Established to commercialise ice-warning devices for roads, Christchurch-based Solar Bright recovered company assets from founders Patrick and Nicola Martin after a High Court ruling intellectual property was improperly stripped out of the company.
In court, the PATeye and DATAeye inventions were described as ‘the brain children’ of Mr Martin. He took out patents and trademarks to protect his inventions. Solar Bright Ltd shareholders put in over $2.3 million over four years to commercialise the product. Patents and trademarks were transferred to the company. Revenue flows were disappointing; between $20,000 - $40,0000 yearly.
Mr Martin resigned from Solar’s board in late 2017. Three weeks later, his spouse Nicola Martin signed a document as managing director of Solar Bright transferring all company intellectual property back to her husband. No price was put on the value of intellectual property transferred. Ms Martin said it was difficult to value, given product was still in research and development phase. And in any event, both she and her husband were owed considerable sums in unpaid wages together with un-reimbursed expenses incurred in the company’s name, she said.
Solar Bright’s shareholders approved a Companies Act resolution nullifying the sale: transactions with directors and those associated with directors can be set aside within three months if the deal was not at fair value.
Justice Osborne ruled it was for the Martins to prove a fair price was paid. They failed to do so, he said. The document evidencing the asset transfer did not state any price. The Martins claim to a set off against unpaid wages did not stand up given they were suing in the Employment Relations Authority for backpay. And even if the intellectual property was valued at book value of $110,000, their claim for unpaid wages was less than that figure.
Both were ordered to deliver up all Solar Bright property in their possession including storage devices and documents, to surrender domain names and to disclose access passwords. Mr Martin was ordered to re-transfer patent rights.
Solar Bright Ltd v. Martin – High Court (15.03.19)
19.057