If a federal court rules Advanced Environmental RecyclingTechnologies Inc. must pay $2.7 million in legal fees in its case against Mobil Corp., AERT of Springdale, Ark., could go bankrupt, its president told shareholders Aug. 4. AERT Chairman Joe G. Brooks announced at the company's annual meeting that it might have to purchase a bond to cover the legal fees, which Mobil had asked the U.S. District Court in Wilmington, Del., to order.
``We thought we ought to let our stockholders know all the options. [Federal court authorities] could award nothing, or they could award up to the $2.7 million'' in attorneys' fees.
AERT produces ChoiceDek lumber from recycled polyethylene and cedar sawdust at its plant in Junction, Texas. Fairfax, Va.-based Mobil makes a composite lumber named Trex in a plant in Winchester, Va.
In late May, AERT announced an exclusive marketing agreement with timber conglomerate Weyerhaeuser Co. of Tacoma, Wash., to retail ChoiceDek through Weyerhaeuser's distribution network.
AERT's relationship with Weyerhaeuser has been highly favorable for the lumber maker, with the company's Nasdaq listing rising from 38 cents in January to more than $1 per share last week, despite publication of a story of the bankruptcy option and the fact that 7-year-old AERT has never made a profit.
Mobil filed suit in 1992 in Wilmington questioning the validity of six AERT lumber patents. The federal court subsequently invalidated four of the AERT patents and held that Mobil had not infringed on the remaining two.
On July 10, AERT filed a Court of Appeals motion in Wilmington to overturn the district court's ruling and order a new trial.