Justia Contracts Opinion Summaries

Dr. John Insall, an orthopedic surgeon, developed and patented knee replacement devices, which he licensed to Zimmer Biomet Holdings, Inc. In return, Zimmer agreed to pay royalties to Insall, and later to his estate after his death. When Insall’s last patent expired in 2018, Zimmer ceased royalty payments, claiming the obligation had ended. The dispute was submitted to arbitration, where the Estate prevailed. Zimmer then sought to vacate the arbitration award in district court, arguing that continuing royalty payments violated public policy. The district court confirmed the arbitration award.The United States District Court for the Northern District of Illinois reviewed the case. Zimmer argued that the arbitration award should be vacated based on public policy grounds, citing Supreme Court decisions in Brulotte v. Thys Co. and Kimble v. Marvel Entertainment, LLC, which prohibit collecting royalties on expired patents. The district court rejected Zimmer’s argument and confirmed the arbitration award, leading to Zimmer’s appeal.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court emphasized the limited scope of judicial review over arbitration awards under the Federal Arbitration Act (FAA). The court found that the arbitration panel had correctly interpreted the 1998 amendments to the agreement, which untethered the royalty payments from the patents themselves, making them based on the marketing and branding of the NexGen Knee products. Consequently, the court held that the arbitration award did not violate public policy as outlined in Brulotte and Kimble. The Seventh Circuit affirmed the district court’s decision and confirmed the arbitration award in favor of Insall’s Estate. View "Zimmer Biomet Holdings, Inc. v. Insall" on Justia Law

Ascension Data & Analytics, Rocktop Partners, and Rocktop Holdings II (collectively, "Ascension") entered into a contract with Pairprep, Inc. for data extraction services. The contract was terminated due to an alleged data breach and Pairprep's failure to extract reliable data. Ascension then contracted with another vendor, Altada Technologies Solutions, but that contract was also terminated early due to Altada's financial crisis. Ascension initiated arbitration proceedings against Pairprep to recover remediation costs incurred as a result of the data breach. Pairprep counterclaimed, alleging breach of contract and violation of the federal Defend Trade Secrets Act. The arbitration panel rejected Ascension's defenses and granted Pairprep a monetary award.Ascension filed an application in the Northern District of Texas to vacate the arbitration award, arguing that Pairprep's counterclaims were barred by res judicata due to a previous dismissal of identical claims against Altada. Pairprep filed an application to confirm the arbitral award in a Texas state court, which was granted. The district court dismissed Ascension's application for lack of subject matter jurisdiction and denied its motion for preliminary injunctive relief.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. The court applied the Supreme Court's decision in Badgerow v. Walters, which held that a district court must have an independent jurisdictional basis to consider applications to confirm, modify, or vacate arbitral awards under the Federal Arbitration Act. The court found that Ascension had not established an independent basis for subject matter jurisdiction, as the parties were not diverse and Ascension did not identify any federal law entitling it to relief. Therefore, the court concluded that the dispute over the enforceability of the arbitral award must be litigated in state court. View "Ascension Data v. Pairprep" on Justia Law

The case revolves around a dispute between Apprio, Inc., a government contractor, and its former employee, Neil Zaccari. Zaccari, a Senior Technical Manager at Apprio, had developed a regulatory compliance software prior to his employment. During his tenure, he updated the software, demonstrated it at work, and handed it over to Apprio upon request. Apprio then sent Zaccari a document titled “Proprietary Information and Assignment of Inventions Agreement,” which Zaccari acknowledged through Apprio’s human resources portal. After his termination, Zaccari copyrighted the updated software and sued Apprio for breaching the agreement when it allegedly forced him to turn over a copy of the software to an Apprio client. In response, Apprio countersued Zaccari for breaching the agreement when he refused to assign his rights in the updated software to Apprio.The District Court combined the cases, dismissed Zaccari’s case for failure to state a claim, and granted partial and full summary judgment for Apprio with respect to contractual assignment of rights in the updated software and its breach of contract claim. Zaccari appealed, arguing that the agreement is not an enforceable contract and, alternatively, that the agreement neither supports the assignment of his rights in the updated software to Apprio nor a finding that he breached the agreement.The United States Court of Appeals for the District of Columbia Circuit disagreed with Zaccari's arguments. The court held that Zaccari’s “acknowledgment” of the agreement created an enforceable contract that requires Zaccari to assign his rights in the updated software to Apprio. Accordingly, Zaccari breached the binding agreement by failing to assign those rights to Apprio and disclosing the updated software’s underlying code to the U.S. Copyright Office in order to obtain the copyright. The court affirmed the District Court's decision. View "Apprio, Inc. v. Zaccari" on Justia Law

This case involves a dispute between the owners of El Gran Combo, one of the most popular Puerto Rican bands in history, and the band's former lead vocalist, Carlos Aponte-Cruz. The dispute centers on the interpretation of the Digital Performance Right in Sound Recordings Act of 1995, which entitles the "recording artist or artists featured on [a] sound recording" to a 45% share of certain royalties that the recording generated. Aponte-Cruz argues that he is the "artist . . . featured" on certain El Gran Combo sound recordings for which he was the lead vocalist and is therefore entitled to his portion of the 45% share of the statutory royalties for those recordings. The owners of El Gran Combo, on the other hand, contend that the band as an independent entity distinct from any of its individual members is the "artist . . . featured" on those recordings.The United States District Court for the District of Puerto Rico ruled in favor of the owners of El Gran Combo, finding that the band, as a distinct legal entity, was the group most prominently featured on the sound recordings and thus entitled to collect the royalties as the featured artist. The court also ruled that Rafael Ithier, as the sole owner of El Gran Combo, was entitled to collect the featured artist royalties due to the corporation.On appeal, the United States Court of Appeals for the First Circuit reversed the District Court's ruling. The appellate court concluded that even though the covers for the El Gran Combo albums that contain the disputed recordings refer only to the band itself and not to any of its individual members, Aponte-Cruz, as a "recording artist . . . featured" on the recordings in dispute, is entitled to his portion of the 45% share of the statutory royalties for those recordings. The court found that neither EGC Corp. nor Ithier is entitled to the 45% royalty share in the recordings at issue. View "Ithier v. Aponte Cruz" on Justia Law

The case involves Analog Technologies, Inc. ("ATI") and its CEO Dr. Gang Liu, who accused Analog Devices, Inc. ("ADI") of misappropriating trade secrets under federal and Massachusetts law. ATI claimed that they took reasonable measures to maintain the secrecy of development materials shared with ADI, and ADI violated its obligation to limit its use of those materials. The dispute originated from two agreements: a 2000 agreement, which included a confidentiality clause that expired five years after termination, and a 2015 agreement, which superseded the 2000 agreement and released ADI from any claims related to the 2000 agreement.The U.S. District Court for the District of Massachusetts granted ADI's motion to dismiss the claim, ruling that any restrictions on ADI's use of the materials had expired under the clear terms of the written agreement among the parties. The court also found that there were no trade secrets under the 2000 agreement still in existence to have been misappropriated in 2021.On appeal, the United States Court of Appeals for the First Circuit affirmed the lower court's decision. The appellate court concluded that ADI did not misappropriate the development materials as the restrictions on ADI's use of these materials under the 2000 agreement had expired in 2011. Furthermore, the 2015 agreement released ADI from any remaining use restrictions. The court also rejected the argument that ADI had a duty to limit its use of the materials at the time of the alleged misappropriation, as such a duty did not exist under the 2015 agreement. View "Analog Technologies, Inc. v. Analog Devices, Inc." on Justia Law

The case revolves around a dispute between the Board of Regents of the University of Texas System and IDEXX Laboratories, Inc. over the interpretation of a patent licensing agreement. The agreement, signed in 2000, pertained to a peptide used to test for Lyme disease in dogs. The agreement stipulated different royalty rates for different types of products, depending on what tests were included. The dispute arose over the interpretation of two royalty provisions, one for 1% and the other for 2.5%, which could both be read to apply to the same sales of goods. IDEXX Laboratories had been paying the lower royalty rate, but the University argued that the higher rate should have been applied.The trial court ruled in favor of the University, concluding that the licensing agreement was clear and unambiguous and that the University was entitled to recover the unpaid royalties claimed plus accrued interest. On appeal, IDEXX Laboratories argued for the first time that the licensing agreement was ambiguous. The court of appeals agreed, concluding that both interpretations of the royalty provisions were reasonable and conflicting, and therefore the agreement was ambiguous. It reversed the trial court's decision and remanded the case.The Supreme Court of Texas disagreed with the court of appeals. It found that the royalty provisions were not ambiguous when read in the context of the licensing agreement itself and the objective circumstances in which the agreement was produced. The court concluded that the provisions were most reasonably interpreted to require royalties on IDEXX Laboratories' products at the higher rate stipulated in the agreement. The court reversed the court of appeals' judgment and remanded the case to that court for further proceedings. View "Board of Regents of the University of Texas System v. IDEXX Laboratories, Inc." on Justia Law

In this case, Amy Bricker, a high-ranking executive, moved from Cigna Corporation to CVS Pharmacy, Inc., both of which are major healthcare conglomerates. Cigna sued Bricker and CVS, seeking to enforce a non-compete agreement that Bricker had signed while employed at Cigna. The district court granted a temporary restraining order and a preliminary injunction to preserve the status quo and protect Cigna's business interests. Bricker and CVS appealed the preliminary injunction.Previously, the district court had found that Cigna's protected interests were numerous and substantial, spanning multiple lines of products and services. It also found that Bricker likely retained a considerable amount of protected information from her time at Cigna. The court concluded that Cigna had a fair chance of demonstrating that the non-compete agreement was reasonable and enforceable under Missouri law.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court agreed with the lower court's findings and concluded that the non-compete agreement was likely enforceable under Missouri law. The court also found that Cigna would likely suffer irreparable harm if the preliminary injunction was not granted, as Bricker could potentially disclose Cigna's trade secrets to CVS. The court concluded that the balance of equities favored Cigna and that the public interest supported the enforcement of contractual obligations. Therefore, the court held that the district court did not abuse its discretion in granting the preliminary injunction. View "Cigna Corporation v. Bricker" on Justia Law

Between November 2019 and August 2020, Core Optical Technologies, LLC filed complaints against three groups of defendants led by Nokia Corp., ADVA Optical Networking SE, and Cisco Systems, Inc. Core Optical alleged that these companies infringed on U.S. Patent No. 6,782,211, which was assigned to Core Optical by the inventor, Dr. Mark Core, in 2011. The defendants argued that the patent was actually owned by Dr. Core's former employer, TRW Inc., due to an employment-associated agreement signed by Dr. Core in 1990.The district court in the Central District of California agreed with the defendants, ruling that the 1990 agreement between Dr. Core and TRW automatically assigned the patent rights to TRW. The court found that the patent did not fall under an exception in the agreement for inventions developed entirely on the employee's own time, as Dr. Core had developed the patent while participating in a fellowship program funded by TRW.The United States Court of Appeals for the Federal Circuit vacated the district court's judgment and remanded the case for further proceedings. The appellate court found that the phrase "developed entirely on my own time" in the 1990 agreement was ambiguous and did not clearly indicate whether Dr. Core's time spent on his PhD research, which led to the invention, was considered his own time or partly TRW's time. The court concluded that further inquiry into the facts was needed to resolve this ambiguity. View "CORE OPTICAL TECHNOLOGIES, LLC v. NOKIA CORPORATION " on Justia Law

This case involves a dispute between Jacam Chemical Company 2013, LLC (Jacam) and its competitor GeoChemicals, LLC, along with Arthur Shepard Jr., a former Jacam employee who later worked for GeoChemicals. Jacam sued both Shepard and GeoChemicals, alleging breach of contract, misappropriation of trade secrets, and tortious interference with contracts. Shepard and GeoChemicals countersued Jacam. The district court granted a declaratory judgment to Shepard, concluding that he owed no contractual obligations to Jacam, and dismissed the remaining claims of Jacam and GeoChemicals.The district court had previously reviewed the case and granted summary judgment to Shepard, holding that he had no enforceable agreements with Jacam. The court also dismissed all of Jacam’s and GeoChemicals’s other claims against each other. Both Jacam and GeoChemicals appealed aspects of the summary judgment order.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court found that neither the HCS Agreement nor the 2015 version of CES’s Conduct Code created an enforceable contract between Jacam and Shepard. The court also held that Jacam did not make reasonable efforts to keep its pricing information secret, which means the pricing information documents were not trade secrets which Shepard could misappropriate. Finally, the court agreed with the district court that Jacam’s tortious-interference claim fails. The court also dismissed GeoChemicals’s cross-appeal, holding that Jacam did not commit an independently tortious act that interfered with GeoChemicals’s relationship with Continental. View "Jacam Chemical Co. 2013, LLC v. Shepard" on Justia Law

This case involves a dispute between two tribally owned businesses, AQuate II, LLC and Kituwah Services, LLC, both of which compete for federal contracts under the Small Business Administration’s 8(a) Business Development Program. AQuate alleges that Kituwah and its employee, Jessica Myers, stole trade secrets related to a government contract that AQuate had won in the past. AQuate claims that Myers, a former employee, breached her employment agreements and violated both the Defend Trade Secrets Act of 2016 and the Alabama Trade Secrets Act. Kituwah, however, argues that it is shielded by tribal sovereign immunity, while Myers contends that her employment contract mandates that any claims against her can only be brought in a designated tribal court.The United States District Court for the Northern District of Alabama dismissed the case, finding that Kituwah had not waived sovereign immunity for the trade secrets claims and that the claims against Myers should be resolved in the Alabama-Quassarte Tribal Town court, as stipulated in her employment contract. AQuate appealed the decision, arguing that the tribal court did not exist.The United States Court of Appeals for the Eleventh Circuit reversed the district court’s decision. The appellate court found that Kituwah had waived sovereign immunity for claims related to the federal contracting program and could be sued. Regarding Myers, the court determined that the district court failed to consider whether the clause naming the allegedly nonexistent tribal court as the appropriate forum was valid and enforceable. The case was remanded for further consideration. View "Aquate II, LLC v. Myers" on Justia Law