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DIRTT Expands Litigation Against Falkbuilt in Texas

DIRTT Environmental Solutions Ltd. (“DIRTT”) (TSX: DRT, NASDAQ: DRTT) an interior construction company that uses proprietary software to design, manufacture and install fully customizable environments, announces that it has expanded its litigation against Falkbuilt (a company started by two of DIRTT’s founders Mogens Smed and Barrie Loberg), and continues to aggressively pursue Smed, Loberg and Falkbuilt via four separate lawsuits across North America, as outlined below.

Kevin O’Meara, chief executive officer, stated, “Our primary focus is the successful execution of our strategic plan and capturing the benefits of improving construction market conditions, however we also remain steadfast in our commitment to vigorously defend the value of our business, our brand and the interests of our employees, clients, distribution partners, suppliers and shareholders. We are disappointed that the actions of Falkbuilt and its founders necessitated any of this litigation, but we are determined to pursue these actions to the fullest extent of the law.”

DIRTT Files a New Lawsuit in Texas

Today, DIRTT’s U.S. operating subsidiary filed a federal lawsuit in the U.S. District Court for the Northern District of Texas (Case No: 3:21-CV-1483) against Falkbuilt (the “Texas Litigation”). The lawsuit alleges that Falkbuilt has unlawfully used DIRTT’s confidential information in the United States and intentionally caused confusion in the United States in an attempt to steal customers, opportunities, and business intelligence, with the aim of establishing a competing business in the United States market. Among other things, the lawsuit alleges violations of the U.S. Lanham Act, the Texas Uniform Trade Secrets Act, the Federal Defense of Trade Secrets Act, the Pennsylvania Uniform Trade Secrets Act, the Colorado Consumer Protection Act, and the Ohio Deceptive Practices Acts. In addition, the lawsuit seeks injunctive relief that was previously granted in Utah, which is also being sought in Canada.

DIRTT Continues to Pursue the Utah Litigation

In addition to the Texas Litigation, DIRTT continues to pursue its trade secret misappropriation claims against Falk Mountain States, an entity purportedly operating as Falkbuilt’s Salt Lake City “Branch”, and several individuals affiliated with the Branch in the U.S. District Court for the District of Utah (Case No: 1:19:CV-00144) (the “Utah Litigation”). DIRTT is currently reviewing discovery and intends to conduct depositions in the near future. Falkbuilt and Smed were previously parties to the Utah Litigation, but the judge in the Utah Litigation recently ruled that it would be “more convenient” for certain aspects of the case to be heard in Canada. DIRTT disagrees with this ruling and intends to appeal the decision.

DIRTT Seeks Order Compelling Smed and Loberg to Attend Depositions; Increases Claim to $25 million

In Canada, DIRTT continues to aggressively pursue its claims against Falkbuilt, Smed, Loberg and several other former DIRTT employees in a lawsuit filed on May 9, 2019 in the Court of Queen’s Bench of Alberta alleging, among other things, breaches of restrictive covenants; fiduciary duties; and duties of loyalty, fidelity and confidentiality; conspiracy; and the misappropriation of DIRTT’s confidential information (the “Canadian Litigation”).

DIRTT recently filed an application seeking a court order compelling numerous defendants, including Smed and Loberg, and others, to attend depositions. In addition, DIRTT is seeking to have the preliminary injunction previously granted in the Utah Litigation entered in Alberta, and it is seeking leave to file an amended claim increasing its damages to Cdn$25 million, which it believes is reflective of Falkbuilt’s revenues to date.

U.S. Patent Case Continues

In addition to the three lawsuits described above, DIRTT has also filed an action for federal patent infringement in the U.S. District Court for the Northern District of Illinois (Case No: 1:20-cv-04637) against Falkbuilt. The patent lawsuit alleges that Falkbuilt’s “EchoDome” software infringes certain of DIRTT’s patents relating to its proprietary ICE® software (the “U.S. Patent Case”), one of whose inventors was Barrie Loberg, a founder of Falkbuilt and a defendant in the Canadian Litigation.

About DIRTT

DIRTT is a global leader in industrialized construction. Its system of physical products and digital tools empowers organizations, together with construction and design leaders, to build high-performing, adaptable, interior environments. Operating in the commercial, healthcare, education, and public sector markets, DIRTT’s system provides total design freedom, and greater certainty in cost, schedule, and outcomes. Headquartered in the US and Canada, DIRTT trades on Nasdaq under the symbol “DRTT” and on the Toronto Stock Exchange under the symbol “DRT”.

For further information please contact:

  • Kim MacEachern

    Investor Relations, DIRTT

    1-403-723-5000kmaceachern@dirtt.com

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