From Document 78 Filed 04/27/2007 - 5th Counterclaim
posted on
May 28, 2007 05:47AM
FIFTH COUNTERCLAIM
(Breach of Duty to Negotiate in Good Faith)
43. e.Digital incorporates by reference the allegations in the preceding paragraphs of this Counterclaim.
44. digEcor’s refusal to respond to terms tentatively agreed to in early negotiations, and their refusal to negotiate any further terms, constitutes bad faith and a breach of its duty to negotiate in good faith a split of maintenance revenues and other revenue sharing provisions breached under the express and implied terms in the 2002 Agreement.
45. e.Digital is entitled to damages for digEcor’s breach of its duty to negotiate in good faith.
Additional Background Facts for Sixth, Seventh, and Eighth Counterclaims
45. digEcor has made repeated harassing contacts with e.Digital customers and business associates making misrepresentations regarding e.Digital’s ability to serve the customers, the meaning of rulings made by this Court, and the stability of e.Digital’s business.
46. Among other misrepresentations, digEcor has incorrectly represented to e.Digital customers that a ruling by this Court may prohibit e.Digital from selling its digital media players, and thus the customers should purchase digital media players from digEcor instead of from e.Digital. The Court has made no such ruling.
47. digEcor has made harassing telephone calls to several of e.Digital’s customers seeking specific information about the exact terms of the customers’ contracts with e.Digital.
48. Several of e.Digital’s customers have stated that they have asked digEcor to stop making such contacts, and have complained to e.Digital about the contacts.
49. Several of e.Digital’s customers have contacted e.Digital requesting indemnification and other concessions with specific reference to claims made to them by digEcor about e.Digital.
50. Further, the misrepresentations and harassing contacts made by digEcor to e.Digital’s present and prospective business relations have damaged e.Digital’s ability to transact business with these parties and forced e.Digital to make contract concessions and incur current and prospective costs as a direct result.
51. digEcor contacted one prospective client of e.Digitals and threatened that if the company gave its business to e.Digital, digEcor would recall all of the players it had supplied to the company, and further disrupt their business.
52. As a result of digEcor’s improper threats to that company, e.Digital was not awarded that company’s business, which would have brought revenues of many millions of dollars.
53. On information and belief, digEcor has incorporated e.Digital’s technology into media players that also incorporate proprietary technology belonging to other parties, without the consent of such third parties or of e.Digital.
54. For example, digEcor is marketing products that contain significant sections of proprietary software code that is the property of DivX, Inc. On information and belief, digEcor is not licensed to use DivX’s code.
55. digEcor’s use of unlicensed proprietary technologies in media players that also incorporate e.Digital’s technology puts e.Digital at risk of suit by those other parties.
