Illinois Tool Works, Inc. & Subsidiaries - Page 7




                                        - 7 -                                         

          (O’Brien), petitioner’s group technology counsel, also studied              
          the patents and formed the conclusion that the Lemelson lawsuit             
          would most likely result in no liability exposure.  Anton was the           
          lead on-site due diligence person for petitioner’s acquisition of           
          the DeVilbiss assets, and Buckman and O’Brien were attorneys and            
          members of the patent bar.  The representatives of petitioner               
          estimated that legal fees of approximately $400,000 would be                
          incurred to defend the lawsuit.  The “worst case scenario” that             
          was contemplated by petitioner’s representatives was that                   
          petitioner could incur a liability of between $1 million and                
          $3 million.  However, they concluded that the likelihood of this            
          exposure was somewhere between zero and 5 percent.  They believed           
          that there was a 98- to 99-percent chance that petitioner would             
          prevail in the patent infringement claim.                                   
               The reserve for the Lemelson lawsuit, in the course of the             
          acquisition, was eventually set at $350,000.  At the conclusion             
          of the due diligence review, the purchase price of the DeVilbiss            
          assets was adjusted from $126.5 million to $125.5 million.                  
          Petitioner and DeVilbiss considered the pending Lemelson lawsuit,           
          but the lawsuit liability did not affect the adjustment in the              
          purchase price.  The acquisition closed on April 24, 1990.                  
               After the acquisition, petitioner assumed the defense of the           
          Lemelson lawsuit in the District Court in 1991.  On January 17,             
          1991, the jury returned a verdict against Champion (and, thus,              





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011