(MMM) 3M Company Settles Patent Litigation

3M Company (MMM) through its three companies 3M, 3M Innovative Properties Co., and 3M Canada has settled a patent litigation filed against Eurotex in Canada for infringing a 3M patent for reflective fire coat trim. The case was being fought in the Federal Court in Ottawa, Canada which ordered Eurotex to pay 3M for the past profits and gave a ruling against Eurotex. Eurotex has agreed to the commandment.

As per the court ruling, Eurotex is prohibited from manufacturing, selling and distributing any products violating 3M’s Canadian Patent No. 2,188,141. Three products TriViz, TrivizMyLite, and FireLiteC offered earlier by Eurotex have also been prohibited by the court.

Earlier on April 21, 2011, the Second Intermediate People’s Court of Shanghai gave a ruling for the patent infringement of 3M’s Chinese Patent No. ZL95193042.7 by Zhejiang Daoming Reflective Materials Company. The court had ordered Daoming to pay for the damages suffered by 3M. However, the enforcement of the ruling has been suspended after Daoming appealed the Shanghai court’s ruling.

Strong cash flow position and continuously expanding sales revenue provides 3M ample resources to expand through acquisition and innovation of new products. 3M is known globally recognized for its innovations, together with some of its well-known brands such as Nexcare, Post-it, Scotch, Scotch-Brite, and Scotchgard being the market leaders. We believe that continued capital expenditure with new product launches should bolster its prospects across most end markets.

However, the company’s growth objectives are largely dependent on timing and market acceptances of its new product offerings, including its ability to continually renew its pipeline of new offerings and bring those to the market at acceptable price points. Further, the results have been impacted by worldwide economic and capital market conditions.

Negative consumer sentiment is affecting the retail store traffic. On the corporate side, lower employment levels are negatively reducing office supply purchases in most companies.

3M Company together with its subsidiaries, operates as a diversified technology company with manufacturing operations spread over 60 countries worldwide. It has more than 35 business units organized into six segments: Consumer and Office, Display and Graphics, Electro and Communications, Healthcare, Industrial and Transportation, Safety, Security and Protection Services Business. Major competitors of 3M are Avery Dennison Corporation (AVY), EI DuPont de Nemours & Co. (DD) and Johnson & Johnson (JNJ).

We continue to maintain a Neutral rating on 3M Company for the long term. The company has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

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