634 F. App'x 557
6th Cir.2016Background
- Priva Technologies (borrower) granted Pro Marketing Sales a 2009 Security Agreement giving Pro Marketing a first‑priority lien on all Priva assets, expressly including “Intellectual Property,” copyrights, copyright licenses, and after‑acquired property.
- Priva entered Chapter 11 in 2011; Pro Marketing began foreclosure in March 2012 for default under the Security Agreement.
- In April 2012 Priva and Cyber Solutions executed a License/Design Services Agreement: Cyber paid for development and Article 5.2 provided that Cyber would own “updates, modifications or improvements” to the SKSIC technology developed with Cyber’s funding (Priva “agrees to assign and agrees to assign in the future”). The License acknowledged Pro Marketing’s preexisting liens.
- Bankruptcy court approved Priva’s reorganization plan and the Cyber license, noting the license was subordinate to Pro Marketing’s lien and Pro Marketing could recover technology on default.
- Priva later (with Cyber funding) developed TRSS (an improvement of SKSIC); Priva ceased operations, Pro Marketing foreclosed in a friendly foreclosure and took possession of SKSIC/TRSS. Cyber sued for declaratory/injunctive relief claiming ownership of TRSS; Pro Marketing counterclaimed for declaration of ownership. District court granted summary judgment for Pro Marketing; Cyber appealed.
Issues
| Issue | Plaintiff's Argument (Cyber) | Defendant's Argument (Pro Marketing) | Held |
|---|---|---|---|
| Whether TRSS is part of Pro Marketing’s secured collateral | Article 5.2 of the License automatically made Cyber the owner of any SKSIC updates (TRSS) the moment they were developed, so Priva never owned TRSS and it falls outside Pro Marketing’s collateral | Security Agreement covers after‑acquired IP and Priva first acquired any rights in improvements, which it was obligated to assign later to Cyber; thus TRSS was owned (even briefly) by Priva and therefore included in Pro Marketing’s collateral | TRSS falls within Pro Marketing’s security interest; Pro Marketing’s lien is superior to Cyber’s claim |
| Whether Pro Marketing is barred by the unclean‑hands doctrine from obtaining declaratory relief | Pro Marketing allegedly coerced Priva’s termination of the Cyber license via pressure/settlement with Priva’s president, so its misconduct is related and should bar equitable relief | The alleged misconduct (state‑court suit/settlement) is not directly tied to Pro Marketing’s original security interest or its separate ownership claim; unclean hands requires a direct, material relation | Court did not apply unclean‑hands; misconduct lacked the immediate/material relation required and district court did not abuse discretion |
Key Cases Cited
- Meridian Leasing, Inc. v. Associated Aviation Underwriters, Inc., 409 F.3d 342 (6th Cir. 2005) (summary judgment standard and de novo review of contractual interpretation)
- Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359 (Fed. Cir. 2010) (language stating a party “agrees to assign” is a promise to assign in the future, not an immediate transfer)
- Performance Unlimited, Inc. v. Questar Publishers, Inc., 52 F.3d 1373 (6th Cir. 1995) (unclean‑hands doctrine requires misconduct to have immediate and necessary relation to the claim)
- McDonald v. Asset Acceptance LLC, 296 F.R.D. 513 (E.D. Mich. 2013) (assignee obtains only the rights the assignor possessed)