William D. Chapman, Orange County business litigation attorney of Smith, Chapman & Campbell was retained by Michael P. Gorman, the Michael Gorman Corporation and Intellectual Holding Company, Inc. to represent their interests in the above case.
Gorman is the inventor of 21 patents relating to modular electrical outlets which revolutionize the safety and dramatically reduce the cost of installing electrical outlets in building construction. Gorman assigned all of his patent rights to ProtectConnect in exchange for stock in the company and royalties.
ProtectConnect claimed that Gorman signed a document waiving all of his rights in the patents, including his right to receive royalty payments, in order to induce investors to buy more stock in the company. This "waiver" document became a major issue in the case.
ProtectConnect admitted that the signature on the alleged "waiver" was forged but claimed that Gorman forged his own signature so that he could later deny that he signed the document. Gorman foreclosed on his security interests in the patents and sent out a notice to all interested parties and existing customers of the product notifying them that he was again in control of his patents.
ProtectConnect sued Gorman to try to invalidate the foreclosure and for damages relating to Gorman's alleged interference with ProtectConnect's customers. Gorman sued ProtectConnect to declare the forged document invalid and to confirm that he is the true owner of the patents.
The parties were scheduled for trial on February 25, 2008 and assigned to Judge Robert Monarch, Orange County Superior Court, Department 67 for trial. After three days of pretrial hearings in settlement discussions, the parties settled the case.
In the settlement, ProtectConnect agreed to pay royalties to Gorman with a guaranteed minimum in a lump sum payment for his royalty rights if the company is sold. If ProtectConnect is late on more than two payments, all of the patent rights will revert to Gorman.