Greentech Consultancy Co., WLL v. Hilco IP Servs.
| Decision Date | 11 May 2022 |
| Docket Number | C. A. N20C-07-052 AML CCLD |
| Parties | GREENTECH CONSULTANCY CO., WLL, Plaintiff, v. HILCO IP SERVICES, LLC, Defendant. |
| Court | Superior Court of Delaware |
Submitted: March 2, 2022
Upon Plaintiff GreenTech Consultancy Co.'s Motion for Summary Judgment, DENIED
Upon Defendant Hilco IP Services, LLC's Motion for Summary Judgment, GRANTED IN PART, DENIED IN PART
Theodore A. Kittila, Esq., William E. Green, Jr., Esq. Halloran Farkas & Kittila LLP, Wilmington, Delaware Counsel for Plaintiff GreenTech Consultancy Co.
Richard L. Renck, Esq., Duane Morris LLP, Wilmington, Delaware, Counsel for Defendant Hilco IP Services, LLC.
In 2017, Plaintiff GreenTech Consultancy Company, WLL ("GreenTech") and Defendant Hilco IP Services, LLC ("Hilco") entered into a joint venture to develop and commercialize certain intellectual property owned by GreenTech. They memorialized the "general terms and conditions" of their agreement in a Term Sheet, which recognized the need for a subsequent agreement "setting forth the specific terms and conditions of the proposed transaction in more detail." The Term Sheet also recognized that the final closing "shall be subject to" several conditions described therein. Ultimately, Hilco developed misgivings about the venture and backed out before closing. GreenTech could not afford to maintain its ownership of the intellectual property without Hilco's financial support. In this action, GreenTech seeks to recover damages pursuant to the Term Sheet under alternative claims for breach of contract and promissory estoppel.
Both parties have moved for summary judgment as to GreenTech's claims. Their briefing raises a series of questions, including: (1) does GreenTech have standing to maintain this action when one portion of the term sheet refers to GreenTech's members, rather than GreenTech, receiving an interest in the joint venture; (2) what were Hilco's obligations under the Term Sheet, which expressly contemplated further negotiations between the parties; (3) did Hilco breach its obligations; (4) if Hilco breached, is GreenTech entitled to recover its expectation damages; and (5) can GreenTech maintain its alternative promissory estoppel claim?
For the reasons explained below, the Court holds: (1) GreenTech has standing because Hilco's proffered interpretation of the Term Sheet is neither reasonable nor consistent with its terms; (2) Hilco was obligated to "negotiate [with GreenTech] in good faith in an effort to reach final agreement within the scope that ha[d] been settled in the preliminary agreement"[1]-i.e., the Term Sheet; (3) whether Hilco breached this obligation is a factual question that cannot be resolved on summary judgment; (4) the Court cannot determine GreenTech's entitlement to damages on the present record; and (5) GreenTech cannot maintain its promissory estoppel claim. Accordingly, GreenTech's motion is DENIED and Hilco's motion is GRANTED as to the promissory estoppel claim and DENIED as to the breach of contract claim.
I. BACKGROUND
Greentech is a Bahraini limited liability company owned by Anwar Ahmed and his wife, Asmar Malik.[2] Hilco is a Delaware limited liability company with its principal places of business in New York, Massachusetts, and Illinois.[3] Non-party Internet Corporation for Assigned Names and Numbers ("ICANN") is an entity that oversees the coordination of policies of the Internet's Domain Name System ("DNS").[4] Non-party Etihad Etisalat Company is a large Saudi Arabian telecommunications company that does business as "Mobily."[5]
A top-level domain ("TLD") is the extension to the right of the dot in an Internet domain name (i.e., delaware.gov).[6] The number of permitted TLDs was limited for much of the Internet's history (e.g., .com, .org, .edu, etc.).[7] That changed in 2012, when ICANN opened the DNS to virtually any potential TLD.[8] The change in policy caused many entities to apply to ICANN to obtain new, customized TLDs.[9]
In 2012, Wael Nasr of WiseDots LLC ("WiseDots") requested that Ahmed assist WiseDots in applying to obtain two TLDs from ICANN.[10] The TLDs were English and Arabic versions of ".mobily" (together, the "dotMobily TLDs"). WiseDots could not apply for the dotMobily TLDs directly because financial constraints prevented it from meeting ICANN's application requirements.[11]GreenTech agreed to help. On May 10, 2012, Ahmed, Malik, and GreenTech entered into a written agreement with WiseDots, under which GreenTech would "cause[] its name to be entered into the ICANN . . . application slots as an applicant for the potential new gTLDs."[12] GreenTech then applied for the rights to become the registry operator for the dotMobily TLDs.[13] The dotMobily TLDs were significant because Etihad Etisalat Company does business as "Mobily." GreenTech and WiseDots believed there was a chance the dotMobily TLDs might catch on in the Middle East, thereby increasing their value.[14]
In June 2014, WiseDots entered into a gTLD Agreement with Mobily.[15] The gTLD Agreement stated in relevant as part follows:
WiseDots, as discussed with Mobily, has applied for the [dotMobily] TLDs using an entity named GreenTech, an affiliate of WiseDots, as the applying entity only and that this arrangement is clearly stated in the response to question 18a of the TLDs registry applications.[16]
The gTLD Agreement contemplated that ownership of the dotMobily TLDs would be transferred to Mobily once the registry agreements for the dotMobily TLDs had been formalized with ICANN.[17] The transfer was to occur "through a petition to ICANN by WiseDots immediately and without any conditions as soon as ICANN rules allow."[18] Although the record is silent regarding what came of the gTLD Agreement, it appears ownership of the dotMobily TLDs never was formally transferred to Mobily.
In December 2014, GreenTech executed registry agreements with ICANN relating to the dotMobily TLDs (the "Registry Agreement").[19] The Registry Agreements required GreenTech to pay ICANN quarterly registration fees to maintain ownership of the dotMobily TLDs, among other things.[20] GreenTech maintains Mobily agreed to share the expense of those fees, but ultimately failed to do so.[21] GreenTech could not pay the fees without Mobily's support, which created the risk ICANN might terminate the Registry Agreements and revoke the dotMobily TLDs. GreenTech attempted to avoid termination by soliciting new investors. One such potential investor was Kevin Wilson ("Wilson"), the former CFO of ICANN and then-CEO of WiseDots.[22]
Hilco is in the business of providing advisory assistance concerning Internet services.[23] The CEO of Hilco at all relevant times was Gabriel Fried ("Fried"). In March 2016, Fried emailed Wilson a draft document titled "New gTLD Program Overview," which identified "a significant investment opportunity in the gTLD industry."[24] In late 2016, Fried and Wilson began negotiating the terms of an employment agreement whereby Wilson would lead a d/b/a of Hilco called TLD Advisors. Hilco and Wilson executed an employment agreement in May 2017.[25] Under the agreement, Wilson was permitted to continue working on certain projects predating his employment, including the dotMobily TLDs.[26]
Wilson presented the dotMobily TLDs to Fried. On July 13, 2017, Fried emailed a draft investment memo to his colleagues at Hilco.[27] The memo detailed the many ways in which the status of the dotMobily TLDs was, in Fried's words, "messy."[28] The dotMobily TLDs had not been launched; there were no domain registrations and thus no revenue; GreenTech owed ICANN about $75, 000 in unpaid fees and had no ability to pay them; GreenTech owed approximately $160, 000 to vendors; and going forward, fees to ICANN and related services would be approximately $63, 000 per year.[29] Furthermore, GreenTech's relationship with Mobily was "currently non-existent," ICANN had threatened to revoke the dotMobily TLDs from GreenTech, and GreenTech had no means to fund operations without support from Mobily or other investors.[30] Finally, the memo noted that GreenTech had entered into a joint venture with WiseDots and "two individuals who were instrumental in obtaining the [Registry Agreements]."[31] Despite these issues, Fried and Wilson identified "a few paths forward" to assume control of the Registry Agreements, each of which would be contingent on ICANN's approval.[32] According to GreenTech, Fried and Wilson continued working on the dotMobily TLDs through the summer of 2017.[33]
GreenTech and Hilco executed a six-page "Term Sheet" titled "ACQUISITION OF THE DOT MOBILY TLDS" on September 8, 2017.[34] The Term Sheet's opening paragraph explains it contains the "general terms" of the parties' agreement, which would be subject to further documentation:
This term sheet, dated as of September 8, 2017 . . . sets forth the general terms and conditions pursuant to which (i) NEWCO, a newly-formed Delaware limited liability company ("NEWCO"), will purchase selected assets and liabilities as specified below from GreenTech Consultancy Company, WLL, a Bharani limited liability company or its designee ("GreenTech") which owns the ICANN Registry Agreements ("RAs") for .mobily and [the Arabic equivalent of .mobily] . . . in exchange for assumption of certain specified liabilities ("Assumed Liabilities") and a 30% interest in NEWCO (the "Dot Mobily TLDs Acquisition"), upon the terms and conditions as set forth below. The parties recognize that this transaction will require further documentation, including the...
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