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Inspired Development Group, LLC v. Inspired Products Group, LLC

United States District Court, S.D. Florida

January 31, 2017

INSPIRED DEVELOPMENT GROUP, LLC, a Florida limited liability company, Plaintiff,
INSPIRED PRODUCTS GROUP, LLC, d/b/a KIDSEMBRACE, LLC, a California limited liability company, Defendant. INSPIRED PRODUCTS GROUP, LLC, d/b/a KIDSEMBRACE, LLC, a California limited liability company, Counter-Plaintiff,
INSPIRED DEVELOPMENT GROUP, LLC, a Florida limited liability company, and MITCHELL PRINE, individually, Counter-Defendants.



         This matter is before the Court on Defendant Inspired Products Group's (“IPG”) Motion for Summary Judgment [DE 74] and Plaintiff Inspired Development Group's (“IDG”) Motion for Summary Judgment [DE 77]. Both motions have been fully briefed. For the reasons set forth below Defendant IPG's Motion for Summary Judgment is granted in part and denied in part and Plaintiff IDG's Motion for Summary Judgment is denied.

         I. UNDISPUTED FACTS [2]

         For background information purposes, the Court sets forth below the undisputed history of this case. To the extent there are disputed facts relevant to the Court's decision, the Court addresses the dispute in its analysis, infra.

         This case is about one company that produced products, the Defendant, one company that owned the patents for those products, the Plaintiff, and the Defendant's eventual termination of its relationship with Plaintiff. The Plaintiff in this case, IDG, was founded in 2005. DE 75 at 2. IDG was founded by Mr. Mitch Prine (who became the CEO) because Mr. Prine wanted to commercialize the idea of making child car seats that incorporated famous cartoon and comic book characters. Id. Mr. Prine succeeded in obtaining patents for his idea, however, at that time, neither Mr. Prine nor IDG obtained any rights or permissions to use the intellectual property of the characters the car seats were patterned after, such as Batman. Id. at 3. In 2006 and 2007, Mr. Prine was able to convince investors to form a company to manufacture the car seats and, as a result, the Defendant in this case, IPG, was formed. Id. The design of the business was such that IPG would manufacture the car seats and pay a royalty to IDG for the use of its patents. Id. In 2007, a formal Exclusive Patent Licensing Agreement was entered into between IPG and IDG that memorialized this arrangement wherein IPG would pay royalties to IDG. Id. at 4.

         In January of 2008, IPG signed a non-exclusive license agreement with Marvel to put a Spiderman character on children's car seats.[3] Id. at 15. The terms of that license agreement (as well as others) would eventually fracture the relationship between IPG and IDG, as explained below. In 2009, IPG sought investment from Boliari, EAD, a Bulgarian corporation. Id. at 5. As a condition for its investment, Boliari required both IDG and IPG to execute a Binding Letter of Agreement. Id. at 6. The terms of the Binding Letter Agreement were varied, but the terms included a provision that stated that IDG would be entitled to a certain amount of funds if IPG were ever to be sold. See id.

         After the Boliari investment, in early 2010, Mr. Prine was removed as CEO of IPG. Id. at 8. After Mr. Prine's removal, the new leadership at IPG began to question the value of IDG's patents and the value of IPG's payments for the use of those patents. See Id. at 8. IPG's concerns were focused on the terms of its non-exclusive licensing agreements with the owners of the fictional characters the car seats resembled. See Id. at 7-8. More specifically, the terms of IPG's various non-exclusive licensing agreements for the fictional characters required, in various ways, that IPG would “not use . . . the [images] in any manner likely to cause confusion or doubt in the mind of the public as to the ownership and control thereof or in any manner that does not make clear that the [image] is owned and controlled exclusively by [the licensor.]” See DE 75-15 at 11. IPG's concern was its requirement, pursuant to its non-exclusive licensing agreements, not to assert any sort of exclusivity over the character images, juxtaposed to the patents it was paying for, which in turn facially appeared to exercise exclusivity over the character images, once they were affixed to the car seat that was the subject of the patent. See DE 75 at 22 (“[T]he licensed rights to the specific characters in combination with the Design Patent protection for the seat utilizing that character design, effectively precludes the licensor from granting a character license for a similar (i.e. infringing) seat.”). Stated succinctly, IPG was concerned the patents it was paying for had no value, conflicted with its license agreements, or both. See id.

         In light of its concerns, IPG requested extensive information from IDG pertaining to the patents. See Id. at 9. IDG did not respond to IPG's satisfaction. See Id. IPG terminated its relationship with IDG by terminating the Patent License Agreement. Id. This lawsuit followed, with IDG asserting it was owed outstanding royalties under the Patent License Agreement and a lump-sum payment under the Binding Letter of Agreement. DE 1. IPG answered by filing counterclaims, however, those counterclaims were subsequently dismissed without prejudice. Only IDG's claims remain before this Court.


         Summary judgment is appropriate if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The existence of a factual dispute is not by itself sufficient grounds to defeat a motion for summary judgment; rather, “the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A dispute is genuine if “a reasonable trier of fact could return judgment for the non-moving party.” Miccosukee Tribe of Indians of Fla. v. United States, 516 F.3d 1235, 1243 (11th Cir. 2008) (citing Anderson, 477 U.S. at 247-48). A fact is material if “it would affect the outcome of the suit under the governing law.” Id. (citing Anderson, 477 U.S. at 247-48).

         In deciding a summary judgment motion, the Court views the facts in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. See Davis v. Williams, 451 F.3d 759, 763 (11th Cir. 2006). The Court does not weigh conflicting evidence. See Skop v. City of Atlanta, 485 F.3d 1130, 1140 (11th Cir. 2007). Thus, upon discovering a genuine dispute of material fact, the Court must deny summary judgment. See id.

         The moving party bears the initial burden of showing the absence of a genuine dispute of material fact. See Shiver v. Chertoff 549 F.3d 1342, 1343 (11th Cir. 2008). Once the moving party satisfies this burden, “the nonmoving party ‘must do more than simply show that there is some metaphysical doubt as to the material facts.'” Ray v. Equifax Info. Servs., LLC, 327 F. App'x 819, 825 (11th Cir. 2009) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). Instead, “[t]he non-moving party must make a sufficient showing on each essential element of the case for which he has the burden of proof.” Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). Accordingly, the non-moving party must produce evidence, going beyond the pleadings, to show that a reasonable jury could find in favor of that party. See Shiver, 549 F.3d at 1343.

         III. ANALYSIS

         IPG has moved for summary judgment as to each count against it: Count I (Breach of Patent License Agreement), Count II (Breach of Binding Letter of Agreement), Count III (Unjust Enrichment), and Count IV (Promissory Estoppel). IDG has moved for summary judgment as to Count II. For the reasons set forth below, the Court grants summary judgment in IPG's favor on each count except for Count I and denies summary judgment in IDG's favor on Count II

         Count I - Breach of Patent License Agreement

         IPG argues that it is entitled to summary judgment as to IDG's Count I, which is a breach of contract claim premised on the parties' Patent License Agreement. IDG's breach of contract claim is based upon the allegation that during the fourth quarter of 2012 and all of 2013 IPG did not pay IDG royalties as the Patent License Agreement required. IPG's contention on summary judgment is that it was excused from any such obligation to pay royalties because, prior to its alleged obligation to do so, IDG materially breached the Patent License Agreement. IPG's position is premised upon the following provision in the Patent License Agreement:

6. Obligations of Licensee. In addition to the obligations set forth hereinabove, IPG shall fulfill the following obligations:
a. Marking. Licensee agrees to mark or have marked all Licensed Products manufactured, used or leased by it or its sub licensees as such may be desirable or required by applicable patent laws.
b. Diligent Exploitation. Licensee shall use its commercially reasonable efforts to bring Licensed Patent Rights to market through a thorough, vigorous and diligent program and to continue active, diligent marketing efforts throughout the life of this agreement.
c. Protection Against Infringement. Licensee shall use its commercially reasonable best efforts to vigorously protect and guard against infringement of the Licensed Patent Rights incorporated in the Licensed Products throughout the life of this Agreement.
d. Patent Prosecution and Maintenance. IDG and IPG shall cooperate with respect to all future patent prosecution and patent maintenance. IPG shall pay future costs of preparation, filling, prosecuting and maintenance of patents and applications on patentable improvements included in the Licensed Patent Rights, however, in the event that IPG refuses to file patent applications on such patentable improvements in the United States and selected foreign countries when requested by IDG, the rights to such patentable improvements for said countries shall be returned to IDG.
i. Preparation and maintenance of patent applications and patents undertaken at IPG's cost shall be performed by patent attorneys selected by IPG (with the advance written consent of IDG, such consent not to be unreasonably withheld); and due diligence and care shall be used in preparing, filling, prosecuting, and maintaining such applications on patentable subject matter. Both parties shall review and approve any and all patent related documents.
ii. IPG shall have the right to, on thirty (30) days written notice to IDG, discontinue payment of its share of the prosecution and/or maintenance costs of any of said patents and Vor patent applications. Upon receipt of such written notice, IDG shall have the right to continue such prosecution and/or maintenance in its own name at its own expense in which event the License shall be ...

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