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Firm Wants Royalties on|NFL Scouting Software

(CN) - A licensing agreement catapulted rival software makers into the NFL market, but they never promoted or paid royalties on the licensed program, a company claims in Federal Court.

NExTT Solutions filed suit in Hammond, Ind., claiming that XOS Technologies and StratBridge LLC exercised "tactical deceit in luring NExTT into a contract which granted defendants an exclusive license to use, market and sell software relating to player scouting to the National Football League."

The software creates customized scouting reports, player injury information, salary cap administration, and in-depth comparison of player statistics. NExTT's founders allegedly spent 20 years developing the software and signed up eight NFL teams before entering into 2009 license agreement with StratBridge to further market and promote the product.

But NExTT says XOS and StratBridge "instead have surreptitiously forced NExTT out of the NFL market, usurped NExTT's business relationships with numerous NFL teams and now market products and software to the NFL (which may be based on NExTT's licensed technology) without paying NExTT the royalties it is due under the license agreement.

"In essence, defendants entered into the license agreement with NExTT under the guise it was going to expand the market share for NExTT's software in the NFL (and compensate NExTT accordingly) when defendants really only wanted the coveted 'in' with the NFL as well as the inner workings of NExTT's software," the complaint states. (Parentheses in complaint.)

Under the license, StratBridge agreed to pay NExTT a minimum of $2 million in royalties over five years. But after two years StratBridge had paid only about $64,000 of the royalties due, according to NExTT.

"It was soon discovered why the revenue share payments were exponentially lower than the pre-agreement projects," NExTT says in its complaint. "In essence, StratBridge was ignoring its obligations under the license agreement to use its 'best efforts' to market the royalty-bearing products so it could instead usurp NExTT's relationships with the NFL teams to aggressively market StratBridge's own products and avoid making revenue share payments due NExTT under the license agreement."

In 2012, XOS Technologies bought Stratbridge and admitted that it owed NExTT royalties under the licensing agreement. But the new owner has so far failed to pay the full debt, NExTT claims.

"After four years of the license agreement the amount of revenue share payments made to date totals $129,501," NExTT says in the complaint. "The remaining amount due to meet the minimum revenue share is $1,870,499."

As a result of the companies' actions, "a business which NExTT's founders dedicated a lifetime to develop has been destroyed," the complaint states.

NExTT seeks damages for breach of contract, breach of fiduciary duty, breach of implied covenant, and fraudulent inducement.

The company is represented by Daniel Tarpey with Tarpey Wix in Chicago.

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