Lufthansa Systems Infratec GmbH v. Wi-Sky Inflight, Inc.

894 F. Supp. 2d 677, 2012 WL 3579610, 2012 U.S. Dist. LEXIS 116490
CourtDistrict Court, E.D. Virginia
DecidedAugust 17, 2012
DocketCivil Action No. 3:10cv745-JAG
StatusPublished
Cited by1 cases

This text of 894 F. Supp. 2d 677 (Lufthansa Systems Infratec GmbH v. Wi-Sky Inflight, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lufthansa Systems Infratec GmbH v. Wi-Sky Inflight, Inc., 894 F. Supp. 2d 677, 2012 WL 3579610, 2012 U.S. Dist. LEXIS 116490 (E.D. Va. 2012).

Opinion

MEMORANDUM OPINION

JOHN A. GIBNEY, JR., District Judge.

The essence of this case is a familiar one: a business deal soured by funding problems during an economic recession. At its inception, the deal was marked by optimism and cooperation between the parties. Negotiations culminated in the Contractor Confidentiality, Invention Rights, Exclusivity and Non-Compete Agreement (the “Invention Rights Agreement,” “IRA,” or “Agreement”), a written contract that focused too heavily on future profit margins from a revolutionary product not yet in existence.

Fundamentally, the Invention Rights Agreement encompassed a joint venture between an inventor/developer and backing company. Wi-Sky Inflight, Inc. (“WiSky”), the capital provider, contracted with inventor — Michael Leabman (and his company, Vivano Networks, Inc. (“Vivano”)) to utilize his expertise in the creation of a functional and FAA-approved mechanism to provide high-speed internet access to [679]*679airplane passengers. Leabman had the design concept and developmental knowledge; Wi-Sky provided initial consideration and promised future payments once a commercially-viable product was formed. Over time, however, Wi-Sky experienced difficulties subsidizing the project, and Leabman eventually backed out.

The instant litigation centers on what Leabman transferred when he signed the Agreement. Wi-Sky claims it purchased Leabman’s intellectual property, inventions, and all related patents (or patents pending). Leabman and Vivano disagree. They claim the IRA’s explicit language is forward-looking and grants ownership only for those concepts and inventions created by Leabman for Wi-Sky after the Agreement’s signing.

This matter is currently before the Court on a number of motions filed by the parties in the case. The plaintiff, Lufthansa Systems Infratec, GmbH (“Lufthansa”), and one of the defendants, True Path Holdings, LLC 1 (“True Path”), have filed motions for summary judgment on the enforceability of the Invention Rights Agreement. Notably, Lufthansa and True Path’s interests are aligned in this case— they both seek to have the Agreement voided or, alternatively, a declaratory judgment granting ownership of Leabman’s previously-created concepts and inventions to True Path.2

Holding the opposite interest in this case is Wi-Sky, who seeks enforcement of the Agreement. The company also petitions the Court for a declaration that it owns all of Leabman’s intellectual property and inventions related to air-to-ground, broadband internet communication. WiSky has filed two motions related to discovery that are currently pending: (1) a motion for entry of a new scheduling order, and (2) a motion for an extension to complete discovery under Federal Rule of Civil Procedure 56(d). Ostensibly, Wi-Sky aims to recover information or documents pertaining to the IRA’s formation that supports their enforceability argument.3 Wi-Sky acknowledges, however, that additional discovery is unnecessary if the Court finds the Agreement enforceable. (See Wi-Sky Mem. in Supp. Ext. to Complete Disc. (Dk. No. 199) 3 (recognizing that on the “narrow issue” of “[w]ho owned the technology under the language of the IRA ... extensive discovery was not required.”).)

For the following reasons, the Court finds that the Invention Rights Agreement is an enforceable contract. The summary judgment motions filed by Lufthansa and True Path must be denied as a result. Wi-Sky’s discovery motions must also be denied since they were filed for the purpose of extending the discovery period if the Agreement was deemed unenforceable.

After extensive and careful deliberation, however, the Court concurs with Lufthansa and True Path’s interpretation of the IRA. The contract language is clear and explicit: Wi-Sky only paid Leabman to build a marketable, finished product for its benefit using his sophisticated design concept. In other words, Leabman did not forfeit the rights to his own prior inventions and intellectual property by signing [680]*680the Agreement. Rather, he agreed to buy into Wi-Sky, assume the position of Chief Technology Officer, and create a final product for the company. Along the way, “inventions” would be made and new design concepts would be developed — all of which would become the property of the funding company, Wi-Sky. To hold differently would defeat the clear language and true essence of the Agreement.

I. BACKGROUND

This case involves disputes over plans to develop new technology for airplanes. The various parties attempted to negotiate contracts to create, market, and purchase devices to provide high-speed internet service to airplane passengers. Their deals fell apart, and litigation ensued.

The plaintiff in this case is Lufthansa, a German corporation with an interest in purchasing technology to transmit wireless internet signals, known as Wi-Fi, to airplanes. The primary defendant, WiSky, is a Delaware corporation formed to develop and market Wi-Fi for airplanes. Michael Leabman, another defendant, is an inventor-engineer who developed a design concept and accompanying technology for the transmission of high-speed Wi-Fi to moving aircraft as well as other modes of transportation (the “Technology”). Defendant Vivano is a Delaware corporation organized by Leabman to serve as a vehicle in the development of his Wi-Fi Technology. True Path is a limited liability company to which Leabman eventually transferred his rights in the Technology following Wi-Sky’s filing of a lawsuit against Leabman and others in Georgia state court (the “Atlanta suit”). Defendants V10 Capital Partners, LLC (“V10”) and Turnstone Capital Partners, LLC (“Turnstone”) are entities that provided or were approached to provide financing to Wi-Sky and Leabman in their joint venture to develop the Technology.

In March 2008, Wi-Sky began to work on a project to improve internet service for airline passengers. By November 2008, Michael Leabman, an electrical engineer, had formed Vivano to produce ground-based “base stations” and radios/“mobile clients” designed to provide broadband Wi-Fi to passengers in planes, boats, cars, and trains. Leabman designed and constructed a ground-to-air communication system in 2008 while at his former company, Data Runway. In early 2008, he filed a provisional United States patent application for this system, Serial No. 61/025,219. Around that time, Wi-Sky became interested in marketing Leabman’s Technology and entered into the Invention Rights Agreement.4 Leabman thereby agreed to serve as Wi-Sky’s Chief Technology Officer (“CTO”), and Vivano agreed to produce equipment for the project.5 Wi-Sky, in [681]*681turn, would provide the necessary capital for raw materials and testing to generate a marketable product.6 Notably, Grant Sharp, Wi-Sky’s CEO and President, initially utilized a boilerplate form downloaded from <www.RealDealDocs.com> as a template for the IRA. Without the assistance of an attorney, the parties then collaborated to alter the template to the specific terms of their business deal. The Court finds that Wi-Sky and Leabman/Vivano are equally responsible for the drafting of the Invention Rights Agreement.7

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894 F. Supp. 2d 677, 2012 WL 3579610, 2012 U.S. Dist. LEXIS 116490, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lufthansa-systems-infratec-gmbh-v-wi-sky-inflight-inc-vaed-2012.