London High Court Affirms 3M Legal Victory; Awards Company Litigation Fees and Costs

Published on Friday, 03 February 2012 12:12 Written by TradersHuddle Staff

ST. PAUL, Minn.-( Business Wire )-

3M announced today that the High Court of the United Kingdom (“U.K.”) not only reaffirmed a prior judgment granting 3M a decisive victory in a London trial proceeding, but also further awarded 3M litigation fees and costs in the case. The case concerns 3M’s decision to cease its support for BacLite, a product it acquired from Acolyte Biomedica Limited (“Acolyte”) in 2007. 3M has now prevailed on virtually every important issue of the dispute.

Porton Technology Fund, Porton Capital, Inc. (together, “Porton”) and Ploughshare Innovations Limited, a subsidiary of the U.K. Ministry of Defence (collectively “Claimants”), investors in Acolyte, filed a lawsuit in December 2008 against 3M seeking approximately $40 million in damages. A 24-day bench trial occurred from June 15 – July 18, 2011. Today, the High Court reaffirmed a decision, dated November 7, 2011, that Claimants will receive only $1.3 million in damages (to be converted to pounds sterling at the exchange rate effective July 9, 2010), plus interest.

Because the final judgment of $1.3 million was for an amount less than 3M had offered to settle the matter before trial, the High Court ordered Claimants to pay the litigation fees and costs that 3M incurred in the lawsuit after March 3, 2011. In addition, because 3M prevailed on most of the issues disputed at trial, the High Court also denied Claimants 25 percent of the fees and costs they incurred before March 3, 2011. While the actual amount of the fees and costs to be paid will be determined in later proceedings, these findings mean that 3M will likely receive a net payment from Claimants after appropriate offsets.

“The court’s final order underscores a decisive victory for our company and the positions it took relative to this technology,” says Maureen A. Harms, 3M assistant general counsel and general counsel for the company’s Healthcare Business.

The U.K. High Court also denied Claimants’ request for permission to appeal.

Significantly, while the order resolves the claims in the U.K. High Court, a defamation lawsuit filed by 3M is going forward. The federal court in Washington, D.C. issued an opinion on February 2, 2012, that 3M’s defamation claims against lawyer and public relations advisor Lanny Davis survived Davis’ motion to dismiss and, in a matter of first impression, rejected Davis’ attempt to use the District of Columbia’s Anti-SLAPP Act (Strategic Lawsuit Against Public Participation) in federal court.

The opinion from U.S. District Court Judge Robert L. Wilkins allows the case against Davis to continue. The court decision does not address 3M’s pending claims against Harvey Boulter.

“With the London matter now successfully resolved, 3M looks forward to pursuing its defamation claims against Mr. Davis,” says William A. Brewer III, partner at Bickel & Brewer and lead counsel for 3M. “We are eager to conduct discovery on these claims – and bring this case to trial as quickly as possible.”

3M acquired BacLite in February 2007 from Acolyte. In connection with the acquisition, the Claimants alleged that 3M breached its contractual obligations to actively market the product, diligently seek regulatory approvals, and provide the technology with the necessary level of financial resources. Claimants had asserted they were entitled to significant earn-out payments based on their claims. 3M successfully proved otherwise, establishing that it discontinued marketing BacLite in 2008 because, after diligent efforts and spending substantial resources, it believed the product did not meet performance and customer expectations. The company demonstrated at trial that after thorough investigation and analysis, it concluded BacLite was not a commercially viable product for the detection of Methicillin-resistant Staphylococcus aureus (MRSA), an antibiotic resistant bacteria commonly found in hospitals.

Among other things, the U.K. High Court found that 3M had acted with reasonable care and judgment in seeking regulatory approval for BacLite from the U.S. Food and Drug Administration. While the High Court did find that 3M had technically breached the Sale and Purchase Agreement (SPA) by ceasing BacLite’s sales without final consent from the Claimants, it nevertheless agreed with 3M that “BacLite as it was would never have been a commercial success…and future sales of the product would have been limited” if 3M had continued to market the technology.

Brewer was joined in representing 3M by Mark Howard, QC, and Simon Salzedo, QC, of Brickcourt Chambers; Simon Morgan and Paolo Caldato of Simmons & Simmons; Tim Maloney, Matt Blower, Theresa Bevilacqua and Paul Klaas of Dorsey & Whitney; and Michael J. Collins, Ken Hickox and Farooq A. Tayab of Bickel & Brewer.

About 3M

3M captures the spark of new ideas and transforms them into thousands of ingenious products. Our culture of creative collaboration inspires a never-ending stream of powerful technologies that make life better. 3M is the innovation company that never stops inventing. With $30 billion in sales, 3M employs 84,000 people worldwide and has operations in more than 65 countries. For more information, visit www.3M.com or follow @3MNews on Twitter.

About Bickel & Brewer:

Bickel & Brewer has earned a reputation as one of the most successful law firms in the United States practicing exclusively in the field of complex commercial litigation and dispute resolution. With offices in New York and Dallas, Bickel & Brewer represents a wide spectrum of industry leaders – from entrepreneurs to Fortune 500 corporations – facing the most challenging of legal issues. Visit Bickel & Brewer at www.bickelbrewer.com.

3MDonna Fleming Runyon, 651-736-7646orBickel & BrewerTravis J. Carter, 214-653-4856