Greatbatch hit with $21.7 million verdict in suit
Accused of using customer’s designs
Greatbatch Inc. has been hit with a $21.7 million verdict in a lawsuit alleging that the Clarence battery and medical device maker fraudulently used product designs from a former customer’s batteries to develop its own competing product.
Greatbatch executives said Thursday that the company plans to appeal the award made by a Louisiana state court jury to Ion Geophysical Corp. from a lawsuit the Houston-based company filed in 2002.
The $21.7 million verdict is more than Greatbatch has earned in all but one year, 2003, since the company began disclosing its financial information in 1998. The company’s profits totaled $18.6 million last year.
The size of the award shocked Greatbatch executives, who had estimated in a Securities and Exchange Commission filing in March that they believed their maximum possible loss in the lawsuit was no more than $1.7 million. A subsequent filing in August increased that estimated exposure to $2.5 million.
The lawsuit stems from a failed business transaction that dates back to 1997. Ion alleged that Greatbatch used its product designs and other trade secrets on a type of battery that its Electrochem subsidiary makes for the geophysical surveying and seismic markets.
If upheld, the verdict could cost Greatbatch considerably more than $21.7 million because Ion also would be able to recover attorneys’ fees and other costs related to the case, as well as interest that would have accrued on the award dating back to 2002.
The verdict “is wholly disproportionate to the profit realized by Electrochem from sales of the battery,” said Susan Bratton, the senior vice president of Greatbatch’s commercial battery business. Greatbatch has earned less than $1 million in profits over the last eight years from the battery covered by the lawsuit, she said.
The bulk of the damages included in the jury verdict were for future lost profits, said Marco Benedetti, Greatbatch’s controller and treasurer.
Greatbatch initially won a summary judgment to dismiss the case in 2007, but Ion appealed and the Louisiana Court of Appeals reinstated the case in January 2008.
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