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Contact: Adam Williams
Phone: +1 801 489 2031
Fax : +1 801 489 2104
E-mail: [email protected]

digEcor and e.Digital lawsuit partial ruling, what it means

SPRINGVILLE, Utah March 19, 2009 - On March 13, 2009, the Federal Court in Utah issued a partial ruling on digEcor's and e.Digital's cross-motions for summary judgment and collateral matters. In this ruling, the court dismissed digEcor's claim that e.Digital breached a covenant of non-competition. By invoking a technicality, the trial judge said he would not enforce a non-compete agreement under provisions of California law even though e.Digital had signed a contract and promised not to engage in competition. While digEcor will have to wait to appeal the court's decision that "Paragraphs 1, 4, 5 and 6 of the 2002 NDA are invalid under California law," digEcor is pleased with the many other favorable aspects of the court's decision.

For example, the court held that e.Digital had breached its contract with digEcor by failing to deliver batteries. e.Digital owes digEcor a significant refund but, to date, has refused to remit this refund.

In addition, in this dispute e.Digital had denied contractual obligations to digEcor to timely deliver product that was paid for in full, or refund the purchase price, by claiming that a failure of its supplier Maycom excuses e.Digital's obligation to perform. digEcor is pleased that the court ruled on this issue by declining e.Digital's request to dismiss digEcor's claim for substantial damages, holding that "e.Digital is incorrect that Maycom's failure excuses e.Digital from any breach claim as a matter of law."

digEcor is also pleased with the court's decision to dismiss as a matter of law a portion of e.Digital's counterclaim where e.Digital sought to recover revenue from digEcor. Furthermore, digEcor is pleased that in a prior order dated December 15, 2008, the court dismissed all of e.Digital's claims that digEcor had misappropriated e.Digital technology in some way. In light of this order, e.Digital can make no claim that digEcor has misappropriated any e.Digital technology, and all prior suggestions made by e.Digital to this effect are conclusively established to be without merit.

In another important holding, the court found "as a matter of law that the PO, not the DRM Agreement, governs the purchase of the 1250 digEplayer 5500s at issue here." The court agreed with digEcor that "a careful reading of the language of the DRM Agreement and the PO confirms that they were meant as separate agreements," clearing the way for digEcor to pursue at trial recovery of the full measure of its damages.

The court will hold a second hearing on March 23, 2009, to consider other additional portions of the cross-motions made by digEcor and e.Digital. At the next hearing, the court will decide whether to grant summary judgment to digEcor on its claim that e.Digital breached a covenant of good faith and fair dealing and to e.Digital or its counterclaims for defamation and tortious interference. The court will also decide whether digEcor has enough evidence to go to trial on its unfair competition claims.

Subject to the outcome of the next hearing, digEcor is looking forward to a trial on its claims that: (1) e.Digital breached its contract by failing to timely deliver 1,250 players in 2006; (2) e.Digital breached warranty obligations owed to digEcor; (3) e.Digital breached the covenant of good faith and fair dealing owed to digEcor by offering a competing product to digEcor's customers in 2006; (4) e.Digital breached its promise to give digEcor exclusive rights to DRM Technology in the IFE industry by incorporating that technology into a competing product; and (5) e.Digital and its officers, Fred Falk and William Blakeley, committed violations of federal and state unfair competition laws in connection with their marketing of e.Digital's competing product.

In light of the recent rulings, digEcor remains determined to pursue justice from e.Digital for the substantial harms e.Digital has perpetrated in said matters.

About digEcor, Inc.

digEcor provides a turn-key solution specializing in sourcing, encoding, and encrypting content; pioneering proprietary personal media platforms; and implementing end-to-end programs. With years of experience, digEcor's team focuses on increasing traveler satisfaction, creating easily executed solutions, and generating revenue opportunities for clients. Based in Springville, Utah, digEcor has offices throughout the United States, Europe, and Asia. Visit digEcor online at www.digEcor.com or call +1 801 489 2022.