Court Fight Over 3D Movie Secrets

LOS ANGELES (CN) - A software producer claims in court that he was defrauded of his stake in a 3D movie technology venture.

Thomas Randolph claims in Superior Court that the other men stole his trade secrets, falsely accused him of self-dealing, and failed to pay him an agreed upon 5 percent cut in the venture, known as StereoD.

Randolph and his company Interactive Artists LLC sued William Sherak (son of nonparty Tom Sherak, president of the Academy of Motion Pictures Arts and Sciences and a former partner of Revolution Studios); movie producer Christopher Mallick; actor Giovanni Ribisi; Kuniaki Izumi, the owner and developer of VDX software; and Hollywood agent David Phillips, who along with Sherak allegedly introduced Randolph to Mallick.

Mallick formed MRSR LLC fka StereoD LLC in 2009 to market and sell Izumi's VDX technology, according to the complaint. Randolph claims that he created the business plan for the 3D conversion company and introduced Mallick to Izumi's software, which converts 2D movies into 3D.

Randolph says he met with Mallick in late 2008, while he was a principal of Kerner Technologies, when the filmmaker expressed an interest in converting 2D movies into 3D.

Randolph says he told Mallick about the VDX technology, and persuaded Izumi to combine VDX technologies with Kerner's CPX technologies and with Kerner's consent entered into a venture with Mallick.

Under the terms of deal, Randolph would be the venture's Chief Technical Officer, own a 5-10 percent stake and license FrameFree and CPF technologies from Kerner, according to the lawsuit.

But Randolph says that before the deal was complete, Phillips "began plotting and conspiring" against Randolph over their finders' fees.

Randolph claims that he told Phillips that Mallick or StereoD should pay the fee up front once the company was operational, but that Phillips was not "satisfied with such assurances" and "decided to double-cross" him.

"To that end, Phillips allegedly notified Ian Rose ('Rose'), Kerner's general counsel, of the new VDX deal that Randolph was trying to broker between Izumi and Mallick to the exclusion of Kerner," the complaint states.

"In fact, what is abundantly clear is that Phillips plainly conspired with Rose and some of the Kerner Principals ([Joe] Suicki most likely) to create the legend of Randolph's 'self-dealing.' If Kerner Technologies were to be back in the deal as its major component, then Phillips' claim to a finder's fee would be much stronger. In addition, with the same strike, Phillips would get rid of the element he perceived as most vocal, influential and obstinate to his finder's fee claim - Randolph," the complaint states. (Parentheses, but not brackets, in complaint.)

Randolph claims that after he resigned from Kerner in early 2009, Suicki and Rose falsely accused him of failing to disclose the VDX deal to Kerner Technologies and misrepresenting to Mallick, Ribisi, Sherak and Phillips that he could negotiate the VDX deal without Kerner Technologies' involvement.

Mallick, Ribisi, and Sherak then told Randolph that they were ejecting him from the venture based on those false accusations, the complaint states.

But Randolph says he stayed in touch with Izumi, who allegedly assured him that he would protect Randolph's interest in StereoD.

"After conclusion of the VDX deal, W. Sherak (or a limited liability company owned by him) went on to become StereoD's major owner, with a 32 percent stake in the company, and, after the 2011 acquisition of StereoD, a three-year $14 million deal to run the purchaser. Mallick and Ribisi earned tens of millions when StereoD was purchased by Deluxe. Izumi's stake in StereoD ended up being a lot smaller than what Randolph's proposal's envisioned (from 34 percent down to 2 percent). Phillips, also thrown out in the end, had to sue Mallick, W. Sherak, Ribisi and StereoD for his share of the finder's fee, on a fairly ephemeral claim, and, allegedly settled his lawsuit for a multi-million dollar cash payment," the complaint states. (Parentheses in complaint.)

Randolph says he discovered that Izumi was part of the "overall conspiracy against him," when StereoD's assets were sold to a subsidiary of the Deluxe Entertainment Services Group, Deluxe 3D. Then, Randolph says, he learned that he "in fact had no equity or ownership interest in StereoD whatsoever."

Randolph seeks damages for breach of contract, intentional interference with prospective economic advantage, intentional interference with contractual relations, fraud and negligent misrepresentation.

He is represented by Alexander Volchegursky, with Lvovich, Volchegursky & Szucsko, in San Francisco.

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