PHOENIX

ENTERPRISES, INC
v INTECH
ELECTRONICS, INC
OPENING STATEMENT FOR
RESPONDENT

Lucia Blessing Viriri

MICROSOFT
PHOENIX ENTERPRISES, INC v INTECH ELECTRONICS, INC

OPENING STATEMENT FOR RESPONDENT

Good day to you all, esteemed members of the Tribunal, members of the opposition and guests.
I am Lucia Viriri and with me is my co-council Kundai Mpiwa and we are here to plead an
injustice on behalf of our client, Intech Enterprises, Inc.
Phoenix can claim that we breached the contract that we did not act in all honesty, that we
violated the covenant of good faith and fair dealing but did we really? Are we to blame for
exercising our free will, even if that free will was contrary to the claimant’s wishes? We have
been vilified and falsely accused and a review of the current facts of the case shall serve to
exonerate us.
Intech Electronics is a company domiciled in the United States of America under the leadership
of George Taylor who is the CEO and majority shareholder of the company. The company is a
manufacturer of video game cartridges and decks. The opponent, Phoenix Enterprises is a
Chinese manufacturer and distributer of Chinese leisure products, helmed by one Simon Lim. In
2001, our client developed an innovative new software titled and patented as “Smartplug”. Thus
software allowed for fast paced action games with better handling and controls and offered a
new way of gaming onto the market. It quickly dominated the American market and our client
soon felt that he could emulate this success internationally as well. After careful research and
analysis, Asia was chosen as the best market to breach. Due to our client’s unwillingness to set
up new distribution and manufacturing sites on the continent, an already established distributer
with whom to partner with, was the next logical step. After a process of investigation, Phoenix
Enterprises was our choice.
While Phoenix was not a game distributer, they did deal in leisure goods for the Asian markets
which our client did not mind about, at that time. After a round of negotiations between the two
companies, a licencing agreement was signed in January 2004 for the sale and distribution of
Smartplug and related products in Asia, with the contract renewable in five years upon review
and satisfactory performance by Phoenix. Suffice it to say, they did not perform satisfactorily
and sales were, in a word, abysmal. We had specified in in the Agreement in Section 1, that the
licence was for the dissemination of our product throughout Asia and yet for some reason,
Phoenix decided to focus their attention primarily on China, contrary to our expectations. After
review of their 2004 and 2005 sales report, we lost confidence in them as a partner.
The release and subsequent success of the patented new software known as “Sp2” by our
client solved the glaring issues that the former software, Smartplug had. Sp2 had better
processing capabilities and was able to support both fast action as well as cerebral games. It
offered something to everyone. It was a new innovation, completely separate from Smartplug
meaning we did not have to immediately hand it over to Phoenix for distribution as per Section 3
of our contract. We started looking for another distributer, one who would help us break into the
Japanese market in particular and expand our reach in Asia. We received an offer from a
Japanese company called Sakura Company which was an established game distributer with
solid contacts throughout Asia. At the insistence of Phoenix, a clause was included in our initial
contract, granting Phoenix the right of First Refusal on any new products we brought to the
market. Now while this clause meant that we had to accept a bid for distribution from Phoenix, it
did not mean we could not solicit any other distributers. Otherwise what would Phoenix need to
match or exceed if there was no offer from other competitors as stated in Section 10 of the
agreement? With this in mind, we are astounded that Phoenix claims that we went behind their
backs in receiving the proposal from Sakura. Nowhere in the contract did it state that we needed
their permission to seek other distributers, just that we should include them in our
considerations for distributers of our new products.
Following Section 9 of the contract we sent a letter by express mail on the 19th of November
2006 to the CEO of Phoenix, informing them of the offer from Sakura and asked them to
exercise their right of first refusal within 30 days by either matching or exceeding the offer made
by Sakura. Counteroffers would not be entertained. They managed to reply us within the time
period set but instead of matching or exceeding the terms of the proposal by Sakura, they made
what we felt was a counteroffer by removing one of the material terms of the offer, which was
the issue of repair facilities in certain locations. This was what had initially attracted us to
Sakura’s offer in the first place and was a sticking point for us which our client made clear to
CEO Lim in the letter sent on the 18th of December 2006. Phoenix now claim that we were trying
to sabotage their chances of distributing the product and while we do admit that we were now
leery of handing over our new product to them, the clause in our initial contract stated to a right
of first refusal, not a right of refusal, meaning that they only one chance to match or exceed any
offers from competitors. We could not possibly wait for them to make up their minds with our
product. We also did not breach the contract with them and they even agreed to a renewal of
our initial contract for continued distribution of Smartplug recently and so we fail to see how they
could continue to work with a company they felt was unfair and dishonest.
Considering that we actually helped them break into new markets and aided them in expanding
their consumer base with the distribution of Smartplug products, our presence here before this
august tribunal feels like one who bites the hand that feeds it. We therefore ask this august
tribunal to dismiss the claims of the claimant and help us seek redress for this vilification.
I thank you.