Federal Court dismisses Fortescue and Element Zero’s two-year legal battle

Fortescue’s (ASX: FMG) long-running legal pursuit of three former employees who created rival green iron start-up, Element Zero, has come to an end with both parties agreeing to pay their own legal costs.

Pursuant to confidential terms of settlement, the Federal Court dismissed the claims against Element Zero and its co-founders Michael Masterman, Bart Kolodziejczyk and Bjorn Winther-Jensen.

In April last year, Fortescue alleged that trade secrets were stolen and confidential information was misused by the former employees to develop Element Zero’s patented technology — marking the beginning of a nearly two-year-long legal battle.

In 2021, Dr Kolodziejczyk and Dr Winther-Jensen, were employed by Fortescue, as chief scientist and technology development lead respectively, where they led and undertook research and development work. Their work included a confidential process of electrochemical reduction of iron oxide to iron using ionic liquid electrolytes, which Fortescue accuses Element Zero of stealing.

Mr Masterman was employed as the Fortescue Future Industries (FFI) chief financial officer from October 2020 to July 2022.

Federal Court documents released to the public in July last year showed Fortescue had hired private investigators to follow Dr Kolodziejczyk and Dr Winther-Jensen for 22 days before the Federal Court authorised search warrants.

The search and seizure resulted in the acquisition of more than nine million documents from the three men’s homes and offices. However, lawyers and the Federal Court found little evidence.

Fortescue went to court more than 30 times to fight for access to the suppressed documents but Element Zero remained steadfast in its innocence, arguing that documents that do not exist cannot be handed over.

In October, the Federal Court denied Fortescue access to documents following an expert witness testimonial. Arguing that Element Zero was withholding information, Patent lawyer Dr Grant Jackson told the court of documents that “should” exist if Element Zero had truly developed its own technology.

Federal Court Justice Bridgette Markovic described the Fortescue testimony as “speculative and arguably contentious”.

Mr Masterman says the decision ends nearly two years of uncertainty for the company and its supporters.

“While Element Zero has continued to make significant technical and commercial progress throughout the duration of the matter, we are delighted to put this episode behind us,” he said.

“We can now focus all of our deep and capable technical resources on rapidly advancing our iron ore-to-iron technology and developing our manufacturing sites in the Pilbara heartland of Port Hedland and in the US.”