Selectica, Inc. v. Versata Enterprises, Inc.: A Case Study on the Use (and Usefulness) of Experts in Delaware Corporate Litigation

August, 2010

Publication| Corporate Transactions| Corporate & Chancery Litigation

The Delaware Court of Chancery’s decision in Selectica, Inc. v. Versata Enterprises, Inc has garnered a great deal of attention for its analysis and treatment of the low threshold poison pill used by Selectica, Inc. (“Selectica”) to protect its net operating loss carry-forwards (“NOLs”), and the fact that it was the first time a poison pill has ever been triggered in modern memory. However, the Selectica Court’s interesting analysis of the statutory protections afforded to directors by General Corporation Law Section 141(e) (“Section 141(e)”) highlights the great depth of protection available to directors who take counsel from qualified experts in the course of their deliberations.

At the same time that it issued its Memorandum Opinion after trial, the Selectica Court also issued a lesser-known second opinion which resolved the parties’ dispute over the admissibility of the opinion testimony of certain of Selectica’s experts at trial (the “Experts Opinion”). In the Experts Opinion, the Court explained the various reasons why an expert testifying on the basis of personal, boots-on-the-ground experience can be as (if not more) helpful to the Court than one testifying purely from an academic perspective.

These twin opinions thus provide an interesting case study on the importance and usefulness of qualified experts, both in the board and court rooms.

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