Technological
Mediation

A global household name, designed and marketed a washing machine which saved the consumer 4.5% electricity. Saved 6% water and washed clothes 5% more effectively than the leading market equivalent.

Although the cost of the new machine was slightly more than previous models. As well as the competition’s latest model, its efficiency savings, would be massive and quick return on investment. After all it was the technology that the consumer was purchasing.

Low and behold, their claims were completely true. Sales went through the roof; the company was struggling to keep up with demand. Backorder’s piled up. They could not manufacture them fast enough.

A competitor claimed that the technology used to create this new fantastic machine was in fact their idea. They were able to evidence this also. It was alleged that although the tech used was slightly different, it was based on their years of research, and product development, which they were just finalising.

In essence their claim was they owned the intellectual property for the technology, and a claim was brought for just over £59 million. Based on the sales of the product globally, as well as economic loss and damage to reputation.

The matter was listed in the High Court, with legal fees mounting, the parties entered into mediation. After a 3-day mediation, several private and joint meetings, listening to the leading engineering experts for both companies.

It was clear that although the design was very similar, it had actually been developed by a third-party consultancy firm. It was then sold, to both of these competitors at different times, but each version had been slightly altered. Therefore, the years of research, product development was not exactly correct as had been claimed.

The consultancy firm contested the foul play, stating what they had sold was two different pieces of technology, and they were in fact unique. They also relied on the terms of sale, the contract, and particular clauses which were slightly onerous, but if upheld by a court, would clear them of any wrong doing.

As both of the organisations had QC’s as counsel, the consultancy a leading barrister, who also was a Judge from their country, it was quite clear that the law could easily be interpreted in several ways. The litigation risk, legal fees the loosing party would have to pay was beyond scary.

A confidential agreement was drawn up between the three, simply because it made more sense to cut a commercial deal, which was in all their interests then take the gamble in the High Court!

Although both organisations were global giants. Having to pay a costs order in the millions, would not bankrupt either of them. But it would severely impact them, putting thousands of jobs at risk. Not to mention damage to reputation and future sales.