Justia Contracts Opinion Summaries

Dyax Corporation performed research for Ares Trading S.A. and licensed patents to Ares, including some held by Cambridge Antibody Technology (CAT Patents). Ares used Dyax’s research to develop a cancer drug, Bavencio, and agreed to pay royalties to Dyax based on the drug’s sales. The royalty obligation outlasted the lifespan of the CAT Patents. The District Court held that Ares’ royalty obligation was not unenforceable under Brulotte v. Thys Co., which prohibits royalties that extend beyond a patent’s expiration.The United States District Court for the District of Delaware found that Ares’ royalty obligation did not violate Brulotte because it was not calculated based on activity requiring the use of inventions covered by the CAT Patents after their expiration. The court characterized the royalties as deferred compensation for Dyax’s pre-expiration research. Additionally, the court noted that Ares’ royalty obligation could run until the latest-running patent covered in the agreement expired, which included patents other than the CAT Patents.The United States Court of Appeals for the Third Circuit affirmed the District Court’s decision. The Third Circuit held that Ares’ royalty obligation was not calculated based on activity requiring post-expiration use of the CAT Patents, and thus, Brulotte did not apply. The court emphasized that the royalties were based on sales of Bavencio, which did not require the use of the CAT Patents after their expiration. The court also rejected Ares’ argument that Dyax violated the implied covenant of good faith and fair dealing, noting that Ares received all the benefits promised under the agreement. The court concluded that Dyax did not breach any obligations under the agreement, and Ares’ royalty obligation remained enforceable. View "Ares Trading SA v. Dyax Corp" on Justia Law

Wanda Bowling entered into a contract with the Interstate Medical Licensure Compact Commission to manage its information technology functions. When the contract ended, Bowling allegedly withheld login information for three online accounts, leading the Commission to sue for breach of contract. Bowling counterclaimed for libel and misclassification of her employment status. The district court dismissed the misclassification counterclaim and granted summary judgment to the Commission on all other claims.The United States District Court for the District of Colorado dismissed Bowling's counterclaim for misclassification and denied her motion to amend it, citing untimeliness. The court also granted summary judgment to the Commission on its breach of contract claim, concluding that Bowling's login information constituted intellectual property and that she had breached the contract by not certifying the erasure of confidential information. The court awarded the Commission $956.67 in damages. Additionally, the court granted summary judgment on Bowling's libel counterclaim, citing a qualified privilege defense.The United States Court of Appeals for the Tenth Circuit reviewed the case. It affirmed the district court's finding of subject-matter jurisdiction, holding that the Commission had adequately alleged damages exceeding $75,000. However, the appellate court found that the contract was ambiguous regarding whether the login information constituted intellectual property or other materials covered by the contract, and that there was a genuine dispute of material fact regarding the damages. Therefore, it reversed the summary judgment on the breach of contract claim. The court also upheld the district court's denial of Bowling's motion to amend her counterclaim for misclassification, finding no abuse of discretion.On the libel counterclaim, the appellate court agreed that the district court erred in granting summary judgment based on a qualified privilege without giving Bowling notice. However, it affirmed the summary judgment on the grounds that the Commission's statements were substantially true. The case was affirmed in part, reversed in part, and remanded for further proceedings. View "Interstate Medical Licensure Compact Commission v. Bowling" on Justia Law

A physician in Puerto Rico, Dr. Jaime Salas Rushford, had his board certification suspended by the American Board of Internal Medicine (ABIM) after ABIM concluded that he had improperly shared board exam questions with his test prep instructor. ABIM sued Salas Rushford for copyright infringement in New Jersey. Salas Rushford counterclaimed against ABIM and several ABIM-affiliated individuals, alleging that the process leading to his suspension was a "sham."The counterclaims were transferred to the District of Puerto Rico, where the district court granted ABIM's motion for judgment on the pleadings and denied Salas Rushford leave to amend his pleading. The court found that Salas Rushford failed to state a claim for breach of contract, breach of the implied covenant of good faith and fair dealing, and tort claims against the ABIM Individuals. The court also dismissed his Lanham Act claim for commercial disparagement.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's dismissal of Salas Rushford's claims. It held that ABIM had broad discretion under its policies to revoke certification if a diplomate failed to maintain satisfactory ethical and professional behavior. The court found that Salas Rushford did not plausibly allege that ABIM acted with bad motive or ill intention, which is necessary to state a claim for breach of the implied covenant of good faith and fair dealing under New Jersey law.The court also affirmed the dismissal of the Lanham Act claim, noting that Salas Rushford failed to allege actual consumer deception or intentional deception, which is required to state a claim for false advertising. Finally, the court upheld the district court's denial of leave to amend the complaint, citing undue delay and lack of a concrete argument for why justice required an amendment. View "American Board of Internal Medicine v. Salas-Rushford" on Justia Law

In 2018, John Burns and Rajeev Arora, representing Moca Financial Inc., engaged in discussions with Manoj Baheti, represented by Yash Venture Holdings, LLC, about a potential investment. The alleged agreement was that Yash would provide $600,000 worth of software development in exchange for a 15% non-dilutable ownership interest in Moca. However, subsequent documents and communications indicated ongoing negotiations and changes in terms, including a reduction of Yash's proposed stake and a shift from software development to a cash investment. Yash eventually refused to sign the final documents, leading to the current litigation.The United States District Court for the Central District of Illinois dismissed most of Yash's claims, including breach of contract, fraud, and securities fraud, but allowed the equitable estoppel and copyright infringement claims to proceed. Yash later voluntarily dismissed the remaining claims, and the district court entered final judgment, prompting Yash to appeal.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court found that Yash did not adequately allege the existence of an enforceable contract, as there was no meeting of the minds on the material term of whether the ownership interest was non-dilutable. Consequently, the breach of contract claim failed. Similarly, the promissory estoppel claim failed due to the lack of an unambiguous promise. The fraud and securities fraud claims were also dismissed because they relied on the existence of a non-dilutable ownership interest, which was not sufficiently alleged. Lastly, the breach of fiduciary duty claims failed as there was no enforceable stock subscription agreement to establish a fiduciary duty. The Seventh Circuit affirmed the district court's judgment. View "Yash Venture Holdings, LLC v. Moca Financial, Inc." on Justia Law

C.R. Bard, Inc. (Bard), a medical device company, held patents on a vascular graft and entered into a licensing agreement with Atrium Medical Corporation (Atrium) to settle a patent infringement lawsuit. The agreement required Atrium to pay Bard a 15% per-unit royalty on U.S. sales until the U.S. patent expired in 2019 and on Canadian sales until the Canadian patent expired in 2024. Additionally, Atrium was to pay a minimum royalty of $3.75 million per quarter until the FDA approved the iCast stent for vascular use or rescinded its approval for all uses. Atrium ceased minimum royalty payments after the U.S. patent expired, leading Bard to sue for breach of contract.The United States District Court for the District of Arizona held a bench trial and found that the minimum royalty provision was primarily intended to compensate Bard for U.S. sales, thus constituting patent misuse under Brulotte v. Thys Co. The court concluded that the provision violated Brulotte because it effectively extended royalties beyond the patent's expiration based on the parties' motivations during negotiations.The United States Court of Appeals for the Ninth Circuit reversed the district court's judgment. The appellate court clarified that the Brulotte rule requires examining whether a contract explicitly provides for royalties on the use of a patented invention after the patent's expiration. The court held that the licensing agreement did not violate Brulotte because it provided for U.S. royalties only until the U.S. patent expired and Canadian royalties until the Canadian patent expired. The minimum royalty payments were not tied to post-expiration use of the U.S. patent but were instead based on Canadian sales, which continued to be valid under the Canadian patent. The Ninth Circuit concluded that the district court erred by considering the parties' subjective motivations and reversed the judgment for Atrium on Bard’s breach of contract claim. View "C.R. BARD, INC. V. ATRIUM MEDICAL CORPORATION" on Justia Law

Bruce Molzan, a well-known chef, filed a lawsuit against Bellagreen Holdings, LLC, and other associated entities and individuals, alleging trademark infringement and other claims under the Lanham Act and Texas law. Molzan claimed that he had been using the "RUGGLES" trademarks for over forty years and that the defendants misused these trademarks after a forced sale of his restaurants. He alleged that the defendants continued to use the "RUGGLES GREEN" trademark and domain name without authorization, causing consumer confusion.The United States District Court for the Southern District of Texas dismissed all of Molzan's claims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. The court found that Molzan's allegations were conclusory and did not establish a connection between the defendants and the third-party websites causing the confusion. The court also determined that the Settlement Agreement between the parties addressed the alleged infringements and provided a remedy for such transgressions.The United States Court of Appeals for the Fifth Circuit reviewed the case and found that Molzan's complaint contained well-pleaded factual allegations that made his claims facially plausible. The court noted that the allegations established a likelihood of confusion due to the defendants' continued use of the "RUGGLES" trademarks. The court also found that the district court erred in assuming the veracity of the defendants' assertions over Molzan's well-pleaded allegations. The Fifth Circuit reversed the district court's dismissal of Molzan's federal and state trademark infringement, false advertising, unfair competition, and state trademark dilution claims. The court also reversed the dismissal of Molzan's breach of contract and unjust enrichment claims and remanded the case for further proceedings. Additionally, the court vacated the district court's dismissal of the Web Defendants and the denial of Molzan's motion for leave to amend his complaint. View "Molzan v. Bellagreen Holdings" on Justia Law

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