May 1, 2001

Ninth Circuit Affirms District Court's Grant of Summary Judgment in Favor of Intelligy Corporation on Breach of Contract Claim Seeking $2 Million by Japanese Corporation Contact: Daniel J. Bergeson, Esq. Ina Stangenes, Esq. (408) 291-6200 Intelligy Corporation, a Pleasanton-based company that developed an educational children's program called "Wings," once again emerged victorious in a $2 million dollar lawsuit filed in the United States District Court for the Northern District of California by a Japanese corporation, International Exchange Center for Intelligence Education ("IECIE"). IECIE contended that it was entitled to fifty percent of the proceeds Intelligy received for the assignment of its intellectual property rights to the Wings program to NSA International, Inc. IECIE, a Japanese corporation engaged in the development educational activities for children entered into an agreement authorizing Intelligy Corporation to commercially exploit products created by IECIE called "IE Works." Intelligy never made, sold or marketed IE Works. Instead, it spent in excess of $4 million to redesign IE Works, creating a new program called Wings. In 1991, Intelligy sold its entire Wings inventory to NSA International, Inc. Two years later Intelligy Corporation assigned all of its intellectual property rights to NSA International, Inc. In its lawsuit against Intelligy Corporation, IECIE contended it was entitled to fifty percent of the proceeds Intelligy Corporation received for the assignment to NSA International, Inc. because its agreement with Intelligy entitled it to receive a fifty percent royalty based on proceeds received from the "sublicensing" or "subpublishing" of IE Works. The Court granted Intelligy Corporation's motion for summary judgment, holding that the assignment of Intelligy Corporation's intellectual property rights to NSA International, Inc. did not constitute a "sublicensing" or "subpublishing" arrangement under the parties' agreement. The Ninth Circuit Court of Appeal affirmed the District Court's decision in a memorandum opinion dated May 1, 2001. Intelligy Corporation was represented by partners Daniel J. Bergeson and Ina Stangenes of Bergeson & Eliopoulos, LLP. International Exchange Center of Intelligence Education was represented by the New York firm of Charles E. Bruzga of Law Firm of Charles Bruzga and Justin Schwartz of the Justin Schwartz Law Office of Oakland, California.