychem admits knowing that Thiede is the president of Powmet, Inc. All other allegations in paragraph 6 of the SAC not admitted are denied.

7.

Paragraph 7 of the SAC includes a definition by Climax, and does not require a

response. Any other allegations in paragraph 7 of the SAC not admitted are denied

8.

The allegations of paragraph 8 of the SAC are admitted.

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9.

Molychem admits that this Court has subject matter jurisdiction over this case as to

Molychem, and that venue is proper as to defendant Molychem in this judicial district. All other allegations set forth in paragraph 9 of the SAC not specifically admitted are denied.

10.

Molychem admits that on November 16, 1999, United States patent no. 5,985,236

(the `236 patent) entitled "Ammonium Octamolybdate CompositionAnd Method For ProducingThe Same" was issued to Cyprus Amax Minerals Company, as assignee of the inventors Mohamed H. Khan, James A. Cole, Timothy G. Bruhl, Wendell S. Delder, Gary A. Glasgow, and Vijaykumar M. Wagh. Defendant is without information to form a belief as to the truth or accuracy of the other allegations set forth in paragraph 10 of the SAC, and it therefore denies the same.

11.

Defendant admits that what is purported to be a copy of the `236 patent is attached to Defendant is without information to form a belief as to the truth or

the SAC as Exhibit "A".

accuracy of the other allegations set forth in paragraph 11 of the SAC, and it therefore denies the same.

12.

Defendant is aware of the reissue filing of Reissue Application Serial Number

10/002,852, but is without information to form a belief as to the truth or accuracy of the allegations set forth in paragraph 12 of the SAC, and it therefore denies the same.

13.

Defendant admits that on May 22, 2001, United States patent no. 6,235,261 ("the

`261 Patent") entitled"Method For ProducingAmmonium OctamolybdateComposition" was issued to Cyprus Amax Minerals Company, as assigneeof the inventorsMohamed H. Khan, James A. Cole, Timothy G. Bruhl, Wendell S. Delder, Gary A. Glasgow, and Vijaykumar M. Wagh. Defendant is without information to form a belief as to the truth or accuracy of the other allegations set forth in

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paragraph 13 of the SAC, and it therefore denies the same.

14.

Defendant admits that what is purported to be a copy of the `261 Patent is attached

to the SAC as Exhibit "B". Defendant is without information to form a belief as to the truth or accuracy of the other allegations set forth in paragraph 14 of the SAC and therefore denies the same.

15.

Defendant denies the allegations of paragraph 15 of the SAC.

16.

Defendant admits that defendant Thiede is a managing member of Molychem. All

other allegations of paragraph 16 of the SAC are denied.

17.

Paragraph 17 of the SAC is an incorporation clause and need not be furtheranswered.

18.

Defendant denies the allegations of paragraph 18 of the SAC.

19.

Defendant denies the allegations of paragraph 19 of the SAC.

20.

Defendant denies the allegations of paragraph 20 of the SAC.

21.

Defendant denies the allegations of paragraph 21 of the SAC.

22.

Defendant denies the allegations of paragraph 22 of the SAC.

23.

Paragraph 23 of the SAC is an incorporation clause and need not be furtheranswered.

24.

Defendant denies the allegations of paragraph 24 of the SAC.

25. 26.

Defendant denies the allegations of paragraph 25 of the SAC. Defendant denies the allegations of paragraph 26 of the SAC.

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27.

Defendant denies the allegations of paragraph 27 of the SAC.

28.

Defendant denies the allegations of paragraph 28 of the SAC.

B. (Affirmative Defenses) 1. Climax's claims are barred by the doctrine of res judicata.

2. preclusion.

Climax's claims are barred by the doctrines of collateral estoppel and/or issue

3.

The `236 and `261 patents are invalid under 35 U.S.C. §102(b) for anticipation and

because of an on-sale bar. 4. The `236 and the `261 patents are invalid due to the fact that X-AOM was known

substance more than one year prior to the filing of the applications that matured into the `236 and `261 patents. 5. The Raman spectrum used to define X-AOM was shown in an article published in a

1977 issue of the periodical Zeitschrift fur Naturforschung, by Karl-Heinz Tytko and Bernd Schonfeld of the Inorganic Institute of the University of Gottingen, Germany (Concerning Solid Isopolymolybdates and their Relation to Isopolymolibdate Ions in Aqueous Solution, Zeitschrift fur Naturforschung, 30b, 471-484 [1975], the "Tytko Article"), anticipating the claims of the `236 and `261 patents. 6. The `236 and the `261 patents are invalid due to the fact that X-AOM was known

substance that was place on sale by the E. Merck company of Germany as described in the Tytko

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Article more than one year prior to the filing of the applications that matured into the `236 and `261 patents. 7. The `236 is invalid as being anticipated as directed at an inherent product of the

process disclosed in U.S. Patent No. 4,762,700 to Huggins (the `700 patent or "Huggins patent"). 8. 9. The `261 is invalid as being an obvious process in light of the `700 patent. The `236 patent is invalid under 35 U.S.C. 102 as being directedat a product that was

commercialized, sold or offered for sale by Climax in the United States more than one year prior to the date of the application for patent in the United States. 10. The `261 patent is invalid under 35 U.S.C. 102 as being directed at a method that was

commercialized, sold or offered for sale by Climax in the United States more than one year prior to the date of the application for patent in the United States. 11. The `236 and `261 patents are unenforceable becauseof Climax's inequitable conduct

during their prosecution before the United States Patent and Trademark Office, as found and concluded in the August 28, 2003 Final Determination of the United States International Trade Commission (ITC) in ITC proceeding 337-TA-477.

WHEREFORE, Molychem, having fully answered, prays that the SAC be dismissed with prejudice, for a declaration that the `236 and `261 patents are invalid and unenforceable, for an award of its reasonable attorney's fees and costs, and for an award of interest on such fees. II. COUNTERCLAIMS A. BACKGROUND 1. Climax, the world's leading producer of molybdenum and molybdenum-based

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chemicals, is a wholly owned subsidiary of Phelps Dodge. Molybdenum is primarily produced through mining, and the mines that produce molybdenum include both mines where molybdenum is the primary product and copper mines where molybdenum is secondary to copper. Phelps Dodge produces about 60 percent of the copper produced in the U.S. Climax currently produces about 27,500,000 pounds of molybdenum per year,and Phelps Dodge currentlyproduces about 30,000,000 pounds of molybdenum as a byproduct of its copper operations - for a total combined production of about 57,500,000 pounds of molybdenum per year. 2. As a subsidiary of Phelps Dodge, Climax works with Phelps Dodge and act in concert

with Phelps Dodge in the processing and marketing of molybdenum produced by Phelps Dodge. 3. According to data published by the U.S. Geological Survey, in 2004 the U.S.

consumed approximately 41,600 metric tons of molybdenum products, meaning that Climax and Phelps Dodge were producing enough molybdenum to satisfynearly 77% of the U.S. consumptionof molybdenum products for 2004, making Climax a dominant producer of molybdenum with in the U.S. market, with market power in that market. 4. Since the commencement of this action in 2002 the price of molybdenum has

increased from about $4 per pound to its current price of about $33 per pound. 5. Molybdenum is one of the primary raw materials needed to produce Ammonium

Octamolybdate (AOM). 6. Phelps Dodge acquired Climax in late 1999, providing Phelps Dodge with control

over Climax, allowing Phelps Dodge to vertically integrate its molybdenum production with Climax's and thus provide a unified marketing and processingstrategy for molybdenum producedby Climax and Phelps Dodge.

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7.

Molybdenum produced by Phelps Dodge is processed by Climax's facilities,

vertically integrating the production of Climax and Phelps Dodge. The products produced through that processing include AOM. 8. In the mid-to-late 1990's Climax controlled nearly all of the market for AOM used as

a smoke suppressant for PVC jacketing for use in building ceiling plenum areas. 9. Since Phelps Dodge's acquisition of Climax, Climax and Phelps Dodge control in

excess of 60% of the market for AOM used as a smoke suppressant for PVC jacketing for use in ceiling plenum areas. 10. Through its monopoly power over the AOM market, Climax has been able to extract

monopoly level prices from consumers of AOM used as a smoke suppressant for PVC jacketing for use in ceiling plenum areas. 11. Through their monopoly power over the AOM market, Climax and Phelps Dodge

have been able to extract monopoly level prices from consumers of AOM used as a smoke suppressant for PVC jacketing for use in ceiling plenum areas. 12. In 2001 Molychem speculated that Climax's prices included extraordinary profit

margins that were extracted through the lack of competition, and thus Molychem decided to enter this market, and it spent significant resources in developing its capability to provide consumers of AOM used as a smoke suppressant for PVC jacketing for use in ceiling plenum areas. 13. Molychem's entry into the AOM market posed a treat to Climax and Phelps Dodge's

monopoly position, to which Climax and Phelps Dodge responded by engaging in the following anticompetitive acts:

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a.

Fraudulently obtained the `236 and `261 patents and enforced these patents against

Molychem with knowledge of their fraudulent origins; b. Threatened to refuse to deal with customers that did not purchase all of their

molybdenum-based products from Climax; c. d. Intimidated customers into not purchasing AOM from Molychem; Sued Molychem's managing member personally in order to intimidate individual

entrepreneurs from launching enterprises such as Molychem; e. Brought an action before the U.S. International Trade Commission (ITC) against

Molychem to enforce the `236 patent with knowledge of the patent's fraudulent origin; f. Continues to enforce the `236 against Molychem before this Court, despite its

knowledge of the ITC's finding that the `236 patent was obtained through fraud, and Climax's acquiescence to that finding through the abandonment of its appeal of the ITC's decision to the U.S. Court of Appeals for the Federal Circuit; g. Engaged in a predatory price squeeze scheme wherein since the commencement of

this action Climax has kept its price for AOM at a constant (if not lower) price for AOM, while the price for the molybdenum used to manufacture AOM has more than quintupled, and used its dominance in the supply for the molybdenum to keep the price of the molybdenum raw material high. 14. Climax and Phelps Dodge continue to be the largest producer of AOM in the United

States, and have market power in the market for AOM and X-AOM. 15. Climax and Phelps Dodge are dominant and have market power in the U.S. market for

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the molybdenum used to make AOM. 16. X-AOM is sold for use as a smoke suppressant additive for polyvinylchloride (PVC)

to be used as jacketing or insulating material on telecommunications cabling for use in ceiling plenum areas. 17. At the commencement of this action Molychem competed with Climax and Phelps

Dodge in the market for AOM for PVC for use as a smoke suppressant for telecommunications cabling for use in ceiling plenum areas. THE MARKET 18. In the U.S., telecommunications cabling for use in ceiling plenum areas of buildings

must comply with Undewriters Laboratories Standard "UL 910", as well as other fire protections standards such as the National Fire ProtectionCode standard"NFPA 262" or the more recent "NFPA 255" ("the fire protection standards"), which set forth stringent minimum smoke and fire resistance performance characteristics for jacketing or insulating materials used on telecommunications cabling. 19. Of the known materials that are suitable for use for jacketingor insulatingmaterial on

telecommunications cabling, polyvinyl chloride (PVC) is by far the most commonly used material, due to its low cost. In order to meet the requirements of the fire protection standards, plasticizers, smoke suppressants, and other additives must be added to PVC before it can be used as jacketing material for plenum cable. The addition of these materials to PVC affects the mechanical properties of the PVC. Only a very specific blend of additives and smoke suppressants will produce a material that meets both the requirements of the fire protection standards and the mechanical strength and resistance requirements that will allow PVC to be used for telecommunications cabling for plenum

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areas. 20. X-AOM has emergedas the only commercially viable or practicalmolybdenum-based

smoke suppressant for PVC jacketing for telecommunications cabling for use in plenum areas. Molybdenum-based additives, especially X-AOM, allowed the PVC jacketing to meet both the UL fire protection standards and mechanical strength and resistance requirements. 21. Other known isomers of AOM, such as alpha-AOM, have proven to be commercially

incapable of serving as substitutes for X-AOM. 22. AOM. 23. At all times relevant hereto, Climax and Phelps Dodgepossessed market power in the Climax has abandoned most, if not all, of its production of alpha-AOM in favor of X-

United States market for molybdenum-based additives in polyvinyl-chlorideplenum cable jacketing for the purpose of suppressing smoke in the event of fire. 24. Due to X-AOM's inherently superior smoke suppression properties there are no

molybdenum-based substitutes for X-AOM in the molybdenum-based smoke suppressant additives for polyvinyl-chloride plenum cable jacketing. Consequently, the market for molybdenum-based smoke suppressant additives for PVC plenum cable jacketing is the market for X-AOM. ENFORCEMENT OF THE FRAUDULENTLY OBTAINED PATENTS 25. The `236 patent covers a molybdenum-based chemical compound of ammonium

octamolybdate, which is referred to herein as X-AOM. 26. The `261 patent covers the method for making X-AOM, and this patent relies on the

step of producing X-AOM for patentability.

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27.

The `261 patent was obtained through the same fraudulent acts on the PTO as were

perpetrated in the prosecution of the `236 patent. Specifically, Climax and Phelps Dodge submitted the same sworn declaration and made the same intentionally misleading statements to the PTO during the prosecution of the `236 patent as were made during the prosecution of the `261 patent, and causing the PTO to rely on these misleading statements and issue the `261 patent. 28. On August 28, 2003, the United States International Trade Commission (ITC)

determined that the `236 Patent was invalid and unenforceable. The `236 patent was unenforceable because it was obtained by fraud practiced by Climax on the United States Patent and Trademark Office. Climax appealed the ITC's decision to the U.S. Court of Appeals for the Federal Circuit, but later withdrew that appeal. 29. Climax and Phelps Dodge enforced, and continues to enforce, the `236 patent with

knowledge of its fraudulent origin, with the intent to monopolize the United States market for XAOM. 30. At various times commencing in 2002, Climax and Phelps Dodge intimidated

Molychem's current and potential X-AOM customersby threatening them with legal action based on the `236 and `261 patents if they purchased X-AOM from Molychem. 31. Despite the ITC's findings and Climax's fraud, Climax and Phelps Dodge continueto

enforce the fraudulently obtained `236 and `261 patents in order to take advantage of the staggering disparity between Climax and Molychem in litigation resources so as to increase Molychem's operating costs and thus place Molychem at a competitive disadvantage. 32. Climax and Phelps Dodge continue to enforce the fraudulently obtained `236 and

`261 patents despite its knowledge of the facts (found by the ITC) that X-AOM was a known

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substance, as shown by the Tytko article, and that X-AOM is produced by the process disclosed in the Huggins patent (also found by the ITC), and that X-AOM had been offered for sale more than one year prior to the filing of the application that led to both the `236 and `261 patents (also found by the ITC). 33. Through enforcement of the fraudulently obtained `236 and `261 patents and through

predatory pricing, Climax and Phelps Dodge have maintained their market power, and through this and other anticompetitive activity they have prevented, lessened, or destroyed competition in the United States market for molybdenum based smoke suppressant additives for PVC plenum cable jacketing. THE PRICE SQUEEZE 34. In addition to enforcement of the Fraudulently Obtained Patent, Climax has engaged

in a predatory scheme to squeeze competitors out of the market for molybdenum-based smoke suppressant additives for PVC plenum cable jacketing. 35. Specifically, since the commencement of this action Climax and Phelps Dodge have

continuously sold X-AOM at about the same price, despite the fact that the market price for the molybdenum raw material needed to make X-AOM has nearlyquintupled. Other elementsin the cost of production of X-AOM have increased in price or remained relatively constant since the commencement of this action. 36. Accordingly, Climax and Phelps Dodge have engaged in what is known as a "price

squeeze" designed to squeeze out competing producers and sellers of X-AOM, such as Molychem. 37. As a dominant producer of molybdenum-based raw material, with market power in

that market, Climax and Phelps Dodge have kept the price for the molybdenum-based raw material

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high, while keeping the price for X-AOM artificially low in order to squeeze out processors such as Molychem who must purchase the molybdenum-based raw materialfrom Climax and Phelps Dodge, and then incorporate the cost of the molybdenum-based raw material into the final price for its XAOM. 38. Molychem is Climax and Phelps Dodge's only known significant competitor in the

molybdenum-based smoke suppressant for PVC jacketing for telecommunicationscabling for use in plenum areas, and thus elimination of Molychem as a competitor will allow Climax and Phelps Dodge to raise their price for X-AOM to monopolistic levels, which Climax enjoyed prior to Molychem's entry into the molybdenum-based smoke suppressant for PVC jacketing for telecommunications cabling - and thus allow Climax and Phelps Dodge to recover the profits they sacrificed while attempting to squeeze Molychem out of the X-AOM market. REFUSALS TO DEAL 39. In addition to its attempts to eliminatecompetition by enforcement of the fraudulently

obtained patents, conducting sham litigation against individuals who attempt to enter the AOM additive market, and squeezing out those who have managed to enter the AOM additive market, Climax and Phelps Dodge have abused their dominant position and market power to intimidate costumers from purchasing molybdenum based products such as the AOM additives from competitors such as Molychem. 40. Molybdenum is a natural resource and an element with unique characteristics, with

few if any substitutes; and thus the market for molybdenum is highly inelastic. Molybdenum occurs in only a few parts of the world, and the development of mines and processing plants takes years. Thus the increase in the price of molybdenum does not lead to the prompt entryof producersthat can

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satisfy the increase in demand. 41. Their possession of most of the molybdenum reserves in the U.S., their production

capacity, and their domination of the relevant markets, has allowed Climax and Phelps Dodge to intimidate customers from purchasing from competitors such as Molychem by informing customers that if they do not purchase their molybdenum based products from Climax, Climax may not supply them with these products during times of market-wide shortages of molybdenum-based products. 42. Still further, since the commencement of this action, Climax and Phelps Dodge have

instituted a tiered-pricing structure whereby customers that have routinely purchased their molybdenum products from Climax will be insulated from price fluctuations by being able to purchase molybdenum-based products at sub-market prices during price increases due to marketwide shortages of molybdenum. 43. Climax's tiered-pricing structure is designed to extend Climax and Phelps Dodge's

dominance and market power in the mining and production of molybdenum into the molybdenumbased products markets, and specifically into the molybdenum-based smoke suppressant market. This policy intimidates purchasers of molybdenum-based products from purchasing from Climax competitors such as Molychem, who must purchase the molybdenum raw materials on the open market in order to produce the finished molybdenum based products, such as AOM. 44. Specifically, purchasers who buy from Climax and Phelps Dodge competitors, such as

Molychem, risk being squeezed out their markets by other competitor purchasers who avail themselves to Climax's tiered-pricing structure by routinely purchasing exclusively or nearly exclusively from Climax, and who thus benefit from the sub-market prices provided by Climax during market-wide shortages of molybdenum.

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45.

This fear of being shut-out of molybdenum based products effectively intimidates

purchasers from dealing with competitors such as Molychem, who must purchase the molybdenum raw materials on the open market in order to produce the finished molybdenumbased products,such as AOM. 46. Climax's tiered pricing structure injures the consumers of molybdenum-based

products in that they are afraid of taking their business to Climax competitors such as Molychem, who scour the open market for the lowest price of molybdenum raw material and then produce molybdenum-based materials at the lowest available price. B. CLAIMS FOR RELIEF 1. FIRST CLAIM FOR RELIEF Willful Acquisition and Maintenance of a Monopoly In Violation of §2 of the Sherman Act (15 U.S.C. §2) 47. 48. Molychem realleges and incorporates paragraphs 1 through 46. The market for molybdenum-based smoke suppressant additives for the PVC

jacketing of telecommunications plenum cabling is a relevant product market within the meaningof the antitrust laws. 49. 50. The relevant geographic market is the United States. Climax, as a subsidiary of Phelps Dodge, possesses monopoly power in the relevant

market, maintaining a market share of well over 90% of the market by volume and by sales. 51. Substantial barriers to entry and expansion exist in the relevant market.

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52. market. 53.

Climax has the power to control prices and exclude competition in the relevant

Through the above-described conduct, Climax has engaged in anticompetitive

conduct that was intended to maintain its monopoly and to monopolize the market for molybdenumbased smoke suppressant additives for PVC jacketing of telecommunications plenum cabling. The exclusionary behavior was designed to exclude competition by increasing costs to entrants,by direct litigation, through enforcement of fraudulently-obtained patents, through intimidation of potential entrants by exposing individuals to baseless litigation, through a predatoryprice squeeze designedto cripple the ability of competitors such as Molychem to make a return on molybdenum-based products, through a pricing scheme designed to discourage consumers from purchasing products in the relevant market at a more competitive price, and through threats of boycotts of purchasers in the event of shortages of materials in the relevant market or supplies of molybdenum. 54. Through the above-described activity, Climax has intentionally monopolized and

maintained its monopoly of the relevant market. 55. 56. There is no legitimate business purpose for Climax's conduct and pattern of conduct. Climax's acts have caused and will continue to cause Molychem to suffer injury to its

business and property. 57. Climax's acts have caused and will continue to cause injury to the relevant market in

the form of higher prices, reduced competition, reduced product quality, and consumer choice. 58. Climax's acts are violative of §2 of the Sherman Act (15 U.S.C. §2) as illegal

monopolization, by reason of which Molychem has suffered, and will suffer in the future, actual damages including, but not limited to, lost profits, attorneys' fees, expert fees, expenses, costs and

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attorneys' fees in connection with the defense of the ITC proceeding, attorneys' fees in defense of Climax's claims in this Court, and attorneys' fees in the prosecution of this counterclaim - all in an amount to be proved at trial and thereafter. 59. Pursuant to §4 of the Clayton Act (15 U.S.C. §15), Molychem is entitled to recover

treble its actual damages specified above (includingits attorneys' fees incurredin the ITC proceeding and in defending Climax's claims in this case), interest from the date of the filing of this counterclaim to the date of judgment, its reasonable attorneys' fees incurred in prosecuting this counterclaim, and costs. 2. SECOND CLAIM FOR RELIEF Attempted Monopolization Through Intentional Anticompetitive Conduct With Dangerous Probability of Producing a Monopoly In Violation of §2 of the Sherman Act (15 U.S.C. §2) 60. 61. Molychem realleges and incorporates paragraphs 1 through 58. The market for molybdenum-based smoke suppressant additives for the PVC

jacketing of telecommunications plenum cabling is a relevant product market within the meaningof the antitrust laws. 62. 63. The relevant geographic market is the United States. Climax, as a subsidiary of Phelps Dodge, has engaged in a course of exclusionary

conduct with the specific intent of producing monopoly power in the relevant market, and which created the dangerous probability that Climax would achievemonopoly power in the relevantmarket and did produce monopoly power in the relevant market, yieldinga market share of well over 90% of the market by volume and by sales.

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64. 65. market. 66.

Substantial barriers to entry and expansion exist in the relevant market. Climax has the power to control prices and exclude competition in the relevant

Through the above-described conduct, Climax has engaged in anticompetitive

conduct that was intended to maintain its monopoly and to monopolize the market for molybdenum based smoke suppressant additives for the PVC jacketing of telecommunications plenum cabling. The exclusionary behavior was designed to exclude competition other than on the merits by increasing costs to entrants by litigation, through enforcement of fraudulently obtained patents, through intimidation of potential entrants by exposing individuals to baseless litigation, through a predatory price squeeze designed to cripple the ability of competitors such as Molychem to make a return on molybdenum-based products, through a pricing scheme designed to discourage consumers from purchasing products in the relevant market at a more competitive price, and through threats of boycotts of purchasers in the event of shortages of materials in the relevant market or supplies of molybdenum. 67. Through the above-described activity, Climax has intentionally monopolized and

maintained its monopoly of the relevant market. 68. 69. There is no legitimate business purpose for Climax's conduct and pattern of conduct. Climax's acts have caused and will continue to cause Molychem to suffer injuryto its

business and property. 70. Climax's acts have caused and will continue to cause injury to the relevant market in

the form of higher prices, reduced competition, reduced product quality, and consumer choice.

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71.

Climax's acts are violative of §2 of the Sherman Act (15 U.S.C. §2) as an illegal

attempt to monopolize, by reason of which Molychem has suffered, and will suffer in the future, actual damages including, but not limited to, lost profits, attorneys' fees, expert fees, expenses,costs and attorneys' fees in connection with the defense of the ITC proceeding, attorneys' fees in defense of Climax's claims in this Court, and attorneys' fees in the prosecution of this counterclaim - all in an amount to be proved at trial and thereafter. 72. Pursuant to §4 of the Clayton Act (15 U.S.C. §15), Molychem is entitled to recover

treble its actual damages specified above (including its attorneys' fees incurredin the ITC proceeding and in defending Climax's claims in this case), interest from the date of the filing of this counterclaim to the date of judgment, its reasonable attorneys' fees incurred in prosecuting this counterclaim, and costs. 3. THIRD CLAIM FOR RELIEF Willful Joint Acquisition and Maintenance of a Monopoly In Violation of §2 of the Sherman Act (15 U.S.C. §2) 73. 74. Molychem realleges and incorporates paragraphs 1 through 71. The market for molybdenum-based smoke suppressant additives for the PVC

jacketing of telecommunications plenum cabling is a relevant product market within the meaningof the antitrust laws. 75. 76. The relevant geographic market is the United States. Climax in concertwith Phelps Dodge possess monopolypower in the relevantmarket,

maintaining a market share of well over 90% of the market by volume and by sales.

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77. 78.

Substantial barriers to entry and expansion exist in the relevant market. Climax while acting in concert with Phelps Dodge have the power to control prices

and exclude competition in the relevant market. 79. Through the above-described conduct, Climax while acting in concert with Phelps

Dodge have engaged in anticompetitive conduct that was intended to maintain its monopoly and to monopolize the market for molybdenum-based smoke suppressant additivesfor the PVC jacketingof telecommunications plenum cabling. The exclusionary behavior was designed to exclude competition by increasing costs to entrants by litigation, through enforcement of fraudulently obtained patents, through intimidation of potential entrants by exposing individuals to baseless litigation, through predatory price squeeze designed to cripple the ability of competitors such as Molychem to make a return on molybdenum based products, through a pricing scheme designed to discourage consumers from purchasing products in the relevant market at a more competitive price, and through threats of boycotts of purchasers in the event of shortages of materials in the relevant market or supplies of molybdenum. 80. Through the above-described activity Climax, while acting in concert with Phelps

Dodge, has intentionally monopolized and maintained its monopoly of the relevant market. 81. There is no legitimate business purpose for Climax and Phelps Dodge's conduct and

pattern of conduct. 82. Climax and Phelps Dodge's concerted acts have caused and will continue to cause

Molychem to suffer injury to its business and property. 83. Climax and Phelps Dodge's concerted acts have caused and will continue to cause

injury to the relevant market in the form of higher prices, reduced competition, reduced product

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quality, and consumer choice. 84. Climax and Phelps Dodge's concerted acts are violativeof §2 of the Sherman Act (15

U.S.C. §2) as illegal monopolization, by reason of which Molychem has suffered, and will suffer in the future, actual damages including, but not limited to, lost profits, attorneys' fees, expert fees, expenses, costs and attorneys' fees in connection with the defense of the ITC proceeding, attorneys' fees in defense of Climax's claims in this Court, and attorneys' fees in the prosecution of this counterclaim - all in an amount to be proved at trial and thereafter. 85. Pursuant to §4 of the Clayton Act (15 U.S.C. §15), Molychem is entitled to recover

treble its actual damages specified above (includingits attorneys' fees incurredin the ITC proceeding and in defending Climax's claims in this case), interest from the date of the filing of this counterclaim to the date of judgment, its reasonable attorneys' fees incurred in prosecuting this counterclaim, and costs. 4. FOURTH CLAIM FOR RELIEF Attempted Joint Monopolization Through Intentional Anticompetitive Conduct With Dangerous Probability of Producing a Monopoly In Violation of §2 of the Sherman Act (15 U.S.C. §2) 86. 87. Molychem realleges and incorporates paragraphs 1 through 83. The market for molybdenum-based smoke suppressant additives for the PVC

jacketing of telecommunications plenum cabling is a relevant product market within the meaningof the antitrust laws. 88. 89. The relevant geographic market is the United States. Climax in concert with Phelps Dodge have engaged in a course of exclusionary

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conduct with the specific intent of producing monopoly power in the relevant market, and which created the dangerous probability that Climax and Phelps Dodge would achieve monopoly power in the relevant market and did produce monopoly power in the relevant market, yieldinga market share of well over 90% of the market by volume and by sales. 90. 91. market. 92. Through the above-described conduct, Climax and Phelps Dodge have engaged in Substantial barriers to entry and expansion exist in the relevant market. Climax has the power to control prices and exclude competition in the relevant

anticompetitive conduct that was intended to maintain its monopoly and to monopolize the market for molybdenum-based smoke suppressant additives for the PVC jacketing of telecommunications plenum cabling. The exclusionary behavior was designed to exclude competition other than on the merits by increasing costs to entrants by litigation, through enforcement of fraudulently obtained patents, through intimidation of potential entrants by exposing individuals to baseless litigation, through predatory price squeeze designed to cripple the ability of competitors such as Molychem to make a return on molybdenum based products, through a pricing scheme designed to discourage consumers from purchasing products in the relevant market at a more competitiveprice, and through threats of boycotts of purchasers in the event of shortages of materials in the relevant market or supplies of molybdenum. 93. Through the above-described activity, Climax and Phelps Dodge have intentionally

monopolized and maintained its monopoly of the relevant market. 94. There is no legitimate business purpose Climax and Phelps Dodge's conduct and

pattern of conduct.

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95.

Climax and Phelps Dodge's acts have caused and will continueto cause Molychem to

suffer injury to its business and property. 96. Climax and Phelps Dodge's acts have caused and will continue to cause injury to the

relevant market in the form of higher prices, reduced competition, reduced product quality, and consumer choice. 97. Climax and Phelps Dodge's acts are violative of §2 of the Sherman Act (15 U.S.C.

§2) as an illegal attempt to monopolize, by reason of which Molychem has suffered, and will suffer in the future, actual damages including, but not limited to, lost profits, attorneys' fees, expert fees, expenses, costs and attorneys' fees in connection with the defense of the ITC proceeding, attorneys' fees in defense of Climax's claims in this Court, and attorneys' fees in the prosecution of this counterclaim - all in an amount to be proved at trial and thereafter. 98. Pursuant to §4 of the Clayton Act (15 U.S.C. §15), Molychem is entitled to recover

treble its actual damages specified above (includingits attorneys' fees incurredin the ITC proceeding and in defending Climax's claims in this case), interest from the date of the filing of this counterclaim to the date of judgment, its reasonable attorneys' fees incurred in prosecuting this counterclaim, and costs. C. SUMMARY PRAYER FOR RELIEF WHEREFORE, Molychem demands judgmentagainst Climax and Phelps Dodge as follows: a. Declaring that Climax wrongfully maintained its monopoly of the U.S. market for

molybdenum-based smoke suppressant additives for the PVC jacketing of telecommunications plenum cabling in violation of § 2 of the Sherman Act, and awarding Molychem treble actual damages, including damages associated with defending litigation by Climax before this Court and 24

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the ITC, pursuant to §4 of the Clayton Act (15 U.S.C. §15). b. Declaring that Climax and Phelps Dodge wrongfully maintained their monopoly of

the U.S. market for molybdenum-based smoke suppressant additives for the PVC jacketing of telecommunications plenum cabling in violation of § 2 of the Sherman Act, and awarding Molychem treble actual damages, including damages associated with defendinglitigation by Climax before this Court and the ITC, pursuant to §4 of the Clayton Act (15 U.S.C. §15). c. Declaring that Climax wrongfully attempted to monopolize the U.S. market for

molybdenum-based smoke suppressant additives for the PVC jacketing of telecommunications plenum cabling in violation of § 2 of the Sherman Act, and awarding Molychem treble actual damages, including damages associated with defending litigation by Climax before this Court and the ITC, pursuant to §4 of the Clayton Act (15 U.S.C. §15). d. Declaring that Climax and Phelps Dodge wrongfully attempted to monopolize the

U.S. market for molybdenum-based smoke suppressant additives for the PVC jacketing of telecommunications plenum cabling in violation of § 2 of the Sherman Act, and awarding Molychem treble actual damages, including damages associated with defendinglitigation by Climax before this Court and the ITC, pursuant to §4 of the Clayton Act (15 U.S.C. §15). e. A declaration that this action is "exceptional" under 35 U.S.C. § 285, and awarding

Molychem attorneys' fees, pre- and post-judgment interest, and costs, against Climax and Phelps Dodge in an amount to be established at trial and thereafter.

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JURY DEMAND

MOLYCHEM HEREBY DEMANDS TRIAL BY JURY. DATED this 8th day of July 2005. HART & TRINEN, L.L.P. /s/ Donald T. Trinen_____________ Donald T. Trinen 1624 Washington Street Denver. CO 80203 Telephone: (303) 839-006l

/s/ Ramon L. Pizarro____________ RAMON L. PIZARRO 3515 S. Tamarac Drive, Suite 200 Denver, CO 80237 Telephone: (303) 785-2819 ATTORNEYS FOR DEFENDANT MOLYCHEM, LLC

Molychem FINAL 2nd Amend Answer-Cntrclaim 7-8-05

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