US Construction Machinery Manufacturer Caterpillar Bulldozed in Legal Battle

In a recent US (Illinois, Northern District) case Caterpillar Inc. was ordered by a jury to pay $74.6million (approximately £50million) in exemplary damages in a fierce lawsuit by a former supplier that accused the equipment manufacturer of misappropriating its trade secrets.

Miller UK Ltd., a small family-run company based in Cramlington, won the damages following a trial in the Chicago Federal Court. Jurors also awarded $1million to Caterpillar for a counterclaim.

Background

The transatlantic argument first arose when a client agreement between the two companies ended after a long and mutual beneficial business relationship. Caterpillar had a long-standing agreement with Miller under the terms of which the Caterpillar had exclusive rights to sell the Miller Bug Coupler in America, a product which became an international industry leader in construction. It went into production in 1999, which saw Miller's revenues rise to £38.7m.  But in 2008, in a time where the UK economy was slowing down, Caterpillar ended this agreement. As a consequence of this, Miller said to have lost almost 300 of its 400-strong workforce.

Miller said in its original 2010 lawsuit that Caterpillar, its main customer, stole trade secrets and started producing its own products without having to engineer them from scratch. The Jury found for Miller on a misappropriation of trade secrets claim and a breach of contract claim.

Case

Miller UK's court case centred on their claim that Caterpillar used Millers' designs to make a rival coupler in America. The only way they could do this was through drawings given to them under an obligation of confidence imposed by a confidentiality agreement.  The Jury found that Caterpillar did then steal trade secrets and used them for their own benefit.

Comments

Reed Oslan, the lawyer for Miller who led the case against Caterpillar, said: "The jury gave us everything we wanted. I was always confident that we would get a good result for Miller. I can't articulate how great it felt when the result came in. 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. This result is a win not only for my brothers and me, but for small business the world over."

"We are disappointed by the jury's verdict," Rachel Potts, a spokeswoman for Caterpillar, said in an e-mail. "At this point we are considering our next steps in this litigation."

The case is Miller UK Ltd. v. Caterpillar Inc., 1:10-cv-03770, U.S. District Court, Northern District of Illinois (Chicago).