Thermax Ltd has entered into an amicable settlement with Purolite International ending a five-year-long legal dispute regarding its ion exchange resin business in the US. As per this out-of-court settlement, Thermax will pay Purolite four installments of $9.5 million each spread over the calendar year to settle the litigation.
?The entire amount (Rs 178 crore) will be reflected in the company?s balance sheet in the last quarter of this fiscal, while the actual cash flow will be over the next financial year. We want to finish it off this year,? Meher Pudumjee, chairperson of Thermax, said. The payments will be due in April, July, October and December 2010.
The settlement is for the lawsuit Purolite filed in the Eastern District Court of Pennsylvania in 2005. It was about the production process of resins that are used in water treatment. MS Unnikrishnan, MD, said this was a $1-billion market globally and $20-25 million for Thermax.
The US district court in January 2010 passed an order that three production processes in dispute constituted Purolite?s trade secrets. The case was to be judged at a jury trial slated to start in March 2010 in a US district court. If that trial would have confirmed that the three processes in dispute were trade secrets, the court could have, under certain circumstances, imposed three times the damages plus certain litigation costs of the other party. Thermax?s options were either to continue the battle in the court or to settle it outside it.It chose the latter option after taking a long-term view of all the potential risks of significantly higher liabilities, given the uncertainties associated with jury trials.
The bone of contention
According to Purolite?s lawsuit, four employees left it and joined Thermax US in its ion exchange division. The lawsuit claimed that they had misappropriated Purolite?s trade secrets and had planned to share those with Thermax. Thermax then entered into a stipulated temporary restraining order providing that it did not and would not use any of these alleged Purolite informations. Subsequently, one of the former employees, who had been heading the production of ion exchange resins at Thermax, confessed that he had retained a number of documents while he was working with Purolite. This had not been known to Thermax until this confession. As soon as he disclosed it, Thermax made him return all the documents.
