Trade secret theft lawsuits impact on aircraft financing uncertain

Update, Sept. 14: Marsh plans to continue AFIC despite the lawsuit.

“Since its launch, AFIC has given clients greater choice by contributing significantly to the development and diversification of aircraft finance globally. We stand fully behind it and will defend this case vigorously,” the company wrote in an email to LNC. Boeing declined comment, deferring to Marsh.

Sept. 12, 2018, © Leeham News: The trade secret theft lawsuits filed yesterday by Xavian Insurance and Xavian Holdings against The Boeing Co., Boeing Capital Corp., Marsh & McLennan and Marsh USA strike at the very heart of business plan intended to replace the virtually closed US ExIm Bank financing that Boeing used to rely upon.

It also potentially does so at a similar business plan Marsh created to support Airbus sales.

It’s impossible to assess the validity of the claims, but the lawsuits certainly paint a bleak picture of events—as plaintiffs do when they file one.

The Xavian-Boeing lawsuit may be found here: Xavian_Boeing_Complaint.

The Xavian-Marsh lawsuit may be found here: Xavian v Marsh – Complaint.

Impact to AFIC?

LNC has written many times about the history of ExIm, the political attacks on the bank and what its absence means to Boeing. The lawsuits also give some history, so there is no need to repeat this today.

It’s unclear what impact, if any, the lawsuits will have on the operation of AFIC, the business venture at the heart of the lawsuits.

With Xavian seeking all profits Boeing received from selling airplanes funded under the AFIC structure, and fees, royalties, plus exemplary (punitive) damages and trebling of damages, will Boeing and Marsh risk funding any additional aircraft with this cloud hanging over the companies?

Undoubtedly the lawyers will be making this assessment.

This also casts doubt on Project Balthazar, the Marsh-directed plan to create a similar vehicle for Airbus. The European Credit Agencies support for Airbus have been closed since fraud and corruption investigations began several years ago. Balthazar was intended to give Airbus an alternative credit support vehicle to the ECAs.

LNC is unclear if any deal has been completed since news of Balthazar emerged in May in a report from Airfinance Journal. If not, the lawsuits probably will give parties pause to proceed. If any have been completed, one must question whether more will be.

The lawsuits may well upend future financings for an indefinite

6 Comments on “Trade secret theft lawsuits impact on aircraft financing uncertain

  1. Can you actually “steal” trade secrets?

    They have no protection beyond being secret.
    The holder needs to act on keeping his secrets out of the wild.

    • depends on what they did. if they signed a no compete/NDA type document, listened to the pitch, said “no thanks” then did the exact same thing themselves then yeah, there might be grounds for a lawsuit.

      if they broke in/hacked in and stole documents, then yeah that is stealing.

      if, on the other hand, they had already been considering something similar, had some informal conversations and decided to proceed on their own without the plaintiff then SOL.

      • Pretty sure they wouldn’t have signed a “non-compete”, but they probably did sign an NDA, prohibiting them from using any information they learned. Here is where things turn grey – did Boeing et al actually use any information they learned from these meetings to set up their own business or did they just listen then do their own thing.

        • Normally an NDA does not prevent the recipient from using the information, only from disclosing it further to third parties (hence “non-disclosure”).
          Thus exposing critical competitive information is risky even if an NDA is in place. And non-competes are quite rare, as Bruce says.

        • Actuarial information is likely very detailed numbers. Reminds me of digital maps which provide detailed information and to protect their IP the map makers introduce deliberate small mistakes here and there so that any one copying can be caught out. Plus that small mistakes can happen anyway, but from two different organisations who supposedly created them separately? I have come across small mistakes on digital maps and I used to wonder how that got there, but you would only find out if you were at that location and it wasnt a likely road modification.

  2. One would assume that Boeing’s lawyers investigated these NDAs before giving a green light on AFIC but with what happened during the whole Bombardier debacle, one should not be surprised if something critical was ignored/overlooked/ not provided.

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