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UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF MICHIGAN

In re Chapter 11

ENERGY CONVERSION DEVICES, INC. Case No. 12-43166-TJT

(Jointly Administered)

ENERGY CONVERSION DEVICES


LIQUIDATION TRUST, Adversary No.: 18-_______

Plaintiff, COMPLAINT

-against-

OVONYX, INC., TYLER LOWREY, MICRON


TECHNOLOGY, INC., AND OVONYX
MEMORY TECHNOLOGY, INC.

Defendants.

Plaintiff, the ENERGY CONVERSION DEVICES LIQUIDATION TRUST (the

“Trust”), by its attorneys Honigman Miller Schwartz and Cohn LLP and Quinn Emanuel

Urquhart & Sullivan, LLP, brings this complaint against defendants OVONYX, INC., TYLER

LOWREY, MICRON TECHNOLOGY, INC., and OVONYX MEMORY TECHNOLOGY,

INC. (f/k/a Carlow Innovations, LLC).

The Trust alleges as follows:

NATURE OF THE CASE

1. This is a case of the Trust vindicating its valuable contractual rights to technology

that, without embellishment, could easily revolutionize the way data is stored, secured,

computed, and organized in computers, smart phones, data centers and virtually any other

consumer or commercial electronic product that needs to store and use large amounts of data

quickly including high-performance computing, artificial intelligence, and computer

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learning. This technology fills the speed gap between memory technologies known as DRAM

and NAND, in some cases leading to thousand-fold increases in performance.

2. As described in detail below, the Defendants have knowingly and materially

sought to undermine these contractual rights. Thus, the Trust must seek this Court’s intervention

to seek compensation for the loss caused by the Defendants’ misconduct.

3. The Trust is the successor in interest to Energy Conversion Devices, Inc.

(“ECD”), which filed for bankruptcy in 2012. ECD is the brainchild of Stan Ovshinsky, a

renowned Michigan inventor and scientist who invented numerous technologies in the area of

energy and information and was granted over 400 patents. Beginning in the 1960s, Mr.

Ovshinsky, and then ECD, obtained patents and developed devices concerning, among other

things, “phase-change” memory, a form of nonvolatile memory that is far superior to other forms

of memory.

4. This technology now stands on the edge of extraordinarily valuable

commercialization. In 2015, Defendant Micron Technology, Inc. (“Micron”) announced, along

with its joint venture partner Intel Corporation, the commercial development of “3D XPoint,”

which, on information and belief, employs the intellectual property and device that ECD

invented.

5. It is hard to understate how valuable 3D XPoint, and the technology powering it

that came from ECD and Ovonyx, is to Micron and the computer and memory industry. Micron's

and Intel’s own words on July 28, 2015, the day of the 3D XPoint announcement, sum it up:

Intel Corporation and Micron Technology, Inc. today unveiled 3D XPoint™


technology, a non-volatile memory that has the potential to revolutionize any
device, application or service that benefits from fast access to large sets of data.
Now in production, 3D XPoint technology is a major breakthrough in memory
process technology and the first new memory category since the introduction of
NAND flash in 1989.

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The explosion of connected devices and digital services is generating massive
amounts of new data. To make this data useful, it must be stored and analyzed
very quickly, creating challenges for service providers and system builders who
must balance cost, power and performance trade-offs when they design memory
and storage solutions. 3D XPoint technology combines the performance, density,
power, non-volatility and cost advantages of all available memory technologies
on the market today. The technology is up to 1,000 times faster and has up to
1,000 times greater endurance than NAND, and is 10 times denser than
conventional memory.

6. The Trust has valuable contractual rights relating to the technology powering 3D

XPoint, which rights have been breached and interfered with by the Defendants. Specifically,

under the 1999 Agreement (defined below), the Trust is entitled to payment of royalties by

Defendant Ovonyx, Inc. (“Ovonyx”) and to rights of first refusal over sales of Ovonyx stock or

transfers of assets of Ovonyx. The Defendants have sought to destroy these valuable rights.

7. In 1998, ECD and Defendant Tyler Lowrey (a former senior officer of Micron)

entered in the 1998 Agreement (defined below) that, among other things, called for the formation

of Defendant Ovonyx, which would be jointly owned by ECD, Lowrey and one additional

investor. Defendant Lowrey would later become president and CEO of Defendant Ovonyx and

would remain in these important decision-making positions until July 31, 2015. Lowrey

promised to cause Ovonyx to pay to ECD 0.5% of all Ovonyx’s revenues (the “Royalty”).

Further, Lowrey and ECD promised each other that any time Ovonyx sold any stock or assets, or

if either of them sold any stock of Ovonyx, each would have a right of first refusal in connection

with such transaction.

8. In 1999, Defendant Ovonyx, Lowrey, and ECD entered in the 1999 Agreement

pursuant to which Ovonyx agreed to perform the obligations set forth in the 1998 Agreement,

including paying the Royalty and being subject to the right of first refusal. For years after,

Ovonyx did in fact perform its obligations by paying the Royalty when due and Lowrey

otherwise acknowledged the obligations contained in each agreement.

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9. ECD filed for bankruptcy in 2012, and sold its stock interests in Ovonyx to

Micron, but retained all the rights under the 1998 Agreement and 1999 Agreement, which rights

have been transferred to the Plaintiff. Thus, the Plaintiff should have benefitted from payment of

the Royalty and, if Ovonyx ever sold assets or stock of Ovonyx, or if Lowrey sold any of his

Ovonyx stock, it would benefit from the option it had under the right of first refusal provision.

10. But the Defendants ensured that the Plaintiff was denied its valuable contractual

rights. First, Ovonyx has never paid the Royalty since the bankruptcy sale, in breach of

Ovonyx’s obligations under the 1999 Agreement and Lowrey’s obligations under the 1998

Agreement. This failure to pay the Royalty is intentional; Lowrey for the first time disclosed to

the Trust in May 2018 that

. At the time, Micron and Lowrey

owned a majority of the stock in Ovonyx and appointed a majority of the members of the board

of directors.

11. Second, as the Trust only recently learned, in July 2015,

12. No notice was provided to the Trust so that the Trust could determine whether to

exercise its right of first refusal. On information and belief, the value of stock in Ovonyx that

Micron acquired, amounting to more than 60% of the stock, was far more valuable than what

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Micron paid, and had the Trust been informed of the proposed sale, it could have exercised its

right of first refusal to acquire this valuable asset.

13. Third, on July 31, 2015, Ovonyx transferred a majority of its valuable intellectual

property to Defendant Ovonyx Memory Technology, Inc., (“OMT”),

. No notice was provided to the Trust so that the Trust

could determine whether to exercise its right of first refusal in respect of this transfer to OMT.

14. The Defendants thus breached, and/or tortuously interfered with, the 1998

Agreement and 1999 Agreement. The Trust was substantially damaged by the Defendants.

15. On behalf of ECD and its creditors, who were left being owed in excess of $120

million, the Trust seeks compensation for losses incurred as the result of the Defendants’

misconduct.

JURISDICTION AND VENUE

16. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 157, 1334

and 1367 because involves state-law claims that relate to the ECD chapter 11 case. The Plan

provides that this Court retains such jurisdiction. Venue is proper in this district under 28 U.S.C.

§ 1409 as this proceeding arises in or is related to the ECD case under Title 11 of the United

States Code. Venue is also proper in this district under 28 U.S.C. § 1391 because a substantial

part of the events giving rise to the claim occurred in this district.

17. Claims 1 to 5 are non-core matters pursuant to 28 U.S.C. §157 (c)(1). However,

any matters concerning or relating to interpretation of the Plan or the Bankruptcy Sale (as each is

defined below) is a “core” matter.

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18. Plaintiff consents to entry of a final order on these claims by this Court.

PROCEDURAL BACKGROUND

19. On February 14, 2012, ECD filed a voluntary petition for relief under chapter 11

of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of

Michigan (the “Bankruptcy Court”).

20. On June 20, 2012, ECD and its affiliate filed a Second Amended Joint Chapter 11

Plan of Reorganization (the “Plan”) that, among other things, would establish the Trust for the

commencement of causes of action belonging to ECD.

21. The Plan was confirmed on July 30, 2012 and became effective on August 28,

2012. On the effective date, the Trust was established.

22. On December 21, 2017, the Plaintiff filed a motion in this Court requesting

authority to serve subpoenas under Rule 2004 of the Federal Rules of Bankruptcy Procedure on

Lowrey, Ovonyx, Micron, and OMT (each a “Rule 2004 Subpoena”). This Court granted such

authority by order entered on January 9, 2018.

23. The Plaintiff served each Rule 2004 Subpoena. Each of Lowrey, Ovonyx,

Micron, and OMT produced some, but not all, of the requested documents.

24. In accordance with the Rule 2004 Subpoena, on May 24, 2017, the Plaintiff

deposed Lowrey.

25. On information and belief, documents responsive to the Rule 2004 Subpoenas

were not preserved by some or all the Defendants. Indeed, on information and belief, numerous

responsive documents appear to have been destroyed.

THE PARTIES

26. Plaintiff, the Energy Conversion Devices Liquidation Trust (“Plaintiff” or the

“Trust”), is a trust created and formed under the laws of the State of Michigan by the August 28,

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2012 Trust Agreement. John Madden has been appointed and serves as the Trustee. The Trust

beneficiaries are former creditors of ECD. The Trust is the successor to all assets of ECD,

including rights under contracts where ECD was a party.

27. Defendant Ovonyx, Inc. (“Ovonyx”) is a Nevada corporation with, on information

and belief, its principal executive offices located at 8000 S. Federal Way, in Boise, Idaho. On

information and belief, Ovonyx is wholly owned by Defendant Micron.

28. Tyler Lowrey is an individual who, on information and belief, resides in

Henderson, Nevada.

29. Defendant Micron Technology, Inc. (“Micron”) is a Delaware corporation with its

principal executive offices located at 8000 S. Federal Way, in Boise, Idaho.

30. Ovonyx Memory Technology, Inc. (f/k/a Carlow Innovations LLC) (“OMT”) is a

Virginia corporation with its principal executive offices located at 1940 Duke Street, Suite 200,

in Alexandria, Virginia.

FACTUAL BACKGROUND

31. Founded in 1961 in Detroit, Michigan, and until it filed for bankruptcy, ECD had

been at the forefront of materials science and renewable energy technology for over 50 years.

ECD’s achievements in the laboratory are well documented, having been granted over 100 U.S.

and international patents in its continuing operations.

32. ECD had been a publicly traded company listed on the NASDAQ Global Select

Market under the ticker symbol “ENER.” ECD was primarily a holding company that operated

through its various business segments. One such business segment was Ovonyx, a joint venture

formed to commercialize ECD’s proprietary non-volatile phase change random access memory

technology used in such applications as smartphones, computers, digital cameras and

microelectronics.

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The 1998 Agreement

33. In 1998, Lowrey and ECD entered into that certain “Ovonic Information Handling

Devices Development and Commercialization Contract” (the “1998 Agreement”). Pursuant to

the 1998 Agreement, ECD and Lowrey agreed to jointly pursue the evaluation, development,

licensing or manufacturing of ECD’s proprietary electronic Ovonic Information Handling

Devices. The term “Ovonic” is a term of art that combines Stan Ovshinsky’s last name and the

word electronics.

34. Lowrey entered into the 1998 Agreement because he believed that ECD had

interesting technology for making memory circuits, and Lowrey was expert in commercialization

and manufacturing of memory circuits.

35. The 1998 Agreement contemplated the formation of an entity that would be co-

owned by ECD and Lowrey. The initial board members of the Entity were Stan Ovshinsky and

Lowrey.

36. Upon formation of the Entity, until termination of the 1998 Agreement ECD

agreed to grant to the Entity an exclusive license in “the field,” which the agreement defined to

include “evaluating developing licensing or manufacturing of ECD’s proprietary electronic

Ovonic Information Handling Devices such as those that are Chalcogenide based including the

electronic Ovonic threshold thyrister-like power switch, Ovonic encryption, Ovonic neural

networks and current-modified crystallinity-based and current-modified resistance-based devices

and products.”

37. Upon formation of the Entity, until termination of the 1998 Agreement, Lowrey

agreed to assign his rights in intellectual property in “the field” to the Entity without any

encumbrances.

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38. Section 10 of the 1998 Agreement provided that upon ECD’s written request, “the

Entity shall thereafter pay every three months 0.5% of the Entity’s subsequent revenues to ECD”

(the “Royalty”). The Royalty was material to ECD and specifically requested by ECD.

39. Section 11 contained a Right of First Refusal (the “First Refusal Right”).

Pursuant to the First Refusal Right, Lowrey and ECD granted to each other “a right of first

refusal on the other’s sale of stock in the Entity, intellectual property in the field, and any stock

or asset sales by the Entity, a right exercisable only within thirty days of notice and promptly

executed on the same basis as the proposed purchaser.”

40. The First Refusal Right was material to ECD because, among other things, it

ensured that if the Entity attempted to transfer assets, ECD would have the option to purchase the

assets itself. This provision was particularly important if Ovonyx transferred a majority of its

assets that produced (or were likely to produce) revenue subject to the Royalty.

41. Shortly after execution of the 1998 Agreement, in June 1999, ECD and Lowrey

formed Ovonyx, which is the “Entity” within the meaning of the 1998 Agreement.

42. Section 16 of the 1998 Agreement contained the provisions for terminating the

1998 Agreement. As of today, the 1998 Agreement has not terminated,

Phase-Change Memory Development

43. The 1998 Agreement governs, among other things, intellectual property

associated with “phase-change” memory. Phase-change memory is a material that changes

phases (i.e., from one form of matter to another) and that transition can be used to store memory.

44. Phase-change memory is a way to store non-volatile information, which is

information that is retained even when the power to a device (such as a computer) is turned off.

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While there are other forms of non-volatile memory, phase-change memory has several superior

aspects, including writing data at faster speeds and having greater endurance.

45. Phase-change memory can be, and recently has been, used in a wide array of

products, including computers, cell phones, smart phones, and many other consumer and

commercial products that require storage of memory.

46. The 1998 Agreement also referenced the electronic Ovonic threshold thyrister-

like power switch (the “Ovonic Switch”). This switch was a device developed by ECD that

would switch from a non-conducting “off” state to a highly conductive “on” state with the

application of a threshold voltage.

47. The 1998 Agreement made express reference to Chalcogenide-based 1 devices

that, on information and belief, are the critical technology used in Micron’s 3D XPoint

Technology (described in paragraph _112_ below). Phase-change memory is chalcogenide-

based.

48. The 1998 Agreement remained in effect and has never been terminated.

Defendant Lowrey understood that its terms bound him, including providing a written consent

consistent with the First Refusal Right in 2008.

The 1999 Agreement

49. On August 2, 1999, ECD, Lowrey and Ovonyx entered into that certain “License

and Assignment Agreement” (the “1999 Agreement”).

50. The 1999 Agreement expressly referenced the 1998 Agreement, and, pursuant to

the terms and conditions of the 1998 Agreement, Ovonyx desired to acquire intellectual property

rights from ECD and Lowrey.

1
The term Chalcogenide refers to compounds using elements on the Periodic Table
vertically below Oxygen: Sulfur, Selenium, Tellurium, and Polonium.

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51. Under the 1999 Agreement, ECD granted to Ovonyx a royalty-bearing,

worldwide, exclusive right and license to ECD’s “IP” (as defined in the 1998 Agreement).

52. Lowrey assigned, without encumbrance, to Ovonyx all rights, title and interest in

and to Lowrey’s IP.

53. Lowrey benefitted from entering into the 1999 Agreement because he was a

partial owner of Ovonyx, and Ovonyx would benefit from the transfer of intellectual property

from Lowrey and ECD.

54. Section 5 of the 1999 Agreement expressly provided that “[a]ll terms and

conditions and rights and obligations of the 1998 Agreement remain in full force and effect.”

This provision obligated Ovonyx to undertake the obligations of the 1998 Agreement that ECD

and Lowrey had intended for the “entity” under the 1998 Agreement to undertake.

55. Consistent with the provision of Section 5, ECD provided notice to Ovonyx to

pay a quarterly Royalty equal to 0.5% of Ovonyx’s revenues. Ovonyx paid this Royalty for at

least a decade. In 2008, Lowrey also provided consent to ECD transferring patents to Ovonyx as

required under the 1998 Agreement, consistent with the provisions of Section 5 of the 1999

Agreement that incorporated the 1998 Agreement into the 1999 Agreement.

56. Ovonyx attracted several investors in addition to Lowrey and ECD, including

Intel Corporation (“Intel”), which in February 2000 acquired preferred stock issued by Ovonyx.

On information and belief, two of the original investors in Micron and a senior Micron employee

also acquired equity interests.

57. ECD ultimately held 35.2% of the fully-diluted shares of common stock of

Ovonyx when it filed for bankruptcy on the Petition Date.

58. Ovonyx’s Development and Licensing From 1999 to 2011

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59. After execution of the 1999 Agreement, Ovonyx engaged in efforts to develop

and license the technology it gained from ECD and Lowrey. Over the course of a decade,

Ovonyx entered into at least twelve licensing and/or joint development agreements. Ovonyx

received significant license fees through these agreements. Ovonyx also received royalties from

several of its counter-parties and fees for providing clean-room and other intellectual property

related services.

60. From June 1999 to May 2012, Ovonyx received over $58 million in revenues. As

required under the 1999 Agreement, Ovonyx paid to ECD approximately 0.5% of this amount to

ECD.

61.

62. After 1999 and through 2011, Ovonyx actively worked on developing new

technologies and writing new patents.

63.

64. Ovonyx’s phase-change technology, derived from intellectual property licensed to

Ovonyx by ECD and contributed to Ovonyx by Lowrey, had substantial potential value. For

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example, in one 2007 presentation Ovonyx prepared for ECD, Ovonyx provided projections that

the available market for Ovonyx products in 2009 would be $224 billion, and phase-change

memory was well placed to compete with, and even replace, other forms of non-volatile memory

devices.

65. ECD and Ovonyx also entered into a separate license agreement in September

2002 (the “2002 License Agreement”) concerning, among other things, cognitive computing, and

formed Ovonyx Cognitive Computer, Inc. (“OCCI”), which is 95% owned by the Trust and, on

information and belief, 5% owned by Ovonyx. Pursuant to the 2002 License Agreement,

Ovonyx granted to OCCI certain world-wide licenses to intellectual property owned by Ovonyx.

66. The 2002 License Agreement made express reference to the 1998 Agreement.

The ECD Bankruptcy and Sale of ECD’s Stock in Ovonyx

67. On the Petition Date, ECD commenced its chapter 11 case. Among other assets,

ECD engaged in a marketing process to sell its stock in Ovonyx.

68. Micron was selected as the winning bidder. Pursuant to that certain Equity

Purchase Agreement dated as of August 3, 2012, Micron acquired all of ECD’s stock in Ovonyx

and ECD’s rights under a 2000 stockholder agreement, which agreement was assumed by ECD

and assigned to Micron (the “Bankruptcy Sale”).

69. Micron paid $12 million. This purchase price suggested an equity valuation of

Ovonyx between $31.1 million and $34.0 million.

70. Micron did not take assignment of either the 1998 Agreement or the 1999

Agreement. Micron had the opportunity to do so because the first draft of a sale agreement

provided by the Trust to Micron for the stock of Ovonyx owned by ECD included the

assumption and assignment of each agreement but, on information and belief, Micron declined to

take assignment of each.

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71. This Court conducted a hearing on approval of the Bankruptcy Sale on August 22,

2012. At the hearing, which was attended by counsel representing Micron, ECD provided a

proffer of its investment banker, which included a representation that ECD was informed that

Micron had not communicated with any other equity security holders of Ovonyx and had not had

any dialogue or discussion regarding the sale with Lowrey or Parkinson.

72.

73.

74. ECD assumed the 1999 Agreement pursuant to a motion filed on July 16, 2012

that this Court approved. By virtue of the assumption of the 1999 Agreement, Ovonyx remained

obligated to pay the Royalty and honor the First Refusal Right.

The Post-Sale Activities of Ovonyx and the July 2015 Merger

75. After the sale of ECD’s stock in Ovonyx, Ovonyx continued to operate, receiving

licensing and royalty fees.

76. For at least a year after the Bankruptcy Sale, Ovonyx continued to represent in its

financial statements that it was obligated to pay the 0.5% Royalty as required under the 1998

Agreement and 1999 Agreement.

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77. However, Ovonyx failed to pay any Royalties after the Bankruptcy Sale closed.

78.

. Ovonyx has not paid 0.5% of this amount to ECD.

79. On information and belief, Ovonyx has received additional revenues after May

31, 2015, but has paid nothing to ECD.

80.

81.

82. On information and belief, Intel never exercised its first refusal rights which

allowed Micron, a competitor, to control much of the critical technology associated with 3D

XPoint, or its first offer rights, which allowed OMT to acquire significant rights concerning 3D

XPoint for de minimis consideration.

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83. In July 2015, Ovonyx and Micron entered into a merger transaction pursuant to

which Micron would acquire all of the outstanding shares of Ovonyx, pursuant to a document

titled Agreement and Plan of Merger (the “Merger Document”).

84.

85. The D&P Valuation was purportedly based on Micron management’s belief that

“an 8 year life is a reasonable estimate of the remaining economic life of the acquired license,

with the expectation that the % of revenue attributable to the acquired license will start to decline

in approximately 3 years.”

86. On August 14, 2015, only two weeks after the Merger

Mark Durcan, the then CEO of Micron, hosted Micron’s 2015 Summer Analyst

Conference. In response to a question from the investment community, Durcan discussed the

sales potential of 3D XPoint for Micron stating, “In the 2018 timeframe [Micron’s 3D Point

business] could easily be of the same order of magnitude as our DRAM businesses in that

timeframe. So maybe not the same size maybe half the size in 2018 but it will be a significant

additive revenue stream to Micron at the time”. Whereas Durcan projected 3D XPoint as

potentially as large as DRAM,

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87. Given the size of Micron’s existing DRAM business and the typical Ovonyx

license agreement royalty rate,

88.

89. The Trust, had it been notified, could have exercised its First Refusal Right to

acquire the stock Micron was acquiring at what amounted to a lowball price.

90. Lowrey himself received in excess of

91.

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92.

93. On information and belief, Ovonyx and Lowrey made no effort to market the

stock in Ovonyx to any person other than Micron.

94. Neither Lowrey nor Ovonyx provided notice to ECD that the stock of Ovonyx

would be sold. As set forth above, under the 1998 Agreement and the 1999 Agreement, ECD

had a First Refusal Right over any sales of stock of Ovonyx.

The OMT Asset Sale and Transfer Agreement

95.

96.

97.

98.

99.

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100. Ovonyx did not undertake any analysis to determine whether the consideration

provided by OMT was fair value for the assets Ovonyx was transferring to OMT.

101.

102.

103. On information and belief, OMT is a company that has no operations and no

employees, but merely holds intellectual property rights.

104. OMT was on notice of the existence of at least the 1998 Agreement by virtue of

105.

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106.

107. The OMT Agreement was not arms-length, commercially reasonable transaction

but a sweetheart deal, done in secret.

108. Neither Ovonyx nor Lowrey provided any notice to ECD that Ovonyx would be

entering into the OMT Agreement. Thus, ECD was deprived of the right to exercise the First

Refusal Right, and easily could have matched the de minimis consideration that OMT “paid”

Ovonyx.

109.

Lowrey resigned as an officer and Board member of Ovonyx.

110.

111.

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112. In July 2015, Micron announced the development of 3D XPoint, which is a

technology for making memory circuits that is being jointly developed by Micron and Intel. This

technology permits the vertical stacking of memory elements, which means more memory can be

stored in a given area of the surface of a memory circuit. A representative of IM Flash, an Intel

and Micron joint venture, was quoted as stating that the technology’s “magic parts” were

Chalcogenide material and an “Ovonyx switch” that, on information and belief, is the Ovonic

Switch.

113.

114. On June 6, 2018, the Trust made demand on Ovonyx to pay all owed Royalties

and to confirm that Ovonyx will pay future Royalties. Ovonyx has refused to pay the Royalty.

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CAUSES OF ACTION

FIRST CAUSE OF ACTION


AGAINST OVONYX AND LOWREY
(Breach of Contract)

115. The Trust repeats and realleges the foregoing allegations as though they were

fully set forth here.

116. The 1999 Agreement valid and enforceable contractual relationship existed (and

still exists) between the Plaintiff (as the successor in interest to ECD), on the one hand, and

Ovonyx and Lowrey, on the other hand.

117. The terms of the 1998 Agreement are incorporated into the 1999 Agreement, and

ECD, Lowrey, and Ovonyx’s conduct subsequent to execution of the 1999 Agreement confirms

the parties’ intention that Ovonyx was obligated under the 1999 Agreement to perform

obligations under the 1998 Agreement.

118. It is a breach of the 1998 Agreement if Lowrey did not provide notice of the First

Refusal Right to ECD or cause Ovonyx to pay the 0.5% Royalty.

119. It is a breach of the 1999 Agreement if Ovonyx did not pay the Royalty or provide

notice to ECD so that ECD could exercise the First Refusal Right.

120. ECD assumed the 1999 Agreement under 11 U.S.C. § 365.

121. Since the consummation of the Bankruptcy Sale, Ovonyx has not paid any

Royalty.

122. Neither Lowrey nor Ovonyx provided any notice of the July 2015 Transactions,

including the Merger Document and the OMT Agreement. Thus, the Trust was denied the

opportunity to exercise the First Refusal Right.

123. Lowrey has materially breached both the 1998 Agreement and the 1999

Agreement.

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124. Ovonyx has materially breached the 1999 Agreement.

125. As a direct, proximate, and foreseeable result of the breaches, the Plaintiff was

damaged in an amount to be awarded at trial.

SECOND CAUSE OF ACTION


AGAINST MICRON
(Alter Ego/Successor Liability)

126. The Trust repeats and realleges the foregoing allegations as though they were

fully set forth here.

127. The 1999 Agreement valid and enforceable contractual relationship existed (and

still exists) between the Plaintiff (as the successor in interest to ECD), on the one hand, and

Ovonyx and Lowrey, on the other hand.

128. It is a breach of the 1999 Agreement if Ovonyx did not pay the Royalty or provide

notice to ECD so that ECD could exercise the First Refusal Right.

129. Since the consummation of the Bankruptcy Sale, Ovonyx has not paid any

Royalty.

130. Ovonyx did not provide any notice of the July 2015 Transactions, including the

Merger Document and the OMT Agreement. Thus, the Trust was denied the opportunity to

exercise the First Refusal Right.

131. Ovonyx has materially breached the 1999 Agreement.

132. Micron acquired all of the stock of Ovonyx in July 2015. By acquiring such

stock, Micron is liable for the obligations of Ovonyx.

133. Micron abused the corporate form of Ovonyx by causing Ovonyx to enter into the

OMT Agreement and to orchestrate transactions by which Micron and its joint venture partner

Intel would receive the benefit of a royalty free license for Ovonyx’s technology relating to 3D

XPoint without complying with the 1998 Agreement and 1999 Agreement.

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134. Micron, as alter ego of Ovonyx, is responsible for the obligations of Ovonyx

under the 1999 Agreement.

THIRD CAUSE OF ACTION


AGAINST MICRON
(Tortious Interference With Contract)

135. The Trust repeats and realleges the foregoing allegations as though they were

fully set forth here.

136. The 1999 Agreement valid and enforceable contractual relationship existed (and

still exists) between the Plaintiff (as the successor in interest to ECD), on the one hand, and

Ovonyx and Lowrey, on the other hand.

137. It is a breach of the 1998 Agreement if Lowrey did not provide notice of the First

Refusal Right to ECD or cause Ovonyx to pay the 0.5% Royalty.

138. It is a breach of the 1999 Agreement if Ovonyx did not pay the Royalty or provide

notice to ECD so that ECD could exercise the First Refusal Right.

139. Since the consummation of the Bankruptcy Sale, Ovonyx has not paid any

Royalty.

140. Neither Lowrey nor Ovonyx provided any notice of the July 2015 Transactions,

including the Merger Document and the OMT Agreement. Thus, the Trust was denied the

opportunity to exercise the First Refusal Right.

141. Lowrey has materially breached both the 1998 Agreement and the 1999

Agreement.

142. Ovonyx has materially breached the 1999 Agreement.

143. With respect to the breaches, Micron had actual knowledge of the obligations

owed to ECD under the 1998 Agreement and 1999 Agreement. Among other things, Micron

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could have, but chose not to, take assignment of the 1998 Agreement and 1999 Agreement in

connection with its Bankruptcy Sale acquisition of ECD’s stock in Ovonyx.

144. On information and belief, Micron understood that acquiring Ovonyx’s stock,

including Lowrey’s shares, without providing the Trust notice to exercise the First Refusal Right

would cause a breach of the 1998 Agreement and 1999 Agreement.

145. Micron acted with an improper purpose by ensuring that Ovonyx would never

provide notice to the Trust. Micron knew that the effect of the agreement it designed, drafted,

and negotiated with Ovonyx would result in a breach of the 1998 Agreement and the 1999

Agreement, and allow Micron to acquire Ovonyx, the phase-change technology and the Ovonic

Switch – critical to 3D XPoint.

FOURTH CAUSE OF ACTION


AGAINST OMT
(Tortious Interference)

146. The Trust repeats and realleges the foregoing allegations as though they were

fully set forth here.

147. The 1999 Agreement valid and enforceable contractual relationship existed (and

still exists) between the Plaintiff (as the successor in interest to ECD), on the one hand, and

Ovonyx and Lowrey, on the other hand.

148. It is a breach of the 1998 Agreement if Lowrey did not provide notice of the First

Refusal Right to ECD or cause Ovonyx to pay the 0.5% Royalty.

149. It is a breach of the 1999 Agreement if Ovonyx did not pay the Royalty or provide

notice to ECD so that ECD could exercise the First Refusal Right.

150. Since the consummation of the Bankruptcy Sale, Ovonyx has not paid any

Royalty.

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151. Neither Lowrey nor Ovonyx provided any notice of the July 2015 Transactions,

including the Merger Document and the OMT Agreement. Thus, the Trust was denied the

opportunity to exercise the First Refusal Right.

152. Lowrey has materially breached both the 1998 Agreement and the 1999

Agreement.

153. Ovonyx has materially breached the 1999 Agreement.

154. With respect to the breaches, based on existing license agreements Ovonyx had

entered into that were being assigned to OMT, OMT had actual knowledge of the obligations

owed to ECD under the 1998 Agreement and 1999 Agreement.

155. On information and belief, OMT understood that acquiring Ovonyx’s intellectual

property, without providing the Trust notice to exercise the First Refusal Right, would cause a

breach of the 1998 Agreement and 1999 Agreement.

156. OMT acted with an improper purpose by ensuring that Ovonyx would never

provide notice to the Trust. On information and belief, OMT entered into the OMT Agreement

to facilitate Micron’s acquisition of Ovonyx and would acquire rights to intellectual property for

consideration that was far below market value.

FIFTH CAUSE OF ACTION


AGAINST OMT
(Actual Fraudulent Transfer)
(Michigan Uniform Voidable Transfers Act)

157. The Trust repeats and realleges the foregoing allegations as though they were

fully set forth here.

158. In July 2015, Ovonyx entered into the OMT Agreement which constituted a

transfer of an interest of Ovonyx in property.

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159. The OMT Agreement was entered into with the intent to hinder, delay, or defraud

other creditors of Ovonyx.

160. Ovonyx’s intent is evidenced by the following actions:

a.

b. Ovonyx intentionally hid the OMT Agreement from the Plaintiff, including for

months afterwards even though the Plaintiff had been requesting information from

Ovonyx;

c. No effort was taken to evaluate the OMT Agreement or determine whether

consideration OMT was paying for substantially all of Ovonyx’s assets was fair;

and

d. The transaction materially benefitted Micron, which at the time owned in excess

of 35% of the stock of Ovonyx, had the right to appoint two board members, and

was an insider of Ovonyx

161. The Plaintiff, as a creditor of Ovonyx, was harmed as a result of Ovonyx entered

into the OMT Agreement.

162. Pursuant to Michigan Uniform Voidable Transfers Act § 566.31 et seq., the Trust

is entitled to a judgment (a) avoiding the OMT Agreement; (b) directing that the OMT

Agreement be set aside, and (c) recovering any property transferred to OMT under the OMT

Agreement.

[signature page follows]

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PRAYER FOR RELIEF

WHEREFORE, the Trust respectfully requests that this Court enter judgment in favor of

the Trust and against the Defendants as follows:

a. awarding compensatory damages in amounts to be determined at trial, together


with prejudgment interest at the maximum rate allowable by law;

b. avoiding the OMT Agreement, directing the OMT Agreement be set aside and
recovering all property transferred to OMT under the OMT Agreement;

c. awarding reasonable costs and expenses incurred in this action, including, to the
extent applicable, attorneys’ fees; and

d. granting such other relief as the Court deems just and proper.

Dated: July 12, 2018

By: /s/ Eric D. Winston


Eric D. Winston, Esq. (admitted pro hac)
Quinn Emanuel Urquhart & Sullivan, LLP
865 S. Figueroa Street 10th Floor
Los Angeles, CA 90017
Telephone: (213) 443-3000
Facsimile: (213) 443-3100
Email: ericwinston@quinnemanuel.com

-and-

By: /s/ Joseph R. Sgroi


Joseph R. Sgroi (P68666)
E. Todd Sable (P54956)
Robert M. Riley (P72290)
Honigman Miller Schwartz and Cohn LLP
2290 First National Building
660 Woodward Avenue
Detroit, MI 48226
Telephone: (313) 465-7000
Facsimile: (313) 465-8000
Email: jsgroi@honigman.com
tsable@honigman.com
rriley@honigman.com

Attorneys for Plaintiff Energy Conversion


Devices Liquidation Trust

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