In re: Rearden LLC et al.

Docket No. 2016-125

November 17, 2016

Brief Summary: Writ of mandamus regarding DC denial of evidentiary ruling denied because, e.g., “petitioners have alternative avenues to obtain meaningful review of these arguments after trial”.

Summary: Rearden et al. petitioned for a writ of mandamus challenging the DC’s order “compelling them to produce allegedly privileged documents.” Both parties (Rearden and Virtue Global Holdings Limited) in the case claim to own the visual effects technology known as “MOVA Contour Reality Capture” or “MOVA” that “captures an actor’s facial performance for use in motion picture special effects and video games.” The disputed “MOVA assets” including trademarks, copyrights, trade secrets and patents (US 7,548,272; 7,567,293; 7,605,861; and 8,659,668). According to VGHL, the head of Rearden (Steve Perlman) declined an offer by OL2, Inc. to acquire the MOVA assets and proposed the sale of the same to then-Rearden employee Greg LaSalle through his company MO2, LLC, which occurred. Perlman then demaned that LaSalle turn over the MOVA assets to Rearden. LaSalle did not do so and instead sold the assets to “SHST” which sold the technology through its Digital Domain 3.0 (“DD3”) subsidiary. LaSalle was then dissolved, and VGHL acquired the assets from SHST. The dispute centers on whether SHST ever obtained ownership because, it was alleged, LaSalle did not form MO2 (Perlman and Rearden did) and that through his employment agreement transferred all his rights to Rearden. Thus, it was alleged, LaSalle lacked authority to act on MO2’s behalf and that “in any event…original MO2 transferred the MOVA assets to Rearden MOVA LLC before the purported agreement between LaSalle and SHST.” The FC panel first concluded it had jurisdiction over any appeal of the “petitioners’ [compulsory] patent infringement counterclaims” and, therefore, had “jurisdiction over this petition”, in contrast to a case in which “a plaintiff brings a suit contesting patent ownership and defendants have an infringement claim that matures after the filing of the complaint.” The FC panel also explained that its review of a denial of a request for an evidentiary hearing is reviewed for an abuse of discretion and the factual findings for clear error. A writ of mandamus, it explained, the DC determination is only overturned “upon a showing of a ‘clear and indisputable’ right to relief and no adequate alternative legal channels through which petitioners may obtain the same relief” (Kerr, US 1976). It decided not “to entertain mandamus relief…because petitioners rely heavily on Perlman’s extra-record declaration and petitioners have alternative avenues to obtain meaningful review of these arguments after trial” (Mohawk, US 2009).

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