Infoflows v Corbis
On December 10, 2012, Corbis’ Petition for Review filed with the Washington State Supreme Court was denied. This effectively left standing the Washington State Court of Appeal's (Division 1) earlier decision that affirmed the judgment against Bill Gates owned Corbis Corporation for Fraud, Breach of Contract, Breach of the Duty of Good Faith and Fair Dealing, Misappropriation of Trade Secrets and Unjust Enrichment. The three-judge panel affirmed all but one claim stemming from the six-year legal battle over the ownership of Infoflows’ Fedmark technology. Shortly thereafter Corbis filed a Petition for Review with the Washington State Supreme Court. Further, the Supreme Court agreed to a review of Infoflows Corporation’s conversion claim.
Dispute and Trial
On January 22nd, 2007, Seattle, Washington based Infoflows Corporation filed suit in Washington State Superior Court against Corbis Corporation asserting claims for fraud, breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment and conversion – and seeking damages, injunctive relief and declaratory judgment against Corbis. InfoFlows later amended its complaint to add a claim against Corbis for trade secret misappropriation. On that same day, Corbis sued Infoflows for trade secret misappropriation, breach of contract, and unfair business practices.
On August 24th, 2009, the legal dispute culminated in three-week trial in King County Superior Court, where a 12-member jury dismissed all claims against Infoflows Corporation. Further, the jury found Corbis liable on eight different claims, including two claims of fraud, primarily arising from Corbis’ secret and undisclosed filing of a patent application based in large part on Infoflows’ technology and its fraudulently inducing Infoflows to enter into a software development agreement. The jury also found that Corbis misappropriated Infoflows’ trade secrets, breached its contract obligations, converted its property, and acted in bad faith.
Based on its review of the witnesses and evidence at trial, the jury recognized what Infoflows had believed and asserted from the beginning. That it was Corbis’ goal to stop Infoflows from developing and releasing its own technology implementation, the Fedmark Service. Further, that during the 18 month period prior to terminating the Infoflows relationship with Corbis, senior employees of the Corporation worked to systematically misappropriate Infoflows’ technology and to claim it as their own. The evidence presented to the Court and jury and the resulting findings by the jury and rulings by the Court include the following:
- Since early 2004, Infoflows has been developing a proprietary technology system for purposes of identifying, tracking and managing control of digital objects on the internet. Infoflows' system is called "Fedmark" and, in prior stages of development was known as the "Jazz Service".
- At least as early as October 2005, before signing any contract with InfoFlows relating to a license management system, Corbis began internally contemplating its plan to patent a license management system based on InfoFlows’ technology and vision for such a system.
- In early December 2005, unbeknownst to InfoFlows, Corbis sent to its outside Patent Counsel Infoflows' documents describing designs of a license management system. At trial, one Corbis witness described this conduct as a “labor-saving device.”
- In January 2006, Corbis sent its outside patent additional design documents extracted from Infoflows without disclosing to InfoFlows what it was doing.
- On January 18, 2006, unbeknownst to Infoflows, Corbis filed a non-public patent application for a license management system. As indicated by notes made at the time by a senior Corbis executive, Corbis was trying to gain the “first to market opportunity.”
- On February 16, 2006, a meeting was held with Bill Gates and included senior Corbis executives Steve Davis (former CEO), Gary Shenk (CEO), Sue McDonald (former CFO/COO) and Jim Mitchell (General Counsel) to discuss, among other things, certain software development by Corbis. InfoFlows’ CEO Steve Stone was at this meeting, but was unaware and not told that Corbis had already filed a patent application, nor was he aware that Corbis executives had contemporaneously prepared materials for Bill Gates that identified the non-public patent application as a “growth opportunity” for Corbis.
- In late April 2006, again, unbeknownst to InfoFlows, Corbis personnel met with Corbis’ outside patent counsel and determined that Corbis would “add specifics to the patent app” based on InfoFlows’ work under the software development agreement the parties were then negotiating.
- In early October 2006, Corbis received from InfoFlows, and reviewed, key architecture diagrams that contained InfoFlows’ proprietary architecture design and implementation information regarding the Jazz Service.
- On October 11, 2006, just days after receiving key architectural and design information from Infoflows, Corbis informed InfoFlows via email that Corbis was terminating their Development Agreement.
- Corbis’ position, throughout the litigation, essentially was that it owned nearly everything that InfoFlows ever conceived of or developed.
On February 9th, 2010, the Court ultimately entered judgment against Corbis in the amount of $20 million, including a permanent injunction. The Judgment sets forth that Corbis is liable for:
- Fraudulent inducement,
- Promissory fraud,
- Trade secret misappropriation,
- Breach of contract,
- Breach of duty of good faith and,
- Unjust enrichment.
Additionally, the Judgment required Corbis to return certain trade secret and proprietary information to InfoFlows. As of this date, Corbis has never returned Infoflows’ proprietary information.
Superior Court State of Washington Case Documents
Court: King Co Superior Ct
Case Number: 07-2-03244-4
Doc# Date Description
73 02-19-2007 Infoflows Amended Complaint
Doc# Date Description
445 08-24-2009 Joint Statement of Evidence
502 08-24-2009 Jury Verdict
Post Trial Documents:
Doc# Date Description
557 11-06-2009 Courts Order Denying Corbis Post Trial Motion for New Trial
558 11-06-2009 Courts Order Denying Corbis Post Trial Motion to Dismiss Affirmative Fraud Verdict
560 11-06-2009 Courts Letter to Parties Regarding Post Trial Motions
561 11-13-2009 Courts Decision on Post Trial Motions
Final Judgment Documents:
Doc# Date Description
591 02-10-2010 Order Granting Injunctive Relief in favor of Infoflows
592 02-10-2010 Order Granting Infoflows Application for Attorney's Fees and Costs
602 02-10-2010 Judgment Against Corbis Corporation, Including Declaratory Judgment and Permanent Injunction
Copies of documents relating to this case (07-2-03244-4) may be obtained from the King County Superior Court Clerk’s Office or via the Court’s ECR Washington State Superior Courts Clerks Office.
Infoflows (www.Infoflows.com) is a software services company that provides digital content business intelligence services. Through the application of digital object recognition, search and advanced internet tracking technology, Infoflows is able to provide to our customers valuable business information on the use and abuse of their digital content. Infoflows is currently focused on the digital video, print publishing and the stock photography markets where our Fedmarksm Service enables customers to self monitor their licensed intellectual property. Led by recognized technology entrepreneurs, Infoflows is a privately held company headquartered in Seattle, Washington.
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