Mold & Hotrunner Technology AG is out of appeals, as the German Federal Supreme Court refused to hear its case - leaving Husky Injection Molding Systems Ltd. poised to seek damages of at least 7 million euros ($8.5 million) in an intellectual property dispute against the company founded by former Husky employees.
An official of Hochheim, Germany-based MHT said the 140-employee firm will be able to survive that big an economic hit.
Both companies make PET preform molds and hot runners. The much-larger Husky also makes injection molding machines.
MHT was founded in 1996 by former employees of Husky's preform mold plant in Wiesbaden, Germany, which Husky had closed earlier that year. Husky moved the mold operation into its manufacturing complex in Dudelange, Luxembourg.
Husky alleges that MHT officials took secret Husky computer-aided-design files when it created its own preform molds. MHT has denied using Husky's intellectual property, but the German courts have ruled against MHT, starting with a 2003 ruling in Husky's favor by the Frankfurt District Court.
MHT appealed, but in March 2005, the ruling was upheld. MHT appealed again, but the German Federal Supreme Court, the country's top court, said Nov. 24 that it would not hear the case.
That leaves intact a cease-and-desist order that prohibits MHT from using the business secrets of Husky.
Officials of both companies said the next step will be to add up the monetary damages. Bolton, Ontario-based Husky originally wanted 7 million euros, but Tilman Vossius, Husky's lawyer in Munich, said that figure could go to more than 10 million euros ($12 million).
Vossius accused MHT of dragging its feet on providing financial information to the Frankfurt District Court, which will make a final determination of damages.
But Christoph Kuckels, MHT's chief financial officer, said MHT has been audited and will get the data to the court.
``We have quite a good cash position to pay the fine,'' Kuckels said.
Kuckels declined to give MHT's sales, but said the company is profitable and on solid financial footing. Profit increased in 2004 and 2005, he said, adding that MHT has doubled spending on research and development for new preform molds.
MHT made waves by producing high-cavitation preform molds - including 192-cavity molds for Swiss injection press maker Netstal-Maschinen AG, which competes directly against Husky. MHT also makes 144-cavity molds, and smaller sizes, for Netstal.
According to MHT's Web site, the company also builds preform molds with up to 96 cavities for Munich, Germany-based Krauss-Maffei Kunststofftechnik GmbH, and up to 16-cavity molds for Arburg GmbH + Co. KG of Lossburg, Germany.
Kuckels said Husky, with $860 million in 2005 sales, is playing Goliath to MHT's David. ``Husky is trying to make our customers uncertain, the whole time,'' he said. ``This is, from our point of view, quite unfair. Husky is by far the largest player in the market, with the largest market share.''
Vossius called the comment ``an inappropriate excuse of the infringer.''
Meanwhile, pressure is ratcheting up on Werner Plass, MHT's chief executive officer and one of the founders. According to Vossius, Plass faces criminal charges in a Luxembourg court, the Tribunal D'Arrondissement. According to Vossius, the charges in Luxembourg include violating Husky copyrights, fraudulent access to Husky's computer data and commercializing the stolen data.
Police seized information on a computer server in Luxembourg, leading to the charges, Vossius said.
Kuckels, who confirmed the charges, said Plass remains in charge of MHT. He said Plass would have no comment.