3M 2014 Annual Report Download - page 116

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110
3M sued TransWeb Corporation in Minnesota in 2010 for infringement of several 3M patents covering fluorination and
hydrocharging of filter media used in 3M’s respirators and furnace filters. TransWeb does not make finished goods, but
sells filter media to competitors of 3M’s respirator and furnace filter businesses. TransWeb filed a declaratory judgment
action in and successfully moved the litigation to the U.S. District Court for the District of New Jersey, seeking a
declaration of invalidity and non-infringement of 3M’s patents, and further alleging that 3M waited too long to enforce its
rights. TransWeb also alleged 3M obtained the patents through inequitable conduct and that 3M’s attempt to enforce the
patents constituted a violation of the antitrust laws. In November 2012, a jury returned a verdict in favor of TransWeb on
all but one count, including findings that 3M’s patents were invalid and not infringed, and that 3M had committed an
antitrust violation by seeking to enforce a patent it had obtained fraudulently. The jury also recommended that the court
find 3M had committed inequitable conduct in obtaining the patents, and that the patents were therefore unenforceable.
Since the vast majority of TransWeb’s claim for treble antitrust damages was in the form of its attorneys’ fees and
expenses in connection with the defense of the patent case, the parties agreed that the measure of damages would not
go to the jury, but rather would be submitted to a special master after the trial. The special master’s recommendations
were forwarded to the court in September 2013. On April 21, 2014, the court issued an order denying 3M's motions to set
aside the jury's verdict. In addition, the court found two 3M patents unenforceable due to inequitable conduct. The court
accepted the Special Master's recommendation as to the amount of attorneys' fees to be awarded as damages, and
entered judgment against 3M in the amount of approximately $26 million. In July 2014, 3M filed a notice of appeal of the
judgment to the U.S. Court of Appeals for the Federal Circuit. The parties’ briefing is underway. Oral argument is expected
in May or June 2015, with a decision to follow thereafter.
For commercial litigation matters described in this section, no liability has been recorded since the Company believes that
such liability is not probable and estimable and the Company is not able to estimate a possible loss or range of loss at this
time, with the exception of the TransWeb matter, where the Company’s range of potential exposure, if any, could be
approximately $26 million.
Product Liability Litigation
Électricité de France (EDF) filed a lawsuit against 3M France in the French courts in 2006 claiming commercial loss and
property damage after experiencing electrical network failures which EDF claims were caused by allegedly defective 3M
transition splices. The French Court of Appeals at Versailles affirmed the commercial trial court’s decision that the
transition splices conformed to contract specifications and that EDF thoroughly analyzed and tested the splices before
purchase and installation. The Court of Appeals, however, ordered a court-appointed expert to study the problem and
issue a technical opinion on the cause of the network failures. The court-appointed expert submitted his report to the
commercial court in May 2014. The expert found potential defects in 3M’s product and found that EDF incurred damages
in excess of 100 million Euros. The expert’s opinion is not dispositive of liability or damages and is subject to numerous
factual and legal challenges that will be raised with the court. The commercial court may take from six months to one year
to render its decision.
One customer obtained an order in the French courts against 3M Purification SAS (a French subsidiary) in October 2011
appointing an expert to determine the amount of commercial loss and property damage allegedly caused by allegedly
defective 3M filters used in the customer’s manufacturing process. An Austrian subsidiary of this same customer also filed
a claim against 3M Austria GmbH (an Austrian subsidiary) and 3M Purification SAS in the Austrian courts in September
2012 seeking damages for the same issue. Another customer filed a lawsuit against 3M Deutschland GmbH (a German
subsidiary) in the German courts in March 2012 seeking commercial loss and property damage allegedly caused by the
same 3M filters used in that customer’s manufacturing process. The Company has resolved on an amicable basis claims
of two other customers arising out of the same issue for an amount that is not material to the Company’s consolidated
results of operations or financial condition.
For product liability litigation matters described in this section for which a liability has been recorded, the Company
believes the amount recorded is not material to the Company’s consolidated results of operations or financial condition. In
addition, the Company is not able to estimate a possible loss or range of loss in excess of the established accruals at this
time.