When a Strategic Partnership Turns Adversarial

Strategic partnerships between innovative technology firms and global industrial players are often framed as win-win arrangements. The smaller party brings intellectual capital, agility and breakthrough innovation; the larger party contributes scale, global distribution, capital strength and market credibility. In governance terms, however, such alliances are structurally fragile. They combine asymmetric power, imperfect information, and misaligned time horizons.

The dispute between Sorama B.V., a Dutch high-tech company originating from Eindhoven University of Technology, and Fluke Electronics Corporation, a U.S.-based multinational in industrial measurement equipment, illustrates this fragility with exceptional clarity. What began as a “dream deal” — enabling Sorama’s acoustic imaging technology to reach global markets through Fluke’s products — ultimately escalated into litigation over pricing, exclusivity, royalties, transparency, and trust.

This article treats the case not as a legal curiosity, but as a governance failure with strategic consequences. The court judgment offers rare insight into how governance principles such as transparency, fairness, accountability and role clarity play out — or fail — in complex commercial relationships.

1. The anatomy of the partnership: innovation meets scale

At its core, the Sorama–Fluke relationship was governed by a Master Services Agreement (MSA) and a related addendum covering different product categories. Under these agreements, Fluke received exclusive global rights to integrate Sorama’s acoustic imaging technology into certain industrial products, while Sorama received component sales revenue and ongoing royalties based on Fluke’s net revenue reporting.

From a governance perspective, this structure already contains three classic risk factors:

Dependency risk
Sorama became highly dependent on a single large customer for revenue, production planning and market access.
Information asymmetry
Royalty income depended on sales data controlled entirely by Fluke, creating reliance on reporting accuracy and good faith.
Strategic optionality imbalance
Fluke retained the ability to develop alternative products or sourcing strategies, while Sorama’s technology was contractually constrained.

These risks are not unusual. What matters is whether governance mechanisms — contractual, behavioural and relational — are sufficiently robust to manage them.

2. Pricing disputes as a governance stress test

The partnership began to unravel in mid-2023, when Sorama announced a price increase citing rising material and labour costs — a common and objectively understandable development in that period.

Fluke formally accepted the price increase but demanded cost transparency and subsequently paid invoices only partially, withholding amounts it deemed unjustified.

From a governance standpoint, this moment is pivotal.

2.1 Payment discipline as a governance obligation, not a procurement lever

One of the most revealing aspects of the Sorama–Fluke dispute is not the disagreement over pricing itself, but how payment was used as an instrument once that disagreement arose. From a narrow operational perspective, delayed or partial payment can be framed as a commercial pressure tactic — a way to force renegotiation, obtain cost transparency, or rebalance margins. From a governance perspective, however, this framing is fundamentally flawed.

The Master Services Agreement explicitly prohibited Fluke from withholding or offsetting payments against disputed amounts. That clause is not a technicality. It reflects a deeper governance principle: payment discipline is a cornerstone of trust in asymmetric partnerships. When one party controls cash flows, reporting systems and market access, timely and full payment is one of the few remaining counterweights available to the smaller party.

By partially withholding payments and later cancelling orders while disputes were ongoing, Fluke effectively shifted the dispute resolution arena from contractual process to economic pressure. The court noted this tension explicitly, treating payment behaviour not as a neutral commercial choice, but as conduct that undermined the contractual equilibrium.

This distinction matters. In well-governed organisations, procurement operates within governance boundaries; it does not redefine them. Once payment is repurposed as a negotiation tool, several governance risks materialise simultaneously:

Erosion of contractual certainty: if payment obligations become conditional on subjective satisfaction, contracts lose their disciplining function.
Implicit reprioritisation of power over process: economic leverage replaces agreed escalation mechanisms.
Normalisation of unilateralism: what begins as an “exception” becomes precedent.

The court’s refusal to legitimise this behaviour sends a clear signal: payment discipline is not a tactical option, but a governance obligation. Disputes over pricing, cost structure or margin allocation must be addressed through agreed mechanisms — audit rights, renegotiation clauses, mediation or litigation — not through selective compliance.

For boards and senior executives, the lesson is uncomfortable but essential. Short-term cash protection achieved through payment pressure may appear commercially rational, but it often represents a governance failure in disguise. It transfers risk down the value chain, amplifies dependency asymmetries, and accelerates the breakdown of trust that partnerships ultimately depend on.

In that sense, the Sorama–Fluke case illustrates a broader truth: the moment payment discipline becomes negotiable, governance has already started to fail.

3. Transparency, royalties and the duty to account

Perhaps the most significant governance issue in this case concerns royalty reporting.

Under the MSA, Fluke was required to maintain “full, true, and accurate books of account” and provide detailed reports enabling Sorama to verify royalty calculations. Sorama alleged that thousands of units were missing from Fluke’s reports, representing millions in unpaid royalties.

The court sided with Sorama on this point, ordering Fluke to provide complete and truthful sales data, supported by a substantial penalty mechanism for non-compliance.

3.1 Governance implications

This ruling goes beyond accounting mechanics. It reinforces three governance principles:

Transparency is not optional in asymmetric partnerships
Information control creates fiduciary-like responsibilities, even in commercial contracts
Trust cannot survive selective disclosure

The court explicitly rejected Fluke’s argument that certain revenues (such as bundled service plans) were royalty-exempt, describing such reasoning as potentially contrived.

Read more in our blog on: COSO Internal Control Framework: Lessons from Global Corporate Failures and Good Corporate Governance – Foundations of Trust and Accountability.

4. Exclusivity, disengagement and strategic ambiguity

Another central issue was exclusivity. Fluke accused Sorama of breaching exclusivity by marketing its own competing products. Sorama countered that Fluke had already abandoned the handheld product segment, effectively relinquishing exclusivity.

The court’s assessment is instructive from a governance perspective. It concluded that Fluke’s behaviour and communications, rather than formal termination notices, demonstrated a strategic disengagement from the relevant product line.

4.1 Governance lesson: actions speak louder than clauses

Governance is not exercised only through formal resolutions or written notices. Strategic intent is communicated through:

Product launches
Order cancellations
Internal and external communications
Silence in response to explicit concerns

The court treated Fluke’s silence and subsequent product actions as evidence of relinquished rights. This underscores a crucial lesson for boards and executives:

Governance failures often arise not from what is said, but from what is left unsaid.

5. Power asymmetry and the limits of “commercial realism”

Large corporations often justify aggressive contract enforcement or unilateral actions as “commercial realism.” The Sorama–Fluke case demonstrates where courts — and governance standards — draw the line.

While Fluke possessed greater market power, legal resources and strategic alternatives, the court did not accept that asymmetry as a licence to dilute contractual obligations or transparency requirements.

This aligns with a broader governance trend: courts increasingly scrutinise conduct, not just clauses.

6. Board-level accountability and oversight failures

Although the litigation formally involves operating entities, the governance implications extend to board level.

Key questions boards should ask in similar situations include:

Was the dependency risk of the smaller partner recognised and mitigated?
Were escalation mechanisms in place before payment disputes emerged?
Did legal and commercial teams act consistently with the organisation’s stated governance values?
Was reputational risk adequately weighed against short-term margin protection?

The public nature of the dispute, including press coverage framing the conflict as a “dream deal turned nightmare,” illustrates how governance lapses translate directly into reputational damage.

7. Broader governance lessons for technology partnerships

The Sorama–Fluke case offers at least seven transferable governance lessons:

Royalty-based models require audit-grade transparency
Exclusivity must be actively maintained, not passively assumed
Payment discipline is a governance issue, not a procurement tactic
Silence can constitute strategic signalling
Power asymmetry heightens, rather than reduces, governance duties
Contracts cannot compensate for eroding trust
Exit strategies deserve as much governance attention as entry deals

Read more from the OECD and Corporate governance.

8. Comparative governance perspective: recurring patterns in technology licensing disputes

The Sorama–Fluke conflict is not an anomaly. Across industries where innovation is licensed rather than acquired outright — semiconductors, medical technology, industrial software, and increasingly AI — similar disputes recur with striking regularity. When viewed through a governance lens, these cases reveal consistent structural weaknesses rather than isolated commercial disagreements.

8.1 Common pattern 1: Royalty opacity as a pressure mechanism

(Comparable cases: Qualcomm–Apple, Nokia–Apple, ARM–Qualcomm)

In many high-profile licensing disputes, the conflict escalates when the licensee controls downstream sales data while the licensor’s revenue depends on reported usage. The governance issue is not merely whether royalties are calculated correctly, but who bears the burden of proof.

In the Qualcomm–Apple and Nokia–Apple disputes, licensees challenged royalty structures while simultaneously limiting transparency into sales data. Courts and regulators repeatedly emphasised that withholding information is not a neutral act; it distorts the balance of the agreement.

The Sorama–Fluke case fits squarely into this pattern. The Amsterdam court explicitly framed Fluke’s incomplete reporting as a breach of its duty to enable verification, not as a permissible interpretation dispute. From a governance standpoint, this reinforces a consistent principle:

When one party controls the data, transparency becomes a governance obligation, not a courtesy.

Read mote in the Guardian: Apple to pay Nokia big settlement plus royalties in patent dispute.

8.2 Common pattern 2: Payment withholding as de facto renegotiation

(Comparable cases: SAP–Diageo, Oracle–Rimini Street)

Another recurring theme is the use of payment suspension or partial payment as an informal renegotiation tool. In several enterprise software disputes, customers withheld maintenance fees or license payments while contesting pricing models or service scope.

Courts have generally resisted this approach, distinguishing sharply between:

the right to dispute contractual interpretation, and
the right to suspend payment unilaterally.

The Sorama–Fluke dispute mirrors this governance fault line. Payment withholding functioned as leverage rather than escalation, shifting power dynamics outside agreed governance channels. As in comparable cases, this tactic accelerated conflict rather than resolving it.

Governance lesson across cases:
Once payment discipline erodes, trust collapses faster than contracts can be enforced.

8.3 Common pattern 3: Strategic disengagement masked as compliance

(Comparable cases: Boeing–supplier disputes, Medtronic–technology licensors)

A subtler but equally damaging governance pattern is strategic disengagement without formal exit. Large firms discontinue sourcing, launch alternative products, or reallocate internal investment — while nominally remaining within contractual frameworks.

In several aerospace and medical technology cases, courts examined not only formal notices but also:

product roadmaps
launch communications
internal emails
prolonged silence in response to partner concerns

The Amsterdam court adopted the same reasoning. Fluke’s actions — product discontinuation, silence following explicit questions, and replacement launches — were interpreted as evidence that exclusivity had been effectively abandoned.

Governance insight:
Boards often underestimate how operational decisions are interpreted as strategic intent — especially when power asymmetry exists.

8.4 Common pattern 4: Power asymmetry reframed as commercial realism

(Comparable cases: pharma co-development disputes, platform–developer conflicts)

In many technology partnerships, the dominant party argues that aggressive conduct is simply “commercial reality.” Smaller partners are expected to absorb volatility, dependency and enforcement costs.

However, across jurisdictions and sectors, adjudicators increasingly reject this framing. They focus instead on:

proportionality
consistency of conduct
respect for agreed governance mechanisms

The Sorama–Fluke ruling aligns with this broader trend. The court did not treat Fluke’s size or market position as justification for relaxed discipline. On the contrary, asymmetry increased expectations of transparency and procedural correctness.

9. Synthesis: what these cases collectively tell boards

When the Sorama–Fluke case is viewed alongside similar disputes, a coherent governance narrative emerges:

Licensing models amplify governance risk because value creation and value verification are decoupled.
Payment behaviour is one of the clearest governance signals — and one of the fastest trust destroyers.
Silence and inaction are interpreted as decisions, not neutrality.
Power asymmetry does not reduce governance duties; it intensifies them.
Courts increasingly evaluate behaviour, not just contract text.

For boards overseeing innovation-driven partnerships, the implication is unavoidable: effective governance in such relationships requires continuous oversight, not just upfront deal structuring.

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Closing reflection

What ultimately distinguishes failed partnerships from resilient ones is not the absence of conflict, but the quality of governance under stress. The Sorama–Fluke dispute, like its international counterparts, demonstrates that when payment discipline, transparency and escalation mechanisms erode, even technically sound contracts cannot prevent collapse.

In that sense, this case belongs not only in legal archives, but in boardrooms — as a reminder that governance is tested most severely when interests diverge, margins tighten, and trust is no longer convenient.

Conclusion – From contract management to governance maturity

Ultimately, this case is not about who “won” the lawsuit. It is about how a strategically promising collaboration deteriorated due to governance weaknesses that were foreseeable, but unmanaged.

For boards, executives and governance professionals, the Sorama–Fluke dispute serves as a reminder that good governance is not abstract. It manifests in invoice approvals, data disclosures, email responses, and the willingness to honour both the letter and the spirit of agreements.

In an era where innovation increasingly depends on partnerships between unequal players, governance is no longer a back-office function. It is a strategic capability — and when neglected, the costs extend far beyond the balance sheet.

FAQ’s – the Sorama–Fluke technology licensing governance

FAQ 1 – What is corporate governance in strategic partnerships?

Corporate governance in strategic partnerships concerns the frameworks, principles and behaviours that guide how partnering organisations make decisions, share risks, manage power asymmetry and resolve conflicts. Unlike internal governance, partnership governance relies heavily on contracts, transparency obligations, payment discipline and escalation mechanisms. Effective governance ensures that collaboration remains balanced even when interests diverge or economic pressure increases.

FAQ 2 – Why do strategic partnerships between unequal companies often fail?

Strategic partnerships between unequal companies frequently fail due to power asymmetry, information imbalances and dependency risks. The larger party often controls cash flows, reporting systems and strategic alternatives, while the smaller party depends on timely payment and transparency. Without strong governance safeguards, disputes over pricing, data access or strategy can quickly escalate into mistrust and litigation.

FAQ 3 – Why is payment discipline considered a governance issue?

Payment discipline is a governance issue because it reflects respect for contractual commitments and the balance of power between partners. When payments are delayed, partially withheld or used as leverage during disputes, governance shifts from rule-based decision-making to economic coercion. Courts increasingly view such behaviour not as a procurement tactic, but as a breakdown of governance and trust in the partnership.

FAQ 4 – What role does transparency play in royalty-based partnerships?

In royalty-based partnerships, transparency is essential because one party’s revenue depends on sales data controlled by the other. Accurate, complete and verifiable reporting is therefore a governance obligation, not a voluntary practice. Lack of transparency undermines trust, distorts incentives and often becomes the central trigger for disputes, audits and litigation.

FAQ 5 – How do courts assess governance failures in partnership disputes?

Courts increasingly assess governance failures by examining behaviour as well as contract text. This includes payment practices, reporting accuracy, communication patterns, strategic actions and silence in response to partner concerns. Formal compliance alone is insufficient if conduct shows abandonment of agreed principles such as transparency, exclusivity or fair dealing.

FAQ 6 – What lessons should boards draw from governance disputes in technology partnerships?

Boards should recognise that governance in technology partnerships requires ongoing oversight, not just initial deal approval. Key lessons include safeguarding payment discipline, enforcing transparency rights, monitoring dependency risks and ensuring that operational decisions align with contractual commitments. Most importantly, boards must understand that governance failures often emerge gradually through everyday decisions rather than dramatic breaches.

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