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Bruce Kirby, Inc. v. LaserPerformance (Europe) Ltd.

United States District Court, D. Connecticut

August 12, 2016

BRUCE KIRBY, INC., et al., Plaintiffs,
v.
LASERPERFORMANCE (EUROPE) LIMITED, et al., Defendants.

          ORDER REGARDING CROSS-MOTIONS FOR SUMMARY JUDGMENT ON CLAIMS AND COUNTERCLAIMS

          JEFFREY ALKER MEYER United States District Judge.

         This case principally concerns a contract dispute between Bruce Kirby, the designer of the renowned Kirby Sailboat, and certain companies that build and sell those sailboats under the “Laser” brand name. Both Kirby and his company, Bruce Kirby, Inc., claim that the builders breached their contracts with them and have also infringed their intellectual property rights. Amidst a sea of claims, counterclaims, and competing motions for summary judgment, the builders assert that neither Kirby nor his corporate namesake have standing to sue them, because Kirby and Bruce Kirby, Inc. sold their contractual and intellectual property rights to another company who has not been joined as a plaintiff in this action. I agree, and therefore will grant defendants' motions for summary judgment on plaintiffs' claims. I will otherwise grant in part and deny in part the remaining motions for summary judgment in this case.

         Background

         In 1969, Bruce Kirby designed a small sailboat that could be carried on the top of a car, and he thereby revolutionized the sport of sailboat racing. During the early 1970s, plaintiffs entered into an agreement, called the Head Agreement, with two international sailing bodies- the International Sailing Federation (ISAF, formerly known as the International Yacht Racing Union) and the International Laser Class Association (ILCA)-to regulate the manufacture, sale, and registration of these sailboats that use the Kirby Sailboat design and are sold under the brand name “Laser.” Plaintiffs also entered contracts (“Builder Agreements”) with sailboat builders-including predecessors to defendants LaserPerformance (Europe) Limited (LPE) and Quarter Moon, Inc. (QMI)-to build the sailboats in conformity with the Head Agreement. The Builder Agreements granted LPE and QMI (as successors to the original parties to the Builder Agreement) a license to manufacture, sell, and market the Laser sailboat. Docs. #228-11 at 5 (1983 Agreement); #228-12 (1989 Agreement). In exchange for the license, LPE and QMI owed plaintiffs royalties in an amount of 2% of the dealer wholesale price. The dealer wholesale price was defined in the Builder Agreements and excluded, among other things, packaging costs. If the royalty payment was overdue, the Builder Agreements established a 12% interest rate on the amount overdue.

         In 2008, Kirby decided to sell his rights in the Laser boat. He and his company entered into a sales contract with a New Zealand company called Global Sailing Limited (GSL) to receive $2.6 million for all of his interest in the Kirby Sailboat design, including all intellectual property rights and all rights under agreements entered into between plaintiffs and third parties relating to the Kirby Sailboat. In January 2009, GSL informed LPE and QMI that the rights had been assigned and to send all royalty payments to GSL. See Doc. #228-15. But, citing the lack of documentation to show that plaintiffs had assigned rights to GSL, LPE and QMI continued to send royalties to plaintiffs; when plaintiffs refused to accept the payments, defendants made the payments in escrow. See Docs. #228-16 (confirming LPE's and QMI's payment for September 2009 through January 2010 royalties sent to plaintiffs), #228-20 (returning check to plaintiffs that they had sent to QMI), #228-22 (noting that February 2011 payment from QMI was in escrow).

         In May 2010, GSL attempted to terminate the Builder Agreement with LPE. See Doc. #219-5. QMI remained an authorized builder. In 2011, plaintiffs and GSL entered another agreement that purported to revise the parties' relationship in light of the lack of consent by the builders to the plaintiffs' transfer of their rights to GSL. Following entry into that agreement, plaintiffs then purported to terminate the Builder Agreements with QMI and LPE in 2012 on the basis of their non-payment of royalties that plaintiffs claimed were owed under the Builder Agreements. See Docs. #228-24, #228-25, #228-26, #228-27.

         In this lawsuit, plaintiffs claim that certain builders-including defendants LPE and QMI-breached the Builder Agreements. LPE and QMI allegedly breached their Agreements by not paying the proper royalties, and allegedly infringing on plaintiffs intellectual property rights by continuing to build sailboats and to place racing hull numbers on them after the Builder Agreements had been terminated due to their breach.

         Plaintiffs initially pressed seven claims against seven defendants. By the time of the pending motions for summary judgment, there were three remaining defendants to the original suit: LPE, QMI, and ILCA. Defendants LPE and QMI have moved for summary judgment on all remaining claims (Doc. #186). Defendant ILCA has moved to dismiss for lack of personal jurisdiction and also for summary judgment (Docs. #174, 183). In addition, LPE and QMI have brought various breach of contract and tortious interference counterclaims against plaintiffs and GSL, and these counterclaim defendants have likewise moved for summary judgment on the counterclaims (Docs. #180, 184). I will address each of the pending motions for summary judgment in turn below.

         Discussion

         1. LPE and QMI’s Motion for Summary Judgment

         Article III of the Constitution limits the jurisdiction of federal courts to “Cases” and “Controversies.” U.S. Const., Art. III, § 2. To bring a case or controversy within the meaning of the Constitution “a plaintiff must show (1) an injury in fact, (2) a sufficient causal connection between the injury and the conduct complained of, and (3) a likel[ihood] that the injury will be redressed by a favorable decision.” Susan B. Anthony List v. Driehaus, 134 S.Ct. 2334, 2341 (2014) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).

         In contract disputes, “absent a contractual relationship there can be no contractual remedy.” Ancile Inv. Co. v. Archer Daniels Midland Co., 784 F.Supp.2d 296, 303 (S.D.N.Y. 2011) (quoting Suffolk Cnty. v. Long Island Lighting Co., 728 F.2d 52, 63 (2d Cir. 1984)). This underlying rule of contract law runs parallel to the requirements for constitutional standing of any litigant to maintain a claim for breach of contract, because “strangers may not assert the rights of those who do not wish to assert them, ” and “the terms of a contract may be enforced only by contracting parties or intended third-party beneficiaries of the contract.” Rajamin v. Deutsche Bank Nat. Trust Co., 757 F.3d 79, 86 (2d Cir. 2014). Similarly, in copyright or other intellectual property actions, only the owner-or his assigned designee-of the intellectual property rights may sue for infringement of those rights. See Davis v. Blige, 505 F.3d 90, 98-99 (2d Cir. 2007).

         Here, defendants argue that plaintiffs do not have standing to bring any of the claims because they are no longer parties to any of the Head or Builder Agreements. Plaintiffs counter that the 2008 sale was never valid due to the lack of satisfaction of conditions precedent, and even if it were valid, the 2008 sale was negated by the later agreement that plaintiffs and GSL entered into in 2011. As plaintiffs would have it, when they entered into the 2011 Agreement, the 2008 sale to GSL was effectively undone, plaintiffs' rights were restored as parties to the Head and Builder Agreements, and they regained or retained their intellectual property rights.

         This Court must interpret the various agreements as they are written. “[W]ords and phrases [in a contract] should be given their plain meaning, and the contract should be construed so as to give full meaning and effect to all of its provisions.” Olin Corp. v. Am. Home Assur. Co., 704 F.3d 89, 99 (2d Cir. 2012). Therefore, I must look to the terms of the Head Agreement, Builder Agreements, the 2008 Agreement, and the 2011 ...


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