Justia Contracts Opinion Summaries

Defense contractor Raytheon, specializes in infrared imaging. Indigo, also specializing in infrared imaging, was founded by former Raytheon employees including Woolaway, who promised not to recruit Raytheon employees. Indigo began consulting for Raytheon, governed by Confidential Disclosure Agreements. In 1997, Raytheon became concerned that Indigo was recruiting Raytheon personnel to gain access to trade secrets. The companies settled the matter by agreement. The relationship between Raytheon and Indigo terminated in 2000. In 2000, Indigo won a military contract; in 2003, Indigo was selected over competitors, including Raytheon, to receive another subcontract. In 2004, Raytheon acquired and disassembled an Indigo infrared camera and found what it believed was evidence of patent infringement and trade secret misappropriation. In 2007, Raytheon found a correlation with the expertise of former employees who had departed for Indigo. The district court dismissed claims of trade secret misappropriation as time barred. The Federal Circuit reversed. The district court erred by resolving genuine factual disputes in favor of Indigo, the moving party, and concluding that Raytheon should have discovered its claims before March 2, 2004. View "Raytheon Co. v. Indigo Sys. Inc." on Justia Law

RTI owns patents relating to the automatic routing of telephone calls based upon cost. Aware of infringement by Speakeasy, a telecommunications company, RTI offered to release Speakeasy from liability in exchange for a one-time payment under RTI’s tiered pricing structure. In 2007, the companies entered a “Covenant Not to Sue” with a payment of $475,000 to RTI, and a provision barring Speakeasy from challenging, or assisting others in challenging, the validity of the patents. The agreement defined “Speakeasy” to include both Speakeasy and Best Buy, which had previously announced plans to acquire Speakeasy. Three years later, Best Buy announced a plan to sell Speakeasy and merge it into Covad. RTI again learned of an infringement and notified Covad. Covad sought a declaratory judgment that the patents were invalid. The action was later dismissed voluntarily. RTI initiated the present lawsuit. The district court dismissed, holding that the doctrine of licensee estoppel, under which a licensee of intellectual property “effectively recognizes the validity of that property and is estopped from contesting its validity,” is unenforceable in the context of challenges to patents, and that the no-challenge clause was contrary to the public interest in litigating the validity of patents. The Second Circuit affirmed.

In 2005, Forest Park formulated a concept for a television show called "Housecall," in which a doctor, after being expelled from the medical community for treating patients who could not pay, moved to Malibu, California, and became a concierge doctor to the rich and famous. Forest Park created character biographies, themes, and storylines, which it mailed to Sepiol, who worked for USA Network. Initial discussions failed. A little less than four years later, USA Network produced and aired a television show called "Royal Pains," in which a doctor, after being expelled from the medical community for treating patients who could not pay, became a concierge doctor to the rich and famous in the Hamptons. Forest Park sued USA Network for breach of contract. The district court held that the claim was preempted by the Copyright Act, 17 U.S.C.101, and dismissed. The Second Circuit reversed. Forest Park adequately alleged the breach of a contract that included an implied promise to pay; the claim is based on rights that are not the equivalent of those protected by the Copyright Act and is not preempted.

This case arose when the University told Daniel A. Moore, an artist who painted famous football scenes involving the University since 1979, that he would need permission to depict the University's uniforms because they were trademarks. Moore contended that he did not need permission because the uniforms were being used realistically to portray historic events. The parties could not reach a resolution and the University subsequently sued Moore for breach of contract, trademark infringement, and unfair competition. The court held that, as evidenced by the parties' course of conduct, Moore's depiction of the University's uniforms in his unlicensed paintings, prints, and calendars was not prohibited by the prior licensing agreements. Additionally, the paintings, prints, and calendars did not violate the Lanham Act, 15 U.S.C. 1125(a), because these artistically expressive objects were protected by the First Amendment. Accordingly, the court affirmed the grant of summary judgment by the district court with respect to the paintings and prints, and reversed with respect to the prints as replicated on calendars. With respect to the licensing agreements' coverage of the mugs and other "mundane products," the court reversed the district court's grant of summary judgment because disputed issues of fact remained. Accordingly, the court affirmed in part, reversed in part, and remanded.

Soon after Yale Preston was employed by Pennaco Energy, a wholly-owned subsidiary of Marathon Oil Company (collectively referred to as Marathon), Preston signed an employee agreement with a disclosure and assignment of intellectual property clause. The present dispute centered around allegations of patent infringement and questions of ownership of two patents that covered a baffle system that Preston invented. The district court found that Preston was the sole inventor of the patents and that the employee agreement was a valid contract, pursuant to which Preston was required to assign his ownership interest in the patents to Marathon. At issue on appeal was the validity of the assignment of intellectual property rights given to Marathon without an additional consideration other than continued at-will employment. The Supreme Court accepted certification and held that continuing the employment of an existing at-will employee constitutes adequate consideration to support an agreement containing an intellectual property-assignment provision.

Plaintiff alleged infringement of patents covering systems and devices for testing blood samples against a competitor in the diagnostic field. The patents at issue name defendant as the assignee. Plaintiff claimed ownership based on confidentiality and non-competition clauses in employment and consulting contracts between its predecessor and an employee, the inventor. The district court dismissed, finding that plaintiff lacked standing because the 1999 Consulting Agreement did not continue the 1984 Agreement’s Disclosure and Assignment Covenant. The Federal Circuit affirmed, holding that the company lacked standing with respect to rights assigned long after the inventor resigned from the company.

In 1995, plaintiff, a popular psychic and astrologer, and defendant entered into a contract for production and distribution of materials featuring plaintiff's psychic and astrological services. Plaintiff granted defendant the right to use his trademark, name, and likeness. After a 2006 dispute led to litigation; a jury rejected plaintiff's claim that he had validly terminated the agreement, found that he had violated the agreement, and found that defendant owed him no compensation. In 2009, both parties sought injunctive relief to prevent the other party from using the trademark. The district court entered a preliminary injunction in favor of defendant, finding that plaintiff had assigned the trademark in perpetuity. The First Circuit affirmed. The district court did not abuse its discretion in issuing a preliminary injunction, based on its interpretation of the agreement and application of collateral estoppel, based on the prior litigation.

The issue before the Supreme Court was whether a claim under Colorado law for civil theft of a copyrightable work required a trial court to instruct the jury on principles of federal copyright law. Petitioner Steward Software hired Respondent Richard Kopcho to develop and market a new software program. Steward never entered into a written agreement governing the ownership of the software with Holonyx, Inc. (one of Respondent's multiple corporate entities) or Respondent. By the time the software was ready for testing, the relationship between the parties had become strained. Steward refused to make further payments and under Respondent's direction, Holonyx locked Steward out of the software code and refused to turn it over. Holonyx then filed a copyright registration for the software with the U.S. Copyright Office, listing the software's author a new corporation Respondent controlled called Ruffdogs Software, Inc. Steward sued Respondent for breach of contract and civil theft. Before trial, the parties tendered proposed jury instructions; one of Steward's proposed instructions pertained to the ownership and registration of copyrightable works. The trial court determined that copyright law did not pertain to Steward's civil theft claim and rejected the tendered instruction. Upon review, the Supreme Court agreed that ownership of the copyright in the code was irrelevant. The Court thus concluded the trial court correctly refused to instruct the jury on the principles of copyright law. The court reversed the appellate court and reinstated the trial court's opinion.

Plaintiffs DISH Network Corporation and DISH Network LLC (Dish) filed a diversity action in the District of Colorado seeking a judgment declaring that Dish's insurers had a duty under Colorado law to defend Dish in a patent infringement suit. The district court held that the underlying complaint did not allege an "advertising injury" under the policies issued to Dish by the five defendant Insurers. The court granted Insurers' motion for summary judgment, and Dish appealed. In its amended complaint, Ronald A. Katz Tech. Licensing (RAKTL, the Plaintiff in the underlying suit) alleged that Dish had infringed one or more claims in each of twenty­ three patents. Applying Colorado law, the district court concluded that a claim for patent infringement could "properly give rise to coverage, or even the specter of coverage, such that an insurer will have a duty to defend." For purposes of the summary judgment motion, the court ruled that RAKTL's reference to "customer service functions" in its complaint was sufficient to allege that Dish engaged in "advertising." The court granted summary judgment for Insurers without addressing the third element of its test-­- causation --or the additional arguments certain insurers had raised under their individual policies. Upon review, the Tenth Circuit concluded that the RATKL complaint potentially alleged advertising injury arising from the misappropriation of advertising ideas. The Court therefore reversed and remanded for further proceedings: "the scope of advertising injury coverage in this case is at least ambiguous with regard to patent infringement allegations. Although the cases are rare in which an allegedly infringed patent is itself an advertising idea rather than merely an advertised product, ... we hold that '[d]epending on 'the context of the facts and circumstances of th[e] case,' patent infringement can qualify as an advertising injury if the patent 'involve[s] any process or invention which could reasonably be considered an 'advertising idea.'"

This post-trial opinion determined the voting membership of GnB, LLC, a Delaware limited liability company. The parties disputed whether Firehouse Gallery, LLC, a Florida limited liability company, was a voting member of GnB. The parties also disputed whether GnB possessed an exclusive license to use the first-tier, generic domain name candles.com; held an option to purchase candles.com; and owned other assorted domain names relating to the candles business. The court held that Firehouse and plaintiff, who controlled GnB, each held a 50% voting membership interest; GnB owned the exclusive license and option to purchase candles.com and the other domain names; and plaintiff and defendant, the current principal of Firehouse, each breached their fiduciary duty of loyalty to GnB and must account for the profits and personal benefits they received. The court held that defendant was not otherwise liable to GnB or plaintiff. Because all of the litigants engaged in misconduct that could support fee-shifting, the doctrine of unclean hands applied with particular salience. Accordingly, the court held that all parties would bear their own fees and costs.