Recently, equipment manufacturing company Caterpillar was forced to pay $73.6 million in damages to Miller UK Limited as a result of misappropriating trade secrets. The secrets, which Caterpillar took from Miller UK Limited, revolved around the use of a coupler device.
Background
Miller, which initiated the lawsuit in 2010, had been a long time supplier of coupler devices to Caterpillar. The equipment was designed to allow operators of hydraulic excavators to attach tools, such as buckets and hammers.
Caterpillar designed their own coupler in 2008 and attempted to end their supply agreement with Miller.
In turn, Miller UK stated that the product Caterpillar designed was based on confidential trade secrets that they provided. In addition, Miller also accused Caterpillar of misappropriating trade secrets.
Award and Financing
Miller UK Limited, a small business with approximately 100 employees, financed their lawsuit through third party funding. How this type of financing works is outside third party companies, such as hedge funds and financial institutions, provide capital for the litigation of the lawsuit in exchange for a percentage of any damages that are awarded.
However, according to critics the type of financing described above is controversial since it may promote frivolous lawsuits. Supporters of companies providing outside funds believe that Plaintiffs are able to file cases that they may not be able to otherwise.
Analysis
There are many factors to consider based on this particular case. First, companies need to be aware of what they share with other organizations or individuals since they may be exposing themselves to similar products entering the marketplace. In addition, businesses may want to consider an agreement when providing information regarding goods.
At the same time, the method that Miller UK used to finance their lawsuit may lead to organizations evaluating whether or not they will be able to defend or file a case. Furthermore, using outside capital may lead the company in question to become dependent on others down the road.
Conclusion
If a company or individual have any questions regarding trade secrets or the manufacturing of similar products, it can be useful to consult a business attorney. A lawyer can help explain any potential liability that may arise for the organization. The attorney can also provide insight as to what information should be protected and what may be shared with outside individuals or organizations. Lastly, the lawyer can discuss any monetary awards and fees may be involved if and when a case is initiated and goes to trial.
rw