After reading the Court’s findings, I was very impressed with Judge Stewart and his ascertaining of the facts.  He saw through digEcor’s bull$hit and ruled heavily in e.Digital’s favor, to the dismay of bashers everywhere, i.e. Friendlyfred, Cassie, murryhill, et al.  I'm sure they'll be doing damage control research all day. LOL.

A.  Defendants’ Motion to Dismiss Certain Claims in the Complaint.

Defendants (e.Digital) make several arguments in support of their Motion.

Argument 1. Operation of Agreements.  The Court finds, as a matter of law, that the 2002 Agreement (October 2002) does not supersede the 2002 NDA (April 2002).  Specifically, the Court finds that the merger clause of the later agreement does not alone allow it to supersede the obligations under the prior one.

Argument 2.  Limit on Damages.  Defendants’ requested remedy (limiting recovery of the 1250 digEplayer order and DRM to $25K) would be tantamount to this Court rendering a declaratory judgment on this issue, and the Court will not do so.

Argument 3.  Unjust Enrichment.  The Court dismisses Plaintiff’s (digEcor) unjust enrichment claim because of the existence of express contracts between the parties.

Argument 4.  The Economic Loss Doctrine.  The Court dismisses Plaintiff’s claims for fraud, negligent misrepresentation, tortuous interference, and punitive damages because it finds that they are barred by the economic loss rule.

B.  Plaintiff’s Motion for Partial Summary Judgment on Liability and Damages.  The Court will deny Plaintiff’s Motion for Partial Summary Judgment on the issue of liability and general damages.  The motion is premature as there has been no discovery in this action.  Moreover, Defendants have established by affidavit and other evidence that there are genuine issues of material fact, including whether Plaintiff performed under the contracts and whether Plaintiff contributed to any breach of the contracts.  [The Court sees a fox in the hen house here…betcha BOW $hit his pants on this one. LOL.]

C.  Defendants’ Motion for Judgment on the Pleadings as to the Scope of Exclusivity Under the DRM Agreement.  The Court finds, as a matter of law, that the DRM Agreement is unambiguous in setting forth RBE as one necessary component of DRM technology, as that term is defined by the Agreement, and that the parties here have chosen to define DRM technology as the sum of its component parts.  As discussed in further detail below, the DRM Agreement is not unclear, does not omit terms, and does not contain terms with two or more plausible meanings on the issue in dispute.  Accordingly, the Court finds, as a matter of law, that Plaintiff’s exclusivity rights are limited to technology which, among the other components listed in Addendum One, includes RBE (random block encryption).  The Court further finds that the DRM Agreement defines DRM technology as the sum of its component parts, as set forth in Addendum One, and not severally as to each component.  [Meaning all e.Digital has to do is remove RBE from the DRM technology and it now becomes non-DRM technology and can be utilized in the eVU.  This was the big one for us…allowing us to pursue eVU business with other airlines, healthcare business and travel/leisure.]

CONCLUSION

For the above mentioned reasons, it is hereby

ORDERED that Defendants’ Motion to Dismiss is GRANTED in PART and DENIED IN PART. 

ORDERED that Plaintiff’s Motion for Summary Judgment is DENIED.

ORDERD that Defendants’ Motion for Judgment on the Pleadings is GRANTED.

Overall a decisive win for e.Digital and a crushing loss for digEcor.