Skycam, Inc. v. Bennett

• Decision Date: 01 August 2011
• Docket Number: Case No. 09-CV-294-GKF-FHM
• Court: United States District Courts. 10th Circuit. Northern District of Oklahoma
• Parties: SKYCAM, INC., a Delaware corporation, and SKYCAM, LLC, an Oklahoma limited liability company, Plaintiffs, v. PATRICK J. BENNETT, an individual, and ACTIONCAM, LLC, an Oklahoma limited liability company, Defendants.

SKYCAM, INC. a Delaware corporation, and SKYCAM, LLC an Oklahoma limited liability company, Plaintiffs, v. PATRICK J. BENNETT an individual, and ACTIONCAM, LLC, an Oklahoma limited liability company, Defendants.

Case No. 09-CV-294-GKF-FHM

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

ENTERED August 1, 2011

OPINION AND ORDER

This matter is before the court on the issue of which plaintiff - Skycam, Inc. or Skycam, LLC - is the proper party plaintiff as to each the four claims remaining to be tried to a jury in this case. The parties submitted trial briefs on the issues, and an evidentiary hearing was conducted on July 25, 2011.

The following claims remain for jury trial:

(1) breach of contract against defendant Bennett (Third Claim for Relief in Plaintiffs' Third Amended Complaint);

(2) misappropriation of trade secrets against defendants Bennett and Actioncam under the Oklahoma Uniform Trade Secrets Act, 78 O.S. §85, et seq. (Second Claim for Relief);

(3) false representation claims under the Oklahoma Uniform Deceptive Trade Practices Act, 78 O.S. § 54.A and the Lanham Act, 15 U.S.C.

§ 1125(a)(1)(B) against defendants Bennett and Actioncam (Fourth Claim for Relief); and

(4) a claim against defendants Bennett and Actioncam for ownership of the Actioncam Patent Application (Ninth Claim for Relief).

Plaintiffs assert that all assets and related rights were transferred by Skycam LLC toSkycam, Inc. Defendants contend Skycam LLC remains the owner of all four claims.

I. Findings of Fact

1. The Skycam® System (the "Skycam System") is an aerial camera system used to record live sporting events. Prior to April 2004, the Skycam System was owned by CFInflight, Ltd. ("CFInflight"). On July 15, 2004, Skycam LLC purchased the Skycam System from CFInflight. [Dkt. #252, PX 142, 7/15/04 Asset Purchase Agreement between CFInflight and Skycam LLC].

2. Defendant Patrick J. Bennett ("Bennett") was employed by Skycam LLC from August 2004 to January 3, 2006, at which time his employment was terminated pursuant to the terms of a Separation Agreement and Release (the "Separation Agreement") dated January 5, 2006. [Dkt. #252, PX 1, 1/5/06 Separation Agreement]. In the Separation Agreement, Bennett acknowleged and agreed that

During his employment, [Bennett] has been given access to or has developed information which is confidential or proprietary in nature, and/or qualifies as a trade secret. All such information and material shall be treated by [Bennett] as confidential information to be protected from disclosure or unauthorized use. Such confidentiality may be waived only by the written consent of [Skycam]. For the purposes of this Agreement, 'confidential or proprietary' information means information unique to [Skycam] which has a significant business purpose and is not known or generally available from sources outside the Company.

[Id., PX 1 at 3].

3. On February 2, 2006, Winnercomm Holdings, Inc., a Delaware corporation ("WHI"), was formed. On February 24, 2006, WHI acquired the ownership interest in Skycam LLC and became its sole member. [Id., DX 16, 12/24/06 Contribution Agreement between Winnercomm Holdings, Inc. Investors; DX 17, Schedules to Contribution Agreement; DX 18, Written Consentof Sole Member of Winnercomm Holdings, Inc.]. Shortly thereafter in July 2006, WHI acquired the assets of Cablecam, LLC, another computer-controlled aerial camera services provider.

4. On January 9, 2009, Outdoor Channel Holdings, Inc. ("OCH") formed Skycam Inc., Winnercomm, Inc. a Delaware corporation ("Winnercomm DE"), and Cablecam, Inc., a Delaware corporation, as subsidiary entities.

5. On January 12, 2009, pursuant to an Asset Purchase Agreement (the "2009 APA"), OCH acquired the assets of Skycam LLC, Cablecam, LLC and Winnercom-OK . [JX 3-4, 2009 APA and Disclosure Schedule].

6. Contemporaneously, OCH assigned the assets acquired from Skycam LLC to Winnercomm-DE and then to Skycam Inc., pursuant to assignments dated January 12, 2009, and amendments thereto, dated January 12, 2009 (collectively, the "Assignment"). [JX 6-7].

7. The preamble to the 2009 APA states, in pertinent part:

WHEREAS, Skycam owns the rights to a business of developing, operating, renting, marketing, manufacturing and otherwise dealing with an advanced computer controlled mobile aerial camera suspension system (the "Skycam System") (collectively, the "Skycam Business");

* * * *

WHEREAS, each of the Sellers desires to sell, and the Buyer desires to purchase all or substantially all of the assets and operations of Sellers, and assume certain specified liabilities of each Seller, as they pertain to the Purchased Assets (as defined herein) as of the Closing Date (as defined herein) for the consideration and upon the terms and conditions set forth in this Agreement; . . .

[JX 3, p. 1].

8. Article I of the 2009 APA contains broad conveyance language:

1.1 Purchased Assets. Subject to the terms and conditions hereof, at the Closing, each Seller shall assign, convey, sell, and/or transfer to Buyer, and Buyer shall purchase or be assigned all of each Seller's rights in and to all of the assets of the Sellers, including,without limitation, the following assets (excluding those assets excluded from this sale pursuant to Section 1.2) (collectively, the "Purchased Assets"):

(a) The "Skycam Assets," which shall include, without limitation:

1) all right, title and interest in and to the equipment, tools, plans, specifications, designs, improvements, bills of material, inventory and parts (including spare parts inventory) work in progress and supplies representing the Skycam System;

2) all rights, titles and interests that Skycam has or may have to Intellectual Property, including without limitation, Intellectual Property owned, used, useful or developed in connection with the ownership of the Skycam System and the operation of the Skycam Business (the "Skycam Intellectual Property"). The Skycam Intellectual Property is set forth on 1.1(a)(2);

3) all of Skycam's rights in and to certain computer software used in the Skycam Business, including but not limited to source and object codes for operating and controlling all aspects of the Skycam System;

4) all documents, blueprints and other materials, whether in written, magnetic, digital, or other form, relating to the Skycam System;

5) all real estate leasehold interests set forth on Schedule 1.1(a)(5);

6) all of Skycam's accounts receivable, as set forth on Schedule 1.1(a)(6); and

7) the contracts to which Skycam is a party listed on Schedule 1.1(a)(7) (the "Skycam Contracts").

[JX 3, p. 2] (emphasis added).

9. Schedule 1.1(a)(2), "Skycam Intellectual Property," lists a patent for a camera assembly not at issue in this case, the trademark "Skycam"-Registration No. 1634708, and the domain name www.skycam.tv. [JX 4, Schedule 1.1(a)(2) at 2]. None of the alleged trade secrets or confidential or proprietary information at issue in this case is listed in Schedule 1.1(a)(2). [Id.].

10. Schedule 1.1(a)(1)(7) lists 17 agreements, several of which are confidentiality or nondisclosure agreements. The Separation Agreement with Bennett is not listed on Schedule1.1(a)(1)(7). [JX 4, Schedule 1.1(a)(1)(7)].

11. As set forth above, Section 1.1 of the 2009 APA states that only those assets excluded from the sale pursuant to Section 1.2 are excluded from the transfer. Section 1.2 lists the following assets excluded from the transfer:

Assets Excluded from Purchase. Other than the Purchased Assets, no other asset of any Seller shall be transferred and sold to Buyer pursuant to this Agreement, including, without limitation, the following (the "Excluded Assets"):

(a) all rights that accrue or will accrue to any Seller under this Agreement;

(b) all of Sellers' financial and organizational books and records; and

(c) any other assets set forth on Schedule 1.2(d).

[JX 3, p. 4].

12. Schedule 1.2(d), in turn, lists 34 items, most of which are financing or employment agreements. [JX 4, Schedule 1.2(d) at 79-80]. The Separation Agreement is not listed as an excluded asset on Schedule 1.2(d). [Id.].

13. Article 4 of the 2009 APA contains certain representations and warranties made by the sellers as of the date of the agreement. Article 4 does not contain language or limitations pertaining to transfer of the Purchased Assets. Included in Article 4 are the following representations:

4.5 Sufficiency of Assets.The Purchased Assets include all tangible and intangible assets and rights that are used or held for use in the operation or conduct of the Businesses, and are sufficient for the conduct of the Businesses by the Buyer following the Closing in substantially the same manner as conducted by each Seller prior to the date hereof. None of the past or present affiliates of any Seller participates (or has participated) in the operation or conduct of, or own or have any rights to any assets or property sued or held for use in the operation or conduct of, the Businesses or the Purchased Assets.

* * * *

4.8 Litigation. Except for those matters set forth in the Seller Disclosure Schedule, there are no claims, actions, suits, proceedings (arbitration or otherwise) or investigations involving or affecting any such Seller or the Business or Purchased Assets, or its directors, managers, officers, members or shareholders in their capacities as such, pending, or to the best of such Sellers' Knowledge, threatened, before or by any court or governmental agency or instrumentality, or before an arbitrator of any kind, at law or in equity; and no pending claim, action, suit, proceeding or investigation, if determined adversely, would either individually or in the aggregate, have an adverse effect on the assets, earnings, business, operations or financial condition of any such Seller. ... Except as otherwise stated above, to any such Sellers' Knowledge there is no basis for any claims, actions, suits, proceedings, or investigations as discussed above.

* * * *

4.11 Intellectual Property.

(

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