Justia Contracts Opinion Summaries

Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V. (Fraunhofer) is a non-profit research organization that developed and patented multicarrier modulation (MCM) technology used in satellite radio. In 1998, Fraunhofer granted WorldSpace International Network, Inc. (WorldSpace) an exclusive license to its MCM technology patents. Fraunhofer also collaborated with XM Satellite Radio (XM) to develop a satellite radio system, requiring XM to obtain a sublicense from WorldSpace. XM later merged with Sirius Satellite Radio to form Sirius XM Radio Inc. (SXM), which continued using the XM system. In 2010, WorldSpace filed for bankruptcy, and Fraunhofer claimed the Master Agreement was terminated, reverting patent rights to Fraunhofer. In 2015, Fraunhofer notified SXM of alleged patent infringement and filed a lawsuit in 2017.The United States District Court for the District of Delaware initially dismissed the case, ruling SXM had a valid license. The Federal Circuit vacated this decision and remanded the case. On remand, the district court granted summary judgment for SXM, concluding Fraunhofer's claims were barred by equitable estoppel due to Fraunhofer's delay in asserting its rights and SXM's reliance on this delay to its detriment.The United States Court of Appeals for the Federal Circuit reviewed the case and reversed the district court's summary judgment. The Federal Circuit agreed that Fraunhofer's delay constituted misleading conduct but found that SXM did not indisputably rely on this conduct in deciding to migrate to the high-band system. The court noted that SXM's decision was based on business pragmatics rather than reliance on Fraunhofer's silence. The case was remanded for further proceedings to determine if SXM relied on Fraunhofer's conduct and if it was prejudiced by this reliance. View "Fraunhofer-Gesellschaft v. Sirius XM Radio Inc." on Justia Law

Carroll Shelby Licensing, Inc. and Carroll Hall Shelby Trust filed a lawsuit against Denice Halicki and her associated entities, alleging that Halicki's copyright claims over the "Eleanor" Ford Mustangs were invalid. Halicki counterclaimed, asserting that Shelby's "GT-500CR" Mustangs infringed her copyright in Eleanor, a collection of Mustangs featured in four films. The dispute also involved claims of breach of a prior settlement agreement between the parties.The United States District Court for the Central District of California held that Eleanor was not entitled to character copyright protection and dismissed Halicki’s breach of contract claim based on the settlement agreement. The court also denied Shelby’s request for a declaration that the GT-500CR did not infringe any of Halicki’s rights.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court’s summary judgment that Eleanor was not entitled to character copyright protection. The Ninth Circuit applied the Towle test and concluded that Eleanor did not have conceptual qualities, consistent traits, or distinctive elements necessary for character copyright protection. The court also affirmed the district court’s judgment that Shelby did not violate the settlement agreement, which prohibited Shelby from copying only Eleanor’s distinctive hood and inset lights.However, the Ninth Circuit reversed the district court’s denial of declaratory relief and remanded the case for the purpose of issuing the appropriate declaration. The appellate court held that a declaration would clarify and settle the legal relations between Shelby and Halicki and provide Shelby relief from the uncertainty that led to the proceedings. View "CARROLL SHELBY LICENSING, INC. V. HALICKI" on Justia Law

InfoDeli, LLC and Breht C. Burri (collectively, InfoDeli) brought a lawsuit against Western Robidoux, Inc. (WRI), Engage Mobile Solutions, LLC, and other defendants, including members of the Burri family and several companies. InfoDeli alleged copyright infringement, tortious interference, and violations of the Missouri Computer Tampering Act (MCTA). The dispute arose from a joint venture between InfoDeli and WRI, where InfoDeli created webstores for clients, and WRI provided printing and fulfillment services. The relationship deteriorated when WRI hired Engage to replace InfoDeli's webstores, leading to the lawsuit.The United States District Court for the Western District of Missouri granted summary judgment to the defendants on the copyright infringement claim, dismissed or tried the remaining claims before a jury, which found in favor of the defendants. The district court also granted in part and denied in part InfoDeli's sanctions motion and awarded attorney’s fees and costs to the defendants. InfoDeli appealed these decisions.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court's grant of summary judgment on the copyright infringement claim, finding that InfoDeli failed to show that the nonliteral elements of its webstores were protected by copyright. The court also upheld the district court's denial of InfoDeli's motion for summary judgment on CEVA's conversion counterclaim, finding it was timely under Missouri law. Additionally, the court affirmed the district court's denial of InfoDeli's posttrial motions for judgment as a matter of law and a new trial as untimely.The Eighth Circuit also reviewed the sanctions imposed by the district court and found no abuse of discretion in the amount awarded or the decision not to impose additional sanctions under Rule 37(e). Finally, the court upheld the award of attorney’s fees and costs to the defendants, finding that the district court did not abuse its discretion in its assessment. The court affirmed the district court's decisions in all respects. View "InfoDeli, LLC v. Western Robidoux, Inc." on Justia Law

Honeywell International, a Delaware corporation, and OPTO Electronics, a Japanese company, are competitors in the barcode-scanning equipment market. In May 2019, Honeywell sued OPTO for patent infringement, alleging that OPTO's barcode products infringed on seven of Honeywell's patents. The parties settled in January 2020 with a patent-licensing agreement, allowing OPTO to use Honeywell's patents in exchange for royalty payments. In March 2021, Honeywell audited OPTO and claimed that OPTO had underreported its revenues, leading to a dispute over the definition of "2D Barcode Products." Honeywell then sued OPTO for breach of contract in September 2021, alleging unpaid royalties.The United States District Court for the Western District of North Carolina handled the case. A jury found that OPTO's laser-scanning barcode readers were "2D Barcode Products" but awarded Honeywell only $859,741. The district court also rejected OPTO's counterclaim of patent misuse, concluding that Honeywell had not engaged in such conduct. Both parties filed post-trial motions, which the district court denied. Honeywell sought attorney's fees, and OPTO moved to set aside the jury verdict, but both requests were denied.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court determined that it could not reach the merits because the United States Court of Appeals for the Federal Circuit has exclusive appellate jurisdiction over the appeal due to the patent-related counterclaim asserted by OPTO. The Fourth Circuit dismissed the appeal, allowing the parallel appeal pending in the Federal Circuit to proceed. The main holding was that the Federal Circuit has exclusive jurisdiction over appeals involving patent claims and counterclaims, even if the primary dispute is over a contract. View "Honeywell International, Inc. v. OPTO Electronics Co., Ltd." on Justia Law

Pemco and Boeing entered into a contractual "teaming arrangement" to bid for a 2008 Air Force contract, which included a master agreement, a work share agreement, and a non-disclosure agreement. The relationship soured, leading Pemco to sue Boeing for breach of contract and trade secret misappropriation under the Missouri Trade Secrets Act. The district court initially dismissed the trade secrets claim as time-barred but allowed the breach of contract claims to proceed, resulting in a jury awarding Pemco $2,132,038 in direct damages.On appeal, the Eleventh Circuit reversed the dismissal of the trade secrets claim, holding that the Missouri statute of limitations applied, not Alabama's. After remand, Pemco filed a new complaint asserting only the trade secrets claim. The district court dismissed this claim, concluding that the contractual limitation of liability provision barred all additional damages since Pemco had already recovered the maximum amount allowed for breach of contract.The Eleventh Circuit reviewed the case de novo and held that the limitation of liability provision in the master agreement applies to Pemco’s trade secrets claim, barring most categories of damages, including incidental, punitive, and consequential damages. However, the court found that the provision does not bar recovery for unjust enrichment, which Pemco had alleged. The court noted that unjust enrichment damages are distinct from the direct, out-of-pocket damages Pemco had already recovered and are not categorically barred by the limitation provision.The court reversed the district court’s dismissal of Pemco’s trade secrets claim and remanded the case for further proceedings, allowing Pemco to pursue recovery based on Boeing’s alleged unjust enrichment. The court denied Pemco’s request to reassign the case to a different district judge. View "Alabama Aircraft Industries Inc. v. Boeing Company, The" on Justia Law

In 2008, the plaintiff, ams-OSRAM USA Inc. (formerly Texas Advanced Optoelectronic Solutions, Inc. or TAOS), sued Renesas Electronics America, Inc. (formerly Intersil Corporation) in the Eastern District of Texas. TAOS alleged patent infringement and state-law claims of trade secret misappropriation and breach of a confidentiality agreement related to ambient-light sensors. The patent claim is no longer at issue. TAOS claimed that Intersil used confidential information disclosed during merger discussions to develop competing products.The district court entered a judgment in 2015 based on a jury verdict, awarding TAOS damages for trade secret misappropriation but not for breach of contract, deeming the latter duplicative. In 2018, the Federal Circuit affirmed Intersil’s liability for trade secret misappropriation on a narrower basis, vacated the monetary award, and remanded for further proceedings. The court also vacated the judgment denying contract damages as duplicative.On remand, the district court held additional proceedings, including a new jury trial. The court awarded TAOS $8,546,000 in disgorged profits for trade secret misappropriation, $17,092,000 in exemplary damages, and reasonable royalties for breach of contract totaling $6,637,693. The court also awarded prejudgment interest and attorneys’ fees. Both parties appealed.The United States Court of Appeals for the Federal Circuit affirmed the district court’s findings on the trade secret and contract claims, including the disgorgement and exemplary damages awards. However, the court reversed the finding that the trade secret became properly accessible in January 2006, determining the correct date to be February 28, 2005. The court affirmed the 26-month head-start period and the inclusion of profits from sales to Apple for the iPod Touch in the disgorgement award. The court vacated the prejudgment interest awards and remanded for further consideration of the appropriate accrual dates for interest on sales occurring after the complaint was filed. View "AMS-OSRAM USA INC. v. RENESAS ELECTRONICS AMERICA, INC. " on Justia Law

Jason and Kacie Highsmith hired Shelter, LLC to manage a home renovation project and later contracted with Design Gaps, Inc. to design and install cabinets and closets. The contracts required arbitration for disputes but did not specify completion dates. Design Gaps failed to meet multiple promised deadlines, leading the Highsmiths to terminate the contracts and hire another company. The Highsmiths shared Design Gaps' copyrighted drawings with the new contractor. They then filed for arbitration, alleging breach of contract and other claims, while Design Gaps counterclaimed for various issues, including copyright infringement.The arbitrator held a three-day hearing, during which the Highsmiths presented multiple witnesses, while Design Gaps only presented David Glover. The arbitrator found in favor of the Highsmiths, awarding them damages and attorney’s fees, and denied Design Gaps' counterclaims, including the copyright claim, citing fair use and lack of evidence for copyright registration.Design Gaps petitioned the United States District Court for the District of South Carolina to vacate the arbitration award, arguing the arbitrator disregarded the law and failed to issue a reasoned award. The district court denied the petition and confirmed the arbitration award, also granting the Highsmiths' motion for attorney’s fees.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court dismissed the appeal, citing lack of federal jurisdiction based on the precedent set in Friedler v. Stifel, Nicolaus, & Co., which held that federal courts do not have jurisdiction over motions to vacate arbitration awards unless there is an independent basis for federal jurisdiction beyond the Federal Arbitration Act. The court concluded that the petition did not meet this requirement. View "Design Gaps, Inc. v. Shelter, LLC" on Justia Law

FlightSafety International Inc. (FlightSafety) supplied the U.S. Air Force with commercial technical data under subcontracts awarded by CymSTAR, LLC. The data included restrictive markings, which the Air Force challenged. The Armed Services Board of Contract Appeals (Board) determined that the restrictive markings were improper under applicable statutes and regulations, leading FlightSafety to appeal.The Board found that the restrictive markings placed by FlightSafety on the technical data were improper. The Board concluded that the government had unrestricted rights to the data, as it was necessary for operation, maintenance, installation, or training (OMIT data). The Board also determined that the government could challenge the restrictive markings under the Validation Clause, which was not limited to challenges based on the funding source of the data.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the Board's decision. The court held that the government had unrestricted rights to the OMIT data and that the restrictive markings placed by FlightSafety contradicted these rights. The court also held that the government could challenge the restrictive markings under the Validation Clause, which was not limited to challenges based on the funding source of the data. The court found that the restrictive markings, including the terms "proprietary" and "confidential," as well as the requirement for written authorization, were impermissible as they contradicted the government's unrestricted rights. The court also found that the copyright notice in the markings was misleading and contradicted the government's rights. View "FLIGHTSAFETY INTERNATIONAL INC. v. AIR FORCE " on Justia Law

Aquarian Foundation, Inc., a non-profit religious organization, alleged that Bruce Lowndes infringed on its copyrights by uploading spiritual teachings of its late founder, Keith Milton Rhinehart, to various websites. Lowndes claimed he had a license from Rhinehart, granted in 1985, to use the materials. Rhinehart passed away in 1999, bequeathing his estate, including the copyrights, to Aquarian.The United States District Court for the Western District of Washington granted partial summary judgment, confirming that Rhinehart's copyrights were properly transferred to Aquarian via his will. After a bench trial, the court ruled against Aquarian on its claims of copyright infringement, trademark infringement, and false designation of origin. The court found that Rhinehart created the works as his own, not as works for hire, and that he had validly licensed them to Lowndes. The court also determined that Lowndes did not breach the licensing agreement and that Aquarian could not terminate the license under 17 U.S.C. § 203(a). The court denied attorneys’ fees to both parties.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s findings that Rhinehart’s works were not created as works for hire, that he validly licensed the works to Lowndes, and that Lowndes did not breach the licensing agreement. The court also affirmed the decision not to award Lowndes attorneys’ fees under the Lanham Act. However, the Ninth Circuit reversed the district court’s determination regarding the termination of the license, holding that Aquarian’s termination letter in May 2021 was effective. The case was remanded for further proceedings to address any infringement that may have occurred after the license termination, as well as the denial of injunctive relief and attorneys’ fees under the Copyright Act. View "AQUARIAN FOUNDATION, INC. V. LOWNDES" on Justia Law

Kevin Lavery, an ophthalmologist, invented a vision screening device and patented it. He entered into an agreement with Pursuant Health, a company developing vision screening kiosks, to transfer his patent in exchange for royalties on the sales of these kiosks. Lavery's patent expired in May 2021, and Pursuant Health ceased paying royalties. Lavery sued Pursuant Health, seeking a declaration that the royalty payments should continue indefinitely, damages for breach of the Contribution Agreement, and damages for unjust enrichment.The United States District Court for the Eastern District of Michigan granted summary judgment in favor of Pursuant Health, ruling that the expiration of Lavery's patent rendered the royalty agreement unenforceable. Lavery appealed the decision, challenging the grant of summary judgment on his breach of contract claim.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the royalty provision in the Contribution Agreement was unenforceable after the expiration of Lavery's patent. The court found that the agreement did not specify any non-patent contributions that would justify continuing the royalty payments beyond the patent's expiration. The court also noted that the royalty was based on the sales of kiosks that incorporated Lavery's patent, and thus, the royalty provision improperly extended beyond the patent's 20-year term. Consequently, the Sixth Circuit affirmed the district court's decision to grant summary judgment in favor of Pursuant Health. View "Lavery v. Pursuant Health, Inc." on Justia Law