Arbitrator orders Magnetek to pay $23 million in patent dispute

Los Angeles, CA—Magnetek Inc. reports that an arbitrator has decided it must pay $23.4 million in damages to Ole Nilssen as a result of their long-running patent dispute and former litigation.


Los Angeles, CA— Magnetek Inc. reports that an arbitrator has decided it must pay $23.4 million in damages to Ole Nilssen as a result of their long-running patent dispute and former litigation.

As disclosed in the firm’s SEC filings during the past seven years, Nilssen filed a lawsuit in April 1998 alleging infringement of patents pertaining to certain types of electronic ballasts previously sold by Magnetek, and seeking unspecified damages and injunctive relief. The company denied these products, which it no longer manufactures, infringed any valid patent, and filed a response asserting affirmative defenses, as well as a counterclaim for a judicial declaration that its products did not infringe Nilssen's patents, and also that the asserted patents are invalid.

In April 2003, Mr. Nilssen's lawsuit and the counterclaims were voluntarily dismissed with prejudice, and both parties agreed to submit limited issues in dispute to final and binding arbitration.

The arbitration process commenced on November 8, 2004, and Magnetek announced that it expected a decision during its present fiscal quarter. While Magnetek says it presented what it believes are compelling defenses at arbitration, it also repeated in its filings and statements that a decision in favor of the plaintiff could have a material adverse effect on the company.

Magnetek learned May 3 that the arbitrator had awarded damages to Nilssen totaling $23.4 million. While this outcome was unexpected, the decision is final, binding, and not subject to ap-peal or explanation by the arbitrator. As a result, Magnetek is discussing various available option with its advisors and with Nilssen and his advisors.

Magnetek manufactures digital power products for communications, industrial automation, information technology, consumer products, alternative energy, power generation, transportation, and other applications that require highly reliable, precise, energy-efficient power. It operates manufacturing and research facilities in North America, Europe and China, and reported revenues of $243 million for its 2004 fiscal year, ending on June 30, 2004.

Control Engineering Daily News Desk
Jim Montague, news editor

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