HP AND TURBON SETTLE TRADE SECRET LAWSUIT

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Date: Thursday June 23, 2011 12:54:22 pm
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    HP AND TURBON SETTLE TRADE SECRET LAWSUIT

    A little over a year ago, Turbon International filed a lawsuit against Hewlett-Packard (HP), alleging that the OEM had contracted Turbon to supply it with remanufactured cartridges for its managed print services (MPS) business but then abruptly ended the relationship. The remanufacturer accused HP of misappropriation of trade secrets, unfair competition, false advertising, tortious interference, and fraudulent inducement. Late last week, word emerged that the two parties have reached a settlement agreement. On June 17, Judge Victor Marrero of the U.S. District Court for the Southern District of New York signed a notice stating that Turbon, HP, and Hewlett-Packard (Thailand), Ltd. had reached a settlement agreement and dismissing with prejudice all claims in the action. The notice said that each side would bear its own costs “except as the settlement agreement between them otherwise provides.”

    We reached out to both Turbon and HP for comment. As is often the case with such matters, neither side was willing to discuss the agreement. Turbon did not respond to our request for more information. HP would say only, “HP and Turbon have settled their differences and the lawsuit has been dismissed.  We cannot comment further.”

    While sometimes in settlement agreements, each party walks away each bearing only its own costs and attorneys’ fees, it is certainly possible that some other financial agreement was made between the two parties. If so, neither Turbon nor HP is discussing the matter.

    Despite the bad blood between the two firms, we are not surprised that this lawsuit ended in a settlement agreement rather than before a jury. Both Turbon and HP had reasons for wanting to see this lawsuit resolved.

    Turbon was dealt a pair of significant defeats in the lawsuit when Judge Marrero dismissed Turbon’s claims of misappropriation of trade secrets by HP, unfair competition by HP, and false advertising by HP. Then, Judge Marrero denied Turbon motion for reconsideration of this decision. For our coverage of these and other developments lawsuit, see Turbon v. HP (2010). It is possible that Turbon was willing to come to the table because it felt it had little chance of prevailing with the two remaining complaints. The firm also may have felt it achieved a measure of victory in making its complaint public. Moreover, certain court documents indicated that HP considered Turbon’s public filing of the complaint a breach of the confidential disclosure agreements that Turbon had signed. So Turbon faced the possibility of a countersuit.

    HP, too, had reasons for wanting to put an end to the lawsuit. As the defendant in the complaint, HP faced ongoing legal fees as well as the possibility of being ordered to pay Turbon damages. Moreover, certain details of the case, first made public in Turbon’s original complaint, were embarrassing to HP, which has long publicly eschewed remanufactured cartridges as inferior to OEM cartridges. A settlement agreement essentially puts to an end ongoing public coverage of the lawsuit, and the agreement most likely includes provisions about confidentiality that prevent either party from further discussing the matter publicly.

    We know that we should treat all the lawsuits we write about like our children and not play favorites. But, we must admit that this one has been our favorite, not for any other reason than it was so compelling. Legal documents can make for dry reading, but that was certainly not true of this page-turner of a lawsuit in which Turbon, with colorful detail, spilled details about its agreement with HP. The lawsuit also revealed that HP, which dabbled in the remanufactured cartridge business many years ago but has since been vociferous in championing the superiority of OEM cartridges over remanufactured cartridges, had a contract in place to offer remanufactured cartridges made by Turbon through its MPS program—an indication that behind the scenes, OEMs and non-OEM supplies vendors often have much closer working relationships than they let on.

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