Reed Smith Client Alerts

In the Delaware Court of Chancery’s recent decision, Slingshot Technologies, LLC v. Acacia Research Corp., C.A. No. 2019-0722-JTL (Del. Ch. Mar. 29, 2021) (Order), the court denied a motion to dismiss a claim for breach of the implied covenant of good faith and fair dealing, because the court found an implied covenant was inferable from an express contract term which precluded the sale of assets to a party that had received confidential information the plaintiff disclosed to potential funding sources.


Plaintiff Slingshot Technologies LLC (Slingshot) filed suit in the Delaware Court of Chancery against defendants Acacia Research Corp. (ARC), Acacia Research Group (ARG, and with ARC, Acadia), Monarch Networking Solutions LLC (Monarch), Transpacific IP Group Ltd. (Transpacific), as well as the managing director of non-party litigation finance company Burford Capital (Burford) who joined Acacia’s board, Katherine Wolanyk (Wolanyk). Slingshot’s claims arose from Acacia’s acquisition of a patent portfolio (the Orange Patent Portfolio) from Transpacific, which Slingshot previously sought to acquire pursuant to a purchase agreement (the Purchase Agreement) that provided Slingshot with the sole and exclusive right to acquire the Orange Patent Portfolio at agreed upon terms (the Exclusive Option) and afforded Slingshot certain protections even beyond the exclusivity period provided in the Purchase Agreement.

Slingshot is in the business of acquiring and monetizing patents and, according to its complaint, Slingshot entered the Purchase Agreement with Transpacific in September 2018 after analyzing strategies to enforce the patents that Slingshot asserts constituted trade secrets. Slingshot also explored financing acquisition of the Orange Patent Portfolio with Burford, and introduced Burford to Transpacific. The Purchase Agreement includes a provision (the Prohibited Transaction Provision) that precludes Transpacific from selling the Orange Patent Portfolio to “any funding source introduced to [Transpacific] by [Slingshot]” if Transpacific did not conclude a sale with Slingshot:

In the event that [Slingshot] does not purchase the [Orange Patent Portfolio] from [Transpacific], [Transpacific] agrees not to enter into any sale transaction regarding the [Orange Patent Portfolio] with any funding source introduced to [Transpacific] by [Slingshot] for a period of one year following the expiration of the Exclusive Option period.

Shortly after entering into the Purchase Agreement with the Exclusive Option, Slingshot entered Non-Disclosure Agreements (the NDAs) in October 2018 with Burford that Wolanyk, who was Slingshot’s primary point of contact, executed on Burford’s behalf. The NDAs preclude Burford from disclosing “non-public, confidential, or proprietary information relating to subject matter, such as business plans, business or financial information, research, and technical data” for seven years, and include arbitration clauses. After entering the NDAs, Slingshot shared its analyses with Burford and Wolanyk.