April 18, 2022
Hubbell Lighting & M3 Settle Sportslighting Lawsuit
A $50+ million lawsuit filed in 2021 ends with an out-of-court settlement
In May 2021, M3 Innovation, an Upstate New York sports lighting startup, filed a $50+ million lawsuit against Hubbell Lighting citing nine counts – including breach of contract, breach of good faith and breach of fair dealing. In recently filed documents from March 2022, the plaintiff, M3, has voluntarily withdrawn the complaint as the two parties have reached a settlement. Terms of the settlement were not disclosed.
M3 was co-founded by Joe Caspar, the man who previously founded pioneering LED sports lighting company, Ephesus, which eventually grew to $22 million in revenues and sold to Eaton’s Cooper Lighting in 2015.
The lawsuit alleged that M3 and Hubbell Lighting were involved in many months of negotiations that would have given Hubbell exclusive rights to M3's products. After many rounds of negotiations and prolonged due diligence the companies came to an agreement, that according to M3, Hubbell eventually did not honor.
M3 claimed that Hubbell Lighting protracted the negotiations in order to acquire M3’s trade secrets patents and to ensure M3 would be unable to consummate a deal with Hubbell’s competitors.
M3 submitted into evidence a written agreement that appeared to be signed by executives from each company. The agreement detailed that in exchange for Hubbell's access to M3's products, the parties agreed as follows:
- Hubbell would pay an upfront fee of $2,500,000.
- Hubbell would pay a 10% royalty on net sales of M3’s products.
- Hubbell and M3 would work cooperatively on the development of analytics and video products under a specified profit-sharing arrangement.
- M3 promised to provide services exclusively to Hubbell, and to no other entity, for at least five years.
- Hubbell would pay M3 $350,000 per year, and a 1-2% sales commission, to support the cost and growth of M3’s sales organization and sales channels.
- Hubbell would pay M3 $1,200,000 per year, beginning in 2022, in four annual installments for M3’s satisfactory performance of services.
- Hubbell would pay to M3 an additional 10% commission on sales, up to $1,300,000 per year, to support M3’s research and development.
The Hubbell Lighting website currently lists only six products in indoor & outdoor Sports Lighting subsections. M3 has rebranded as Mako M3 Sports Lighting and has not announced any partnerships with other lighting companies to date.
