Former shareholders seek to regain rights and control of Patent Portfolio
Following a hearing on a motion to dismiss an action pending in Delaware Chancery Court, Vice Chancellor Sam Glasscock III drafted a 48-page opinion that upholds nearly all claims alleged by the plaintiffs against Tom Rogers, Hank Ratner, and other defendants. Vice Chancellor Glasscock found that “the Amended Complaint states adequate breach of fiduciary duty claims against the Director Defendants, a claim for recission, as well as a claim against the Director Defendants, as well as a claim against the Director Defendants and the largest blockholder of WinView for unjust enrichment.”
The lawsuit and amended complaint, filed July 9th, 2021, seeks to rescind a three-way merger that created Engine in 2020, in addition to other damages. The plaintiffs allege Rogers, Ratner, Graham Holdings, Inc., and the board advanced their personal interests over their fiduciary obligations to WinView. The defendants are alleged to have threatened and misled WinView’s shareholders to advance a merger plan that left common shareholders with nothing.
Among Plaintiffs’ claims that survived the motion to dismiss were non-exculpated breaches of fiduciary duty against the Director Defendants, breaches of the duty of loyalty, unjust enrichment, and conflicts of interest. The Chancellor also declined to defer to a shareholder vote in favor of the merger, as the allegedly conflicted Director Defendants controlled a substantial portion of voting shares, and thus the vote was also conflicted.
The Plaintiffs seek to rescind the merger, and if successful will regain the rights to WinView’s assets which are primarily a portfolio of more than 80 issued United States Patents relating to mobile sports betting and online gaming that the directors represented were worth $175 million at the time of the merger. Three such patents are currently at the center of patent infringement cases against DraftKings and FanDuel in the United State District Court of New Jersey.
The Plaintiff stockholders are represented by the law firms Diamond McCarthy LLP and Whiteford, Taylor & Preston LLP. Please find link to the opinion for the release: https://courts.delaware.gov/Opinions/Download.aspx?id=330350