Case Highlight: Spiro v. Vions Technology, Inc. – State Court Maintains Subject Matter Jurisdiction In Dispute Surrounding Intellectual Property Ownership Rights of A Now-Bankrupt Corporation

Intellectual property and bankruptcy disputes are matters typically reserved for the subject matter jurisdiction of the federal courts. However, in Spiro v. Vions Technology, Inc., C.A. No. 8287-VCP (Del. Ch. March 23, 2014) the Court of Chancery of the State of Delaware (“Chancery Court”) addressed a procedural question as to subject matter jurisdiction and held that where a debtor’s intellectual property and related licensing agreements had been abandoned by the bankruptcy trustee, the Chancery Court has subject matter jurisdiction over an action to determine, among other things, the ownership of such intellectual property. Specifically, plaintiff Spiro, a creditor in the bankruptcy action and a former shareholder of the bankrupt corporation, Ionsep Corporation Inc. (“Ionsep”), brought an action in the Chancery Court seeking, along with damages, that the Court: (i) void the exclusive licensing of the intellectual property as an allegedly fraudulent transfer, (ii) enjoin further licensing of the intellectual property by the licensee and (iii) return the intellectual property to the shareholders of Ionsep. Defendant Vions Technology Inc. (“Vions”), to which the intellectual property at issue had been transferred pre-bankruptcy, argued that Spiro had no standing to bring the fraudulent transfer action and that the bankruptcy court maintained jurisdiction over the intellectual property in question.