AFTER SCOTSON WEBBE'S LONG legal battle with Johnson & Johnson, one of his own lawyers characterized him as a "a little bit of a pain in the rear end" -- in this case, meant to be a compliment on his tenacity and persistence.
Webbe certainly needed those qualities to beat his towering opponent. Handgards Inc., the disposable-glove company he runs, recently won an $18.9-million award against J&J, the giant health care concern. But Handgards may have been the real loser, as small companies sometimes are when they duel against a giant. Often, legal costs and the drain on scarce management resources severely hurt a small company. In this case, the underdog was practically paralyzed for almost a quarter century.
Webbe was a consultant in 1962 when J&J filed a lawsuit in which it claimed to own the patent on a heatsealing process that Handgards was using. The patent was ruled invalid six years later. Then Handgards filed a countersuit charging that J&J had known that fact and had been trying to destroy its competition. Handgards won the case this year when the U.S. Supreme Court refused to hear J&J's appeal.
The battle barely affected J&J, which posted sales of more than $6 billion in 1984. But for Handgards, which expects sales of $8.5 million this year, it was a different matter. "It really throttled our operations," says Webbe. "We couldn't merge, sell, or buy. We couldn't do anything." Prospective buyers approached Handgards but were unable to appraise the company. "We had suitors, but when they took a look at the lawsuit, they backed away," Webbe notes. He estimates that he spent one third of his time orchestrating the company's courtroom strategy.
The lawsuit, which brought big legal bills, also cost Handguards some employees. Some chose to bail out during the fight because they saw a bleak future. "They thought the lawsuit would bleed us white and that they'd better find a job somewhere else," Webbe, 68, recalls. "It's a horrendous experience. That's why most small companies cave in."