From our private database of 14,100+ case briefs...
Versata Enterprises, Inc. v. Selectica, Inc.
Supreme Court of Delaware
5 A.3d 586 (2010)
Selectica, Inc. (Selectica) (plaintiff) was a public company that lost significant money over several years, accumulating approximately $160 million in net-operating-loss carryforwards (NOLs) under the tax code. These NOLs allow either a refund of prior taxes or a reduction of future income tax owed. NOLs are an asset and can be financially valuable. The tax code imposes limitations to prevent corporations from benefiting from NOLs generated by other entities. If an ownership change occurs, as defined by Internal Revenue Code § 382, then the NOLs become restricted and lose substantial value. Section 382 focuses on shareholders with five percent or more of the corporation’s shares. One of Selectica’s competitors, Trilogy, bought approximately six percent of Selectica’s stock. Selectica’s board of directors then met with financial experts and determined that Selectica’s poison pill needed to be adjusted to preserve the NOLs. The board amended Selectica’s shareholder-rights plan to reduce the stock-purchase threshold that would trigger the poison pill from 15 percent to 4.99 percent. Trilogy continued to purchase stock and triggered this poison pill, but it refused to agree to any conditions that would protect the NOLs. Selectica’s board then adopted a reloaded poison pill to protect the NOLs. The reloaded poison pill doubled all outstanding shares except for Trilogy’s shares. This reduced Trilogy’s holdings to approximately 3.3 percent. Litigation commenced regarding the legality of Selectica’s poison pills. The Court of Chancery found that the poison pills were valid. Trilogy appealed to the Supreme Court of Delaware.
Rule of Law
Holding and Reasoning (Holland, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 221,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,100 briefs, keyed to 189 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.