Employees
As of March 5, 2004, we and our consolidated subsidiaries had a total
of 529 employees in the U.S. and 169 employees outside of the U.S. The above
numbers do not include employees of our joint ventures or licensees.
Principal Facilities
A summary of our principal facilities and those of our consolidated
subsidiaries, Ovonic Battery, United Solar Ovonic and Ovonic Fuel Cell Company,
follows:
Number of
Location Square Feet
ECD:
2956 Waterview, Rochester Hills, MI 49,550
1050 East Square Lake Road, Bloomfield Hills, MI 11,000
1621 Northwood, Troy, MI 24,900
Ovonic Battery:
1864 Northwood, Troy, MI 12,480
1826 Northwood, Troy, MI 12,480
1707 Northwood, Troy, MI 27,400
2968 Waterview, Rochester Hills, MI 33,804
1414 Combermere, Troy, MI 9,870
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United Solar Ovonic:
1100 West Maple Road, Troy, MI 47,775
3800 Lapeer Road, Auburn Hills, MI 167,526
Av. La Paz. No. 10009, Parque Industrial
Pacifico, Tijuana, B.C., Mex. C.P. 22670 67,362
Ovonic Fuel Cell Company:
2983 Waterview, Rochester Hills, MI 27,080
TOTAL 491,227
Except for the property located at 1050 East Square Lake Road, Bloomfield
Hills, Michigan, which is owned by us, the foregoing properties, which are
generally of brick and block construction, are leased by us. The foregoing
properties are devoted primarily to the product development, production and
pre-production activities and administrative and other operations. We expect to
vacate the property located at 1707 Northwood, Troy, Michigan, upon expiration
of the lease term at the end of March 2004. Management believes that the
above facilities are adequate for present operations.
A summary of the facilities of our North American joint ventures follows:
Number of
Location Square Feet
Texaco Ovonic Hydrogen Systems:
2983 Waterview, Rochester Hills, MI 50,292
Texaco Ovonic Battery Systems:
1334 Maplelawn, Troy, MI 28,122
1250 Maplelawn, Troy, MI 21,000
1104 West Maple Road, Troy, MI 15,000
50 Ovonic Way, Springboro, OH 170,000
TOTAL 284,414
Legal Proceedings
In March 2001, Ovonic Battery initiated litigation in Federal District
Court for the Eastern District of Michigan against Matsushita Battery Industrial
Co., Ltd. and related companies, or MBI, Panasonic EV Energy Co. Ltd., Toyota
Motor Corporation and related companies, and five employees of MBI for
infringement of Ovonic Battery's U.S. Patent Nos. 5,348,822 and 5,536,591 in
connection with hybrid electric vehicle battery and consumer battery sales in
the United States; U.S. Patent No. 5,879,831 in connection with hybrid electric
vehicle sales in the United States; for misappropriating confidential
information and filing applications for U.S. Patent No. 6,013,390 and
corresponding foreign patents incorrectly naming MBI employees
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instead of Ovonic Battery employees as inventors. In July 2001, Texaco Ovonic
Battery Systems LLC sought to join the litigation as a co-plaintiff. The
plaintiffs presented a motion for a preliminary injunction against MBI and its
affiliates to enjoin the sale of infringing batteries in the United States.
After a hearing held on October 10, 2001, the Court allowed Texaco Ovonic
Battery Systems to join the case, found that certain counts of our Amended
Complaint should be arbitrated, and scheduled a hearing on our request for a
preliminary injunction to prevent MBI from infringing our patents by offering
or selling batteries to U.S. manufacturers of hybrid electric vehicles, pending
the outcome of the arbitration. On December 12, 2001, we filed an arbitration
demand with the International Chamber of Commerce on the counts held to be
arbitrable by the Federal District Court as well as additional patent
infringement claims. In December 2001, the parties initiated settlement
discussions and the Court, on January 16, 2002, granted a joint motion to stay
further proceedings in the litigation pending the outcome of the settlement
discussions. The International Chamber of Commerce also agreed to hold its
proceedings in abeyance pending settlement discussions.
In December 2002, we and our related companies entered into an arbitration
agreement with MBI and Toyota Motor Corporation and related companies. The
agreement established the basic terms, conditions and procedures to resume
arbitration before the International Chamber of Commerce of the existing patent
infringement disputes involving nickel metal hydride batteries used in
gasoline-electric hybrid vehicles and other products. Pursuant to the
arbitration agreement, the existing disputes among the parties will be resolved
in the arbitration and, therefore, the parties have agreed to dismiss the patent
infringement litigation previously initiated by our related companies in the
U.S. District Court, Eastern District of Michigan. The arbitration proceeding
was held in New York City from November 4-19, 2003 and concluded on January 21,
2004. The parties' arbitration agreement calls for a ruling by the arbitration
panel within two months. Because of administrative handling of the ruling
through the International Chamber of Commerce, International Court of
Arbitration, in Paris, France, the decision is not expected to be released until
May 2004.
On July 24, 2001, an individual, Kaplesh Kumar, filed a lawsuit against
Ovonic Battery, ECD and Mr. Ovshinsky, in the Federal District Court of
Massachusetts, alleging infringement of Kumar's U.S. Patent No. 4,565,686 and
other acts of unfair competition for inducing others to infringe. On July 8,
2002, the Court granted our motion for summary judgment and dismissed Kumar's
complaint. Kumar has appealed the decision of the Federal District Court
granting our motion for summary judgment of non-infringement and the Court's
dismissal of Kumar's complaint to the United States Court of Appeals for the
Federal Circuit. Oral arguments were presented before a panel of the Court of
Appeals for the Federal Circuit on September 19, 2003. In December 2003, the
Court of Appeals for the Federal Circuit issued an opinion vacating the District
Court's dismissal of Kumar's complaint and remanded the case to the District
Court for further proceedings concerning the meaning of certain terms in Kumar's
now expired patent. We believe that the suit is without merit and that we will
prevail.
Due to the uncertainty of the ultimate outcome of these matters, the
impact on future financial results is not subject to reasonable estimates.
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Glossary of Technical Terms
Certain technical terms used herein have the following meanings:
Amorphous -- having an atomic structure that is not periodic.
CD-ROM (CD--Read Only Memory) -- a type of data-storage media using a CD format
with pre-recorded data which cannot be recorded by the user.
CD-RW (CD--Rewritable Memory) -- a type of data storage media using a CD format
employing our proprietary phase-change rewritable optical memory technology
capable of being recorded and re-recorded many times.
Crystalline -- having a repeating atomic structure in all three dimensions.
Cycle Life -- the number of times a device can be switched or can be charged and
discharged.
Disordered -- Minimizing and lifting of lattice constraints which provides new
degrees of freedom, permitting the placement of elements in multi-dimensional
spaces where they interact in ways not previously available. This allows the use
of multi-elements and complex materials where positional, translational and
compositional disorder remove restrictions so new local order environments can
be generated controlling the physical, electronic and chemical properties of the
material, thereby permitting the synthesis of new materials with new mechanisms.
DRAM (Dynamic Random Access Memory) -- a type of semiconductor memory device
used for the main system memory in most computers.
Electrode (battery) -- the chemically active portions of a battery.
Energy Density -- the amount of energy stored in a specific volume or weight.
Electric Vehicle -- a vehicle propelled exclusively by an electric drive system
powered by an electrochemical energy storage device, typically a rechargeable
battery.
FLASH -- a type of semiconductor memory device that retains stored data even
with the power off.
Encryption -- encoding of information.
Fuel Cell Electric Vehicle -- an electric vehicle that derives its electricity
from a fuel cell.
Fuel Cell Hybrid Electric Vehicle - a vehicle that is propelled both by a fuel
cell and an electrochemical energy storage device coupled to an electric drive.
Fuel Cell -- a device which produces electric power by oxidizing hydrogen and
exhausting only water and heat as byproducts.
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Hybrid Electric Vehicle -- a vehicle that is propelled both by an
electrochemical energy storage device coupled to an electric drive and an
auxiliary power unit powered by a conventional fuel such as reformulated
gasoline, direct injection diesel, compressed natural gas or hydrogen.
Nanostructural - refers to materials having functional features on the nanometer
length scale.
Nonbinary processing -- computation in a base other than the binary base 2 used
in conventional computers.
Nonvolatile -- a property of some types of computer memory which retain stored
data even when power is removed.
Optical Memory -- a computer memory technology that uses lasers to record and
play back data stored on a rotating disc.
Ovonic -- [after Stanford R. Ov(shinsky) + (electr)onic] - the term used to
describe our proprietary materials, products and technologies.
Peak Power -- the maximum rate of energy output available for a sustained period
of time, typically 10 to 30 seconds.
Phase-Change Rewritable -- an optical memory technology invented by Mr.
Ovshinsky in which data is stored or erased on memory media by means of a laser
beam that switches the structural phase of a thin-film material between
crystalline and amorphous states.
Photovoltaic -- direct conversion of light into electrical energy.
Regenerative Power -- the process of restoring energy to the battery by
absorbing kinetic energy of the vehicle as it slows down.
Roll-to-Roll Process -- a process where a roll of substrate is continuously
converted into a roll of product.
Semiconductor -- a class of materials with special electrical properties used to
fabricate solar cells, transistors, integrated circuits and other electronic
devices.
Specific Energy -- the amount of energy capacity divided by the weight of the
battery.
Specific Power -- the amount of energy available for a sustained period of time
divided by the weight of the battery.
Stabilized Energy Conversion Efficiency -- the long-term ratio of electrical
output to light input.
System-on-a-chip -- an ASIC (application specific integrated circuit) that
integrates, on a single silicon die, processors, memories, logic, I/O
(input/output), and analog functions previously implemented as multiple discrete
chips.
Thin Film -- a very thin layer of material formed on a substrate.
Von Neumann concept -- classical sequential method of computing.
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