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.