Court: British gov't, Porton get $1.3M in 3M dispute

In a bizarre case that involved a supposedly ineffective MRSA test, the British Defense Ministry, the Porton Group, a private equity firm and Ploughshare Innovations Limited have won $1.3 million in a dispute with 3M ($MMM). The group had been seeking roughly $40 million in damages.

The trio had accused 3M of botching clinical trials on BacLite, a product for detecting MRSA in hospitals. Back in 2007, 3M spent $20.4 million to acquire the BacLite, which incorporated technology developed for the British military to detect an attack by biological weapons, from Acolyte Biomedica. 3M cited disappointing results from the trials as the reason for abandoning BacLite. The technology was already available in the EU at the time.

Porton had accused the company of mismanaging the trials to protect Fastman, a 3M-developed detection product, from the less expensive BacLite. And earlier this year, the group urged the FDA to use an independent party to conduct a new round of clinical trials on BacLite.

In the decision, the U.K. court found 3M was in material breach of its obligation actively to market BacLite in the EU from the end of June 2008; in the U.S. from February 2009; in Canada from October 2008; and in Australia from October 2008. However, while "3M was in breach failing actively to market from the end of June 2008 there is no satisfactory evidence that this was known and intended by 3M U.S. ... There is equally no satisfactory evidence that 3M U.S. knew that the termination of the business was a breach of contract and intended such breach to take place," Justice Nicholas Hamblen said in court documents.

The court's decision resolves the claims in the U.K.; however, a lawsuit filed by 3M against Porton and its CEO, Harvey Boulter, and legal and public relations advisor Lanny Davis remains pending in Washington, D.C. 3M is accusing the group of concocting an illegal campaign to extort more than $34 million to settle the BacLite case prior to a final judgment. If 3M refused to settle, Boulter and Davis would use their influence with recently resigned U.K. Minister of Defense Liam Fox to interfere with the company's business in the U.K., according to a statement. 

Initially, Fox denied that he and Boulter had discussed a plan to resolve the dispute during a meeting in Dubai. Hours after the meeting, Boulter in an email allegedly threatened the company's business in the U.K., as well as the knighthood of the conglomerate's British-born CEO, George Buckley. When confronted with witness statements that the meeting with the Porton head had taken place, Fox backtracked and said Boulter had mentioned the matter briefly. The move prompted the company to bring a blackmail lawsuit in the U.S. Fox abruptly resigned last month after it came out that a friend had accompanied him on official trips and presented himself as someone who could broker access to the British government, as The New York Times notes.

"With the London matter now successfully resolved, 3M is anxious to press forward with its claims against Mr. Boulter and his affiliates," says William A. Brewer III, partner at Bickel & Brewer and counsel for 3M. "In our view, the judgment in London demonstrates that Mr. Boulter and others clearly were not entitled to the tens of millions of dollars that they sought from 3M."

- get 3M's statement
- check out the High Court's decision (.pdf)
- read the NYT's take

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