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Schlegel GmbH did not own any of the patents, processes, or other
intellectual property that it used to manufacture its products.
Schlegel GmbH entered into a silent partnership agreement
with Schlegel Corporation in December 1981. The partnership
agreement provided terms for a contribution of 10 million
Deutsche marks from Schlegel Corporation to Schlegel GmbH.
Subsequent amendments were made to this agreement, extending it
through December 18, 1990.
Schlegel GmbH had its lone production facility in Hamburg,
Germany. This factory was built in 1972, and Schlegel GmbH had
experienced problems with the foundation of the building since
the mid-1970's. The floor on one end of the factory was sinking
due to the settling of the soil beneath. This sinking occurred
at an approximate rate of 3 centimeters per year, resulting in an
approximate total sinkage for some parts of the floor of 50
centimeters by 1989. The sloping floor posed potential
production problems in addition to safety concerns.
Environmental contamination was also discovered under the factory
in 1988.
Schlegel GmbH management was aware of these problems but did
not take significant steps to stop the floor from sinking until
1990 and 1991. Those attempts were unsuccessful. In addition,
an adjoining warehouse was subsequently built with an entirely
different support structure that required floor support pilings
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Last modified: May 25, 2011