Justia Contracts Opinion Summaries

In 2010, the Army granted Authentic a nonexclusive license to manufacture and sell clothing bearing the Army’s trademarks. The agreement required the Army’s advance written approval of any products and marketing materials bearing the Army’s trademarks and included exculpatory clauses that exempted the Army from liability for exercising its discretion to deny approval. In 2011-2014, Authentic submitted nearly 500 requests for approval; the Army disapproved 41 submissions. During that time, Authentic received several formal notices of material breach for claimed failures to timely submit royalty reports and pay royalties. Authentic eventually paid its royalties through 2013. Authentic’s counsel indicated that Authentic would not pay outstanding royalties for 2014.Authentic's ensuing breach of contract suit cited the Army’s denial of the right to exploit the goodwill associated with the Army’s trademarks, refusal to permit Authentic to advertise its contribution to Army recreation programs, delay of approval for a financing agreement, denial of approval for advertising, and breach of the implied duty of good faith and fair dealing by not approving the sale of certain garments. The Federal Circuit affirmed summary judgment in favor of the government. The license agreement stated in no uncertain terms that the Army had “sole and absolute discretion” regarding approval of Authentic’s proposed products and marketing materials; the exercise of that broad approval discretion is not inconsistent with principles of trademark law. View "Authentic Apparel Geoup, LLC v. United States" on Justia Law

This appeal involves AC-USA's and Silikal's dispute over a shared trade secret consisting of the formula for 1061 SW, a flooring resin Silikal manufactured and sold (along with other flooring resins). AC-USA filed suit alleging that Silikal breached the agreement by selling 1061 SW without its written permission. A jury awarded AC-USA damages on each of its claims for common law breach of contract and for violation of the Georgia Trade Secrets Act of 1990 (GTSA) for misappropriation of the shared trade secret. The district court also awarded punitive damages on the misappropriation claim. The district court then denied Silikal's post-verdict motion for judgment as a matter of law on the misappropriation and contract claims, entering a final judgment for AC-USA for $5,861,415.The Eleventh Circuit rejected Silikal's argument that the district court lacked jurisdiction over its person, and thus affirmed the district court's denial of Silikal's motion to dismiss. However, the court concluded that AC-USA failed to prove its misappropriation claim because the evidence that Silikal misappropriated the trade secret is insufficient as a matter of law. Furthermore, AC-USA failed to prove that it sustained cognizable damages on its contract claim. Therefore, the court reversed the district court's judgment on the misappropriation claim and vacated the damages awarded on the contract claim. Finally, the court held that AC-USA is entitled to nominal damages and attorney's fees on its contract claim in a sum to be determined by the district court on remand. View "Acrylicon USA, LLC v. Silikal GMBH" on Justia Law

Alleshouse and Yeh are named as the inventors on the 685 and 189 patents, which claim water-park attractions that individuals may ride as if surfing, and on the 433 patent, which claims nozzle configurations for regulating water flow in such attractions. Pacific, the company Alleshouse and Yeh formed to develop and market such attractions, is the assignee of the patents. Whitewater is the successor of Wave, which employed Alleshouse until just before he went into business with Yeh and the patented inventions were conceived. Whitewater sued Alleshouse, Yeh, and Pacific, claiming that Alleshouse had to assign each of the patents to Whitewater, as Wave’s successor, under the terms of Alleshouse’s employment contract with Wave. Whitewater also claimed that Yeh, who had not been employed by Whitewater or its predecessors and therefore was not under any alleged assignment duty, was improperly listed as an inventor on each of the patents.The district court held that Alleshouse breached the employment agreement, so Whitewater was entitled to an assignment of the patent interests, and Yeh was improperly joined as an inventor. The Federal Circuit reversed, The contract’s assignment provision is void under California law, (Labor Code 2870, 2872; Business and Professions Code 16600), so Whitewater lacks standing to contest inventorship. View "Whitewater West Industries Ltd. v. Alleshouse" on Justia Law

Carrier manufactures residential Heating, Ventilation, and Air Conditioning (HVAC) systems. ECIMOS produced the quality-control system that tested completed HVAC units at the end of Carrier’s assembly line. ECIMOS alleged that Carrier infringed on its copyright on its database-script source code—a part of ECIMOS’s software that stores test results. ECIMOS alleges that Carrier improperly used the database and copied certain aspects of the code to aid a third-party’s development of new testing software that Carrier now employs in its Collierville, Tennessee manufacturing facility.ECIMOS won a $7.5 million jury award. The court reduced Carrier’s total damages liability to $6,782,800; enjoined Carrier from using its new database, but stayed the injunction until Carrier could develop a new, non-infringing database subject to the supervision of a special master; and enjoined Carrier from disclosing ECIMOS’s trade secrets while holding that certain elements of ECIMOS’s system were not protectable as trade secrets (such as ECIMOS’s assembled hardware). The Sixth Circuit affirmed in part and reversed in part. There are sufficient reasons to conclude that Carrier did infringe on ECIMOS’s copyright, but Carrier’s liability to ECIMOS based on its copyright infringement and its breach of contract can total no more than $5,566,050. The district court did not err when it crafted its post-trial injunctions. View "ECIMOS, LLC v. Carrier Corp." on Justia Law

FEI, Crop Venture's successor-in-interest, filed suit alleging that the individual defendants took proprietary information they developed at Crop Ventures after they left the company and co-founded Farmobile (the corporate defendant). Specifically, FEI alleges that the individual defendants' behavior constituted a breach of explicit or implicit contracts with the company; defendants were obligated to assign to their employer the ownership rights of products they worked to develop; the individual defendants breached their duty of loyalty to their employer; and the individual defendants misappropriated trade secrets. The district court denied in full FEI's motion, and granted in part and denied in part Farmobile's motion.The Eighth Circuit affirmed and held that because no contract bound the parties during Defendant Nuss' term of employment, Nuss was not in breach of an explicit contract; FEI has not shown that any of the individual defendants was similarly "specifically directed" during their product-development process, so no implied contracts were created under the hired-to-invent doctrine; FEI failed to show the individual defendants breached their duty of loyalty to their employer; FEI cannot maintain a trade secret claim under the Nebraska Trade Secrets Act (NTSA) or the federal Defend Trade Secrets Act (DTSA); and the remaining claims are unpersuasive. View "Farmers Edge Inc. v. Farmobile, LLC" on Justia Law

Takeda sued Mylan for patent infringement based on Mylan’s Abbreviated New Drug Application (ANDA) for a generic version of Takeda’s Colcrys® version of the drug colchicine. The parties settled, entering into a License Agreement that allows Mylan to sell a generic colchicine product on a specified date or under circumstances defined in Section 1.2, which refers the date of a final court decision holding that all unexpired claims of the licensed patents that were asserted and adjudicated against a third party are not infringed, invalid, or unenforceable. The parties stipulated that Mylar's breach of Section 1.2 “would cause Takeda irreparable harm.”Takeda also sued Hikma based on Hikma’s FDA-approved colchicine product Mitigare®. The district court granted summary judgment of non-infringement. After Mylan launched its product, Takeda sued, alleging breach of contract and patent infringement.The Federal Circuit affirmed the denial of a preliminary injunction. Takeda failed to show it is likely to succeed on the merits or that it will suffer irreparable harm. Section 1.2(d) was triggered by the third-party litigation; all unexpired claims of the three patents that were “asserted and adjudicated” were held to be not infringed. An objective, reasonable third party would not read Section 1.2(d) to be limited to generic equivalents of Colcrys® excluding section 505(b)(2) products like Mitigare®. Because Takeda had not established that Mylan breached the Agreement, the irreparable harm stipulation did not apply. Money damages would remedy any harm Takeda would suffer as a result of Mylan launching its generic product. View "Takeda Pharmaceuticals U.S.A. v. Mylan Pharmaceuticals, Inc." on Justia Law

In 2003, jury found E*Trade liable for trade secret misappropriation and for breach of a mutual nondisclosure agreement with Ajaxo. The jury awarded damages only for the breach of contract after the court granted a nonsuit on the issue of damages for trade secret misappropriation. On remand, in 2008, a jury found no net damages for unjust enrichment and awarded nothing. The court denied Ajaxo’s request to seek a reasonable royalty under the California Uniform Trade Secret Act (Civ. Code 3426-3426.11). On second remand, the court held a bench trial, declined to award any royalty, and awarded E*Trade its costs as the prevailing party.The court of appeal affirmed. The trial court did not abuse its discretion by declining to award any reasonable royalty despite the available evidence from which a reasonable royalty theoretically might have been derived, considering its findings on the evidence, application of apportionment principles from patent law, exclusion of expert testimony and analysis of Ajaxo’s royalty model, and treatment of the “Georgia-Pacific factors” for determining a royalty rate in intellectual property disputes. The trial court did not err in its prevailing party determination and costs award despite the practical effect of Ajaxo having already obtained full satisfaction of what became a separate, final judgment in its favor following the 2006 remittitur from the first appeal, including costs. View "Ajaxo, Inc. v. E*Trade Financial Corp." on Justia Law

Cheetah’s 836 patent is directed to optical communication networks. AT&T uses hardware and software components in its fiber-optic communication networks. Cheetah asserted that AT&T infringes the 836 patent by making, using, offering for sale, selling, or importing its fiber equipment and services. Ciena was allowed to intervene in the suit because it manufactures and supplies components for AT&T’s fiber-optic systems; those components formed the basis of some of Cheetah’s infringement allegations. Ciena and AT&T then moved for summary judgment that Cheetah’s infringement claim was barred by agreements settling previous litigation. Cheetah had sued Ciena and Fujitsu and executed two license agreements—one with Ciena and one with Fujitsu. Ciena and AT&T argued that the licenses included implicit licenses to the 836 patent covering all of the accused products. The district court dismissed the suit. The Federal Circuit affirmed, rejecting Cheetah’s argument that the parties did not intend that the licenses extend to the 836 patent. The court noted the presumption that a license to a patent includes a license to its continuation. The naming of certain patents expressly does not evince a clear mutual intent to exclude other patents falling within the general definitions in an agreement. That is especially true here where the licenses list broad categories of patents without reciting their numbers individually. View "Cheetah Omni LLC v. AT&T Services, Inc." on Justia Law

Molon sued Merkle-Korff, for infringement of the 785 patent. Merkle-Korff filed counterclaims relating to Molon’s 915 and 726 patents. Molon unilaterally executed the 2006 Covenant, agreeing not to sue Merkle-Korff for infringement of the 915 and 726 patents. After the dismissal of the counterclaims, the parties entered into the 2007 Settlement. Merkle-Korff agreed to pay a lump sum for an exclusive license to multiple Molon patents including the 785, 915, and 726 patents, within the Kinetek Exclusive Market. The Settlement granted Merkle-Korff “the right, but not the duty, to pursue an infringement claim” and contains a statement that all prior covenants “concerning the subject matter hereof” are “merged” and “of no further force or effect.” Merkle-Korff later became Nidec. Molon sued, alleging that Nidec is infringing the 915 patent outside the licensed Market. Nidec argued that Molon is barred from enforcing the patent under the 2006 Covenant. Molon responded that the Covenant was extinguished by the 2007 Settlement.The court granted Nidec partial summary judgment after comparing the subject matters of the agreements. The Federal Circuit affirmed; the agreements concern different subject matter and do not merge. The 2006 Covenant gives Nidec a right to avoid infringement suits on two patents. The 2007 Settlement is in some ways broader, as an exclusive license, covering multiple patents and applications and providing Nidec with some enforcement rights, and in other ways narrower, being limited to a defined market. The 2006 Covenant remains in effect because it does not concern the same subject matter as the 2007 Settlement. View "Molon Motor & Coil Corp. v. Nidec Motor Corp." on Justia Law

This appeal stemmed from the parties' longstanding dispute over the literary works of John Steinbeck. In this case, a federal jury in Los Angeles unanimously awarded plaintiff, as executrix of Elaine's estate (Elaine was the widow of Steinbeck), compensatory damages for slander of title, breach of contract, and tortious interference with economic advantage, and punitive damages against defendants.Determining that it had jurisdiction, the Ninth Circuit affirmed the orders granting summary judgment and striking defendants' defenses to tortious interference on grounds of collateral estoppel. Furthermore, the panel explained that it follows that the district court's decisions to exclude evidence related to defendants' different understanding of the agreement at issue or the validity of the prior court decisions were not abuses of discretion. The panel affirmed the compensatory damages award, holding that the record contained substantial evidence to support the awards on each cause of action independently. Furthermore, the compensatory damages were not speculative. The panel held that there was more than ample evidence of defendants' malice in the record to support the jury's verdict, thus triggering entitlement to punitive damages. However, the panel vacated and remanded with instructions to dismiss the punitive damages claims against Gail, Steinbeck's daughter-in-law, based on lack of meaningful evidence of Gail's financial condition and her ability to pay. View "Kaffaga v. The Estate of Thomas Steinbeck" on Justia Law