Industrialized construction firms heading to court trial

Key Takeaways:

• A major trade secrets dispute between Alberta-based prefabricated construction firms DIRTT and Falkbuilt is heading to an eight-week trial in Alberta’s Court of King’s Bench starting Feb. 2, with DIRTT alleging wrongful conduct and losses that could exceed $50 million, claims Falkbuilt strongly denies.
• U.S. courts in Utah and Texas have repeatedly dismissed related lawsuits on forum non conveniens grounds, steering the case to Canada and establishing Alberta as the primary venue to resolve the dispute on its merits.
• Both sides are seeking substantial damages and making competing allegations, with DIRTT accusing Falkbuilt of misusing proprietary information and Falkbuilt counterclaiming for $22 million, framing the case as both a high-stakes commercial and reputational battle.

The Whole Story:

A high-stakes trade secrets and business dispute between Alberta-based industrialized construction firms DIRTT Environmental Solutions and Falkbuilt is heading to trial next month

An eight-week trial will take place in the Court of King’s Bench of Alberta starting Feb. 2, with hearings scheduled through March 27. DIRTT has said the case will determine whether Falkbuilt, its CEO Mogens Smed and former DIRTT executive Barrie Loberg — along with others — wrongfully caused losses that could exceed $50 million.

The trial is the latest chapter in litigation that has unfolded across Canada and several U.S. jurisdictions since Smed’s 2018 exit from DIRTT and the launch of Falkbuilt, a competing prefabricated interiors company. Court filings describe both companies as designers and builders of prefabricated interior spaces, a segment of industrialized construction that relies heavily on proprietary design software and standardized components.

In a recent LinkedIn post, Smed said Falkbuilt is “confident in proving our complete innocence” and argued DIRTT’s legal strategy has been aimed at disrupting Falkbuilt’s operations. “Despite this, Falkbuilt has succeeded in every prior proceeding,” he wrote, adding that the dispute will “finally be resolved” at the February trial.

DIRTT’s claim for substantial damages will be tested against that defence in Alberta, where the matter has become the central forum after U.S. courts repeatedly steered related litigation toward Canada under the doctrine of forum non conveniens — a discretionary principle that allows courts to decline jurisdiction when another forum is better suited to hear the dispute.

In the most recent U.S. decision, the U.S. District Court for the District of Utah dismissed DIRTT’s Utah action without prejudice on Feb. 5, 2025, concluding that Canada is an adequate alternative forum and that Canadian law predominates the dispute. DIRTT later characterized the Utah ruling as a redirection of the damages question to Canada, saying the court found that because the trade secrets were owned by the Canadian parent, any injury would be to that Canadian entity whether the alleged misconduct occurred domestically or abroad.

The Utah lawsuit had also produced a significant appellate ruling. In April 2023, the U.S. Court of Appeals for the Tenth Circuit reversed an earlier Utah district court decision that had dismissed the claims against some defendants on forum non conveniens grounds while allowing the case to continue against others. The appeals court held a district court abuses its discretion when it dismisses an action as to several defendants under forum non conveniens while simultaneously allowing the action to proceed against other defendants — a problem in the case because Utah-based defendants had not consented to Canadian jurisdiction at the time.

After that ruling, all defendants later joined the forum non conveniens request and consented to Canadian jurisdiction, which the Utah judge noted in granting the 2025 dismissal.

Parallel proceedings in Texas reached a similar endpoint. In April 2024, the U.S. Court of Appeals for the Fifth Circuit upheld a Northern District of Texas dismissal on forum non conveniens grounds in a related dispute involving DIRTT and the Falkbuilt entities, recounting a timeline that began with Smed’s departure from DIRTT and the founding of Falkbuilt.

The broad set of claims and counterclaims now slated for Alberta trial have been fought not only through court motions but also through public statements from both sides.

In a Feb. 2025 litigation update, DIRTT said Alberta’s Court of King’s Bench scheduled the Canadian lawsuit for an eight-week trial beginning Feb. 2, 2026. DIRTT said it is seeking damages and losses suffered in Canada, the United States and abroad, and it said the damages could exceed $50 million.

Falkbuilt, for its part, has previously framed the dispute as both a competitive and reputational battle. In a May 2022 press release, Falkbuilt said it had filed a counterclaim in Alberta’s then-Court of Queen’s Bench seeking $22 million in damages from DIRTT entities and former DIRTT CEO Kevin O’Meara. The company said it was seeking $2 million for alleged unpaid termination and bonus payments and $20 million for alleged damages tied to defamatory comments and alleged interference in Falkbuilt’s business operations.

In U.S. court documents, DIRTT has alleged that Smed set up Falkbuilt as a direct competitor, recruited DIRTT employees and affiliates and used DIRTT’s proprietary information. The filings also describe a Utah-related thread involving former DIRTT employee Lance Henderson and Falk Mountain States, a Utah affiliate linked to Falkbuilt, alongside allegations that confidential information was taken to support the competing business.

Those allegations are contested. In his LinkedIn statement, Smed said the litigation has put at risk the livelihoods of more than 450 Falkbuilt and Echo team members and warned DIRTT could face potential substantial damages awarded to Falkbuilt if Falkbuilt prevails. He also said Falkbuilt has invested heavily in defending itself over six years and argued the extended legal fight benefits no one involved.

With U.S. actions repeatedly dismissed on forum non conveniens grounds and appellate courts emphasizing the need for a single available forum that can bind all parties, Alberta is set to be the venue where the dispute is argued on the merits.