AN ENVIRONMENTALLY RESPONSIBLE LEADER.

AN ENVIRONMENTALLY RESPONSIBLE LEADER.

Company

The Company's Name Change

CHEMEON Surface Technology, LLC continues to exclusively provide the acclaimed metal-finishing chemistries that were previously marketed by its predecessor in interest, Metalast International, LLC and Metalast Surface Technology, LLC, as well as new chemistries. Since early 2015, all CHEMEON products and services have been branded under the new CHEMEON mark. CHEMEON continues to offer its customers the most advanced surface engineering solutions, which includes prodigious experience with our exclusive QPL Hexavalent Free Mil Spec CHEMEON TCP-HF*, CHEMEON TCP-HF EPA* and SP* – Extended Protection Additive and Spray, as well as CHEMEON TCP-NP* - No Prep. CHEMEON continues to provide this proprietary surface technology advantage both directly and through our Distribution Partners.

Metalast International, LLC, was the sole source of Metalast branded products until November of 2013. As explained in a Court Complaint first filed in June 2015:

  • From the founding of Metalast International, LLC until April, 2013, the manager of the company, was Metalast International, Inc., run by David M. Semas. On April 3, 2013, Mr. Semas admitted that Metalast International, LLC was unable to pay its debts as they became due. On April 25, 2013, a Receiver was appointed to, among other things, take possession of the property of Metalast International, LLC. Subsequently, with Court approval, the Receiver sold all assets of Metalast International, LLC, to CHEMEON, which operated under the name Metalast Surface Technology, LLC, and was the sole source of Metalast products, from late 2013 through June 9, 2015. Included in the sale to CHEMEON was exclusive ownership of all Metalast company good will and trade secrets, including chemistries, products, services, contacts, customer and distributor information, licenses, contracts, product specifications, copyrights, product marks, and logos.
  • The Receiver reported that approximately 1,000 members of Metalast International, LLC had invested more than $95 million, that the accumulated losses exceeded $119 million, and that the accounts payable to its vendors, landlords, suppliers, and employees totaled nearly $1 million. On November 4, 2013, the Court approved a sale of all Metalast International, LLC assets to D&M-MI, LLC, which was then renamed, Metalast Surface Technology, LLC. It continued to provide Metalast products to the market under the Metalast mark until the company changed its name to CHEMEON Surface Technology, LLC in order to eliminate confusion between the company’s new leadership and values, and former management's. CHEMEON Surface Technology currently provides the same products previously provided by Metalast International, LLC but does so under the CHEMEON mark.

As explained in CHEMEON’s November 2016, Petition for Cancellation of a federal registration of the Metalast mark owned by David Semas, in July 2015 David Semas filed for renewal of the registration by submitting a fraudulent statement of use of the mark along with, and based solely upon, fraudulent specimens of use of the mark. The fraudulent specimens were from Metalast International, LLC years before and not in use in commerce by anyone, including David Semas, for many years prior to his filing of his July 2015 registration renewal.

The company will continue to offer the same products previously provided by Metalast International, LLC but will provide them under the CHEMEON mark going forward, with increased service, research and development.

THE CHEMEON v. METALAST INTERNATIONAL, INC., LITIGATION

THE FOLLOWING SETS FORTH CHEMEON’S OPINIONS BASED ON COURT DOCUMENTS AND DECISIONS.  IT IS NOT A CONTRACT OR CONTRACTUAL REPRESENTATION OR WARRANTY.  CHEMEON WELCOME’S ANY QUESTION ABOUT THIS FROM ANY ACTUAL OR POTENTIAL CHEMEON DISTRIBUTOR, CUSTOMER, OR CUSTOMER OF A CHEMEON DISTRIBUTOR.

Q1.      Is it true that CHEMEON entered into a settlement agreement banning it from any use of the term Metalast?

A1.      No.  In fact, the U.S. District Court for the District of Nevada has ruled thatthe Settlement Agreement cannot be construed to provide any such absolute ban, and that, consistent with the governing decision of the U.S. Court of Appeals for the Ninth Circuit in Kassbaum v. Steppenwolf Prods., Inc., 236 F.3d 487, 491-92 (9th Cir. 2000), the contract wording in issue must be construed to allow CHEMEON to recite its former association with the term provided the recitation does not cause likelihood of confusion.  The U.S. District Court has ruled that one reason this is so is because “it is necessary [for Chemeon] to explain the relationship between Chemeon and Metalast, otherwise there would be confusion for products that have already been [in] the market.”  (ECF No. 228 at 103:14-22, 95:9-13.)  So, CHEMEON is free to recite, for example, that it was formerly, before June 9, 2015, Metalast because (i) it is true – when, before March 12, 2015, CHEMEON’s name was Metalast Surface Technology, LLC – and (ii) does not imply any association with that trade name today.

Q2.      Should any distributor or customer of Chemeon be concerned that a third party purported owner of a Metalast trademark or tradename may assert that it is unlawful for the distributor or customer to no more than accurately identify a marked CHEMEON product as also formerly, before June10, 2015, a Metalast product.

A2.      No, as long as the product involved was provided under the Metalast mark before June 10, 2015.  For the same reasons explained in response to Q1 above, Chemeon’s distributors and customers are therefore free to accurately identify CHEMEON products that were formerly known as Metalast products, as such – for example, “formerly, before June 9, 2015, Metalast TCP-HF.”

In any event, in September 2017 the U.S. District Court dismissed with prejudice Mr. Semas’ claims of trademark infringement, unfair competition, and dilution against marketing of CHEMEON products along with the substantially less prominent phrase “formerly Metalast.”  This dismissal with prejudice, which is non-appealable,should preclude any subsequent such claims against any CHEMEON distributors or customers based on the same products and marketing technique.  Consequently, we believe that any party making any such claims should be subject to an award of attorney fees and costs against that party for the accused party.

Q3.      Has CHEMEON achieved any other substantial victories in the pending CHEMEON v. Metalast International, Inc., litigation?

A3.    Yes. In that litigation, CHEMEON also has procured: (i) a preliminary injunction against the defendants enjoining them from knowingly using CHEMEON trade secrets and copyrights; and (ii) summary judgement that the Metalast logo mark was abandoned by its purported owner and its registrations should be cancelled (and in response to this judgment, they were cancelled). In addition, substantial CHEMEON claims remain pending including claims for (i) copyright infringement and trademark infringement against David Semas and his entities, (ii) his abandonment and lack of ownership of the Metalast word mark registrations, and (iii) his unclean hands including his breach of fiduciary duty, his fraudulent procurement of the Metalast word and logo trademark registrations, and his misrepresentations to the SEC, IRS, and investors in Metalast International, LLC, that the company owned its intellectual property when, instead and as explained further below, he had, and continued to, divert a large amount of that company’s intellectual property to another company controlled by him . Related claims for an attorney fee award remain pending against the David Semas and his defendant entities. CHEMEON also has defeated the defendants’ motion for a preliminary injunction against CHEMEON, asking the Court to impose a ban on CHEMEON’s identification of its past affiliation with the term “Metalast”; and (ii) finally, as noted above in response to Q1, in September 2017, the defendants’ stipulated to dismissal with prejudice of the trademark infringement, unfair competition, and dilution claims against CHEMEON and its use of phrases such as “formerly Metalast.” CHEMEON also procured an order holding certain defendants’ attorney-client privilege waived and another order awarding attorney fees against the defendants for failure to produce documents ordered to be produced pursuant to that waiver. CHEMEON also defeated the defendants’ motion to exclude from the trial-to-come the unrebutted report by plaintiff’s expert, James Proctor of Meridian Advantage. Among other things, that expert report explains in detail the “historically poor financial condition, ultimately resulting in insolvency [of Metalast International, LLC],” along with its “poor operating results,” “excessive expenses,” “self-dealing [by its manager],” “large cumulative losses,” “unsustainable debt,” “results significantly and materially lower than forecasted or projected results,” and purported lack of ownership of trademark registrations, patent applications, and issued patent – paid for by Metalast International, LLC (the operating entity in which the LLC members invested), but owned by (that is, procured with LLC assets for the benefit of) its manager, Metalast International, Inc., controlled by David M. Semas, who then assigned the many trademark registrations so procured, from the latter entity to himself in 2013. To see the unrebutted expert report click "Unrebutted report by plaintiff’s expert in CHEMEON v. Metalast International, Inc.” below.

In the meantime, last November, David Semas filed a lawsuit in California against some CHEMEON distributors, claiming trademark infringement, unfair competition, and trademark dilution by their advertising and sale of the “formerly Metalast” CHEMEON products and the distributors’ accurate identification of them as such. CHEMEON promptly took over the defense of that action and moved to intervene in it, moved to have the matter dismissed, transferred to Reno, Nevada, or stayed, and moved for an award of attorneys for bringing an action against CHEMEON’s distributors because the same types of claims against the same CHEMEON products had been dismissed with prejudice against David Semas and his entities in the Reno, Nevada, action long ago. On February 27, 2019, the California court granted the CHEMEON distributors’ motions to transfer the case to the U.S. District Court in Reno Nevada; other motions -- by CHEMEON to intervene and by CHEMEON and its distributors to dismiss the action and for an award of attorneys fees-- remain pending, now before the Reno U.S. District Court.

Q4.      What are CHEMEON’s plans with regard to its claims that do not prevail in that litigation.

A.4      CHEMEON plans to appeal, and for at least some issues (such as the propriety of CHEMEON’s use of the phrase “formerly Metalast” under the Steppenwolfcase for example), to take them to the U.S. Supreme Court if necessary.

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