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LEGAL PROCEEDINGS
12 Months Ended
Dec. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
LEGAL PROCEEDINGS

23. LEGAL PROCEEDINGS

The Company is pursuing multiple lawsuits against its former founders, Mogens Smed and Barrie Loberg, their new company Falkbuilt Ltd. (“Falkbuilt”), and other related individual and corporate defendants for violations of fiduciary duties and non-competition and non-solicitation covenants contained in their executive employment agreements, and the misappropriation of DIRTT’s confidential and proprietary information in violation of numerous Canadian and U.S. state, and federal laws pertaining to the protection of DIRTT’s trade secrets and proprietary information and the prevention of false advertising and deceptive trade practices.

As of December 31, 2024, the Company’s litigation against Falkbuilt, Messrs. Smed and Loberg, and their associates was comprised of two main lawsuits: (i) an action in the Alberta Court of King’s Bench instituted on May 9, 2019, against Falkbuilt, Messrs. Smed and Loberg, and several other former DIRTT employees alleging breaches of restrictive covenants, fiduciary duties, and duties of loyalty, fidelity and confidentiality, and the misappropriation of DIRTT’s confidential information (the “Canadian Non-Compete Case”); and (ii) an action in the U.S. District Court for the Northern District of Utah instituted on December 11, 2019, against Falkbuilt, Smed, and other individual and corporate defendants alleging misappropriation of DIRTT’s confidential information, trade secrets, business intelligence and customer information (the “Utah Misappropriation Case”). Claims previously pending before in the U.S. District Court for the Northern District of Texas have been included in the Utah Misappropriation Case.

Falkbuilt also filed a lawsuit against the Company on November 5, 2019, in the Court of King’s Bench of Alberta, alleging that DIRTT has misappropriated and misused their alleged proprietary information in furtherance of DIRTT’s product development. Falkbuilt seeks monetary relief and an interim, interlocutory and permanent injunction of DIRTT’s alleged use of the alleged proprietary information. The Company believes that the suit is without merit and filed an application for summary judgment to dismiss Falkbuilt’s claim.

On the first matter, on October 25, 2024, the Honourable Mr. Justice Poelman of the Court of King’s Bench of Alberta granted a Court Order directing the Clerk of the Court to schedule an 8-week trial on the first available dates after December 8, 2025, to determine all the issues (including damages and liability). The trial is scheduled to commence February 2, 2026.

In the Utah Misappropriation Case, on April 11, 2023, the United States Court of Appeals for the Tenth Circuit reversed the U.S. District Court for the Northern District of Utah’s decision that Utah was an inconvenient forum for DIRTT’s claims against Falkbuilt and others for the misappropriation of confidential information, trade secrets, business intelligence and customer information. The Texas Unfair Competition Case was dismissed in March 2022, without prejudice, in reliance upon the now-reversed decision in the Utah Misappropriation Case, described above. On March 4, 2024, Defendants jointly moved to move the case to Canada again. Notwithstanding all the prior litigation, on March 28, 2024, Falkbuilt moved to stay the Utah case until the Court ruled on the renewed motion to dismiss (the “Second Motion to Dismiss”). On February 5, 2025, the Utah District Court granted the Second Motion to Dismiss for forum non conveniens, without prejudice. The Utah Court, in essence, redirected the determination of those damages from Utah to Canada, being the appropriate forum for the legal dispute. With the Canadian trial commencing less than a year away, DIRTT is pursuing damages and losses it suffered in Canada, the United States, and abroad in the Court of King's Bench of Alberta.

 

No amounts are accrued for the above legal proceedings.