November 15, 2022
A recent Law 360 story by Emily Lever, “NY Firm Says Enviro Co. Failed To Pay Legal Fees” reports that Bochner IP PLLC sued environmental company Global Thermostat in New York state court over allegedly skipping out on a $102,000 bill for its work on intellectual property transactions aimed at fending off bankruptcy, saying Global Thermostat "never intended to pay" in full.
When Global Thermostat found itself at risk of bankruptcy, the company's co-founder agreed to grant it the use of her intellectual property, according to a complaint filed in New York Supreme Court. Bochner handled the IP transactions, for which Global Thermostat paid the first few installments of the six-figure legal bill — a deliberate deception to create a false sense that Global Thermostat intended to and could pay the full bill, according to Bochner.
"Defendants successfully closed on the transactions and avoided bankruptcy, without having to fulfill their obligations to plaintiff," the complaint says. Global Thermostat, a startup billing itself as being able to suck carbon dioxide out of the atmosphere and stop climate change, was co-founded in 2010 by Graciella Chichilnisky based on technologies she patented.
Global Thermostat PBC, Global Thermostat Operations LLC and Global Thermostat Licensing LLC sought new investors to save them from a possible bankruptcy, according to the complaint. The companies paid Chichilnisky royalties for her technology, but potential investors insisted Chichilnisky transfer the patents to the companies as a condition of investment, according to the complaint.
Chichilnisky agreed, and the companies agreed to pay her legal fees in connection with the transfer of IP as compensation for the loss of royalties. Bochner, a civil litigation and intellectual property firm, represented Chichilnisky in the transaction. Bochner drafted a settlement that allowed the companies to avoid bankruptcy, according to the complaint.
Global Thermostat paid Bochner's first three invoices, which were each for $20,000, before the settlement closed. But once the settlement was finalized Aug. 12, they stopped paying, leaving $102,679.25 worth of invoices unpaid, according to the complaint. The companies "failed to disclose material information of their intent and/or ability to pay" to give Bochner the impression they would pay the full legal bill and to keep the firm working on the settlement that would preserve their business, according to Bochner.
"Defendants made these assertions and payments in order to induce plaintiff into believing it would be paid for all further work done in negotiating and finalizing the transactions," the complaint says. Global Thermostat also ignored demands for payment from other firms that worked on the transaction, according to the complaint.