The problems facing Infinium Labs, creators of the Phantom video game console, seem to be growing at an alarming rate as yet another law suit has been filed against them. The trend that is beginning to surface from these actions against the company suggests that Infinium Labs acquired insider gaming industry expertise and knowledge from companies and individuals and now may be having difficulty on delivering the appropriate compensation for those services.
Digital Interactive Systems, Inc. (DiStream), and Royal O'Brien, its Chairman and Founder, yesterday filed suit against Infinium Labs and its two founders in the Circuit Court of the Fourth Judicial Circuit in and for Duval County, Florida. The complaint alleges material breaches of a series of agreements relating to Infinium's acquisition of DiStream's proprietary, confidential information, technology and know-how.
The agreements negotiated between DiStream, Mr. O'Brien and Infinium authorized Infinium to utilize DiStream technology - including two modules of its DiStream Server, DiEMS (Enterprise Management System) and DiSMS (Services Management System) and its DiCRYPT, AES standard encryption engine used to protect content during distribution - to develop, launch and protect Infinium's gaming network. After the parties executed the agreements, Infinium trumpeted the arrangement, asserting in a November 4, 2003 news release that with DiStream's technology Infinium has taken a big step toward its goal of offering consumers the largest selection of game software.
DiStream and Mr. O'Brien further allege that by promising them significant ownership interests in Infinium, the defendants induced them to provide Infinium with technological know-how essential to the planned 2004 launch of its gaming network. On the strength of this technological know-how and the substantial contribution of DiStream and Mr. O'Brien to Infinium, the lawsuit alleges, the defendants procured essential financing and began to execute on Infinium's business plan.
In February, 2004, without warning, Infinium terminated its relationship with both DiStream and Mr. O'Brien. In clear violation of its agreements with DiStream and Mr. O'Brien, Infinium refused to tender to DiStream and Mr. O'Brien either the shares to which each was entitled for their efforts on Infinium's behalf, or promised cash consideration.
DiStream also seeks injunctive relief to prevent Infinium from employing any trade secrets, relating to their agreement, that Infinium received from DiStream for any purpose, including procuring financing or launching its gaming network.
