## Facts

- Axiam, Inc. was a closely held Massachusetts technology corporation that manufactured and sold products used in building rotating devices, including in jet-engine manufacturing.
- Before Philip Holt joined Axiam, Axiam’s founders and employees began developing a vibration-reduction product later known as SmartStack.
- Axiam later began developing a new and improved version of SmartStack called SuperStack.
- Axiam hired Philip Holt (and also hired Holt’s wife) in 1992; by 1994 Holt was Axiam’s president and served as an officer and fiduciary of the corporation.
- Holt was not involved in the inception, design, creation, or testing of SmartStack or SuperStack.
- In or around 1996, Holt decided he wanted to spin off Axiam’s SuperStack product into a new company that he would own.
- Holt allegedly acted toward that goal by:
  - deciding not to seek patent protection for SuperStack to prevent Axiam from obtaining or claiming patent rights,
  - delaying and at times stopping Axiam employees’ continued development work on SuperStack,
  - marketing SuperStack to potential buyers under Holt’s personal company rather than Axiam,
  - using Axiam resources to prepare marketing materials and presentations while concealing from Axiam’s board that he was presenting the product under his own company, and
  - claiming he was the inventor of SuperStack despite having no role in its development.
- Axiam’s shareholders, including G.L. Cabot Henderson (a shareholder and former director), sued Holt and Holt’s wife in their individual capacities based on the alleged diversion of the SuperStack opportunity and misuse of Axiam assets.

## Issues

1. Whether Axiam’s president and corporate fiduciary breached duties of loyalty and good faith by attempting to divert the SuperStack product opportunity to a company he personally owned.
2. Whether using Axiam’s resources (including employee efforts and company materials) to market SuperStack under a separate personal company, while concealing that conduct from Axiam’s board, constituted misuse of corporate assets and disloyal conduct.
3. Whether Holt’s conduct regarding patenting decisions and his claims of inventorship and ownership supported liability for breach of fiduciary duty and related relief.
4. What remedies were appropriate if a corporate officer used corporate assets for personal benefit without benefit to the corporation.

## Decision

- The court held that Holt, as Axiam’s president and fiduciary, breached his duty of loyalty by using Axiam’s assets and efforts for his own benefit in connection with SuperStack and by attempting to appropriate the SuperStack opportunity.
- The court treated SuperStack as a corporate product opportunity tied to Axiam’s prior development work and resources, rather than Holt’s personal property.
- The court concluded that conduct such as obstructing patent protection for the corporation’s benefit, interfering with internal development, and marketing the product through Holt’s own company while using Axiam resources and withholding disclosure from the board was inconsistent with fiduciary obligations.
- The judgment was affirmed on appeal in a later, unpublished summary disposition.

## Legal Principles

- Corporate officers and directors owe duties of loyalty and good faith and must act for the corporation’s benefit rather than for personal gain in matters connected to corporate business.
- A corporate officer breaches fiduciary duty by using corporate assets for which the corporation receives no benefit.
- A fiduciary may not divert a corporate opportunity—such as a product developed through company employees and resources—to a separately owned business while still serving the corporation.
- Concealing conflicts and competing activity from the board, and using company time or materials to advance a personal venture, supports findings of disloyalty and entitlement to equitable and monetary relief.

## Conclusion

Henderson v. Axiam, Inc. held that Axiam’s president breached fiduciary duties by attempting to spin off and market the SuperStack product through his own company and by using Axiam resources and influence over corporate decisions (including patent-related choices) for personal benefit rather than the corporation’s benefit, warranting relief that treated the SuperStack opportunity as belonging to Axiam and not to the officer individually.


Henderson v. Axiam, Inc., 1999 Mass. Super. LEXIS 580 (1999)