iRobot Vaporizes a Rival

"The wheels of justice grind slow," the old saying goes. But Friday's news that iRobot (Nasdaq: IRBT  ) has prevailed on all counts against upstart rival Robotic FX put the lie to that old chestnut. Clocking in at four months from start to finish, this is one of the fastest cases of civil litigation I've ever seen.

Back in August, I described how the Roomba maker sued former employee Jameel Ahed and the company he founded. I noted how Ahed's "Negotiator" robot bore an uncanny resemblance to the PackBot manufactured by his former employer (and even claimed inspiration from another Motley Fool Rule Breakers pick -- Intuitive Surgical). Most pertinently, I mentioned how Robotic FX's PackBot knockoff, by undercutting iRobot on price, jeopardized a $180 million (actually more, as it turned out) contract to supply the military with 3,000 robots.

Well, just four months after iRobot first sued Robotic FX for patent infringement and "misappropriation and misuse of confidential information," two courts agreed that Robotic FX wasn't playing fair. Turns out, the wheels of justice didn't just grind swiftly -- they ground Robotic FX into dust. As described in a press release issued Friday, the courts:

  • Issued a permanent injunction forbidding Robotic FX from selling products incorporating iRobot trade secrets (including the Negotiator).
  • Forbade Ahed from competing against iRobot again for five years.
  • Dissolved Robotic FX and transferred "certain residual assets" to iRobot.

What assets might those be? The press release didn't say, but I'm guessing they would include any profits Robotic FX earned from past Negotiator sales, and accounts receivable still owed (this would all be bound up in the concept of "disgorging" profits unfairly obtained). One "asset" that I'm sure has already been transferred to iRobot is the Robotic FX website. Try to click through to it today, and you'll be detoured directly to iRobot.

Foolish takeaway
Last week's word that iRobot had reclaimed from Robotic FX a (potentially) $286 million contract with the military was great news, but it was a one-shot deal. Friday's victory has even more far-reaching implications. It secures iRobot's position as the go-to partner when big-name defense contractors like Lockheed (NYSE: LMT  ) or Boeing (NYSE: BA  ) need robotics help. It will almost certainly force whichever "local, state and federal law enforcement agencies" were patronizing Robotic FX in the past to turn to iRobot in the future.

Plus, it vaporized a rival -- and we all know how much robots like to vaporize things.


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