Caterpillar hit with $73.6 mln trade secrets verdict in US

20 Jan 2016 | Author: | No comments yet »

Caterpillar ordered to pay $73.6M to tiny British firm for stealing design.

A federal jury has ordered Peoria-based Caterpillar to pay a small British firm $73.6 million for ripping off its design for a piece of heavy-duty construction equipment.CHICAGO — Caterpillar Inc. will be required to pay $74 million in damages after a federal court jury in Chicago found the company stole trade secrets from a supplier, the Wall Street Journal reported Monday.Siblings Gary, Keith and Jacqui Miller took US construction giant Caterpillar to court in a David Vs Goliath battle over stolen trade secrets, and won, securing $74.6m in damages.

The Friday verdict in the eight-week case in district court found that the Peoria-based manufacturer and onetime biggest customer of England-based supplier Miller UK Ltd. used its position as a major purchaser from the company to gain the secrets, then produce its own product, the Journal reported. The Cramlington-based business launched the legal bid amid claims the one-time customer used confidential documents during the two firms’ working relationship to create a rival product.

The verdict — the largest award under the Illinois Trade Secret Act, according to Miller’s attorneys — was a David and Goliath-style triumph for Miller, which employs just 105 workers in a small town in the north of England, against Caterpillar, which employs 120,000 workers worldwide and is one of Illinois’ largest employers. The firm’s founder Keith Miller and his brother and sister were in Chicago for the case, bidding to get $100m in damages (around £67m) , and lawyers acting for the company said the jury delivered everything they asked.

Reed Oslan, a partner at Kirkland & Ellis LLP, a law firm representing Miller, asked Troy Robl, a Caterpillar engineer, about the development of Caterpillar’s coupler during the trial. “You took the design information that was in the Miller model and then you designed your work on top of it. The jury awarded Miller UK $74.6m (more than £50m) in exemplary damages – a figure expected to top $100m with the addition of interest and attorney fees. The company’s owners re-mortgaged their homes and went from “nice homes and nice cars” to struggling to survive after Caterpillar stole their design, Oslan said. Miller plans to pursue Caterpillar for its legal fees and interest on the $73.6 million verdict, which could take the total Caterpillar will have to pay to “north of $100 million,” he said, adding that he expects Caterpillar to appeal. Supporters say it levels the playing field, allowing small-time litigants to have their day in court against wealthy defendants, but critics say giving outside investors a stake in the outcome of a case can skew the litigants’ decision making.

It was a little but surreal and quite emotional for the Millers – it was a fantastic moment.” Jacqui Miller MBE said: “This is David beating Goliath all over again… and David was a Geordie. As that product became popular, Caterpillar became Miller’s biggest customer and insisted on access to confidential information about the design of the product, according to Miller’s suit. “We were in awe of Caterpillar,” Keith Miller, chairman and founder of the family-owned company, said in an interview. “We were absolutely thrilled with the opportunity of working with Caterpillar.” Miller said in its suit that it expanded production capacity near Newcastle, England, and added a joint-venture plant in China based on assurances that it would remain Caterpillar’s supplier of the couplers. Caterpillar won $1 million back from Miller for its counterclaim of defamation, for claims Miller made in a video about Caterpillar’s rip-off design. In 2008, though, Caterpillar informed the British company that it was developing its own couplers and would phase out purchases from Miller, according to the suit.

They were quite simply fantastic.” Caterpillar’s long-standing agreement with Miller UK had given the US firm exclusive rights to sell the Miller Bug Coupler in America, a product which became an international industry leader when it went into production in 1999, helping Miller UK’s revenues to rise to £38.7m. If Miller UK prevails against any appeal filed by Caterpillar, it would have to share the damages with financial partners that helped fund the litigation.

But in 2008, Caterpillar dealt Miller a catastrophic blow by ending the agreement, a move which Miller said led to the loss of almost 300 of its 400-strong workforce. Then, having clawed their way through the credit crisis that followed, the family business was left reeling when it emerged soon after that Caterpillar was making its own version of the bug coupler. Miller UK’s court case centred on their claim that Caterpillar used Miller’s own designs to make the rival coupler, drawings only given to them as part of a confidentiality agreement – and the jury found that Caterpillar did steal those trade secrets. Keith Miller, who set up the business in 1978, said: “Ironically, having waited around seven years for this result, I never got to hear it in person – I was stuck in a taxi in Chicago in traffic similar to being on the M25 in London in rush hour.

Sitting and listening to Caterpillar’s claims was unbelievable and really quite painful. “I also want to thank all the team at Miller, the people who have supported us and who have given up their time for depositions, some of whom appeared in court.” “I also want to thank the fantastic legal team led by Reed Oslan, for believing in us.

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