Water startup Corncob says lawsuit has ‘ulterior’ motives

Corncob Inc. brought its Alfie pilot model to the MMSD facility for Milwaukee Water Week.

Last updated on July 2nd, 2019 at 09:20 pm

Waukesha-based Corncob Inc. says a lawsuit by two Minnesota companies accusing the water filtration startup of stealing business projects and misrepresenting product development has an “ulterior and improper purpose.”

Corncob and its related company Pro-Equipment Inc. argue in a counterclaim filed earlier this month in the U.S. District Court for Eastern Wisconsin that Clark Engineering and Clark Technology filed their lawsuit to gain an advantage in another legal case and to force Corncob to not compete and sell its filtration products.

Corncob’s water treatment system uses spinning membrane discs in a pressurized housing to convert water from a number of different sources to potable drinking water. During a product demonstration in early 2017, founder Douglas Hwang touted the ability to customize the system to different applications, but also acknowledged the challenges of scaling the concept.

Pro-Equipment is a manufacturer and supplied components to the Clark companies for their competing water treatment system known as the Leachbuster.

Clark Engineering and Clark Tech filed a lawsuit in October accusing Corncob of breaking an alleged guarantee to not circumvent their relationship with Apex Efficiency Solutions SBC or other prospective customers.

Clark and Pro-Equipment had worked together on a project for Apex in 2014 in Kandiyohi County, Minnesota. Apex is currently suing Clark in Minnesota for the performance of its system on the project and for its involvement in another project where Apex is purchasing Corncob equipment.

According to the Corncob counterclaim, Apex later approached Hwang about potentially working on some of its projects, including inquiring about the use of the Corncob II system for a wastewater treatment project for Northern Star Co. in Chaska, Minnesota.

Corncob was ultimately issued a purchase order for the NSC project in September of this year. The company alleges the Clark companies “have attempted to interfere and destroy” its participation in the project.

“The timing of Clark Engineering’s and Clark Tech’s suit was intended to preclude Corncob from contracting with Apex Efficiency Solutions, SBC and other entities and from competing and selling its patented advanced membrane filtration system for wastewater,” the counterclaim says. “(The companies) believe that commencing litigation will stop Corncob’s ability to contract and perform work related to the NSC Project.”

The counterclaim alleges that the Clark companies are abusing the legal process by filing the lawsuit against Corncob and Pro-Equipment. The companies are seeking to have the case against them dismissed and to be awarded monetary damages.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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