New Berlin-based online costume retailer BuySeasons Inc. could be sold to “a large manufacturer of retail inventory” before the end of the week, according to a lawsuit filed Wednesday in U.S. District Court for Eastern Wisconsin by a former executive who resigned her position Monday.
Audrey Walby, formerly vice president of inventory planning and analytics at BuySeasons, is seeking to block the company from using software she developed prior to being hired along with damages for copyright infringement.
Walby found out BuySeasons was involved in negotiations with a potential buyer in March, according to the complaint. She was not a lead representative of the company but was aware the company has “an agreement to sell its stock or substantially all of its assets to a third-party” in a transaction that may occur before the end of June.
Citing confidentiality restrictions, the complaint does not disclose the buyer. Attorneys for Walby described the company as “a large manufacturer of retail inventory” in a letter to attorneys for BuySeasons.
BuySeasons officials did not immediately respond to requests for comment.
The company is currently owned by Liberty TripAdvisor Holdings. Its business is highly seasonal with a focus on Halloween costumes, although it has sought to diversify in recent years.
Revenues have fallen from $83 million in 2014 to $73 million in 2015 and $52 million last year as BuySeasons faced increased competition from online and brick-and-mortar retailers. The company had 158 employees at the end of 2016. It operates its headquarters and warehouse from a 470,000-square-foot leased facility in New Berlin.
BuySeasons was founded in 1999 by Jalem Getz and sold to Liberty Interactive Corp. in 2006 and spun off into Liberty TripAdvisor Holdings in 2014.
Walby was hired by BuySeasons as director of forecasting in June 2015. The complaint says she briefly discussed a sales analysis and forecasting tool she had originally developed in 2000 and since copyrighted and licensed to other companies.
Shortly after Walby was hired, BuySeasons was testing another software program for forecasting. Those tests did not go well and BuySeasons staff, including Walby, began discussing the capabilities of her tool and eventually implemented it, according to the complaint.
Walby says she made it clear that she owned the tool in various meetings, including on in the fall of 2015 with chief executive officer Rick Barton in which he “acknowledged that Walby was the owner and said BuySeasons would see how the program performed for Halloween,” according to the complaint.
Walby, Barton and chief financial officer Chad Olson had conversations about the tool in January 2016 and the company continued using it without having to pay a royalty or license fee. The complaint says BuySeasons saved at least $100,000 annually in wasted inventory and materials by using Walby’s tool.
After learning about the sale negotiations, Walby had several conversations with Barton about the tool. The complaint says Barton assured her that items related to the tool’s ownership would come out in due diligence and that the buyer was interested in both the tool and Walby’s knowledge of it.
The parties had several conversations about a potential license agreement in April, May and early June, but Walby “began to have serious concerns that BuySeasons would transfer, sell or assign the copyrighted material to the third-party buyer because now company representatives were arguing that BuySeasons owned the program.”
Attorneys for Walby sent the company a cease and desist letter June 15, demanding the company stop using the software and delete any copies of it. Warby also “expressly revoked” any prior permission to use the software.
Both sides discussed a potential license agreement after the letter was sent, but no deal was reached. The complaint says BuySeasons would not acknowledge Walby owned the tool and did not confirm if it had stopped using it.
Walby resigned her position Monday and filed the lawsuit Wednesday along with a motion for a temporary restraining order blocking the use or sale of the tool.
