Outlast purchases Frisby assets in bankruptcy auction

Outlast Technologies, Inc. acquired most of the remaining assets of Frisby Technologies for $455,000 in a bankruptcy court auction that closed May 18. The assets include various technology licenses, Frisby’s Thermasorb trademarks, logos and associated website, Frisby’s company website, the Frisby research and development library, product development databases, test reports and intellectual property rights in the field of phase-change materials, customer and supplier databases, and miscellaneous office and lab equipment.

Brad Poorman, global vice president for Outlast, told SNEWS® that Outlast decided to purchase the assets of Frisby to “clear up intellectual property questions.”

“In addition, we knew that Frisby had been conducting as much testing as we had and that the company had reams of data with much of it very good,” Poorman said. “We felt there was strong value in the data and wanted to make sure we owned it. They had also been working on some very interesting projects including exploring licenses with Pittards leather and more that we wanted to own.”

Poorman acknowledged that there was not much immediate value in the Thermasorb trademarks, but allowed that Outlast would probably use the marks in future expansions into industrial applications of its phase-change technology.

As of this writing, all phase-change material research and development now has been consolidated under the Outlast global umbrella of Smart Fabric Technology and within a few weeks, Poorman told us, Outlast should be able to announce several major programs, including two apparel-related ones.

This doesn’t mean, however, that Outlast has fully managed to extract itself from the legal morass it found itself mired in with Frisby. In addition to remaining questions over the rights to a few patents not included in the Frisby assets sold to Outlast, there is a small matter of ongoing litigation.

Frisby entered Chapter 11 bankruptcy protection on Jan. 16, 2003, and subsequently sold its climate-control Comfortemp brand to Germany-based Freudenberg Vliesstoffe KG in July 2003. At the time of the sale of Comfortemp assets, Frisby and Outlast were involved in a dispute over patent-infringement regarding the Comfortemp product, which Freudenberg was very aware of, according to Outlast. While Freudenberg is not directly affected yet, pending the resolution of a final appeal by Outlast, the German company may find it bought more than it bargained for — which is perhaps why it has agreed to partially fund Frisby’s continuing legal defense bill.

“The North Carolina bankruptcy court has given its permission to certify the Denver court decision for appeal and our notice of appeal will soon be filed in Denver to move the case to the Federal Appeals Court in (Washington), D.C.,” corporate legal counsel Duncan Edwards told us.

Edwards confirmed that if the Federal Appeals court finds in Outlast’s favor, Freudenberg could be liable for back damages on Comfortemp sales from the time Freudenberg acquired the worldwide rights to the Comfortemp trademark.

SNEWS® View: Smart move for Outlast, and it nearly closes a chapter on what has managed to become one of the most convoluted bankruptcy proceedings we’ve followed in quite some time. Clearly, Outlast scored by acquiring the only thing of real value in the asset acquisition — the testing data which would cost the company double the price of acquisition or more to conduct the same tests on its own. Lost in all of this legal wrangling is the fact that there are quite a number of unsecured creditors that continue to be left holding an empty bag regarding Frisby. Advertising and PR firm Ground Control is owed $79,000 and Spyder Active Sports is owed $108,000 — by no means chump change. There is small hope among the creditors committee that as money trickles in, as it has from the Outlast acquisition of various assets, that some restitution will be made. Let’s hope so.