Slow Progress But High Stakes in iRobot–Robotic FX Tangle

10/1/07Follow @wroush

Hearings in iRobot‘s Massachusetts lawsuit against Illinois rival Robotic FX lurched forward a few steps today, with both sides scoring minor points. But key issues in the case—in which iRobot is accusing Robotic FX and its founder, Jameel Ahed, of misappropriation and misuse of confidential information related to iRobot’s Packbot military robot—remained undecided as Federal district court judge Nancy Gertner put off further testimony until Wednesday. Meanwhile, both today’s proceedings and filings released late last week paint a vivid picture of just how high the stakes are in this case.

Today’s proceeding were a continuation of a hearing about iRobot’s request for a preliminary injunction against Robotic FX, which last month won a $279.9 million military contract for its Negotiator robot—the device that’s the subject of the Massachusetts suit and a separate patent-infringement suit filed in Alabama. Before the first witness took the stand, Robotic FX’s attorneys told Judge Gertner that they had just learned the Government Accounting Office had issued a stay on the contract in response to a protest filed by iRobot (NASDAQ: IRBT) on September 22. The attorneys suggested that the stay rendered iRobot’s request for an emergency injunction moot, but Judge Gertner allowed the hearing to proceed nonetheless.

The first witness called by Robotic FX’s attorneys was Tom Frost, manager of iRobot’s Packbot program. Their examination ranged over a number of issues. Asked how many defense robots iRobot had sold, Frost said iRobot had supplied over 1,000 robots to explosives-disposal units to various military agencies. This prompted Robotic FX’s attorneys to question iRobot’s contention that the loss of the recent contract would cause the company irreparable harm, given the company’s track record of winning previous contracts. Frost disagreed, saying “I think it will be difficult to get another contract for this market, [because] once the military chooses a solution it tends to stick with it.”

In one odd and dramatic moment, a Robotic FX attorney asked Frost: “Do you believe that public perception is important for a company and that bad press is harmful?” Frost agreed. The attorney went on to ask Frost whether it would surprise him that Joseph Dyer, leader of iRobot’s government and industrial robots division, had sold 62,000 shares of iRobot stock on September 13, the night before the Negotiator contract was awarded to Robotic FX. [Editor's note: According to SEC filings, Dyer was exercising stock options as part of a previously arranged trading plan.] Before Frost could answer, Judge Gertner interjected, asking why the sale of shares was relevant. Robotic FX’s attorney replied that iRobot was claiming irreparable harm from the award of the contract to Robotic FX, but that Dyer appeared to be doing similar harm to shareholders by selling his shares. “So the harm derives from what he’s done, not what the government did?” Gertner asked. Yes, the attorneys answered. “That seems like a stretch,” Gertner said, but she allowed the question nonetheless.

Before Frost could even answer, however, the Robotic FX attorneys dived into a different line questioning, focusing on whether or not … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • wright

    These articles have been fascinating, thank you for writing them.
    However, it seems as though there is some spin in Robotic FX’s favor. It could be that you are trying to remain neutral and are, therefore, searching for reasons why Robotic FX may not be in the wrong in this case. Unfortunately, there are not many strong arguments for Robotic FX.
    Robotic FX’s argument that you conclude this article with seems irrelevant. Litigation is extraordinarily expensive. Accordingly, no one files suit until there is financial incentive. The counter argument would be: if iRobot thought its IP was possibly being infringed it should have (at least) sent cease and desist letters to the alleged infringer. However, in view of the recent Supreme Court ruling regaring declaratory judgement, this could have been a risky move by iRobot. Thus, there would be no reason for iRobot to take any action against Robotic FX until it was a serious competitor and causing significant damage.
    You also seem to be downplaying Robotic FX’s destruction of data. Ahed’s actions are analogous to a murder suspect being seen throwing a gun into a pot of molten lead.

  • Chas Doubletree

    It seems like this is a cheap way for larger defense contractors to use Robotic FX as a catspaw to steal lucrative business away from iRobot. Robotics has a huge upside in the future of warfare. My guess is iRobot has done a bad job of greasing palms in the Dept. of Defense and has left themselves vulnerable to getting cut out of the action. Why else would the Dept. of Defense go with an unproven company?

  • http://www.dessertbuzz.com Nik

    Yes, I would like to second the “thanks” for writing these articles. I am a shareholder in IRBT and I feel I may learn more about this comapny from this lawsuit than from analysts, news items etc…

    I disagree with Wright that your articles are favorable towards Robotic FX. I think you are being very even handed. Many cases that seem clear cut go the other way because of the way the law is written and the specific evidence (OJ Simpson trial?). Why did IRBT wait 2 years to go after this guy? Does that matter in the lawsuit? I don’t know, as I am not an intellectual property attorney. Anyway, keep up the good work.

  • http://www.xconomy.com/author/bbuderi/ Robert Buderi

    Hi Wright and Nik — Thanks very much for your comments, both of them, because we like constructive criticism as well as positive feedback! We do try very hard to be balanced in our coverage, and experience covering court cases has taught us that things don’t always play out as they might seem at first glance, as Nik says. Wright, this is our sixth story on this case, including providing a very detailed account of Ahed throwing potential evidence out in the dumpster, and others (most recently the same day this one was posted) that chronicled in detail his shredding CD-Roms and erasing his laptop’s hard drive—so we do feel we are providing both sides of this story. In any case, keep reading because we will be back at the courthouse today.

  • Britt Doughtie

    Robert and Wade, Just another note to let you both know that you have many grateful readers out in cyberspace following closely your reporting on the lawsuit and court goings-on. Thanks and please hurry to press today!

  • Andy Simpson

    I’ve also followed the coverage and in a comment to one of your initial stories suggested an FX bias. In that story, you accurately reported something positive that had been said about the FX robot, but you did not point out that what was said was also true about the iRobot version. When I pointed this out in the comment, you promptly modified the story. (I had also overlooked a part of your story that addressed another criticism I had raised.) Based upon your reaction, I concluded that there was no effort to put the thumb on the scale in favor of FX.

    Your stories have all been very balanced IMHO. (And I’m an iRobot shareholder and supporter.) This is a difficult topic engineering-wise and legal-wise and you guys are doing a good job trying to translate these topics into understandable stories.

  • Paul Coletta

    While I think the articles are objective (just barely), there seems to be no discussion on the actual practicality of how FX could have even begun to conceive this robot based on the personell of their staff. Contrasted to the MIT based staff at IRobot, the FX’ers are bit players. The technologies and egineering in these robots are very complex and Ahed didn’t have the brainpower to pull it off from scratch.