Healthcare corporation 3M has lost its dispute with representatives of the British Government over the company’s failure to market a diagnostic for MRSA developed within the Ministry of Defence.

The complainants have won $1.3 million in damages, whereas they were seeking $40 million – an outcome claimed by both sides as a success.

The BacLite medical device, which uses photoluminescence to detect MRSA bacteria, was purchased by 3M in 2007 and then abandoned as having failed the necessary clinical trials to support its marketing in the EU and the US.

The MoD, its spin-out company Ploughshare Innovations and private equity firm the Porton Group together claimed that 3M had deliberately mismanaged the BacLite trials in order to protect its rival (and more expensive) Fastman device.

The High Court in London found that 3M was in material breach of its obligation “actively to market” BacLite in the EU, the US, Canada and Australia, including its obligation to seek regulatory approval in the US.

However, it did not find that 3M had “intended” a breach of contract and thereby conducted the clinical trials dishonestly.

3M has announced its intention to pursue charges in the US against the Porton Group for alleged attempts to “extort” an out-of-court settlement by threatening to use political influence.

While the arguments rage on, the question of whether BacLite has the potential to improve worldwide treatment of MRSA remains unresolved.

A rapid diagnostic test for MRSA that US corporation 3M bought and then declined to sell is the subject of a current High Court lawsuit brought by the UK Ministry of Defence.

MoD-owned company Ploughshare Innovations and its financial partner, private equity firm Porton Capital, are suing 3M for up to £41m for failing to properly market the BacLite test.

BacLite used fluorescent light to detect the presence of MRSA. It enabled hospitals to identify MRSA infections within five hours, whereas other test procedures require 48 hours.

Discovered at the MoD’s Porton Down research centre, BacLite was approved by the UK health authorities and marketed to hospitals in 2005 by Acolyte, a company formed by the two partners.

In 2007, 3M bought Acolyte and the BacLite brand for £10.4m, with an earn-out agreement that meant the partners could have been entitled to up to £41m from sales of BacLite up to 2009. The agreement committed the American group to obtain FDA approval and market BacLite in Europe, North America and Australia.

However, in 2008 3M closed Acolyte and withdrew the brand, stating that it had no commercial potential. The viability of their clinical tests of the product is disputed by the lawsuit, which claims 3M allowed BacLite to fail commercially by mismanaging its application for FDA approval.

Commenting on the tests, Ploughshare CEO Pete Hotten said: “3M Corporation failed to get an excellent diagnostic technology into the market, through what 3M’s own officials describe as avoidable mistakes.”

Former Defence Minister Tom Watson MP commented: "This is clearly a matter of public interest, both in terms of public health and also in terms of the potential earnings lost to the UK taxpayer. The British public has a right to know why such an important, potentially life-saving UK product became obsolete as a result of 3M's failure to re-do those vital FDA trials.”

3M has issued a public statement justifying its actions. “A hallmark of 3M is its unwavering commitment to providing effective and reliable products,” said the company’s legal representative, William A. Brewer III. “In the view of the company, BacLite was not commercially viable and it failed to meet certain standards of the marketplace.

“The profit motives of the Porton Group and its publicity campaign will have no bearing on our client’s position in the current litigation.”

Ploughshare Innovations manages the commercial licensing to industry of intellectual property developed within the Ministry of Defence. Porton Capital is a private equity firm that commercialises technology in partnership with the British Government.