Company tried to sell rights to shareholder via IP transfer agreement without telling other party
In a dispute arising from a cooperation agreement under which the parties had joint intellectual property rights (IPR), the Ontario Superior Court upheld an arbitral award requiring the applicant to pay the respondent over $19.7 million, plus costs, fees, and interest.
In Bluewaves Mobility Innovation Inc. v. Si Chuan Heng Wan Ke Ji You Xian Gong Si D.b.a Zillnk, 2026 ONSC 4131, the parties executed the cooperation agreement, which was similar to a joint venture or a partnership, on Sept. 6, 2021.
Under the cooperation agreement, the respondent, doing business as Zillnk, would design, develop, and manufacture products for the applicant, Bluewaves Mobility Innovation Inc. (BMI), to market and sell.
From July 2022 to December 2023, Zillnk supplied 550 FDD radios ordered by Telus. Whenever Telus ordered a radio, BMI issued Zillnk a purchase order, while Zillnk sent BMI an invoice. BMI later admitted that it failed to pay what it owed Zillnk for the radios.
Additional agreements
In July 2023, BMI and Telus executed a master product services agreement (MPSA). Under the MPSA, a non-Canadian legal entity could own or license the IPR for the products, and an entity could design and manufacture the products abroad upon obtaining Telus’s approval.
BMI did not inform Zillnk about these terms or even about the MPSA’s existence. Instead, BMI told Zillnk that Telus demanded Zillnk’s transfer of its IPR to BMI.
Under a supplement agreement dated Aug. 11, 2023, Zillnk transferred to BMI Zillnk’s title, rights, and interests in and to the target assets, comprising all of Zillnk’s IPR in the products it owned. Zillnk agreed to the terms based on BMI’s representations regarding Telus’s demand.
Falling out between parties
In response to Zillnk’s requests for BMI to pay it for the products supplied, BMI’s chief executive officer falsely stated that Telus had not yet paid BMI.
On Dec. 20, 2023, Zillnk learned of BMI’s collaboration with another manufacturer. Zillnk’s CEO confronted BMI’s CEO about whether BMI was attempting to replace Zillnk as its partner.
Zillnk’s CEO temporarily suspended Zillnk’s after-sales support services to BMI. He advised that Zillnk might resume such services if BMI paid what it owed.
In an email to Zillnk’s CEO on Feb. 10, 2024, BMI’s CEO purported to terminate the parties’ deal.
Even though it initially resisted, Zillnk eventually accepted the termination. Zillnk initiated international arbitration to recover the amounts allegedly owed to it.
Transfer of IP
On Mar. 26, 2025, while the arbitration was ongoing, BMI purported to sell the IPR to Titan Crest LLC, its majority shareholder, under an intellectual property (IP) transfer agreement.
Despite knowing that Zillnk disputed BMI’s supposed ownership of the IPR, BMI did not disclose the IP transfer agreement to Zillnk, obtain Zillnk’s consent, or pay Zillnk anything.
Also on Mar. 26, 2025, Titan Crest sold the IPR to AmpliTech, an American company. AmpliTech agreed to pay US$8 million in cash and shares for the IPR and for Telus purchase orders amounting to around $20 million.
Upon inquiry by Zillnk’s counsel, BMI initially produced a falsified version of an IP transfer agreement providing that Titan Crest would remit to BMI all proceeds received, even though the genuine agreement included no such language. BMI’s counsel later withdrew the fabricated version.
Arbitrator’s decision
Last Feb. 11, the arbitrator required BMI to pay Zillnk $6,113,706, and US$9,667,163 (approximately $13.6 million). The arbitrator also awarded Zillnk costs, fees, and interest.
The arbitrator required BMI to account for and reimburse Zillnk for the future sales proceeds of IP that BMI misappropriated.
Zillnk applied for the recognition and enforcement of the arbitral award.
Under art. 34 of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration, BMI moved to set aside the award.
BMI claimed that the arbitrator breached his basic obligations under the International Construction Arbitrators Association (ICAA) to “hear the parties’ case, to decide only what was put before him, to honour the contracts the parties made, and to explain why he ruled as he did.”
Arbitral award enforced
The Ontario Superior Court of Justice dismissed BMI’s motion and granted Zillnk’s application to recognize and enforce the arbitral award, which the court considered just and fair in the circumstances. The court held that the arbitrator:
- had significant experience with international arbitrations
- presided over a reasonable and fair hearing
- gave the parties an opportunity to be heard
- permitted the parties to present their evidence and arguments
- acted within his jurisdiction
- did not contravene public policy
- gave sufficient reasons for his award
Apart from the $6,113,706 and US$9,667,163, plus 5.3 percent annual interest, the court ordered BMI to pay Zillnk:
- $346,345.84, and US$2,041,672.86, as reimbursement for Zillnk’s legal costs of the arbitration
- $88,850 as reimbursement of the arbitrator’s International Centre for Dispute Resolution (ICDR) administrative fees and expenses
- 25 percent of the disclosable revenue, pursuant to BMI’s books
The court also directed BMI to give Zillnk quarterly reports of its revenue from all product sales using the IPR in connection with radio frequency technology used in 4T4R, 4T8R, and small-cell radios.
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