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Telstra is set to be dragged into a Federal Court drama over the alleged theft by Schneider Electric owned Company Clipsal Integrated Systems of technology behind the C Bus home automation system after it was revealed that the telecommunication carrier put up seed capital for a Company called Smart who is now claiming damages against Clipsal for the alleged theft of The Smart Companies Technology.
Court documents obtained by ChannelNews and SmartHouse claim that in 1996 Telstra Ventures invested $200,000 into the Smart Company and were also keen to invest in Clipsal in an effort to get their foot in the door in what were early days for home automation development. Now they are caught up in allegations of theft and skulduggary.
However the investment went pear shaped with both the Smart Company (Smart) and Clipsal now suing each other. At the time Clipsal was owned by Gerard Industries and close friend of John Howard, Robert Gerard and his family.
The documents have revealed that in May 1995 Clipsal and Smart entered into an agreement which was based on joint collaboration between Smart and Clipsal for the development of componentry Interface to enable the direct connection of the Smart System technology and the C-Bus system without having to use a PC interface. The primary objective was the development of C-Bus using Smart System-developed technology.
Clipsal claim that at the time they negotiated in good faith for the Smart technology which was rebranded as Clipsal C-Bus. In a defence documents lodged with the Federal Court both parties set up a Supply Agreement in respect of all trade secrets, proprietary know how and all other information communicated in confidence. This document is set to play a key part in the upcoming case before Justice Lander in the Federal Court in Adelaide.
Under this agreement Smart supplied the Smart System to Clipsal which they then re-branded as Minder and later Home Minder both were sold as Clipsal products. They also sold the Smart System with C-Bus as a packaged Clipsal product, marketed by Clipsal as “the C·Bus/Minder system” and/or the “Clipsal Minder Home Automation” solution and/or “Clipsal-the world’s smartest housekeeper”.
The combined use of the Smart System and the C-Bus through the JV22 Interface device gave C-Bus the smart functionalities they needed in the marketplace.
Throughout 1996 Smart negotiated with Clipsal towards an agreement for Smart and Clipsal to cooperate for the further development of building control and automation products with Smart Functionalities. They were to be called Intelligent Building Control and Automation devices.
While this was happening Clipsal undertook a comprehensive due diligence of Smart. They obtained Smart’s business plans and business and product strategy and eventually a heads of agreement was drafted by Clipsal.
While this was all happening, Smart had succeeded in attracting initial seed funding in the way of venture capital investment from a number of sources including Telstra Ventures Pty Ltd and Foundation Capital Ltd.
Telstra invested $200,000 by way of a loan convertible to equity agreement. Foundation Capital had invested $150,000 by way of a loan convertible to equity. In March 1996 Clipsal advanced an additional $150,000 to the Smart Company as a loan.
After sending the “final” version of the HOA in triplicate to the Smart Company for execution on 9 August 1996, Mr Bill Henderson and Mr Hugh Builder from Clipsal arranged to fly to Perth, the home State of the Smart Company.
That afternoon Clipsal dropped a bombshell on the Smart Company, when, without prior notice and notwithstanding the basis upon which the negotiations had proceeded to date, Clipsal advised the Smart Company that Clipsal no longer intended to become a shareholder in Smart.
In the days that followed and following Clipsal’s decision to not become a shareholder the seed investors Telstra and Foundation Capital decided not to proceed with their investment in the Smart Company. Clipsal then demanded their $150,000 back.
Clipsal gave Smart 14 days to repay the $150,000 plus interest or sign and return the amended version of the HOA which contained a charge in favour of Clipsal over all of Smart’s intellectual property in Smart Products.
The Court documents reveal that among the matters that caused the initial seed investors to alter their position was the delay caused by Clipsal’s change of position as regards the shareholder agreement and the insistence by Clipsal that Clipsal have a charge over Smart’s intellectual property which had the plain and intended effect that Clipsal would be in a much stronger position than any other investor/shareholder.
On Monday we reveal the early structure for C Bus and what happened after Clipsal pulled the plug.
