Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-03564/USCOURTS-cand-3_02-cv-03564-2/pdf.json

Parties Involved:
For3D
Plaintiff
Armand Rousso
Counter-claimant
Alan Shulman
Counter-defendant
Michael Starks
Defendant
TDV Technologies, Corp.
Counter-claimant

Document Text:

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

FOR3D,

Plaintiff,

v

MICHAEL STARKS et al,

Defendants.

 /

AND RELATED COUNTERCLAIM

 /

No C-02-3564 VRW

FINDINGS OF FACT

CONCLUSIONS OF LAW

Plaintiff For3D (“For3D”) brought this action against

defendant TDV Technologies, Corp (“TDVT”) to clarify ownership of

United States Patent No 6,108,005 (“the ‘005 patent”). TDVT

contends that For3D lost title to the ‘005 patent on December 26,

2001, because For3D violated a term in its shareholder agreement

that required it to secure adequate funding by that date. Doc #85. 

For3D counters that it secured adequate funding on time, TDVT lacks

standing and TDVT is estopped from arguing that the shareholder

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 1 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

agreement lapsed. Doc #86. The parties have agreed that this case

will be tried on the papers submitted. Doc #81. The court now

makes its findings of fact and conclusions of law:

I FINDINGS OF FACT

1 Plaintiff For3d is a California corporation involved in 3D

technology.

2 Defendant and counter-claimant TDVT is a Delaware corporation

also involved in 3D technology. TDVT changed its name to X3D

Technologies and now operates as Opticality Corporation.

3 Defendant and counter-claimant Armand Rousso (“Rousso”)

founded TDVT and operated it during the relevant period in

this action.

4 Defendant Michael Starks (“Starks”) and counter-defendant Alan

Shulman (“Shulman”) co-invented the ‘005 patent, which

pertains to a method for producing a synthesized stereoscopic

image.

5 Between about 1991 and 1997, Starks and Shulman conceived and

developed the intellectual property that would later be

captured by the ‘005 patent (the “pre-patent IP”). Tucker

Decl (Doc #69-2), Ex F at 2:14-17.

6 On September 29, 1995, the pre-patent IP became an asset of

Stereo Corporation, a Nevada corporation owned by Starks and

Winston Schwyhart (“Schwyhart”). Id; Schwyhart Decl (Doc #67-

4), Ex D.

7 On November 10, 1995, Stereo Corporation transferred the prepatent IP to Space Corporation (“SpaceCorp”), a British

Anguillan corporation that Starks and Schwyhart had registered

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 2 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

four days earlier. Schwyhart Decl Ex A; Ex D.

8 Schwyhart owned a 28.2 percent interest in SpaceCorp, and

Starks owned the remaining 71.8 percent. Schwyhart had

received this interest in exchange for a $50,000 investment in

3DTV and Stereo Corporation, companies that were owned by

Starks and Schwyhart. Id at ¶ 2; id, Ex D at ¶ 2.

9 Starks and Shulman filed for the ‘005 patent on August 4,

1997, and it was issued on August 22, 2000. Tucker Decl, Ex

D.

10 On June 26, 2001, Starks, Shulman, and two other entrepreneurs

-- Rolf-Dieter Naske (“Naske”) and Joshua Wattles (“Wattles”)

-- entered into a shareholder agreement forming For3D. 

Although all four individuals were shareholders of For3D, only

Shulman and Naske were co-chairmen and members of the board of

directors. Shareholder Agreement (Doc #67-3, Ex A) at ¶¶ 1,

2.

11 The shareholder agreement specifies that both Starks and

Shulman contributed whatever interest they had in the ‘005

patent to For3D. Id at ¶¶ 4, 5. The agreement also states

that “Schweihardt [sic] authorizes and joins in Space Corp’s

conveyance.” Id at ¶ 5.

12 Paragraph 14 of the shareholder agreement specifies that if

For3D did not secure adequate funding by December 26, 2001,

all assets contributed to For3D, including the ‘005 patent,

would be returned to their contributors, and For3D would be

wound up and dissolved. Id at ¶ 14.

//

//

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 3 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

13 The term “adequate funding” in paragraph 14 of the shareholder

agreement was understood as the amount of funding sufficient

to keep For3D in business for an additional year. Second

Shulman Decl (Doc #71-4) at ¶ 6.

14 The shareholder agreement specifies that it “shall be governed

by and construed in accordance with the laws of the State of

California.” Shareholder Agreement at ¶ 20.

15 The shareholder agreement also includes an arbitration clause,

which provides that all disputes regarding the shareholder

agreement would be submitted to arbitration through the

American Arbitration Association in Alameda County,

California. Shareholder Agreement at ¶ 21.

16 On July 15, 2001, Schwyhart agreed to the assignment of the

‘005 patent from SpaceCorp to For3D. Schwyhart Decl, Ex B.

17 On September 10, 2001, Starks and SpaceCorp assigned the ‘005

patent to For3D. First Shulman Decl (Doc #67-3), Ex B. The

assignment was in consideration of For3D’s assuming debts owed

by Starks and shares being issued to Starks. Id, Ex B;

Shareholder Agreement at ¶¶ 1, 8.

18 AMD Corporation provided $10,000 worth of free computers to

For3D. Second Shulman Decl at ¶ 8(n); id, Ex J.

19 Between February and November 2001, Naske raised approximately

$50,000 for For3D from Axel Kloss. Id at ¶ 8(i).

20 In February 2001, Remington Partners agreed to and later did

loan $100,000 to For3D. Id at ¶ 8(a); id, Ex B.

21 Between June 26, 2001 and December 26, 2001, Production City,

a sole proprietorship owned by Shulman, paid approximately

$70,000 for space, utilities and services consumed by For3D. 

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 4 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

For3D and Production City occupied the same location. Id at ¶

8(d); id, Ex E.

22 In July 2001, Remington Partners loaned For3D another $10,000. 

Id at ¶ 8(b).

23 Also in July 2001, Fritz Bathelt loaned $26,000 to For3D. Id

at ¶ 8(e); id, Ex F at 79:14-25.

24 Between July 1, 2001, and December 26, 2001, For 3D received

approximately $3,000 worth of free equipment from Viewsonics

Corporation and $11,000 worth of free software from Adobe

Corporation. Id at ¶¶ 8(l), 8(m); id, Ex J.

25 Also between July 1, 2001, and December 26, 2001, Beth Hatch

loaned For3D $11,000 and Roy Schwartz loaned For3D $10,000. 

Id at ¶¶ 8(h), 8(k); id, Ex G at 82:7-21; id, Ex I at 81:15-

25.

26 In September 2001, For3D sold a For3D system for approximately

$10,000. Id at ¶ 8(o).

27 Also in September 2001, Christie Digital Systems Canada, Inc

(“Christie Digital”) and For3D entered a Memorandum of

Understanding that contemplated future business between the

companies potentially worth millions of dollars to For3D. Id

at ¶ 8(g); id, Ex D2.

28 Between about September and November 2001, For3D received a

purchase order of $50,000 (initially $37,500) from Christie

Digital. Id at ¶ 8(c); id, Ex D1.

29 On October 31, 2001, Shulman wrote in an email to Naske that

Shulman was “putting together some paper to either/or extend

the shareholder’s [sic] agreement * * *.” Naske Decl (Doc

#84), Ex C.

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 5 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

30 In November 2001, NASA committed to purchasing approximately

$30,000 worth of products from For3D. The sale went through

in July 2002. Second Shulman Decl at ¶ 8(f).

31 On November 11, 2001, Shulman wrote in an email to Naske that

Shulman “shall have Mr [Robert] Henn draw up an extension on

the shareholder’s [sic] agreement * * *.” Naske Decl, Ex D.

32 In December 2001, Invest Tec Corporation committed to

investing $200,000 in For3D. The investment occurred in

February 2002. Second Shulman Decl at ¶ 8(j); id, Ex H.

33 On December 1, 2001, For3D’s bank account was overdrawn by

$1,700. Naske Decl, Ex B. For3D also had $850,343 in shortterm liabilities and only $13,300 in total assets. Id. For3D

owned $15,000 in equipment. Id.

34 On December 7, 2001, Naske and TDVT formed an agreement under

which Naske would work with TDVT and sell a patent to TDVT if

the For3D shareholder agreement expired on December 26, 2001. 

Naske had previously contributed that patent to For3D when the

company had been formed. Id, Ex H.

35 On December 11, 2001, Stuart Keirle (“Keirle”), who was

For3D’s Chief Financial Officer, wrote in an email to Naske:

As you know the existing agreement technically

expires on December 26th. Please see Section 14

Return of Agreement. This needs to be extended by

at least 60 days by a separate agreement signed by

all shareholders. I hope you agree. If not then

this will create a major problem. As it is we are

unlikely to obtain any funding without all the

shareholders contributing their agreed assets.

Id, Ex E.

36 On December 25, 2001, Shulman wrote in an email to Starks:

“Rolf [Naske] is dancing a little on extending the

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 6 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

shareholder’s [sic] agreement that is over today * * * * but

sending me an email that states you agree to extending the

For3D’s shareholder’s [sic] agreement for another 6 months

would be one less concern.” First Shulman Decl, Ex D

(omission in original).

37 On December 26, 2001, Starks wrote in response to Shulman’s

December 25, 2001, email: “yes I agree to extend the

agreement.” Id.

38 For3D did not reassign the ‘005 patent to Starks and SpaceCorp

on December 26, 2001, or subsequent to that date.

39 On December 31, 2001, For3D’s bank account was overdrawn by

$1,221.39. Naske Decl, Ex B.

40 On January 21, 2002, Naske wrote in an email to Shulman:

But I want to make some things clear and don’t want

to have a lot of confusion later on.

Currently, I’m negotiating with Fred [Hammett at

TDVT] the new conditions of our shareholders

agreement.

But for the sake of good order, since Dec 26th 2001

I have the right to request my patent and other

contributions back. I’ve espressed [sic] that

request a number of times during our phone calls in

November and December and I do it herewith again.

I’m aware that the full execution of giving the

contributions back depends on the loan agreement

between you and me and between Remington Partners

and FOR3D. We have to find a solution there as soon

as possible.

I have outlined my ideas for a new partnership in

mails to Fred dated Dec 28th 2001, Jan 2nd 2002 and

Jan 7th 2002! You have been on the CC list. So,

you know that I assume my patent is not owned by

FOR3D anymore.

Yes, I want to have a partnership with you and

Michael, definitely.

Id, Ex F.

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 7 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

41 On January 21, 2002, Starks emailed various people at Christie

Digital regarding For3D’s products. In the email, Starks

referred to For3D as “[o]ne of [his] companies” and called

Shulman his business partner. Starks signed the email as

president of 3DTV Corp. First Shulman Decl, Ex C.

42 On January 22, 2002, Starks emailed Bill Speer, the director

of quality assurance at Christie Digital, regarding Speer’s

concerns over the quality of For3D’s products. Id.

43 On February 5, 2002, Starks responded to an email from Gary

Greenberg, after Greenberg expressed interest in Starks’s

website. Starks promoted For3D’s products and referred to

John Urbanic of Neotek and Shulman as his colleagues. Id.

44 On February 6, 2002, Starks emailed Shulman with draft of an

email to be sent to Naske. The draft email was intended to

convince Naske not to leave For3D. Starks represented the

legal difficulties Naske would face in leaving For3D, and also

noted that “[t]he fact that the [For3D shareholder agreement]

expires really does not free any of us from all

responsibility.” Id.

45 In February 2002, For3D negotiated with TDVT over licenses for

certain technologies covered by the ‘005 patent.

46 On February 20, 2002, Shulman sent an email to Rousso

referring to an earlier meeting between the two and proposing

terms for TDVT licensing the ‘005 patent. Tucker Decl, Ex S.

47 On February 21, 2002, Shulman emailed Naske that “For3D

recognizes that you have withdrawn your patent application

from For3D’s assets through your requests, emails and actions. 

It is further understood that you have relinquished all

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 8 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

ownership, control, interest, stock and office in For3D.” 

Naske Decl, Ex G.

48 In late February or early March, a dispute arose between

Starks and Shulman over the ownership of the ‘005 patent.

49 On March 5, 2002, Keirle gave Starks a $20,000 check (paid to

the order of 3DTV Corp) for his continued involvement with

For3D. First Shulman Decl at ¶ 9; id, Ex E; Keirle Decl (Doc

#83).

50 On March 9, 2002, Starks sent an email to Shulman and others:

This is another desperate attempt by Alan [Shulman]

to insist that the For3D agt which expired [i]n Jan

or Feb is still valid, even though all the 5

signatories but him now refuse to extend it. I gave

tentative approval provided all the others agreed to

extend it and Dr. [N]aske refused. Obviously an

agreement that requires 5 signatures and does not

get them cannot be valid.

Tucker Decl, Ex P.

51 On March 10, 2002, Shulman responded to Starks’s March 9,

2002, email: “Lets let the lawyers sort this out what is

correct. This is very stupid on both our parts. There is

substantial money on the table.” Id.

52 On March 11, 2002, Shulman sent an email to Rousso and Starks:

I just want to let you know that patent is owned by

For3D, a California Corporation and not by Michael

Starks or Space Corporation. Michael does not have

authority to act for For3D on his own. Any action

by For3D Corporation which owns the patent requires

my written authorization as the Corporation’s

officer.

Id, Ex T.

53 On March 11, 2002 and in response to Shulman’s email, Starks

wrote that “[t]he grant to represent the patent to For3D Corp

expired earlier this year.” Starks also asserted that he

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 9 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

owned SpaceCorp and that SpaceCorp owned the ‘005 patent. Id.

54 Neither Starks nor Shulman attempted to arbitrate ownership of

the ‘005 patent under the arbitration clause of the

shareholder agreement.

55 On March 15, 2002, Starks sent an email to Shulman:

The For3D shareholders agreement expired in Jan 14th

unless adequate funding was received. Adequate

funding as defined by the business plan was for

about $5 million and Techinvest gave you 225,000 at

the end of Feb. You accepted the money knowing that

you no longer had rights to the technology and thus

put yourself and perhaps everyone associated with

you in an untenable position. You appear to have

misappropriated funds to pay Production City bills

and personal expenses for yourself and your friends. 

You abused your position as acting head of For3D.

I again ask that you cease representing that

you/For3D has rights to our [United States] patent

which is owned by SpaceCorp exclusively. Please

return all copies to me and erase all copies from

your computers. I also ask that you return all

equipment belonging to 3DTV Corp.

Id, Ex Q.

56 Rousso and Starks met on a few occasions sometime after

December 26, 2001, to discuss TDVT’s purchase of the ‘005

patent. Rousso gave Starks $10,000 as a consulting fee at one

of their meetings. Brubaker Decl (Doc #67-2) at ¶ 6; id, Ex

D.

57 On April 16, 2002, Starks sent a letter to For3D:

Notice of withdrawal of property and demand to wind

up and dissolve For3D Corporation

Under the terms of the For3D Shareholder’s [sic]

Agreement of June 26, 2001, if the company failed to

received [sic] adequate funding in 6 months it was

required to return the contributions of the

shareholders and to wind up and dissolve.

I have notified the company’s sole acting officer,

Alan Shulman in person, by email and by telephone on

numerous occasions that the property contributed by

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 10 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

myself and/or Space Corporation is no longer owned

by For3D Corporation.

It appears that our US Patent # 6108005 was

unlawfully reassigned to For3D Corp and that is

[sic] has not been returned to Space Corporation. 

We demand that you immediately return our patent by

changing the assignment.

We also demand that you wind up and dissolve For3D

Corporation. Both of these actions should have

commenced Dec 26th, 2001.

This letter again formally withdraws Space

Corporations [sic] US patent # 6108005 and the

spacespex patent application from For3D Corporation

of California in accordance with the terms of the

shareholders [sic] agreement Dated June 26, 2001.

First Shulman Decl, Ex F.

58 On May 4, 2002, SpaceCorp (through Starks as authorized

officer and representative) assigned the ‘005 patent to TDVT. 

Brubaker Decl, Ex A.

59 As consideration for SpaceCorp assigning the ‘005 patent to

TDVT, TDVT agreed to pay $75,000 directly to Remington

Partners, $175,000 to SpaceCorp and 400,000 shares of TDVT

stock to SpaceCorp. Id, Exs B and C.

60 Starks did not receive Schwyhart’s approval before assigning

the ‘005 patent to TDVT. Schwyhart Decl at ¶ 10.

61 For3D alleges that Starks’s assignment to TDVT was invalid and

“in derogation of the rights of both co-inventor [Shulman] and

Plaintiff For3D in the PATENT.” Compl (Doc #1, Ex C) at ¶ 9.

62 In June 2002, For3D filed a complaint in the Marin County

superior court and alleged, among other things, causes of

action for slander of title, intentional interference with

prospective business advantage, conspiracy to convert, unfair

business practices in violation of Cal Bus & Prof Code ¶ 17200

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 11 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

et seq and declaratory relief regarding patent ownership. 

Compl.

63 On July 25, 2002, the case was removed to this court. Not of

Rem (Doc #1).

64 On August 14, 2002, TDVT and Rousso answered the complaint and

filed counterclaims for declaratory relief regarding patent

ownership, for patent infringement under 35 USC § 271 and for

unfair competition. Doc #7-1.

65 On December 18, 2002, Schwyhart wrote in an email to Starks:

“Where are you? Hope all is well with you. What has happened

since Spacecorp morphed into FOR3D? Are we making money yet?” 

Schwyhart Decl, Ex C.

66 On December 31, 2002, Starks wrote in reply to Schwyhart’s

December 18, 2002, email that “lots happening but not with

For3D as the agreement expired and also Shulman turned out to

be a Lipton clone and had to part company.” Id. Starks also

stated that he had moved to China. Id.

67 On January 13, 2003, Schwyhart sent a letter to Shulman asking

about the patent and clarifying Schwyhart’s interest in it. 

Id, Ex D.

68 On June 20, 2005, the parties requested that the court

determine ownership of the ‘005 patent on the papers

submitted. Doc #81. The court granted the request the same

day. Doc #82.

69 To the extent that any of these findings of fact should more

properly be characterized as conclusions of law, they shall be

deemed as such.

//

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 12 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

II CONCLUSIONS OF LAW

1 “A patent has the ‘attributes of personal property.’ 

Therefore, its ownership may be transferred by an assignment. 

An assignee may freely transfer his or her acquired rights.” 

SuperBrace, Inc v Tidwell, 124 Cal App 4th 388, 393 (Cal Ct

App 2004) (quoting 35 USC § 261).

2 None of the parties contest the patent assignment from Starks

and SpaceCorp to For3D on September 10, 2001. Hence, the

court concludes that this initial patent assignment was valid.

3 Whether patent ownership reverted back to SpaceCorp on

December 26, 2001, depends on whether the shareholder

agreement lapsed, which in turn depends on how the court

interprets the term “adequate funding” in paragraph 14 of the

shareholder agreement.

4 For3D appears on the wrong track to argue that TDVT lacks

standing to assert that the shareholder agreement lapsed

because the issue of contractual standing is irrelevant here. 

TDVT is not trying to enforce the shareholder agreement. 

Instead, TDVT looks to the shareholder agreement only to show

that its predecessor-in-interest -- SpaceCorp -- properly

obtained title to the patent. In other words, TDVT relies on

the shareholder agreement simply to establish one link in its

chain of title. And because TDVT’s asserted patent rights

directly depend on how the court interprets the shareholder

agreement, For3D cannot prevent TDVT from arguing that the

contract lapsed.

5 For3D is also incorrect in arguing that TDVT is estopped from

challenging the shareholder agreement. For3D contends that if

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 13 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

14

it did not secure adequate funding, it was only because TDVT

and Naske interfered in late 2001 with a major contract that

For3D was negotiating with Digital Christie. This contention

might support a business tort claim, a claim for breach of the

shareholder agreement or a breach of fiduciary duty claim or

even an equitable defense against TDVT in an infringement

action. But this contention is not germane to SpaceCorp’s

right to reversion of the ‘005 patent.

6 To determine the meaning of “adequate funding,” the court

applies California law, as specified under paragraph 20 of the

shareholder agreement. This provision accords with the

general principle that “[s]tate law governs contractual

obligations and transfers of property rights, including those

relating to patents.” Regents Of University Of New Mexico v

Knight, 321 F.3d 1111, 1118 (Fed Cir 2003), cert denied, 540

US 820 (2003).

7 “In interpreting a contract, the objective intent, as

evidenced by the words of the contract, is controlling.” 

Lloyds Underwriters v Craig & Rush, Inc, 26 Cal App 4th 1194,

1197 (Cal Ct App 1994). And the court determines “the intent

and scope of the agreement by focusing on the usual and

ordinary meaning of the language used and the circumstances

under which the agreement was made.” Id at 1197-98.

8 The court also may construe a contract by looking at the

parties’ actions subsequent to executing the contract but

before a controversy arose. Spott Elec Co v Industrial

Indemnity Co, 30 Cal App 3d 797, 808 (Cal Ct App 1973).

//

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 14 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

15

9 The evidence conclusively shows that For3D did not have

adequate funding as of December 26, 2001. For3D’s financial

statements indicate that the company had over $850,000 in

short-term liabilities on December 1, 2001, and it was

overdrawn on its bank account both at the beginning and the

end of the month.

10 Additionally, communications between Shulman, Starks, Naske

and Keirle in late 2001 and early 2002 indicate that they knew

For3D was in financial trouble and that an extension would be

necessary to prevent the shareholder agreement from expiring

on December 26, 2001.

11 The shareholder agreement was never extended.

12 Because For3d did not have adequate funding on December 26,

2001, For3D was obligated to assign the ‘005 patent to

SpaceCorp. Hence, the court concludes that ownership of the

‘005 patent reverted back to SpaceCorp on December 26, 2001.

13 To determine whether SpaceCorp’s subsequent assignment of the

‘005 patent to TDVT was valid, the court examines whether the

transfer violated British Anguillan law.

14 Section 125 of the Anguilla Companies Act (Doc #71-6),

entitled “Shareholder approval of extraordinary transactions,”

states:

(1) A sale, lease or exchange of all, or

substantially all, the property of a company other

than in the ordinary course of business of the

company requires the approval of the shareholders in

accordance with this section.

(2) A notice complying with section 110 of a meeting

of shareholders shall be sent in accordance with

that section to each shareholder and shall--

(a) include or be accompanied by a copy or summary

of the agreement of sale, lease or exchange; and

(b) state that a dissenting shareholder is entitled

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 15 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

16

to be paid fair value of his shares;

but failure to make the statement referred to in

paragraph (b) does not invalidate a sale, lease or

exchange referred to in subsection (1).

(3) At the meeting referred to in subsection (2),

the shareholders may authorise the sale, lease or

exchange of the property, and may fix, or authorise

the directors to fix, any of the terms and

conditions of the sale, lease or exchange.

(4) Each share of the company carries the right to

vote in respect of a sale, lease or exchange

referred to in subsection (1), whether or not it

otherwise carries the right to vote.

(5) The shareholders of a class or series of shares

of the company are entitled to vote separately as a

class or series in respect of a sale, lease or

exchange in a manner different from the shares of

another class or series.

(6) A sale, lease or exchange referred to in

subsection (1) is adopted when the shareholders of

each class or series of shares who are entitled to

vote on it have, by special resolution, approved of

the sale, lease or exchange.

(7) The directors of the company, if authorised by

the shareholders approving a proposed sale, lease or

exchange, may, subject to the rights of third

parties, abandon the sale, lease or exchange without

any further approval of the shareholders.

(8) A company the contravenes subsection (2) commits

an offence.

15 SpaceCorp’s assignment of the ‘005 patent to TDVT may have

violated Anguilla Companies Act § 125(2), but this does not

invalidate the assignment to For3D: even if Starks had

complied with the statute and Schwyhart had opposed the

assignment, the majority of SpaceCorp’s shareholders would

have approved the assignment. Although Schwyhart might be

entitled to fair value for his shares, this does not affect

whether the transfer to TDVT was valid.

16 To the extent that any of the foregoing conclusions of law

should more properly be considered findings of fact, they

shall be deemed as such.

//

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 16 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

17

Based on these findings and conclusions, the court

concludes that the shareholder agreement lapsed on December 26,

2001, and ownership of the ‘005 patent reverted back to SpaceCorp. 

Additionally, SpaceCorp’s subsequent assignment of patent ownership

to TDVT was valid. Accordingly, TDVT is the rightful owner of the

‘005 patent.

These findings of fact and conclusions of law appear to

resolve all remaining issues in this case. Accordingly, the

parties are directed to provide the court with an appropriate form

of judgment by November 30, 2005. If any other issues remain, the

parties should contact the courtroom deputy, Cora Delfin, at 415-

522-2039, to schedule a joint case management conference. In any

event, the clerk is directed to terminate all pending summary

judgment motions.

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

Case 3:02-cv-03564-VRW Document 87 Filed 10/27/05 Page 17 of 17