By Sheila Pursglove
Legal News
Some cases cry out for a champagne celebration. A patent license arbitration decision awarding a defendant more than $1.2 million in attorney fees is one.
“An award of attorney fees is rare—and rarer still that attorney fees are awarded to a defendant in an arbitration at such a high level,” says Michael Hilton, a principal with Harness, Dickey, &Pierce PLC in Troy.
“This is in the highest strata of such awards, possibly one of the largest arbitration awards for attorney fees in the nation,” adds Bob Lenihan, another Harness, Dickey principal.
The case—that wrapped up in mid-February after almost nine years—involved re-usable, collapsible shipping containers with textile “dunnage” that erects to protect the components during shipping. The container and dunnage are collapsible so they can be economically returned and reused. Such collapsible, reusable containers were first used to ship automobile components, as an important part of reducing costs with Just-In-Time sequenced manufacturing.
The containers weren’t the only thing that collapsed. So did a business arrangement between two companies—Bradford Company in Holland, Mich., and conTeyor International based in Belgium with a North American office in Troy—that had entered into an arrangement where they agreed to cross-license each other’s technology.
“There’s a long and painful history,” explains Lenihan. “The business marriage was not a happy one, it didn’t work out. There was a lot of litigation, and the disputes boiled down to arbitration.”
The American Arbitration proceeding was initiated in 2005, spanning more than 8 years until it was recently finalized.
“This is the longest arbitration any of us have been involved in,” notes Lenihan.
Ultimately, the arbitrator ruled against Bradford on all its claims completely exonerating conTeyor. The arbitrator did not stop there, but went on to find that, “Bradford deliberately extended this Arbitration process by several years, with apparently the only goal of increasing the disruption to the business operations of conTeyor and to significantly increase conTeyor’s legal expenses in this Arbitration proceeding.”
ConTeyor was awarded more than $1.2 million in attorney’s fees, a significant sum that amounted to 75 percent of conTeyor’s attorney’s fees unnecessarily incurred as a result of Bradford’s bad faith litigation misconduct.
“Although arbitration decisions are rarely overturned, one of the most common reasons for vacating an arbitrator’s decision is not allowing a party to adequately present its case,” explains Allen Pittoors, an associate with the firm and a key player on the litigation team.
“An arbitrator can feel he is between a rock and a hard place, where he is forced to grant a significant amount of leeway to a party. But be careful what you ask for,” Hilton says. “The arbitrator may ultimately determine a party was misusing the arbital process for improper purposes and award attorney fees for that abuse.”
The HDP team is looking forward to celebrating the recent seven-figure deposit into conTeyor’s bank account with its client, who is coming over from Belgium.
“We’ll drink a bottle of champagne and celebrate,” Lenihan says. “Our client is very relieved to have this over…it’s good to have this one in the rear view mirror.”
The comment was echoed by Hilton.
“We’re happy we were able to completely exonerate conTeyor, but we’re even more pleased we were able to get a large chunk of conTeyor’s attorney fees put back in conTeyor’s pocket,” Hilton says.
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