Probatter Sports, LLC v. Sports Tutor, Inc

Filing 535

ORDER granting in part and denying in part 511 Motion to Dismiss for the reasons set forth in the attached Memorandum of Decision. Signed by Judge Vanessa L. Bryant on 3/29/2019. (Lindberg, Christina)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

PROBATTER SPORTS, LLC,
Plaintiff,
v.
SPORTS TUTOR, INC.,
Defendant.

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No. 3:05-CV-1975 (VLB)

March 29, 2019

MEMORANDUM OF DECISION ON MOTION TO EXCLUDE ALL EVIDENCE
AND ARGUMENT CONCERNING DAMAGES [DKT. 511]
Plaintiff ProBatter Sports, LLC (“ProBatter”) brings this patent infringement
action against Defendant Sports Tutor, Inc. (“Sports Tutor”). The Court granted
summary judgment in ProBatter’s favor on the question of infringement and
thereafter conducted a five-day bench trial on the questions of invalidity and relief
finding in ProBatter’s favor again. The case proceeded to the damages phase and
the parties commenced damages discovery. Before the Court is Sports Tutor’s
Motion to Exclude All Evidence and Argument Concerning Damages. Sports Tutor
argues that the Court should preclude all evidence and argument on damages
because ProBatter failed to produce a royalty-free license to Sports Tutor in
discovery and purposefully failed to disclose its existence in response to direct
questioning by the Court. For the foregoing reasons, Sports Tutor’s Motion is
GRANTED IN PART AND DENIED IN PART.

Procedural and Factual Background
ProBatter initially disclosed lost profits as the measure of damages. Nearly
seven years later and long after the close of discovery, ProBatter disclosed
reasonable royalty as the measure of damages in its proposed findings of fact and
conclusions of law, submitted in conjunction with the joint trial memorandum. In
a hearing on Sports Tutor’s objection to changing the measure of damages,
ProBatter represented to the Court that it granted only one license which was to
third-party Joyner Technologies. ProBatter produced this license to Sports Tutor.
Three years ago, on March 23, 2016, this Court denied Sports Tutor’s motion to
preclude evidence of a reasonable royalty to prove damages and ruled that all
interests would be best served by providing Sports Tutor with two additional
months to conduct discovery on damages measured by the reasonable royalty and
ProBatter one month to conduct discovery only with respect to the new evidence.
[Dkt. No. 469 (Mem. of Decision)].
More than two years after the Court’s order, in April 2018, Sports Tutor
issued a subpoena to Sports Attack, LLC (”Sports Attack”) and deposed its
corporate representative, Amanda Pratt, the following month. Sports Attack
produced an agreement between ProBatter and Sports Attack dated October 21,
2008 (the “2008 Agreement”). Sports Tutor now maintains that ProBatter was
dishonest in its representations to the Court because the 2008 Agreement is a
royalty-free license to Sports Attack. Sports Tutor also argues that ProBatter
purposefully failed to produce the 2008 Agreement in discovery. It claims that
ProBatter only produced the 2008 Agreement when it realized that Sports Attack

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would produce the document in response to Sports Tutor’s subpoena.

As a

sanction for ProBatter’s conduct, Sports Tutor asks the Court to exclude all
evidence and argument concerning damages.
Sports Tutor argues that ProBatter had no excuse for failing to disclose this
relevant and comparable license. Sports Tutor claims that it suffered added costs
and unnecessary litigation risks as a result of ProBatter’s conduct. In response,
ProBatter claims that its damages case cannot be excluded because it had no
obligation to disclose the 2008 Agreement. ProBatter argues that the 2008
Agreement is not a binding and enforceable license under Connecticut law
because it was subject to entering into a formal agreement and the parties did not
take such action until July 2018.
The issue before the Court therefore is whether the agreement ProBatter
entered into with Sports Attack which ProBatter failed to disclose and told the
Court did not exist was a license agreement.
The first paragraph of the 2008 Agreement states:
This will outline our relationship with respect to joint collaboration on
Sports Attack’s programmable, 3 wheel pitching machine currently in
development (“the E-Hack Attack Machine”) and its adaption for use
in combination with a ProBatter video conversion system (“the
ProBatter Video Kit”). The following general terms are intended to be
the basis for a formal agreement between ProBatter Sports and Sports
Attack, LLC. In the interim, however, this letter shall [sic] it be
construed as a binding agreement.
The following paragraph discusses the consulting arrangement between the
parties and their respective rights and obligations:
ProBatter will provide Sports Attack with reasonable consulting
services to further its development of the Programmable Hack Attack
machine and facilitate its adaptation with the ProBatter Video Kit.
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Such services will include, but not be limited to, consulting provided
by ProBatter’s engineering department and outside programmers and
control engineers as well as access to ProBatter’s object and source
codes and databases for different pitches. ProBatter will not charge
Sports Attack for engineering time provided by internal ProBatter
engineering and test personnel but if the use of ProBatter’s outside
engineering consultants and programmers are required, Sports Attack
shall pay for the actual cost of such consultants and programmers
subject, of course, to prior written approval by Sports Attack.
ProBatter engineering agrees to make an annual trip to Nevada to
work with Sports Attack at ProBatter’s own cost and expense but if
additional trips are required, Sports Attack shall reimburse ProBatter
for any reasonable travel expenses associated therewith. All rights in
and to the work performed by ProBatter on or in conjunction with the
E-Hack Attack Machine relating to non-video technology shall be
deemed owned by Sports Attack. In that connection, ProBatter will,
without any requirement of further consideration, assign any right,
title, or interest it may have or claim to have in such work product to
Sports Attack and will take such further actions, including the
execution and delivery of instruments of conveyance, as may be
appropriate to protect Sports Attack’s rights in such work product.
However, ProBatter shall be deemed to own all right, title and interest
in and to video technology. In that connection, Sports Attack will,
without any requirement of further consideration, assign any right,
title, or interest it may have or claim to have in such work product to
ProBatter and will take such further actions, including the execution
and delivery of instruments of conveyance, as may be appropriate to
protect ProBatter’s rights is [sic] such work product.
The next paragraph states:
For so long as the parties are working together, ProBatter shall grant
Sports Attack a royalty free license under its US and international
patents for programmable pitching machines subject to entering into
an appropriate license agreement. ProBatter agrees to take
reasonable steps to enforce its right in such patents against third
party infringers.
In the final two paragraphs, the parties agree that Sports Attack shall sell the
E-Hack Attack Machine to ProBatter at its lowest dealer or “favored customer
price.” The parties also state that Sports Attack intends for ProBatter to be its
exclusive video customer for at least two years subject to certain terms and during

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the exclusivity period Sports Attack agrees not to sell the E-Hack Attack Machine
to any entity that it knows or has reason to know intends to incorporate a video
conversion kit with such E-Hack Attack Machine.
Analysis
A.

The Parties Intended to be Bound by the 2008 Agreement.

The threshold issue is whether the 2008 Agreement is binding. The Court
considers the general rules of contract interpretation and the law surrounding
license agreements to determine whether the parties intended to be bound by the
2008 Agreement. The Connecticut Appellate Court recently recited the wellestablished principles of contract construction:
The contract must be viewed in its entirety, with each provision read in
light of the other provisions . . . and every provision must be given effect
if it is possible to do so. . . . In contrast, a contract is unambiguous when
its language is clear and conveys a definite and precise intent . . . The
court will not torture words to impart ambiguity where ordinary
meaning leaves no room for ambiguity . . . Moreover, the mere fact that
the parties advance different interpretations of the language in question
does not necessitate a conclusion that the language is ambiguous.
Nationwide Mut. Ins. Co. v. Allen, 83 Conn. App. 526, 537–38 (2004) (internal
citations and quotation marks omitted). While Nationwide was an insurance
contract case, the principles espoused by the court are applicable to all contracts:
A contract will be read as a whole and every part will be read with
reference to the whole. If possible, the contract will be so interpreted as
to give effect to its general purpose as revealed within its four corners
or in its entirety. This principle governing contract interpretation has
been applied along with other similar rules.
To the extent possible, and except to the extent that the parties manifest
a contrary intent, by stating, for example, that recitals or headings are
not to be considered or given effect in determining the meaning of their
agreement, every word, phrase or term of a contract must be given
effect. An interpretation which gives effect to all provisions of the
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contract is preferred to one which renders part of the writing
superfluous, useless or inexplicable. A court will interpret a contract in
a manner that gives reasonable meaning to all of its provisions, if
possible.
11 Williston on Contracts § 32:5 (4th ed.). Most recently, the Connecticut Supreme
Court stated that when determining the meaning of contract language, courts must:
first attempt to ascertain the parties' intent from the language they used
in their contract, looking at the contract as a whole and giving the
contract's words their ordinary meaning and one that renders its
provisions consistent.
C and H Elec., Inc. v. Town of Bethel, 312 Conn. 843, 853 (2014) (internal citations
omitted). In essence, the Court must reconcile all the language of the 2008
Agreement giving meaning to all of its terms.
Under Connecticut law, “[w]hether the parties intended legally to bind
themselves prior to the execution of a formal contract is to be determined from (1)
the language used, (2) the circumstances surrounding the transaction, and (3) the
purpose that they sought to accomplish.” Friedman v. Donenfeld, 92 Conn. App.
33, 39–42 (2005) (internal citations and quotation marks omitted) (affirming the trial
court’s decision that the parties’ memorandum memorializing a property owner’s
agreement to give prospective sellers a six-month option to purchase the property
was not an enforceable contract because it was a binder toward an option to
purchase subject to a contract signing, it was signed under spontaneous
circumstances without counsel and its purpose was not to enter into a binding
contract). “A consideration of these elements enables a court to determine if the
informal contract . . . is enforceable or simply an intention to negotiate a contract
in the future.” Id.

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The Court finds that the plain language of the 2008 agreement makes clear
the parties did intend to enter into a binding license agreement in 2008. The 2008
Agreement expressly states “this letter shall it [sic] be construed as a binding
agreement.” The fact that it also states the parties intended to enter into a more
formal agreement does not undermine that clear and unequivocal expression of
the parties’ intent to bind themselves in that it states:
For so long as the parties are working together, ProBatter shall grant
Sports Attack a royalty free license under its US and international
patents for programmable pitching machines subject to entering into
an appropriate license agreement. ProBatter agrees to take
reasonable steps to enforce its right in such patents against third
party infringers. (Emphasis added.)
The parties clearly expressed their intent that the agreement convey an immediate
license without any conditions precedent. Like Bender v. Bender, cited by Sports
Tutor, the 2008 Agreement contains no language indicating that any portion of the
agreement was conditional or subject to a certain condition. 292 Conn. 696, 726
(2009).
The next question is whether this equivocal language undermines the finality
of the language granting a license. It does not; first, because the 2008 Agreement
expressed the parties’ intent to commence performance of the Agreement before a
more appropriate agreement is reached. Second, the express terms of the 2008
Agreement clearly state what ProBatter intends to convey to Sports Attack and
what Sports Attack intends to convey to ProBatter in return. It says ProBatter is
granting Sports Attack the immediate use of its patented technology, including its
proprietary information and assistance necessary to understand and exploit it. The
2008 Agreement states:
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ProBatter will provide Sports Attack with reasonable consulting
services to further its development of the Programmable Hack Attack
machine and facilitate its adaptation with the ProBatter Video Kit.
Such services will include, but not be limited to, consulting provided
by ProBatter’s engineering department and outside programmers and
control engineers as well as access to ProBatter’s object and source
codes and databases for different pitches.
In furtherance of their joint venture to develop a video-equipped ball pitching
machine ProBatter also agreed:
All rights in and to the work performed by ProBatter on or in
conjunction with the E-Hack Attack Machine relating to non-video
technology shall be deemed owned by Sports Attack. In that
connection, ProBatter will, without any requirement of further
consideration, assign any right, title, or interest it may have or claim
to have in such work product to Sports Attack and will take such
further actions, including the execution and delivery of instruments of
conveyance, as may be appropriate to protect Sports Attack’s rights
in such work product.
ProBatter reserved for itself “all right, title and interest in and to video technology”
alone. In consideration, Sports Attack agreed:
Sports Attack will, without any requirement of further consideration,
assign any right, title, or interest it may have or claim to have in such
[video technology] work product to ProBatter and will take such
further actions, including the execution and delivery of instruments of
conveyance, as may be appropriate to protect ProBatter’s rights is
[sic] such work product.
As explained in detail below, the purpose and circumstances surrounding the 2008
Agreement indicate that ProBatter intended to grant Sports Tutor a royalty-free
license prior to entering into a formal license agreement inn consideration for the
mutual covenants. Therefore, the ProBatter and Sports Attack intended to be
bound by the 2008 Agreement.

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B.

The 2008 Agreement Is a License Agreement.

The Court must next determine whether the 2008 Agreement is a license
agreement. Black’s Law dictionary defines a license as “[a] permission, [usually]
revocable, to commit some act that would otherwise be unlawful.” License, Black's
Law Dictionary (10th ed. 2014). Monetary compensation is not required for an
agreement to be a license. For example, a “cross-license is “[a]n agreement
between two or more patentees to exchange licenses for their mutual benefit and
use of the licensed products.” Cross-license, Black's Law Dictionary (10th ed.
2014). Monetary payment is also not required for an implied-license which is “[a]
royalty-free license arising from a property owner’s conduct regarding another
person’s use of the property even though the owner has not expressly consented
to the property’s use.” Implied License, Black's Law Dictionary (10th ed. 2014).
“In the patent context, for example, the circumstances surrounding the
conduct give rise to an affirmative grant of consent or permission to infringe a
patent's claims. For example, the conduct of a patentee who encourages the
manufacture of infringing products may be construed as an implied license to use
the patent. An implied license may also arise when a patentee authorizes the sale
or express grant of a license to a buyer, who then resells the license to a third
party; the third party is the patentee's implied licensee.” Id.; see also Implied
license by conduct, Black's Law Dictionary (10th ed. 2014) (“An implied license
based on the patentee's course of conduct, including language, from which
another person could properly infer that the patentee consented to the other's use
of the patent.”).

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Here, the circumstances clearly indicate that the 2008 Agreement is both a
cross-license and an implied license. First, ProBatter and Sports Tutor agreed to
collaborate in the development of a ball pitching machine each employing their
proprietary and in ProBatter’s case, patented technology. The 2008 Agreement is a
cross-license because it facilitated the parties’ agreement to jointly develop a
pitching machine for use with ProBatter’s video system.
Because the subject of the 2008 Agreement, namely the E-Hack Machine,
was in development, the parties could not quantify the value of the technology
transfer. The parties’ statement that they intended to enter into an appropriate
agreement in the future is consistent with their intent to determine the value of the
technology transfer after their collaboration matured and produced a marketable
product. Only then could they ascertain the value of their contributions to the
collaboration and ascertain a reasonable royalty.
Alternatively, the 2008 Agreement is an implied license because ProBatter
granted Sports Attack a broad royalty-free license prior to entering into a formal
license agreement. The 2008 Agreement does not clearly authorize Sports Attack
to use dynamic breaking, but in it ProBatter’s conveys access to its technology,
including its in-house consulting engineers, outside programmers, and control
engineers as well as access to ProBatter’s object and source codes and databases
for different pitches. ProBatter also consented to the sale of the licensed
technology by Sports Attack to third parties. Sports Attack sold over one million
dollars’ worth of the E-Hack Attack machine employing dynamic braking. This

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broad grant of authority to use ProBatter’s technology creates an implied license
to the extent the 2008 Agreement does not create an express license.
ProBatter argues it did not know the Sports Attack ball pitching machine
used dynamic braking. A former ProBatter employee who worked on the E-Hack
machine with Sports Attack testified that he had no knowledge that the machine
used dynamic braking because the focus of the project was to “put a video screen
on [the] front of the e-Hack Attack machines” and he had “not taken the covers off
[the machine] to see what is actually in there.” [Dkt. 517-2 (M. Suba Dep.) at 18-22].
While the deponent may not have known, it is incredulous that no one at ProBatter
knew given the fact that ProBatter agreed to travel to Nevada at least once a year
to collaborate on the development of the machine. It is also incredulous because
ProBatter’s engineering department, outside programmers, and control engineers
were committed to work on developing the machine with the use of ProBatter’s
object and source codes and databases for different pitches. Moreover, it is
inconceivable that ProBatter could enter into an “appropriate” agreement if it had
no knowledge of how its technology transfer was being used and whether and to
what extent it was incorporated into the machine it was jointly developing with
Sports Attack.
Sports Attack’s Ms. Pratt testified that ProBatter approached Sports Attack
because “their core competency was not making pitching machines” and “they
wanted to secure another pitching machine with a company who would affordably
make them and was in the business, and so [ProBatter] approached [Sports Attack]
to be that company.” [Dkt. 510-2 (A. Pratt Dep. at 23:12-25)]. ProBatter required “a

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machine that was electronic and would automate the changing of the pitch.” Id. at
23:24-24:2. Ms. Pratt testified that Sports Attack’s E-Hack machine used Probatter’s
dynamic braking technology, but Sports Attack did not have a license or pay a
royalty. [Dkt. 510-2 (A. Pratt Dep.)]. Ms. Pratt also testified that Sports Attack did
not expect an infringement action from ProBatter because they developed the EHack Attack machine together. [Dkt. 519-1 (A. Pratt Dep.)]. Her testimony is further
support for the conclusion that the 2008 Agreement was a license agreement. In
general, a license is not a property interest at all, but merely a permission to act or,
conversely, a covenant not to sue for such action. See Harris v. Emus Records
Corp., 734 F.2d 1329, 1334 (9th Cir. 1984). As stated by the U.S. Supreme Court in
the context of a patent license, a license is “a mere waiver of the right to sue.”
General Talking Pictures Corporation v. Western Electric Co., 304 U.S. 175, 181
(1938), aff'd on reh'g, 305 U.S. 124 (1938) (quoting De Forest Radio Telephone &
Telegraph Co. v. U.S., 273 U.S. 236, 242 (1927)). Even if couched as the “right” to
conduct action, the license agreement is construed as a promise not to sue.
Spindelfabrik Suessen-Schurr, Stahlecker & Grill GmbH v. Schubert & Salzer
Maschinenfabrik Aktiengesellschaft, 829 F.2d 1075, 1081 (Fed. Cir. 1987). That is
exactly what Ms. Pratt stated ProBatter did, allow Sports Attack to use dynamic
breaking without paying a license fee during their collaboration on the E-Hack
marching in return from the benefits of sports Attack’s technology.
For the foregoing reasons, the Court finds that the 2008 Agreement was a
license agreement that ProBatter failed to disclose.

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C.

Sanction for ProBatter’s Failure to Disclose the 2008 Agreement.

Now that the Court has found that it was unreasonable for ProBatter to
withhold the 2008 Agreement, it must determine the appropriate sanction. Under
Federal Rule of Civil Procedure 37(c)(1), “[i]f a party fails to provide information or
identify a witness as required by Rule 26(a) or (e), the party is not allowed to use
that information or witness to supply evidence on a motion, at a hearing, or at a
trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P.
37(c)(1). “In addition to or instead of this sanction, the court, on motion and after
giving an opportunity to be heard may impose other appropriate sanctions.” Id. at
37(c)(1)(C). Appropriate sanctions include prohibiting the disobedient party from
supporting or opposing designated claims or defenses, striking pleadings, and
dismissing the action or proceeding in whole or in part. Id. at (b)(2)(A)(i)–(vi).
Before awarding exclusion, the Court must consider: “(1) the party’s explanation
for the failure to comply with the disclosure requirement; (2) the importance of the
testimony of the precluded witnesses; (3) the prejudice suffered by the opposing
party as a result of having to prepare to meet the new testimony; and (4) the
possibility of a continuance.” Patterson v. Balsamico, 440 F.3d 104, 117 (2d Cir.
2006) (alterations omitted) (citing Softel, Inc. v. Dragon Med. & Scientific
Commc’ns, Inc., 118 F.3d 955, 961 (2d Cir. 1997)). Bad faith is not required before
awarding exclusion, but “it can be taken into account as part of the party’s
explanation for its failure to comply.” Design Strategy, Inc. v. Davis, 469 F.3d 284,
296 (2d Cir. 2006).

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As the Court explained above, ProBatter provides no reasonable explanation
for its failure to disclose the 2008 Agreement. Next, the Court considers the
importance of the 2008 Agreement and the prejudice to Sports Tutor of ProBatter’s
failure to disclose it to the Court. The Court again finds the 2008 Agreement was a
valuable license. Sports Attack undertook the development of a new ball pitching
machine in consideration for the transfer of ProBatter’s technology. Research and
development has intrinsic value. Because it requires a commitment of resources,
which are quantifiable, it would generally only be undertaken when it is perceived
to have value in excess of the investment.
In addition, Sports Attack provided ProBatter immediate consideration for
its technology transfer.
Sports Attack shall sell the E-Hack Attack Machine to ProBatter at its
lowest dealer or “favored customer price.” The parties also state that
Sports Attack intends for ProBatter to be its exclusive video customer
for at least two years subject to certain terms and during the
exclusivity period Sports Attack agrees not to sell the E-Hack Attack
Machine to any entity that it knows or has reason to know intends to
incorporate a video conversion kit with such E-Hack Attack Machine
The discount and exclusivity negotiated and memorialized in the 2008 Agreement
have measurable value. Now that the E-Hack machine has been developed and
successfully marketed, the value of the technology transfer is ascertainable. It
remains to be seen whether the 2018 License Agreement between ProBatter and
Sports Attack is a credible measure of that value.
ProBatter failed to disclose to Sports Tutor information relating to the 2008
Agreement and identify a witness with knowledge about the agreement as required
by Federal Rule of Civil Procedure 26(a) and (e). The Court has the option of not

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allowing it to use the 2008 Agreement or imposing other appropriate sanctions.
The Court cannot determine on the current record the appropriate sanction. As
previously noted, denial of damages is a harsh sanction relegated to the worst
offenders.
The Court cannot determine the extent to which concealment of the 2008
Agreement appreciably effected the reasonable royalty calculation. Based on the
current record, the joint venture had some value to ProBatter and that value is
quantifiable and can be extrapolated into a royalty rate. However, as the court has
stated previously, the probative value of a royalty rate negotiated after infringement
ceased is questionable. If the purpose of damages is to compensate a patentee for
infringement, then there should be some temporal proximity between the
infringement and the licenses on which a reasonable royalty is calculated—if for
no other reason than to account for the fact that market conditions change over
time. See, e.g., Small v. Nobel Biocare USA, LLC, 808 F. Supp. 2d 584, 588-89
(S.D.N.Y. 2011) (A reasonable royalty can be calculated from a hypothetical
negotiation between the patentee and infringer which “attempts to ascertain the
royalty upon which the parties would have agreed had they successfully negotiated
an agreement just before infringement began”) (internal citations and quotation
marks omitted) (emphasis added).
In addition, measuring damages based on a license between the patentee
and a third party with which the patentee has a business relationship involving the
patent seems unreliable and poses the potential of collusion and inflation. It would
seem that a reasonable royalty preferably should be based on arm’s length

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negotiations where the intrinsic value of the licensed technology is the sole or
primary motivation. Thus, it is not clear to the court that either the 2008 or the 2018
license agreements between Sports Attack and ProBatter are credible bases to
calculate a reasonable royalty.
Accordingly, the parties are ordered to meet and confer and advise the Court
if they can reach an agreement on the inclusion or exclusion of the 2008 and 2018
Agreements. If the parties agree that one or more of them should be considered
or one party insists they should be considered, the parties are directed to advise
the Court what if any additional discovery and or briefing they would require to
bring this matter to a final close.
In view of the inexcusable failure to disclose the 2008 Agreement to Sports
Tutor timely, the Court orders ProBatter to pay all reasonable legal fees and costs
incurred by Sports Tutor in connection with damages discovery relating to the 2008
Agreement and the 2018 Agreement.
Conclusion
For the foregoing reasons, Defendant’s Motion to Exclude All Evidence and
Argument Concerning Damages is GRANTED IN PART AND DENIED IN PART.

IT IS SO ORDERED.
/s/
Hon. Vanessa L. Bryant
United States District Judge

Dated at Hartford, Connecticut: March 29, 2019.

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