U.S. Court of Appeals for the Eight Circuit, Wildhawk Investments, LLC v. Brava I.P., LLC, Docket No. 21-2496

License Agreement and Asset Purchase Agreements

 

Know-How

 

Right of First Refusal

 

Contract Interpretation

 

Extrinsic Evidence of a Contemporaneous Oral Agreement

 

Parol Evidence Rule

 

Breach of Contract

 

Equitable Estoppel Defense

Iowa Law

Contract Drafting

 

 

 

Appeal from United States District Court for the Southern District of Iowa – Central

 

Wildhawk Investments, LLC (“Wildhawk”) initiated this breach of contract action against Brava I.P., LLC (“Brava I.P.”), Paragon Roof Systems, LLC (“Paragon”), and Billibob Boor (collectively, “Paragon Defendants”) for producing composite roofing shingles contrary to an exclusive license agreement. The district court entered a preliminary injunction prohibiting the Paragon Defendants from manufacturing or selling their products. The Paragon Defendants appeal, contending the district court misinterpreted the contract, erroneously rejected their equitable estoppel defense, and improperly found a threat of irreparable harm. We reverse and vacate the preliminary injunction.

 

Wildhawk approached Boor and Edson about purchasing Brava Roof Tile. In July 2015, Boor sent an email to Wildhawk member Adam Brantman proposing “an exclusive license for manufacturing current roofing products.” Boor specified that Wildhawk would “have a right of first refusal on all new product developments.” Brantman responded with a draft letter of intent reiterating that “Wildhawk would have a first right of refusal on new inventions and developments from Boor/Edson.” Brantman characterized Wildhawk’s offer as “what we believe is a fair price for the business as it exists today.” Boor requested in another message, “Remove other compression mold products wording. This deal is for the four products only as discussed.” Brantman sent back, “Agreed.” The final nonbinding letter of intent, signed on July 14, 2015, included the first refusal language from the earlier draft.

 

On November 25, 2015, the parties executed asset purchase agreements and a license agreement. Wildhawk paid a total of almost $4 million for Brava Roof Tile’s assets and for licenses to its patents, know-how, and intellectual property rights.

 

The license agreement granted Wildhawk “an exclusive, perpetual, license to use the Know-How in practicing the Patents or in the manufacturing of raw materials for the production of Licensed Products in accordance with the Manufacturing Guidelines and Conditions.” Know-How included “all engineering, manufacturing data, formulas, designs, methods and processes, programs, listings, documentation and drawings, notes, flow charts, manuals, manufacturing aids, plans, technology, trade secrets, know-how, and other proprietary information licensed by Licensor and related to the Field of Use.” Field of Use was defined as “the manufacture and sale of quality Roofing Shingles and the related accessories.” Roofing Shingles meant “products used as roofing shingles and related materials and accessories including, as an example, the items shown in the list attached hereto as Exhibit A,” which specifically identified the four existing Brava Roof Tile products. The agreement defined Licensed Products as “all quality Roofing Shingles and Related Materials products licensed for production herein or that, if unlicensed, would infringe or otherwise violate one or more claims of the Patents or utilizes the Know-How.”

 

Moreover, the license agreement conferred on Wildhawk an automatic license to “any Improvements,” defined as “improvements to the Technology, whether patentable or not, including any method, apparatus, design, component, system or device.” Technology meant “the Patents and Know-How, collectively.” Brava I.P., Boor, and Edson also warranted that the “Patents, Know-How and/or Intellectual Property Rights constitute all of the intellectual property used in or necessary to conduct the business of manufacturing and selling plastic roofing shingles as conducted and as currently planned to be conducted by Seller or any other entity owned and/or controlled by Seller.”

 

A month before executing the license agreement, the parties agreed to remove a “New Product Applications” section due to requirements imposed by Wildhawk’s lender. The deleted section read:

In the event that Licensor develops new products under its rights to the Technology, Licensee will have forty five (45) calendar days upon being informed of the new product by Licensor in which Licensee may choose to itself seek to purchase a license to the product prior to Licensor’s entering into a binding agreement with a third party purchaser or licensee.

 

Boor and Wildhawk acknowledge that despite removal of that language, they entered into an oral handshake agreement for a right of first refusal at the time they signed the license agreement.

 

Wildhawk achieved success after the acquisition, growing Brava Roof Tile’s gross annual sales from approximately $1 million to $13 million in four years. None of Wildhawk’s members had previous experience in the composite roofing industry. As a result, Wildhawk retained Boor and Edson as paid consultants subject to initial 18-month noncompete agreements. Brantman referred to Boor as “the most important person in the organization.”

 

In August 2016, Boor sent an email to Wildhawk that began with, “As per our handshake agreement, Gerald and I would like to let you know of, and offer your group first right of refusal on the below products.” Among the proposed products was “Platinum Tile,” a design for composite shingles that would later become known as Natura shake. Boor followed up several months later with an outline of a research and development deal structure for Natura shake that suggested “design and IP rights will remain under Billibob and Gerald ownership until” reaching a $1 million royalty cap. He also mentioned duplicating the deal for a Natura slate design.

 

On May 5, 2017, Boor, Edson, and Wildhawk entered into a confidentiality and nondisclosure agreement (“NDA”) regarding “possible R&D ‘new or enhanced product’ agreements.” The NDA stated in part:

As part of the license agreement, it was agreed that Billibob Boor and Gerald Edson would give Recipient first right of refusal on all new R&D developments that they develop related to the composite roofing industry. This agreement was requested to be made a binding verbal agreement on or before November 2015, between Gerald Edson, Billibob Boor, and Wildhawk Investments LLC, due to restrictions on Recipients SBA financing requirements. Recipient understands that breaching this confidentiality agreement would be a breach of the license agreement.

 

After signing the NDA, Wildhawk responded with a proposal to purchase the Natura shake design. Wildhawk offered an increased $1.5 million royalty cap and requested “a right of first refusal . . . for all future profile/product developments.” A Wildhawk member boasted that “if this deal yields the type of success that both parties anticipate, there would be no reason to think that this deal couldn’t serve as a framework...for subsequent deals including” additional composite shingle designs. The parties continued negotiations throughout late 2018 and early 2019 but failed to reach an agreement.

 

Boor and Edson formed Paragon in May 2019, while Boor was still employed as a consultant for Wildhawk. On August 18, 2019, Boor emailed Wildhawk with a final offer regarding the Natura designs. Boor stated that he and Edson had assessed what “we can make on our own over the next five years producing the materials ourselves while still owning the company and have settled on 10 million USD being the number for us to step away from that and to place the program in the hands of Wildhawk.” The email concluded, “Time is of the essence. If we are going to work on a program and tie ourselves together then the time is now.” Wildhawk never substantively responded to the offer.

 

In January 2020, Paragon began producing Natura products in barrel, shake, and slate styles. Ten months later, Wildhawk sued the Paragon Defendants in Iowa state court for breach of contract and other claims not relevant here. The Paragon Defendants removed the case to federal court. The district court granted Wildhawk’s ensuing motion for a preliminary injunction and barred the Paragon Defendants from manufacturing or selling composite roofing products. This appeal followed.

 

A. License Agreement Breach 

The Paragon Defendants principally dispute the district court’s interpretation of the license agreement. “The cardinal rule of contract interpretation is to determine what the intent of the parties was at the time they entered into the contract.” Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430, 436 (Iowa 2008). The words of the contract provide “the most important evidence of the parties’ intentions at the time of contracting.” Peak v. Adams, 799 N.W.2d 535, 544 (Iowa 2011). Iowa courts “also look to extrinsic evidence such as the situation and relations of the parties, the subject matter of the transaction, preliminary negotiations and statements made therein, usages of trade, and the course of dealing between the parties.” NevadaCare, Inc. v. Dep’t of Hum. Servs., 783 N.W.2d 459, 466 (Iowa 2010) (cleaned up).

 

The license agreement’s plain language belies the argument that Wildhawk purchased only the rights to manufacture and sell the four original Brava Roof Tile products. The contract partially defined Licensed Products as “all quality Roofing Shingles . . . that, if unlicensed, . . . utilizes the Know-How.” And Roofing Shingles merely “included, as an example,” the four Brava Roof Tile products. Adopting the Paragon Defendants’ interpretation would render those provisions meaningless. See Art Etc. LLC v. Angel Gifts, Inc., 686 F.3d 654, 657 (8th Cir. 2012) (“Iowa law strives to give effect to all language in a contract.”). The broad language chosen to define key terms indicates the license extended to yet undeveloped products.

 

The Paragon Defendants next focus on the scope of the license being limited to the Know-How used “in practicing the Patents or in the manufacturing of raw materials for the production of Licensed Products in accordance with the Manufacturing Guidelines and Conditions.” They contend that the Natura products fall outside the license because Wildhawk does not claim patent infringement or the impermissible manufacture of actual raw materials. Yet the word “manufacture” can mean “to work up as or convert into a specified product.” Manufacture, n.2.a., Oxford English Dictionary Online, https://www.oed.com/view/Entry/113770 (last visited Feb. 10, 2022). Construing the license to cover the Know-How utilized in the working up or converting of raw materials for producing Licensed Products is consistent with the context surrounding the contract. During the preliminary negotiations, Boor proposed “an exclusive license for manufacturing . . . roofing products.” Neither Wildhawk nor the Paragon Defendants manufacture the raw materials needed to produce composite shingles. In addition, the referenced Manufacturing Guidelines discuss the process for making finished composite roofing products. “Because an agreement is to be interpreted as a whole, . . . an interpretation which gives a reasonable, lawful, and effective meaning to all terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect.” C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65, 77 (Iowa 2011) (citation omitted). When interpreted as a whole, the license agreement afforded Wildhawk a license to the Know-How used in producing composite shingles.

 

Finally, the Paragon Defendants claim that the NDA cleared the way for them to produce the Natura products. The NDA portrays the oral handshake agreement as a “first right of refusal on all new R&D developments . . . related to the composite roofing industry.” Since the NDA retroactively describes what the parties allegedly agreed to at the time they executed the license agreement, it is not a modification of the original contract. Instead, the NDA is extrinsic evidence of a contemporaneous oral agreement. See Garland v. Branstad, 648 N.W.2d 65, 69 (Iowa 2002) (noting that the parol evidence rule affects “negotiations or agreements that are prior to or contemporaneous with the writing”). Under the parol evidence rule, “where there is a binding agreement, either completely or partially integrated, evidence of prior or contemporaneous agreements or negotiations is not admissible in evidence to contradict a term of the writing.” Restatement (Second) of Contracts § 215 (Am. L. Inst. 1981). The right of first refusal for all new product developments in the NDA contradicts the full ownership rights granted to Wildhawk in the license agreement. There is no dispute that the license agreement is partially integrated. The Paragon Defendants thus cannot rely on the NDA or any other extrinsic evidence to contradict its written terms. See Bartlett Grain Co. v. Sheeder, 829 N.W.2d 18, 24-25 (Iowa 2013) (rejecting extrinsic evidence that contradicted partially integrated agreement). The district court did not err when interpreting the license agreement.

 

Evidence from the preliminary injunction hearing illustrates that the Paragon Defendants manufactured the Natura products by using the Know-How exclusively licensed to Wildhawk.

 

We discern no error in the district court’s finding that Wildhawk had a fair chance of proving the Paragon Defendants violated the terms of the license agreement.

 

B. Equitable Estoppel 

All that said, Wildhawk’s conduct after executing the license agreement leads us to conclude that success on the merits of the breach of contract claim is unlikely. Under Iowa’s equitable estoppel doctrine, “the parties to a valid contract may estop themselves from asserting any right under the contract by conduct inconsistent with the continued existence of the original contract.” Margeson v. Artis, 776 N.W.2d 652, 659 (Iowa 2009) (internal quotation marks omitted). An equitable estoppel defense requires clear and convincing evidence that: (1) the opposing party made a false representation or concealed material facts; (2) the party asserting estoppel lacked knowledge of the true facts; (3) the opposing party intended the party asserting estoppel to act upon the representation or concealment; and (4) the party asserting estoppel relied on the representation or concealment and thereby suffered prejudice. Sioux Pharm, Inc. v. Summit Nutritionals Int’l, Inc., 859 N.W.2d 182, 191 (Iowa 2015). “To establish false representation or concealment, there must be evidence the party acted ‘with the intent to mislead the injured party. ’”Boehme v. Fareway Stores, Inc., 762 N.W.2d 142, 147 (Iowa 2009) (quoting Hook v. Lippolt, 755 N.W.2d 514, 525 (Iowa 2008)).

 

Wildhawk professed that the NDA “did not accurately state . . . Wildhawk’s understanding of the right of first refusal arrangement.” Boor’s repeated proposals to sell the Natura designs plainly revealed he thought they came within the right of first refusal rather than the preexisting license. Meanwhile, Brantman testified that Wildhawk believed “we had already paid for this” from the moment Boor sent the initial offer in August 2016. Wildhawk representatives never shared that belief with Boor during the protracted negotiations. Standing alone, silence from a party to an arms-length transaction is insufficient to sustain an equitable estoppel defense. EMC Ins. Grp. v. Shepard, 960 N.W.2d 661, 674 (Iowa 2021). But Wildhawk did more than stand mute. It affirmatively signed the NDA, which ostensibly reserved only a right of first refusal in “all new R&D developments . . . related to the composite roofing industry.” When fairly read, that language necessarily included the Natura products. Wildhawk then proceeded to offer Boor millions of dollars in royalties to purchase the Natura designs and negotiated for months as if the right of first refusal applied. A Wildhawk member went so far as to suggest the possibility of more deals for Boor’s composite shingle designs in the future. Wildhawk misrepresented its position on its entitlement to the Natura products in a manner inconsistent with the license agreement.

 

As for intent to induce reliance, again in its own words, “Wildhawk executed the NDA in an effort to continue its valuable relationship with Boor.” Boor asked Wildhawk to sign the NDA as an assurance before deciding to renew his consulting agreement. Brantman testified that because Boor was “very valuable” to Wildhawk, “we weren’t ready to really pick a fight with him.” He went on to describe “the idea that Boor wouldn’t be working with us as a sales consultant” as “concerning.” That concern led Wildhawk to sign the NDA and to go along with Boor’s offers to sell the Natura designs without ever claiming an existing right to them under the license agreement. Cf. Hawkeye Land Co. v. Iowa Power & Light Co., 497 N.W.2d 480, 487 (Iowa Ct. App. 1993) (deeming intent element met where opposing party “never informed” party asserting estoppel “it was receiving anything less than a full and complete permanent easement” as envisioned by oral contract). Wildhawk intended to entice Boor to stay on as a consultant by misrepresenting its understanding of the right of first refusal arrangement.

 

The remaining equitable estoppel elements are satisfied as well. Boor lacked knowledge of Wildhawk’s true understanding. The preliminary negotiations for the license agreement, offers to sell the Natura designs, and hearing testimony uniformly evince that Boor believed Wildhawk had nothing more than a right of first refusal in all new product developments, even those related to the composite roofing industry. See Bricker v. Maytag Co., 450 N.W.2d 839, 840-41 (Iowa 1990) (upholding estoppel defense notwithstanding relevant contract language due to opposing party’s representations). Boor testified he would not have formed Paragon or incurred over $1 million in expenses to commence production if he had known about Wildhawk’s legitimate claim to the Natura products. Equity bars Wildhawk from now declaring ownership after the Paragon Defendants detrimentally relied on its representations.

 

Uncontroverted evidence establishes each element of equitable estoppel. The district court abused its discretion in rejecting the defense and in finding Wildhawk had a likelihood of success on its breach of contract claim.

 

C. Irreparable Harm 

We have doubts about whether Wildhawk faced a threat of irreparable harm. To demonstrate irreparable harm, the movant “must show that the harm is certain and great and of such imminence that there is a clear and present need for equitable relief.” Roudachevski v. All-Am. Care Ctrs., Inc., 648 F.3d 701, 706 (8th Cir. 2011) (citation omitted). The absence of irreparable harm “is an independently sufficient ground upon which to deny a preliminary injunction.” Grasso Enters., LLC v. Express Scripts, Inc., 809 F.3d 1033, 1040 (8th Cir. 2016) (quoting Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003)).

 

The district court determined that Wildhawk would suffer irreparable harm by losing customers and market share to Paragon. “Economic loss, on its own, is not an irreparable injury so long as the losses can be recovered.” DISH Network Serv. L.L.C. v. Laducer, 725 F.3d 877, 882 (8th Cir. 2013). Wildhawk submitted an itemized list of all Paragon’s sales from inception and specifically identified which sales came from its past customers. Such harm is compensable by money damages. See MPAY Inc. v. Erie Custom Comput. Applications, Inc., 970 F.3d 1010, 1020 (8th Cir. 2020) (“It appears that any harm plaintiff may suffer in the form of lost customers and lost profits is quantifiable and compensable with money damages . . . meaning this harm is not irreparable.”); Mgmt. Registry, Inc. v. A.W. Cos., 920 F.3d 1181, 1183-84 (8th Cir. 2019) (concluding that plaintiff lacked threat of irreparable harm where only injury was calculable loss of revenue).

 

Wildhawk’s alternative assertion that the Paragon Defendants will irreparably injure its “business reputation and goodwill,” Med. Shoppe Int’l, Inc. v. S.B.S. Pill Dr., Inc., 336 F.3d 801, 805 (8th Cir. 2003), is undermined by its decision to wait more than a year to bring this lawsuit despite knowing Boor and Edson intended to produce the Natura products themselves. See Benisek v. Lamone, 585 U.S. ___, 138 S. Ct. 1942, 1944 (2018) (per curiam) (explaining that “a party requesting a preliminary injunction must generally show reasonable diligence”); Adventist Health Sys./Sunbelt, Inc. v. U.S. Dep’t of Health & Hum. Servs., 17 F.4th 793, 806 (8th Cir. 2021) (finding lack of irreparable harm where plaintiff delayed suit until one year after adoption of challenged policy). When Boor gave Wildhawk a final opportunity to purchase the Natura products in August 2019, he implied that he and Edson planned to “produce the materials ourselves while still owning the company” if Wildhawk declined the offer. Boor emphasized that “time was of the essence.” Rather than tell Boor about its putative ownership rights or expeditiously file suit, however, Wildhawk did not meaningfully respond to the offer and waited until November 2020 to commence this action.

 

The Paragon Defendants were prejudiced by Wildhawk’s delay. See Kroupa v. Nielsen, 731 F.3d 813, 821 (8th Cir. 2013) (evaluating prejudice where defendant claimed delay in seeking preliminary injunction counseled against irreparable harm). Boor incurred over $1 million in expenses to start manufacturing the Natura products through Paragon, which he had formed eight months earlier. Wildhawk waited until Paragon had been producing the Natura products for ten months before making its ownership claim. Wildhawk failed to show either reasonable diligence or harm that cannot be compensated by money damages.

 

 

(U.S. Court of Appeals for the Eight Circuit, Feb. 23, 2022, Wildhawk Investments, LLC v. Brava I.P., LLC, Docket No. 21-2496)

Georgia Supreme Court, Edible IP, LLC v. Google, LLC, Docket No. S21G0798

Internet Law

 

Internet Search Algorithms

 

Keyword Advertising Program

 

Advertisement

 

Trade Name

 

Trademark

 

Goodwill

 

Third Party’s Right to Use a Trade Name

Civil Theft of Personal Property

Conversion

 

Trademark Infringement

 

Failure to State a Claim

 

“Money Had and Received” ((Common Law) Unjust Enrichment))

 

Georgia Law

 

 

 

This case involves Google LLC’s application of internet search algorithms, which it uses to auction off search terms for profit to advertisers, and the interests of Edible IP, LLC, which seeks to exercise control over the profit generated from its trade name and associated goodwill. In 2018, Edible IP brought an action against Google arising from Google’s monetization of the name “Edible Arrangements” without permission in its keyword advertising program. Google moved to dismiss the complaint, or in the alternative, to compel arbitration. The trial court granted the motion, dismissing the complaint on several grounds, including that it failed to state a claim, and alternatively compelling the parties to arbitration. Edible IP appealed from that order, and the Court of Appeals affirmed the dismissal for failure to state a claim. See Edible IP, LLC v. Google, LLC, 358 Ga. App. 218 (854 SE2d 565) (2021). We granted certiorari to address whether the trial court properly granted Google’s motion to dismiss. For the reasons that follow, we conclude that Edible IP has not stated a cognizable claim for relief and therefore affirm.

 

The Court of Appeals summarized the relevant facts underlying this appeal as follows:

The complaint alleges that Edible IP owns the trademarks, trade names, and other intellectual property associated with Edible Arrangements, a business consisting of websites and “brick-and-mortar” franchises that sell, among other things, floral-shaped arrangements of fresh-cut fruit. To support these websites and franchises, Edible IP licenses the use of its intellectual property to various entities. Edible IP, however, maintains ownership of the intellectual property, which includes the trademark/trade name “Edible Arrangements,” as well as the goodwill generated by the brand.

 

Google operates an internet search engine that allows individuals to search for information by typing relevant words into a search bar. Using algorithms that analyze the search terms and requested information, Google returns “organic” results of the query on a results page. According to the complaint, Google monetizes its search engine by “selling . . . ‘keywords’” to advertisers that “trigger advertisements on the search results page when Google users search for the keyword term.”

 

Keyword advertising is purchased through an auction-like process, with prospective advertisers bidding on terms suggested by Google. The auction includes general terms like “shoes” and “mother’s day gift,” as well as trade names such as “Edible Arrangements.” Google has never contracted with Edible IP for the right to use the Edible Arrangements trade name, and Edible IP has not otherwise given Google permission to include its trade name in the keyword advertising program. Nevertheless, Google began auctioning the trade name to advertisers in approximately 2011. As described by the complaint, Google places advertisements purchased through the keyword program “in a more attractive location on the results page than its ‘organic’ results in an effort to drive consumer behavior and get those consumers to click on the ad rather than Google’s ‘organic’ results.”

 

Based on these and other allegations, Edible IP sued Google for theft of personal property, conversion, money had and received, and civil Racketeer Influenced and Corrupt Organizations (“RICO”) violations. Google moved to dismiss the complaint, arguing that any claims alleged by Edible IP needed to be arbitrated, that a forum selection clause deprived the trial court of personal jurisdiction over Google, and that the complaint failed to state a claim upon which relief could be granted.

 

Google also requested that the trial court compel the parties to arbitration. 

Edible IP has alleged four claims: (1) civil theft of personal property; (2) conversion; (3) money had and received; and (4) violations of Georgia’s RICO Act. We will address each of the claims in turn.

 

a.   Civil Theft of Personal Property

Georgia law authorizes the owner of property to bring a civil action to recover damages from any person who either (1) willfully damages the owner’s personal property or (2) commits a theft as defined in OCGA § 16-8-2. See OCGA § 51-10-6 (a).

 

In its complaint, Edible IP (…), alleging that “Google has committed theft by taking, in violation of OCGA § 16-8- 2” by “unlawfully taking and otherwise appropriating Edible IP’s property by selling that property without permission to others and keeping the proceeds for itself.” Edible IP identified the property as its “trade name ‘Edible Arrangements’ and the good will and reputation associated with that name.”

 

(…) We are, thus, first required to determine whether Edible IP’s trade name and associated goodwill are “property” within the meaning of the civil theft statute and, if so, the contours of the associated property rights and whether Edible IP has sufficiently alleged that Google has wrongfully “appropriated” this property.

 

(…) “Goodwill” has been defined as “essentially the positive reputation that a particular business enjoys. This ‘positive reputation’ manifests itself as an expectancy that a business has of continued patronage from its customer.” 38 Am. Jur. 2d Good Will § 1. See also Armstrong v. Atlantic Ice & Coal Corp., 141 Ga. 464, 466 (81 SE 212) (1914) (“Good will is the favor which the management of a business wins from the public, and the probability that old customers will continue their patronage and resort to the old place.” (citation omitted)); Goodwill, Black’s Law Dictionary (11th ed. 2019) (defining goodwill as “a business’s reputation, patronage, and other intangible assets that are considered when appraising the business”).

 

We have expressly recognized that goodwill is a type of intangible property interest. See Nat. Assn. for Advancement of Colored People v. Overstreet, 221 Ga. 16, 29 (4) (a) (142 SE2d 816) (1965) (“It is uniformly recognized that good will is a species of property and constitutes a valuable asset of the business of which it is a part.” (citation omitted)). See also Reis v. Ralls, 250 Ga. 721, 723 (1) (301 SE2d 40) (1983) (“It appears clear that in addition to a trademark, a trade name, along with the goodwill it represents, may be the subject of an Article 9 security interest.”).

 

Construing these factual allegations in favor of Edible IP for the purpose of analyzing Google’s motion to dismiss, as we must, Edible IP has sufficiently alleged a property interest in the trade name “Edible Arrangements” and its associated goodwill within the meaning of OCGA § 51-10-6.

 

(…) Under each of these statutes, it is clear that trade names are only protected from use by others to the extent that such use is deceptive or there is a likelihood of confusion by the public.

 

Here, Edible IP has not alleged that Google’s use of the “Edible Arrangements” trade name in its keyword advertising program causes any confusion, and in fact, has disclaimed in the complaint that it is “seeking any . . . relief for any consumer confusion.” Thus, we see no basis in Georgia statutory law for Edible IP’s claim that Google has appropriated the “Edible Arrangements” trade name simply by using it in Google’s algorithms and keyword advertising programs.

 

And although Edible IP disclaims asserting any federal trademark claim, a review of federal trademark law is instructive on the contours of a third party’s right to use a trade name. Like Georgia statutory law and the common law, federal trademark law offers only limited trademark and trade name protection. For example, the doctrine of fair use permits reference to a competitor’s trade name in an advertisement.

 

(…) We see no reason to extend civil theft in Georgia to encompass the mere use of a trade name, without implicating consumer confusion, when doing so would subvert Georgia trademark law, federal trademark law, and the common law of trademark infringement.

 

(…) In sum, given Edible IP’s express disavowal of the element of consumer confusion in the complaint, it cannot state a claim for civil theft arising from the use of its trade name and associated goodwill.

 

Accordingly, the trial court did not err in granting Google’s motion to dismiss Edible IP’s claim for civil theft.

 

b. Conversion

Although Georgia law may provide relief for the conversion of certain intangible property, we have never extended that tort to claims based on the mere use of a trademark or on trade name infringement, and we decline to do so now.

 

Again, the cases Edible IP relies upon are readily distinguishable. For example, in English & Sons, Inc. v. Straw Hat Restaurants, Inc., 176 FSupp.3d 904 (N.D. Cal. 2016), the court concluded that the plaintiffs had “converted” the defendant’s trademark and other intellectual property by wrongfully registering ownership of the trademark with theU.S. Patent and Trademark Office – not just by simple use. See id. at 923 (2).

 

Other courts have likewise rejected attempts to expand the tort of conversion to encompass the type of intangible property traditionally protected within the scope of trademark law. See, e.g., Ortega v. Burgos, Case No. 12-CV-05421, 2014 U.S. Dist. LEXIS 70457, at *3 (II) (E.D.N.Y. May 22, 2014) (dismissing trademark conversion claim because “not only has this Court been unable to find any authority that recognizes trademark conversion, the leading treatise on trademark law states that, ‘every court to consider such a claim has rejected it’” (citation omitted)). See also 4 McCarthy, supra, § 25:9.50 (“Occasionally, a trademark owner will allege, either along with or instead of a traditional infringement claim, that its mark has been ‘converted’ by defendant. Every court to consider such a claim has rejected it. The author agrees that the tort of ‘conversion’ should not be stretched and deformed to substitute for the traditional law of trademark infringement.”).

 

Accordingly, we cannot say that the trial court erred in concluding that Edible IP had failed to state a claim for conversion.

 

c. Money Had and Received

In Count 3 of its complaint, Edible IP asserts a claim for money had and received, alleging that Google currently holds a sum of money belonging to Edible IP. The common law action for money had and received “is founded upon the equitable principle that no one ought to unjustly enrich himself at the expense of another.” Sentinel Offender Services, LLC v. Glover, 296 Ga. 315, 331 (4) (a) (766 SE2d 456) (2014) (citation omitted). This action “is maintainable in all cases where one has received money under such circumstances that in equity and good conscience he ought not to retain it.” Id. (citation and punctuation omitted).

 

Edible IP’s claim for money had and received again relies on its unavailing assertion that, rather than selling advertising space, Google is in essence selling Edible IP’s trade name and illegally profiting from it. And, despite Edible IP’s insistence that our courts have previously held that “the fact that money was received from a third person will not affect a defendant’s liability,” this holding does not change the futility of Edible IP’s claim for money had and received because Edible IP has no claim to the profits that Google has earned by selling advertising. Accordingly, for this reason and for the reasons discussed above in Divisions 1 (a) and (b), Edible IP cannot, as a matter of law, show that it is entitled to profits that Google earns through its keyword advertising program (even if the program uses the trade name “Edible Arrangements”) or that Google has been unjustly enriched at Edible IP’s expense, and this claim likewise fails.

 

 

Secondary sources: J. Thomas McCarthy, Conversion of a Trademark, 4 McCarthy on Trademarks and Unfair Competition, § 25:9.50 (5th ed. 2019) 

 

 

 

 

(Georgia Supreme Court, Feb. 15, 2022, Edible IP, LLC v. Google, LLC, Docket No. S21G0798)

U.S. Court of Appeals for the Federal Circuit, Nippon Shinyaku Co., LTD. v. Sarepta Therapeutics, Inc., Docket No. 2021-2369

Contract Drafting

Mutual Confidentiality Agreement

Purpose of the Agreement Was for the Parties to Enter into Discussions

Covenant not to Sue

Forum Selection Clause to Govern Patent and Other Intellectual Property Disputes

Contract Interpretation

Delaware Law

 

 

Appeal from the United States District Court for the District of Delaware in No. 1:21-cv-01015-LPS

 

On June 1, 2020, Nippon Shinyaku and Sarepta Therapeutics, Inc. (“Sarepta”) executed a Mutual Confidentiality Agreement (“MCA”). J.A. 508–16. As stated in the MCA, the purpose of the agreement was for the parties “to enter into discussions concerning the Proposed Transaction,” which the MCA defined as “a potential business relationship relating to therapies for the treatment of Duchenne Muscular Dystrophy.” J.A. 508–09.

 

The MCA established a “Covenant Term,” which was “the time period commencing on the Effective Date and ending upon twenty (20) days after the earlier of: (i) the expiration of the Term, or (ii) the effective date of termination.” J.A. 509. Section 6 of the MCA contained a mutual covenant not to sue, whereby each party agreed that during the Covenant Term it:

shall not directly or indirectly assert or file any legal or equitable cause of action, suit or claim or otherwise initiate any litigation or other form of legal or administrative proceeding against the other Party . . . in any jurisdiction in the United States or Japan of or concerning intellectual property in the field of Duchenne Muscular Dystrophy. J.A. 512 (MCA § 6.1). Section 6 further stated:

For clarity, this covenant not to sue includes, but is not limited to, patent infringement litigations, declaratory judgment actions, patent validity challenges before the U.S. Patent and Trademark Office or Japanese Patent Office, and reexamination proceedings before the U.S. Patent and Trademark Office . . . . Id. (emphasis added).

 

As noted, the covenant not to sue was time limited and applied only during the Covenant Term. Id. Importantly, the MCA also included a forum selection clause to govern patent and other intellectual property disputes between the parties after the expiration of the Covenant Term. The forum selection clause in Section 10 of the MCA states in relevant part:

 

The Parties agree that all Potential Actions arising under U.S. law relating to patent infringement or invalidity, and filed within two (2) years of the end of the Covenant Term, shall be filed in the United States District Court for the District of Delaware and that neither Party will contest personal jurisdiction or venue in the District of Delaware and that neither Party will seek to transfer the Potential Actions on the ground of forum non conveniens. J.A. 513–14 (MCA § 10) (emphases added). “Potential Actions” is defined in Section 1 of the MCA as “any patent or other intellectual property disputes between Nippon Shinyaku and Sarepta, or their Affiliates, other than the EP Oppositions or JP Actions, filed with a court or administrative agency prior to or after the Effective Date in the United States, Europe, Japan or other countries in connection with the Parties’ development and commercialization of therapies for Duchenne Muscular Dystrophy.” J.A. 509 (MCA § 1) (emphases added).

 

The Covenant Term ended on June 21, 2021, at which point the two-year forum selection clause in Section 10 of the MCA took effect. Yet, on June 21, 2021—the same day the Covenant Term ended—Sarepta filed seven petitions for inter partes review (“IPR”) at the Patent Trial and Appeal Board (“the Board”).

 

We generally review a denial of a preliminary injunction using the law of the regional circuit, here the Third Circuit. See Murata Mach. USA v. Daifuku Co., 830 F.3d 1357, 1363 (Fed. Cir. 2016) (citing Trebro Mfg., Inc. v. Firefly Equip., LLC, 748 F.3d 1159, 1165 (Fed. Cir. 2014)). “However, the Federal Circuit has itself built a body of precedent applying the general preliminary injunction considerations to a large number of factually variant patent cases, and gives dominant effect to Federal Circuit precedent insofar as it reflects considerations specific to patent issues.” Id. (quoting Trebro, 748 F.3d at 1165). Both the Federal Circuit and the Third Circuit review a denial of a preliminary injunction for abuse of discretion. See id.; see also Adams v. Freedom Forge Corp., 204 F.3d 475, 484 (3d Cir. 2000). Under that standard, we review underlying questions of law de novo. Antares Pharma, Inc. v. Medac Pharma Inc., 771 F.3d 1354, 1357 (Fed. Cir. 2014).

 

(…) Here, the district court’s finding that Nippon Shinyaku did not show it was likely to succeed on the merits turned entirely on the court’s interpretation of the MCA. The parties agreed that the MCA “shall be governed by and interpreted in accordance with the laws of the State of Delaware.” J.A. 513 (MCA § 10). Therefore, this appeal presents “a question of contract interpretation under Delaware law, which we review de novo.” Studiengesellschaft Kohle, m.b.H. v. Hercules, Inc., 105 F.3d 629, 632 (Fed. Cir. 1997) (citing Cyrix Corp. v. Intel Corp., 77 F.3d 1381, 1384 (Fed. Cir. 1996)); see also Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989) (“The interpretation of private contracts is ordinarily a question of state law . . . .”); Howmedica Osteonics Corp. v. Wright Med. Tech., Inc., 540 F.3d 1337, 1347 (Fed. Cir. 2008) (“Construction of a contract is an issue of law that we review without deference.” (citing Intel Corp. v. VIA Techs., Inc., 319 F.3d 1357, 1361 (Fed. Cir. 2003))).

 

In interpreting a contract, “Delaware adheres to the ‘objective’ theory of contracts, i.e. a contract’s construction should be that which would be understood by an objective, reasonable third party.” Estate of Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (quoting NBC Universal v. Paxson Commc’ns, No. 650-N, 2005 WL 1038997, at *5 (Del. Ch. Apr. 29, 2005)). Under Delaware law, we must “read a contract as a whole” and “give each provision and term effect, so as not to render any part of the contract mere surplusage.” Id. (quoting Kuhn Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396–97 (Del. 2010)). Importantly, “when the contract is clear and unambiguous, we will give effect to the plain-meaning of the contract’s terms and provisions.” Id. at 1159–60 (citing Rhone-Poulenc Basic Chem. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992)).

 

In this case, the plain language of the forum selection clause in Section 10 of the MCA resolves the dispute. Section 10 states clearly that “all Potential Actions arising under U.S. law relating to patent infringement or invalidity, and filed within two (2) years of the end of the Covenant Term, shall be filed in the United States District Court for the District of Delaware.” J.A. 513–14. The express definition of “Potential Actions” includes “patent or other intellectual property disputes . . . filed with a court or administrative agency,” J.A. 509 (emphasis added), and the district court acknowledged that the “definition of ‘Potential Actions’ in Section 1 literally encompasses IPRs.” Decision, 2021 WL 4989489, at *3. Sarepta does not contend otherwise. The MCA’s forum selection clause is thus unambiguous, and we must “give effect to the plain meaning of its terms.” Estate of Osborn, 991 A.2d at 1159–60.

 

Under the plain language of Section 10, Sarepta was required to bring all disputes regarding the invalidity of Nippon Shinyaku’s patents—including the allegations and contentions contained in Sarepta’s IPR petitions—in the District of Delaware. Sarepta instead brought those disputes in the form of IPR petitions at the Board, which contravened the plain language of the forum selection clause in Section 10 of the MCA.

 

We agree with Nippon Shinyaku that there is no conflict or tension between the two sections of the MCA. During the Covenant Term, Section 6 prohibited the parties from “directly or indirectly asserting or filing any legal or equitable cause of action, suit or claim or otherwise initiating any litigation or other form of legal or administrative proceeding . . . of or concerning intellectual property in the field of Duchenne Muscular Dystrophy.” J.A. 512 (MCA § 6.1). In essence, the covenant not to sue broadly prohibited the parties from litigating any issue relating to patents, regardless of the forum. See id. (expressly clarifying that the covenant not to sue includes “patent infringement litigations, declaratory judgment actions, and patent validity challenges before the U.S. Patent and Trademark Office”). Upon the expiration of the Covenant Term, however, Section 6’s covenant not to sue was no longer in effect, and the parties were thus no longer prohibited from asserting claims relating to patent infringement or invalidity. At that point, to the extent either party wished to assert or file any such claims, Section 10’s forum selection clause merely required that such claims “arising under U.S. law relating to patent infringement or invalidity” be filed in “the United States District Court for the District of Delaware.” J.A. 514 (MCA § 10). This framework— which reflects harmony, not tension, between Sections 6 and 10 of the MCA—is entirely consistent with our interpretation of the plain meaning of the forum selection clause, as set forth above.

 

Sarepta next defends the district court’s reasoning that other language in Section 10 indicates that the forum selection clause is best read as limited only to federal district court litigation. We disagree. To be sure, the district court was correct that issues of patent infringement, forum non conveniens, and jurisdiction challenges are inapplicable to IPR proceedings. See Decision, 2021 WL 4989489, at *3 (citing Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S. 422, 430 (2007); AVX Corp. v. Presidio Components, Inc., 923 F.3d 1357, 1361 (Fed. Cir. 2019)). But it does not follow that the parties’ inclusion of those issues in the forum selection clause means that they intended to categorically exclude IPRs. We think the better reading of Section 10 recognizes the parties’ agreement that, after one party files an action relating to patent infringement or invalidity in the District of Delaware—as a filing party is required to do—the other party will not “contest personal jurisdiction or venue in the District of Delaware” or “seek to transfer . . . on the ground of forum non conveniens.” J.A. 514.

 

Finally, Sarepta argues that the district court correctly determined that neither party intended to bargain away its right to file IPR petitions, which, due to the time bar in 35 U.S.C. § 315(b), would be the practical effect of our reading of the forum selection clause. Again, we disagree with Sarepta and the district court. As a general principle, this court has recognized that parties are entitled to bargain away their rights to file IPR petitions, including through the use of forum selection clauses. For example, in Dodo- case VR, Inc. v. MerchSource, LLC, 767 F. App’x 930, 935 (Fed. Cir. 2019) (non-precedential), we affirmed a district court’s grant of a preliminary injunction on the basis that a defendant had likely violated a forum selection clause by filing IPR petitions, even though the forum selection clause did not explicitly mention IPRs. Even in Kannuu Pty Ltd. v. Samsung Electronics Co., 15 F.4th 1101, 1106–10 (Fed. Cir. 2021), where we determined that the parties’ forum selection clause did not extend to IPRs, that determination was based on the specific language in the forum selection clause at issue in that case. Inherent in our holding in Kannuu was an understanding that a differently worded forum selection clause would preclude the filing of IPR petitions. See id. In the case before us now, we have such a forum selection clause, which uses a defined term that the district court acknowledged “literally encompasses IPRs.” Decision, 2021 WL 4989489, at *3. 

 

We conclude as a matter of law that the forum selection clause in Section 10 of the MCA precludes the filing of IPR petitions during the two-year period following the expiration of the Covenant Term on June 21, 2021. Because Sarepta filed IPR petitions during that time in violation of the forum selection clause in Section 10, Nippon Shinyaku is likely to succeed on the merits of its claim for breach of contract. 

 

 

 

(U.S. Court of Appeals for the Federal Circuit, Feb. 8, 2022, Nippon Shinyaku Co., LTD. v. Sarepta Therapeutics, Inc., Docket No. 2021-2369, Circuit Judge Lourie)

U.S. Court of Appeals for the Fourth Circuit, Berg v. Kingdom of the Netherlands, Docket No. 20-1765

Stolen Artworks

 

Suit is Brought in the U.S.

 

Defendants Are Municipal Museums in the Netherlands

 

Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602, et seq.

 

Expropriation Exception

 

Municipal Museums (NL)

 

Lack of Venue?

 

 

 

Appeal from the United States District Court for the District of South Carolina, at Charleston. Bruce H. Hendricks, District Judge. (2:18-cv-03123-BHH)

 

 

Bruce Berg, a resident of South Carolina, brought suit for recovery of paintings and other works of art taken under duress by the Nazis following the German invasion of theNetherlands in 1940. At the time of the German invasion, Berg’s grandfather, Benjamin Katz, was a partner in Firma D. Katz, which owned and operated three art galleries specializing in the sale of paintings by Dutch Old Masters. Following World War II, many of the stolen artworks were returned to the Netherlands by the United States military under Collection Point Agreements in which the Netherlands agreed to hold the art as “custodians pending the determination of the lawful owners thereof.” See, e.g., J.A. 100. Firma D. Katz was liquidated in 1974, and the artworks have not been returned to the heirs of its partners, Benjamin and Nathan Katz.

 

Berg brought suit in the District of South Carolina against the Kingdom of the Netherlands; Ministry of Education, Culture & Science of the Netherlands (“Ministry”); Cultural Heritage Agency of the Netherlands (“RCE”); and several private and public municipal museums in the Netherlands holding the artworks. Claiming ownership of the artworks, Berg brought claims for declaratory judgment, conversion, unjust enrichment, and constructive trust, arising from the alleged taking and retention of the artworks in violation of international law.

 

 

The four public municipal museums are Dordrechts Museum, Museum de Lakenhal, Museum Het Prinsenhof, and Historisch Centrum Het Markiezenhof. The amended complaint seeks restitution for 143 paintings and other artworks, thirteen of which are alleged to be held in the municipal museums. Am. Compl. ¶¶ 37, 38, 48, and 49.

 

 

As such, this appeal concerns only two groups of defendants: (1) the Ministry and RCE, and (2) the four municipal museums. As to the Ministry and RCE, we affirm the district court’s judgment that the Ministry and RCE, as political subdivisions of the Netherlands, are not subject to suit in federal court under the expropriation exception of the FSIA. As to the municipal museums, we affirm their dismissal for lack of venue.

 

 

Under the FSIA, “a federal court has subject matter jurisdiction over a claim against a foreign state only if that claim falls within one of the FSIA’s exceptions to immunity.” Wye Oak Tech., Inc. v. Republic of Iraq, 666 F.3d 205, 206 (4th Cir. 2011). As Berg’s claim does not arise from commercial activity by defendants in the United States, the only applicable exception to sovereign immunity under the FSIA is the expropriation exception found in 28 U.S.C. § 1605(a)(3).

 

 

As to the municipal museums, the district court dismissed the complaint against them for lack of venue. Venue in civil actions against a foreign state is governed by 28 U.S.C. § 1391(f), and the district court found that subsection 1391(f)(3) governed the municipal museums as agencies or instrumentalities of the Netherlands. That subsection permits venue in any judicial district in which an agency or instrumentality “is licensed to
do business or is doing business.” § 1391(f)(3). Though the district court found the municipal museums had engaged in commercial activity in the United States, the venue provision more narrowly focused on whether they did business in the District of South Carolina. So the allegations of nationwide solicitation and sales did little to show that the municipal museums are “doing business” in the District of South Carolina. 2020 WL 2829757, at *16. On appeal, Berg nowhere challenges this ruling.

 

 

(The district court concluded that the municipal museums were agencies or instrumentalities of the Netherlands lacking sovereign immunity pursuant to the second clause of the FSIA’s expropriation exception. That decision is not challenged on appeal and is consistent with the holding in Altmann v. Republic of Austria, 142 F. Supp. 2d 1187, 1204 (C.D. Cal. 2001) (“The paintings are owned by the Republic, but are exhibited by the Gallery. The exhibition of these paintings fulfills the ‘owned or operated by an agency of instrumentality’ requirement. Therefore, Plaintiff’s claim meets the ‘owned or operated’ requirement of the expropriation exception of the FSIA.”))

 

As to the municipal museums, the district court’s ruling was based on the lack of sufficient allegations that the municipal museums did business in South Carolina as required by § 1391(f)(3). In contrast, the district court did base its venue ruling as to the private museums on its finding that personal jurisdiction was lacking as to them.

 

(…) The district court’s dismissal for lack of venue over the municipal museums is forfeited. Nothing in this record suggests that the district court’s venue ruling as to the municipal museums constitutes fundamental error or results in a miscarriage of justice warranting reversal.

 

To be sure, Berg’s claim that the Nazi regime stole art owned by his grandfather’s partnership presents a strong moral claim. However, as the Second Circuit noted in Garb v. Republic of Poland, “strong moral claims are not easily converted into successful legal causes of action.” 440 F.3d at 581 (internal citation omitted). “Despite the severe injuries asserted by Berg, the capacity of United States courts to exercise jurisdiction over plaintiff’s claims hinges on a legal inquiry narrowly circumscribed by statute.” Id. Because the Ministry and RCE are political subdivisions of the Netherlands, the FSIA bars suit against them. While claims against the municipal museums, as agents and instrumentalities of the Netherlands, fall within the expropriation exception to the FSIA, as for venue, it is improper in South Carolina. As Berg did not ask the district court to transfer venue or otherwise appeal the venue ruling as to the municipal museums, the district court’s ruling as to venue compels affirmance of the judgment below. 

 

 

(U.S. Court of Appeals for the Fourth Circuit, Feb. 3, 2022, Berg v. Kingdom of the Netherlands, Docket No. 20-1765, Published)