On Sunday,
The New York Times ran a
lengthy piece on the protracted legal battle between technology startup Infoflows and Corbis. On Monday, Infoflows followed up with a press release under the headline, “Jury Finds Bill Gates-owned Company Committed Fraud; Corbis Faces $20 Million Judgment and Permanent Injunction.” Corbis, however, says that the battle is far from over and points to the somewhat odd timing of the press coverage.
According to Corbis director of communications Dan Perlet, the Infoflows lawsuit stems from a dispute that took place in 2005–2006, over four years ago. “We are perplexed as to why this is newsworthy now,” said Perlet, pointing out that the trial concluded almost a year ago, in August of 2009. Infoflows’ own Web site confirms, adding: “On February 9, 2010, the Court ultimately entered judgment against Corbis.”
So the timing of the announcement appears to coincide with when Infoflows was able to get major press coverage for the story. Yet the issues of the case are not as straightforward as this obvious—albeit successful—PR stunt.
Infoflows, started by a group of former Microsoft employees in 2004, describes itself as a software services company that provides digital content business intelligence services. In simpler terms, it uses digital object recognition to track proprietary content, such as stock images and video.
Infoflows started working with Corbis when this technology was still in development. The relationship deteriorated as the two companies could not reach an agreement on who owned some of the technology—specifically something called a “license management system.”
Corbis terminated its development agreement with Infoflows in October of 2006, and Infoflows filed a lawsuit in 2007. During the trial, the startup presented evidence that it said demonstrated that Corbis attempted to appropriate inventions that were not its own. For example, Infoflows claims: “In early December 2005, unbeknownst to InfoFlows, Corbis sent to its outside Patent Counsel a PowerPoint containing Infoflows documents describing designs of a license management system. On January 18, 2006, unbeknownst to Infoflows, Corbis filed a non-public patent application for a license management system.”
The 12-person jury sided with Infoflows, issuing an initial award in the amount of $36 million, which was later adjusted to slightly over $20 million, for misappropriation of trade secrets, fraud and breach of contract by Corbis. The award included around $1 million in attorney’s fees and costs to be reimbursed to Infoflows. (Copies of numerous legal documents are available at the Infoflows Web site and can also be ordered directly from the Washington State Superior Courts Clerks Office.)
Corbis issued a statement that said it was disappointed by the outcome of the trial and believed the court made substantial legal errors. “Corbis and Infoflows had a binding written contract that governed the terms of their relationship, which both parties thoroughly negotiated with the benefit of counsel. The terms were clear that Corbis would pay Infoflows to build a license management solution conceived and designed by Corbis, and that Corbis would own any resulting intellectual property.”
Corbis has appealed the verdict, and that case is awaiting review. The company said it was confident it would ultimately prevail.