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A fight over the meaning of a hastily drawn six-page document — described by one side as an iron-clad contract and by the other as a mere memorandum of what might some day be a contract — has ended with a $174.5 million judgment. The award compensates Fluorine On Call, a Texas startup that claimed it had secured from a British company the exclusive rights to a technology to build and sell sophisticated semiconductor chip equipment. The award, coming after an eight-day trial in U.S. District Court in Austin, Texas, includes $120 million for lost income and $12 million in punitive damages. It is the largest by a jury so far this year. The dispute stems from a weekend of sun and yachting in the Florida Keys in August 2000. Executives from both companies spent two days negotiating a possible multimillion-dollar licensing deal. The handwritten document was drafted in a Duck Key, Fla., hotel room and signed after principals for both sides had spent the day negotiating on a yacht called “The Instigator.” Fluorine On Call claimed that the rights it acquired were canceled just six months after being granted by the British defendants, Fluorogas Ltd. and BOC Group PLC, which later acquired Fluorogas. Fluorine On Call Ltd. v. Fluorogas Limited, No. 01-CV-186 (W.D. Texas). In alleging breach of contract and fraud, the plaintiff claimed at trial that it never obtained from Fluorogas the “IP, patents and know-how” promised by the handwritten agreement to build the equipment. As a result, Fluorine On Call said it sold just one generator, a working prototype, for $220,000, when BOC killed the deal in February 2001. Winning lawyer Kevin Sadler, a partner at Baker Botts, said that the verdict “likely assures that BOC will not enjoy a monopoly position in offering this fluorine generator technology to the semiconductor and flat-panel display industry.” But Fulbright & Jaworski partner Christopher R. Benson, who led the defense for BOC and Fluorogas, countered that he is crafting a post-trial motion challenging some of the rulings made by U.S. District Judge James R. Nowlin and the instructions he gave the jury. Should that motion fail, Benson said he will appeal the verdict. In its suit, Fluorine On Call accused both defendants of breach of contract and fraud. The defendants countersued, claiming that certain representations made by FOC’s founders amounted to fraud. At trial, Sadler relied on the testimony of his client’s founding partners, brothers Stephen Siegele, an engineer, and Frederick Siegele, an attorney, as well as a former PriceWaterhouse accountant, Walter Bratic, who offered expert testimony on the value of the agreement. But Sadler also engaged in the sometimes risky strategy of calling as his own witnesses Fluorogas managing director Graham Hodgson, as well as Noel Leeson, chief of technology for BOC’s Murray Hill, N.J.-based U.S. subsidiary. According to Sadler, the highlight of Hodgson’s testimony was his “continued quibbling over the whether the document signed was an agreement or not.” Hodgson had spent the weekend in the Keys with the two brothers. Sadler called this the “fundamental flaw” in the defendants’ case. “They could never get comfortable, ultimately, with what to call it,” he said. Benson still disputes that the memorandum, which was penned by Frederick Siegele in the hotel, was ever meant to be the final expression of the parties’ relationship. But, when asked why neither side ever prepared a more formal, typewritten document, he said, “I’d like to know that myself.” Benson said that Hodgson had “copious notes about what happened on the boat,” and testified that the memorandum was always intended to be only a building block for a more formal relationship between the companies. Bratic testified that BOC’s decision to renege on the promised delivery of the technology “know-how” stripped the nascent Fluorine On Call of a key asset that could have netted the company tens of millions in profits. The eight-person jury also awarded $170,000 to the plaintiff on its fraud claim, on top of the award for lost income and punitives. In his March 4 judgment, Nowlin added more than $24 million in attorney fees, plus prejudgment interest.

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