Stelor Productions, v. Silvers

Filing 13

MEMORANDUM by Steven A. Silvers in opposition to [2-2] motion for preliminary injunction (rb, Deputy Clerk)

Download PDF
Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 1 of 38 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORID A STELOR PRODUCTIONS, L .L .C ., a CASE NO . 05-80393-CIV-HURLEY Delaware corporation , f/k/a STELOR Magistrate Hopkins PRODUCTIONS, INC . , Plaintiff, V. STEVEN A . SILVERS, a Florida resident, Defendant, SILVERS' MEMORANDUM IN OPPOSITION TO PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION The preliminary injunction motion filed by Stelor Productions, LLC ("Stelor") is fatally flawed as a matter of law and should be denied . Asa threshold matter, the Court lacks subject matter jurisdiction to hear this case, because the amount in controversy, as defined in the License Agreement, is below the $75,000 benchmark for diversity jurisdiction . And, Stelor has failed to specifically allege the citizenship of its members, a requirement for determining diversity in cases brought by limited liability companies . Stelor's complaint, in fact, raises questions as to whether the Plaintiff even has standing in this dispute . Further, Stelor is not entitled to injunctive relief as a matter of law because, rather than seeking to maintain the status quo, Stelor seeks to compel specific performance of a terminated contract . Under the cases, injunctive relief is not available ; Stelor's only remedy based on a terminated contract is for damages . Finally, Stelor cannot possibly meet the heightened burden of obtaining a mandatory injunction - - compelling specific performance - - because it canno t LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P.A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 3 3 1 34 -603 7 · TEL . ( 305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 2 of 38 demonstrate a likelihood of success on the merits in light of its litany of breaches and failure to perform its obligations under the very agreements it seeks to revive and enforce . BACKGROUND Steven A . Silvers ("Silvers") created and owns a spectrum of intellectual property consisting of unique alien characters, story lines, graphic images and music based on his original book "Googles and the Planet of Goo" and corresponding trademarks, domain names, copyrights and patents (collectively "Googles IP) .' For many years, Silvers has used the Googles IP to market and promote a variety of products and services directed to children and children's education, using the Googles characters' adventures on earth to illustrate and develop life lessons for the younger set . Silvers' approach is exemplified by the Googles .com slogan: "Teaching children of today, visions of tomorrow . " In May, 2002, after Silvers' then licensee had unrelated problems, Silvers granted a license to use the Googles IP to Stelor. Stelor is a mere licensor, and may only use the Googles IP subject to its compliance with the License, Distribution and Manufacturing Agreement dated June 1, 2002 (Exhibit "A"). Silvers and Stelor also entered into a Letter Agreement dated June 1, 2002, whereby Silvers provided consulting services to Stelor in return for compensation by Stelor (Exhibit `B") . Stelor ' s Breaches and Terminatio n Despite claiming to invest vast sums and enormous energy into developing and exploiting the Googles IP (which cannot be substantiated without an audit), Stelor has paid little attention to its obligations under the License Agreement . Specifically, Stelor failed to pay royalties or provide proper royalty statements, failed to allow an audit, failed to properly register and protect variou s 'The facts cited here are drawn from the Declaration of Steven A . Silvers, filed concurrently. 2 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P.A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 3 3 1 34 -603 7 · TEL . ( 305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 3 of 38 elements of the Googles IP, failed to obtain insur ance, failed to provide samples of goods and se rv ices merch an dised under the Googles IP ("Licensed Product"),failed to maintain quality control over Licensed Products , and failed to provide lists of sublicenses . Silvers discovered Stelor had registered his trademarks in Stelor's name an d claimed copyrights in his works , allowed domain name registrations to lapse , and failed to oppose applications for similar marks . The list of Stelor's sho rtcomings goes on and on . Stelor, consistent with its disregard of the License Agreement , also breached the Letter Agreement by failing to compensate Silvers . Per its terms , Stelor ' s breaches of the compensation provisions of the Letter Agreement are grounds to terminate the License Agreement . (Exhibit `B, ¶C) . Fed up, Silvers retained counsel to persuade Stelor to meet its obligations . When Stelor refused, Silvers provided notice of default on November 12, 2004, initiating a 60 day cure period . Stelor's failure to cure led to Silvers' termination of the License Agreement on January 13, 2005 . Throughout this process, Silvers went by the book and in accordance with the terms of the License Agreement, providing the requisite notice and cure period . As the termination issue came to a head, Stelor filed suit to preempt it (why Stelor insists on filing lawsuits instead of simply complying with the agreements remains a mystery) . The Stelor suit ("Stelor I") primarily sought to prevent Silvers from having discussions with Googles Inc ., the target of numerous proceedings initiated by Stelor with the United States Patent and Trademark Office and the National Arbitration Forum, a forum for resolving domain name disputes . 2 2While Silvers had not had discussions with Google Inc ., he could have . Silvers owns the Googles IP , and c an fr eely sell or assign it should he choose to do so . Stelor is a mere licensee with no ownership ri ghts . See Exhibit " A," Recitals , and ¶¶VIR(B), (C) and (D ) . Conceptually , 3 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON , 9TH FLOOR, CORAL GABLES, FLORIDA 33134-6037 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 4 of 38 While Stelor I was pending, the parties tried to resolve the issues between them . They reached a settlement3, whereby Stelor promised (once again) to cure its breaches under the License Agreement and the Letter Agreement, and agreed to additional obligations . Silvers, in return for Stelor advancing a small amount of royalties, withdrew his termination, and agreed to certain protocols for administering the trademarks and domain names . Silvers did not, in entering into the Settlement Agreement, assume any obligations not already set forth in the License Agreement . And he did not withdraw his notice of default that underpinned the termination . The threat of termination still loomed, in that now Stelor was also required to comply with the Settlement Agreement to avoid termination . (See Settlement Agreement, Recitals, and numerous references to "as long as the [License Agreement] is in effect") . Despite the settlement and Stelor's renewed promises, Stelor still disregarded its obligations . As of April 27, 2005, three (3) months after the settlement, Stelor had refused to schedule an audit, failed to pay royalties, provide certified and conforming royalty statements, provide samples, obtain insurance, correct improper legal notices or compensate Silvers under the Letter Agreement . Stelor had also breached new obligations it assumed under the Settlement Agreement by paying some advance royalties late, not paying others at all, and not providing copies of U .S .P .T .O . proceedings . Stelor's refusal to provide a date for the audit was the last straw . Silvers has requested a date for the audit no less than seven times since November, 2004 . (Silvers Decl ., Exhibit "F"). Yet, while appearing to be cooperative, Stelor just would not provide a date . Thus, on April 27, 2005, Silvers terminated Stelor again . For good . Stelor is a tenant in a building and has (had) the right to use space, but Silvers owns the building . 'This has been filed under seal as an exhibit to the complaint . 4 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P.A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 3 3 1 3 4 - 603 7 · TEL . ( 305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 5 of 38 The License Agreement addresses the possibility of termination and contains safeguards to prevent termination based on technical breaches . A significant protection for Stelor is the posttermination provision, Exhibit "A," ¶X, allowing Stelor six (6) months to use the Googles IP to merchandise its existing inventory of Licensed Product . Thus, Stelor can recoup its investment if it is diligent in marketing the Licensed Product during the post-termination period . THE PRELIMINARY INJUNCTION ISSUES AND APPLICABLE STANDARDS Stelor's motion glosses over the most significant fact underlying this dispute - - Silvers has terminated the License Agreement . Silvers is admittedly not complying with the License Agreement because he is no longer bound by it . This is not about Silvers' breach of contract . Stelor's request to compel Silvers to perform his obligations under a terminated agreement, via injunctive relief, necessarily involves nullifying the termination and reinstating the agreement . Obviously, the court cannot "enforce the terms of the License Agreement" as Stelor requests (Motion at p . 14), if the agreement is inoperative . The central issue, therefore, is whether the Court should void Silvers' termination and reinstate the License Agreement . To do this, the Court would have to change the status quo, rather than preserve it . Stelor in essence seeks to revive the agreement and have the Court compel Silvers to comply with it. This would be a mandatory injunction because it seeks specific performance .4 A related issue therefore is whether Stelor can meet the heightened burden required to obtain specific performance by way of injunctive relief . 4See Stelor's proposed order, which seeks to compel Silvers to "act in compliance with the terms of the License Agreement" and take a variety of affirmative actions, including to "restore" Stelor's ability to administer Silvers' domain names . 5 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P.A . 2525 PONCE DE LEON, 9TH FLOOR, CORAL GABLES, FLORIDA 3 3 1 34-603 7 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH I Document 13 Entered on FLSD Docket 05/23/2005 Page 6 of 38 Injunctive Relief is Unavailabl e It is hornbook law that, once a contract has ended, the remedy of a mandatory injunction compelling specific performance is unavailable . . . . [A]s the contract provides, the agreement of the parties has been terminated . The remedy of specific performance necessarily is based upon the theory that there is a contract extant which a court decree may direct to be performed . When, as in this case, the parties have stated in clear language that upon the happening of a certain event their contract is to be deemed cancelled and thereafter the event which they had in mind occurs, any claim for specific performance is inconsistent with the cancellation provisions of the contract . Dillard Homes v. Carroll, 152 So .2d 738, 740 (3d DCA 1963) . See also, Collins v. Pic-Town Water Works, Inc ., 166 So .2d 760, 762 (2d DCA 1964) ("Thus the contract was terminated and was no longer enforceable by injunction or specific performance .") Preliminary injunctive relief is an extraordinary remedy . It is unavailable based on a terminated contract. Stelor's sole available remedy is for money damages . For example, in Jacksonville Elec . Auth. v. Beemik Bldrs. & Const., Inc., 487 So .2d 372 (1S` DCA 1986), the defendant terminated a construction contract, and the contractor sought an injunction ; the court found that, in light of the terminated contract, the contractor' s sole remedy consisted of damages, and that irreparable harm could not exist . Similarly, in Airlines Reporting Corp . v. Incentive Int'l Travel, Inc., 566 So .2d 1377, 1379 (5`'' DCA 1990) the court vacated an injunction based on a terminated contract and remanded to determine whether the plaintiff 's sole remedy - - money damages - - was available . Once an agreement has expired or terminated a court cannot, as a matter of law, enjoin a party to perform the agreement . Florida Power Corp. v. Town of Belleair, 830 So .2d 852, 854 (2 d 6 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON, 9TH FLOOR, CORAL GABLES, FLORIDA 3 3 1 34-60 3 7 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 7 of 38 DCA 2002) (trial court cannot, by injunction, extend the terms of a contract after its expiration) . Granting the relief sought by Stelor would violate this principle, by requiring Silvers to perform what he is allegedly required to do under a terminated and inoperative agreement . Rather than maintain the status quo, such an injunction would radically disturb the status quo, by extending the terms of the agreement beyond its life span . Stelor obviously disputes Silvers' termination of the License Agreement but that is an issue for trial, not a preliminary injunction . And, an attempt to enjoin the termination - - what Stelor actually seeks - - is equally ill suited for injunctive relief . Shearson Lehman Hutton, Inc . v. Meyer, 561 So .2d 1331, 1332 (5`h DCA 1990) (injunctive relief not available to prevent termination of agreement as only remedy is damages) . This rule did not descend from the clouds . When a party to a contract terminates the contract, the courts recognize the futility of coerced performance . This very issue arises regularly in this district, thanks to forum selection clauses used by Burger King and other franchisors . Typically, the franchisor terminates the franchise, and seeks to enjoin the franchisee's post-termination use of the previously licensed trademarks . The franchisee's inevitable attempt to use the trademarks posttermination, based on a claim of wrongful termination, is always denied . For example, in Burger King Corp . v. Hall, 770 F . Supp . 633, 638-39 (S .D . Fla. 1991) the court held the terminated franchisee's claim for wrongful termination was redressable only by damages, not by allowing the continued use of the franchisor's trademarks . While Hall does not dispute that her present use of the BKC Marks is without BKC's license or consent, she does contend that her franchise was wrongfully terminated since her alleged damage claims against BKC exceed the total of unpaid royalties and advertising contributions she refused to pay. 7 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON, 9TH FLOOR, CORAL GABLES, FLORIDA 33134-6037 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH I Document 13 Entered on FLSD Docket 05/23/2005 Page 8 of 38 As a matter of law, however, a terminated franchisee's remedy for wrongful termination is an action for money damages, and not the continued unauthorized use of its franchisor's trademarks . Thus, while a terminated franchisee may seek money damages for any injuries resulting from the alleged wrongful termination of its franchise, it may not continue to use the franchisor's trademarks without authority in violation of law . See Burger King Corp . v. Austin, No . 90-0784-Civ-Hoeveler (S .D . Fla. Dec . 26, 1990) ; ClWare Rayco, Inc . v. Perlstein, 401 F . Supp . 1231, 1234 (S .D .N .Y . 1975) . Burger King Corp . v. Hall, 770 F . Supp. at 638 . Same result in Burger King Corp . v. Majeed, 805 F . Supp . 994, 1003 (S .D . Fla. 1992) (terminated franchisee's remedy for wrongful termination is an action for damages and not the continued unauthorized use of its franchisor's trademarks) (citing Burger King Corp. v. Austin, Bus . Fran . Guide CSCH) 1 9788 (S.D. Fla. 1990) . The case of Burger King Corp. v. Agard, 911 F . Supp . 1499 (S .D . Fla. 1995) involved an expired license under a franchise relationship, but adhered to the rule : "[O]nce a license contract is terminated, there is no doubt the ex-license has no authorization or consent to continue use of the mark . After the license has ended, the ex-licensee must stop use of the mark ." Id. at 1503 . Here, Silvers granted Stelor the right to use the Googles IP and, after three years, has not seen a dime . He has the right to terminate the agreement based on Stelor's breaches . If he improperly terminated the agreement, he should be held accountable by paying damages (if any) . But Stelor should not - - and cannot under the cases - - be to allowed to use the Googles IP post-termination . The injunctive relief requested by Stelor would have the court ignore the termination, and allow Stelor to use Silvers' trademarks (and other elements of the Googles IP) based on a wrongful termination claim . Such a result would fly in the face of the no injunction rule and the Burger King line of cases . 8 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON, 9TH FLOOR, CORAL GABLES , FLORIDA 3 3 1 34-603 7 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 9 of 38 Heightened Standar d Stelor's request for specific performance faces a higher standard than the typical request for injunctive relief. "A mandatory preliminary injunction requiring defendant to take affirmative action is proper only in `rare circumstances ."' Burgos v. University of Central Florida Board of Trustees, 283 F . Supp. 2d 1268, 1271 (M .D . Fla. 2003) (quoting Harris v. Witters, 596 F .2d 678 (5`h Cir . 1979) .5 A preliminary injunction is "prohibitory" if it bars conduct that would alter the status quo before a cou rt has an opportunity to resolve the merits of the action . See Tom Doherty Assocs., Inc. v. Saban Entertainment, Inc., 60 F .3d 27, 34 (2d Cir . 1995) . By contrast, a "mandatory" injunction "comm and [ s] some positive act ." Id. In such a case, a heightened burden of proof attaches, and the injunction may issue "' only upon a clear showing that the moving pa rty is entitled to the relief requested , or where extreme or very seri ous damage will result from a denial of preliminary relief. "' Id. ; accord Koppell v. New York State Bd. Of Elections, 8 F . Supp . 2d 382, 384 (S .D .N .Y .), aff'd, 153 F .3d 95 (2d Cir. 1998) (per curiam). As put by one court : The injunctive relief sought by Norcom is mandatory rather than prohibitory : it would require CIM to undertake positive action by selling machines and parts to Norcom. See New Pacific Oversees Group (USA), Inc. v. Excal Int 'l Dev. Corp ., No . 99 Civ. 2436, 1999 WL 285493, at *4 (S .D .N .Y . May 6, 1999) . Norcom Elec. Corp. v. CIM USA, Inc ., 104 F . Supp . 2d 198,207 (S .D .N.Y . 2000) . See also , Cornell v. Sachs, 99 F . Supp. 2d 695, 704 ( mandatory injunction requires clear and convincing probability of success). Stelor ' s request for a preliminary injunction is subject to this high hurdle because, at 5 Decisions of the Fifth Circuit prior to October 1, 1981 are binding on this Court . Bonn v. City of Prichard, 661 F .2d 1206, 1209 (11' Cir. 1981) . 9 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P.A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 3 3 1 3 4-603 7 · TEL . ( 305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 10 of 38 bottom, it seeks to alter the status quo by reviving an inoperative agreement and compelling Silvers to act as if the agreement still applied . In light of the heightened standard Stelor must meet, Stelor's motion must be denied . STELOR IS NOT LIKELY TO PREVAIL ON THE MERITS Stelor's complaint and preliminary injunction motion are riddled with procedural deficiencies precluding relief. Equally deficient is Stelor's ability to show it can prevail on the merits given its multi-faceted breach of the License Agreement, Letter Agreement and Settlement Agreement . Procedural Flaw s Stelor lacks standing to bring this case and has not pled, nor can it meet the requisites for subject matter jurisdiction . Silvers' former licensee is Stelor Productions, Inc . See License Agreement (Exhibit "A") . Under the agreement, Stelor is precluded from assigning its rights to another entity, absent Silvers' consent . JXXI, License Agreement, (Exhibit "A"). Silvers has not consented to an assignment, and Plaintiff does not allege to hold the license rights by assignment from Stelor Productions, Inc . Yet, this case is brought by another entity - - Stelor Productions, LLC . It appears, therefore, the Plaintiff lacks standing to bring this action . If Stelor Productions, LLC is the proper plaintiff, then the complaint lacks allegations sufficient to confer subject matter jurisdiction. In the 11`h Circuit, a limited liability company - - like plaintiff - - is deemed a citizen of any state of which any of its members is a citizen for purposes of diversity jurisdiction . Rolling Greens MHP, LP v . Comcast SCHHoldings, L .L.C., 374 F .3d 1020, 1022 (1It' Cir . 2004) . And, it is up to the limited liability company/party invoking diversity jurisdiction - - Stelor - - to specifically allege the citizenship of all its members . Id. If any member resides in Florida - - Silvers' place of citizenship - - diversity is destroyed . Stelor has failed t o 10 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 33134-6037 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 11 of 38 sufficiently plead its members' citizenship to establish jurisdiction as required by Rolling Greens .6 Until Stelor properly pleads these details, the Court cannot determine whether subject matter juri sdiction exists . Stelor Cannot Prevail on the Contract Clai m Under the familiar preliminary injunction standard to obtain injunctive relief a movant must show a substantial likelihood of success on the merits of the underlying claim . Stelor concedes that, to prevail, it must establish "the existence of a contract ." Motion at p . 10 . This it cannot do, because the License Agreement is terminated . This undisputed fact alone compels the denial of injunctive relief. And, while Stelor can state a claim for wrongful termination, (which should be resolved at trial, not here), Stelor cannot show it is likely to prevail on the merits of that claim . As detailed in the accompanying declarations, Stelor has repeatedly breached every agreement between the parties, been put on notice, and failed to cure the majority - - and most significant - - of the breaches . Silvers had ample basis to terminate . The Non-Audit - Silvers is absolutely entitled to audit Stelor's books up to twice a year . Exhibit "A," ¶N . No right is more important to a licensor relying on an exclusive licensee to pay royalties and successfully develop licensed rights . Not counting Silvers' verbal requests (ignored by Stelor), he formally requested an audit on November 5, 2004 . Since then, through the course of the Stelor I litigation, the Settlement Agreement negotiations and to the present, Silvers has repeatedly demanded the audit. After Stelor finally agreed to allow it, it sought to impose conditions (identity of the accountant, the scope, etc .), but never provided a date . The audit requests (Silvers 6 Stelor also cannot meet the amount in controversy requirement of $75,000, because damages are limited by the License Agreement , ¶XIII(B) and fall below the requirement amount . 11 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON , 9TH FLOOR, CORAL GABLES, FLORIDA 33134-6037 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH i Document 13 Entered on FLSD Docket 05/23/2005 Page 12 of 38 Decl ., Exhibit "F") clearly show Silvers repeatedly requested a date . Not once did Stelor provide one . Even Stelor's belated, post-termination "cure" attempt (Silvers Decl ., Exhibit "J") does not cure the problem, because it still is silent on a date . Stelor's books are at Stelor's office in Maryland ; Silvers cannot conduct an audit without the green light and a date from Stelor . Stelor's refusal to provide a date, six months after the initial request, breached the License and Settlement Agreements . Why is Stelor's failure to allow the audit a big deal, and a basis for termination? Because Silvers is not required to accept Stelor's word - - reflected in the non-royalty statements - - that no Licensed Product is being marketed . And, it is clear Stelor is not playing straight . "Non-Merchandising" the Goo lg es IP - Since mid 2004, Stelor has sold Googles music on Itunes, over the internet . Keva Labossiere Decl ., ¶16-9, Exhibit "E ." Internet consumers can purchase and download 30 songs and two compact discs . Id. The publisher is Stelor Productions . Id . A receipt for one of the CDs, provided to Silvers by an associate, reflects a purchase price of $12 .96, with a purchase date of August 31, 2004 . Silvers Decl ., ¶13, Exhibit "D ." This activity is not reflected on any royalty statements . Silvers Decl ., Exhibit "E ." Stelor has not paid a penny in royalties . Silvers Decl ., ¶ 16 . Sales of the Googles music continues on Itunes . Labossiere Decl., ¶ 10, Exhibit G . This is not a technical breach by Stelor. It gives to the heart of the Licensor/Licensee relationship . Concealing sales of $100 is just as bad as covering up sales of $1,000,000. If the Googles IP takes off and grow to "Barney" level success, Silvers does not want, and should not have to work with, a sloppy or dishonest exclusive licensee . And, while it is a material breach if only a few songs and CDs were sold, it appears the Googles music has been very successful . The absolutely .net website lists one Googles song as the No . 3 seller in children's music in th e 12 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 3 3 1 34- 603 7 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 13 of 38 Netherlands ; the United Kingdom lists a Googles song at No . 29 and another at No . 65 . Labossiere Decl ., ¶12-13, Exhibit "H ." In Spain, a Googles song is listed in the top five . These songs were released on Itunes in mid 2004 . Id. Silvers also learned in 2004 that Stelor arranged for Licensed Product to be sold on the internet . As reflected in the Labossiere Declaration, Googles merchandise such as clothing, hats, coffee mugs, mouse pads, etc . are offered by CafePress .com . The web pages (Keva Labossiere Decl ., Exhibit "A") reflect the activity began in 2002 .' The Googles products use Silvers' characters and drawings, and are undisputedly Licensed Product . Anyone can buy this merchandise on the internet . Yet, Stelor never provided samples, reported or paid royalties . Further troubling is Stelor's claim, on the CafePress .com store, that it holds the copyright for the Googles characters and images . Labossiere Decl ., Exhibit "B ." This is false ; Silvers owns these copyrights and licensed them to Stelor. This is the same problem that led Silvers to provide notice and eventually terminate Stelor - - it consistently claims to own what it licenses . The CafePress.com merchandise demonstrates that Stelor has violated and continues to violate the License Agreement and Settlement Agreement . Non-Royalty Statements - Stelor's royalty statements disclose no merchandising . Notably, Stelor is required to submit a quarterly report relating all manner of details, i .e. country of sale, description, quality, item, allowance, and discounts . Exhibit "A," ¶III(C) . And Stelor must provide 'Given the expedited heari ng, Silvers has not had the opportunity to take discovery providing more details about Stelor ' s merchandising, including the volume of sales and revenue generated . Particularly interesting would be discovery directed at Stelor ' s monetizing of the domain name traffic, which is substantial and highly valuable . 13 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P.A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 33134-6037 · TEL . (305 ) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 14 of 38 a report even if no "sales" occurred . Id. Thus, even if Stelor gave away the Licensed Product, it must report it to Silvers . ' Stelor breached by never complying with the royalty report provision . Silvers Decl ., ¶ 16, and Exhibit "E ." The "reports" for the period June 2002 through June 2004 were all late, incomplete and failed to conform with the License Agreement . No reports were provided for the 3rd and 4' quarters of 2004, the same period we know Stelor merchandised Licensed Product. The post-termination "cure" report is also non-conforming, and is not certified as required . Non-Samples - Stelor has not provided Silvers with a single sample ofthe Licensed Products, other than two Googles music compact discs provided after the Settlement Agreement . These, of course, have been available to consumers and for purchase on the internet since 2004 . Stelor's offer to provide samples, post-termination, is ineffective . It had from November 12, 2004, the date Silvers put Stelor on notice, to cure this default . Silvers has been reduced to learning how Stelor markets his Googles EP on his own, or from others in the field . Stelor's delay and continued promises (but no production) of samples violates the License and Settlement Agreements . Non-Sublicenses - Stelor is required to identify, on a quarterly basis all parties with sublicenses for the Licensed Product. Presumably, Stelor has not allowed the Licensed Product to be merchandised on Itunes or CafePress .com without securing the necessary sublicenses .9 And, who knows what other deals Stelor has, given the non-audit . Yet Stelor has not disclosed a single 'This, of course, would breach Stelor's obligation under the License Agreement, ¶V(B)(iii), to exploit the Licensed Goods in a commercially reasonable manner . 'Again, if Stelor was so lax that it allowed others to use and market the Googles IP without a sublicense, it has violated ¶¶V(B)(iii) and VI(B) of the License Agreement . 14 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P.A . 2525 PONCE DE LEON, 9TH FLOOR, CORAL GABLES, FLORIDA 3 3 1 3 4-603 7 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 15 of 38 sublicense since inception . Stelor had notice since November 12, 2000 and failed to cure . This violates the License and Settlement Agreements . Non-Protection - Stelor is obligated to protect the value and distinctiveness of the Googles IP . Exhibit "A," ¶VRI(A) . Yet Stelor allowed numerous "Goo" domain names to lapse, and stood by while other parties obtained the rights . Stelor similarly failed to oppose trademark applications by others, who now have registrations for the "Googles" mark in other fields . Silvers Decl ., ¶18 . Non-Insurance - Stelor is required to obtain insurance, naming Silvers as an additional insured . Exhibit "B," ¶XII and Schedule "A ." The purpose of this provision, in addition to protecting Silvers individually, is to protect Silvers indirectly by creating a safety net for his exclusive licensee . Stelor has had since June, 2002 to obtain the insurance, but never did . This is a breach of the License Agreements . Stelor's attempt to "cure" by doing so after the April 27, 2004 termination is insufficient . The policy was obtained after the termination . (See Silvers Decl ., Exhibit "K") . Moreover, the policy does not conform to the requirements of the License Agreement, which calls for coverage of $2 million per occurrence, not the $1 million Stelor obtained . This is par for the course ; Stelor cannot or just won't get it right . The Non-Option Agreement - Since June 2002, Stelor has been obligated to provide a written option agreement reflecting Silvers' right to purchase Stelor stock . (Exhibit `B," ¶ 1(b) . It never has. Stelor has, like with its other obligations, made promises and promises, offered excuse after excuse . As termination loomed, Stelor again promised to provide an agreement based on its board approving it . But, Silvers does not need or want more promises or the Stelor board approval . Stelor is already obligated to provide a enforceable agreement to Silvers reflecting his options . Stelor is also required to provide its written option plan so Silvers can verify the number of options to which he is entitled . 15 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 3 3 1 34 -603 7 · TEL . ( 305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 16 of 38 This has never been provided either. Stelor's inexplicable delay and inability to provide the option agreement breached the Letter Agreement and the Settlement Agreement . Stelor's post-termination attempt to cure (Silvers Decl ., Exhibit "J") cured nothing. No agreement is forthcoming- - just another excuse (the "recent" conversion to a LLC) . In fact, Stelor formed its LLC in 2002, and converted to the LLC months ago, according to the Delaware Secretary of State. (Exhibit "C") . Stelor had had three years to comply with this requirement . The Letter Agreement, which created the obligation, has already expired by its terms . Silvers is through waiting . Non-Payment of Health Insurance - Silvers was obligated under the Letter Agreement to pay for Silvers' health insurance premiums . This is a particularly important term, as Silvers has a serious medical condition . During the term of the Letter Agreement, Stelor failed to pay Silvers' premiums . (Silvers Decl ., ¶10) . In the settlement, Stelor agreed to make this up, and pay an advance royalty of $1,000 per month toward Silvers' premiums starting on February 1, 2005 . Stelor paid the past due amounts, although it did so past the date required by the Settlement Agreement . But this "cure" immediately turned into another default when Stelor was late with payments due under the settlement, and finally failed to make one altogether . (Silvers Decl ., ¶23) . Thus, Stelor again breached the Letter Agreement and Settlement Agreement . Silvers ' Termination of Stelor is Justifie d Silver's right to terminate Stelor is grounded in the parties' agreements . The Letter Agreement expressly provides that Stelor's failure to provide an option agreement or pay health insurance premiums gives Silvers that right . Exhibit "B," ¶11(b) and 1(c) . Similarly, the License Agreement, Exhibit "A," ¶1X(A), gives Silvers the right to terminate if Stelor breaches a materia l 16 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON, 9TH FLOOR, CORAL GABLES, FLORIDA 33134-6037 · TEL . (305) 372-1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 17 of 38 provision . Surely, Stelor's failure to account to Silvers for merchandising of Licensed Products, non-conforming royalty statements, failure to provide samples, failure to identify sublicenses, failure to schedule an audit, etc . are material breaches . And, if Stelor really is allowing others to merchandise the Licensed Goods without generating income for Silvers, Stelor is breaching material provisions of the License Agreement, Exhibit "A," ¶V(B)(iii), requiring it to use commercially reasonable efforts to market the Licensed Goods, and ¶VI(B) requiring quality control . CONCLUSION A license agreement creates a unique relationship . The licensor giveth, and the licensor can take away under proper circumstances . Silvers' termination was proper under the circumstance here . Even if Silvers is ultimately judged to have improperly terminated the agreement which is unlikely, injunctive relief is not available for Stelor to reinstate the License Agreement and compel Silvers to act under its terms . Respectfully submitted , DIMOND, KAPLAN & ROTHSTEIN, P .A . KOZYAK TROPIN & THROCKMORTON, P .A. Co-Counsel for Defend ant Counsel for Defendant 200 S . E . First Street, Suite 708 2525 Ponce de Leon , 9`h Floor Miami, FL 33131 Coral Gables , Flori da 3313 4 Telephone: (305) 374-1920 Telephone : (305) 372 ;,18 0 Adam T . Rabin, Esq . By: Kenneth R. Hartmann Flo ri da Bar No : 664286 Gail M . McQuilkin Flo ri da Bar No . 969338 J 17 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON , 9TH FLOOR , CORAL GABLES , FLORIDA 33 1 34- 603 7 · TEL . ( 305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 18 of 38 CERTIFICATE OF SERVIC E I HEREBY CERTIFY that a true and correct copy of the foregoing was h an d -delivered this 2Cl ay of May, 2005, to : Kevin C . Kaplan , Esq ., Daniel F . Blonsky, Esq . and David Zack, Esq ., Burlington , Weil, Schwiep , Kaplan & Blonsky, P .A ., Counsel for Plaintiff, Office in the Grove, Penthouse A, 2699 South Bayshore D ri ve , Miami , FL 33133. By : Kenneth L e l(2 ; . Hartmann 3339/101/253141 .1 18 LAW OFFICES KOZYAK TROPIN & THROCKMORTON, P .A . 2525 PONCE DE LEON , 9TH FLOOR, CORAL GABLES, FLORIDA 3 3 1 3 4-603 7 · TEL . (305) 372- 1800 Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 19 of 38 EXHIBIT "A" Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 20 of 38 Exhibit A LICENSE, DISTRIBUTIO N AND MANUFACTURING AGREEMENT This LICENSE, DISTRIBUTION AND MANUFACTURING AGREEMENT between Steven A . Silvers and Stelor Productions, Inc. is effective as of June 1, 2002 and is entered into by and between Steven A . Silvers (LICENSOR), an Individual, whose official address is 3741 NE 163"`' Street, PMB #325, North Miami Beach, FL 33160 and Stelor Productions, Inc . (LICENSEE), a Delaware corporation with its current offices located at ; 14701 Mockingbird Drive, Darnestown, Maryland, 20874 . WITNESSETH WHEREAS, LICENSOR is the sole and exclusive owner of the GOOGLES characters identified more fully in "Schedule A" attached hereto (the "Licensed Property") ; WHEREAS, LICENSOR is the sole and exclusive owner of the GOOGLES trademarks identified more fully in "Schedule A" attached hereto (the "Licensed Trademarks") ; WHEREAS, LICENSOR has the power and auth o ri ty to grant to LICENSEE th e right, privilege and license to use, manufacture , distribute, and sell th ose types of products th at incorporate or are otherwise based on the Licensed Property as identified in "Schedule A" attached hereto ( the "Licensed Products") and to use the Licensed Trademarks on or in association wi th such Licensed Products ; WHEREAS , LICENSEE has or will have th e ability to manufacture, have manufactured, have submanufactured , distribute and sell or have sold and distri buted the Licensed Products in th e Licensed Territory more clearly defined in Schedule A (the Territory) and to use the Trademark(s) on or in association wi th the Licensed Products ; WHEREAS , LICENSEE desires to obtain from LICENSOR an exclusive license to use , manufacture, have manufactured and sell Licensed Products in the Territory and to use th e Licensed Trademarks on or in association wi th th e Licensed Products ; WHEREAS, LICENSEE has agreed , pursuant to a letter agreement , to act as a consultant for LICENSOR ; and NOW, THEREFORE, in consideration of the promises and agreements set forth herein, the par ti es, each intending to be legally bound hereby, do hereby agree as follows : I-L1 CENSE ~GKAN'T A. LICENSOR hereby grants to LICENSEE, for the Term of this Agreement as-recited in "Schedule A" attached hereto, the exclusive (even as to LICENSOR), worldwide, sub licensable right and license to use, reproduce, modify, create derivative works of, manufacture, have manufactured, market, advertise, sell, distribute, display, perform, and otherwise commercialize the Licensed Products and Licensed Properties in the Territory . The license includes a license under any and all intellectual property rights and interests therein, including by way of explanation, products which deal with the creative characters known as The Googles, anything that contains the letters GOO (in upper or lower case) together with any and all products, which comprise and which will comprise those characters, likenesses, which include Iggle, Oogle, Oggle, Gooroo, Gootian(s), the planet Goo , slides , computer web site(s), membership lists, clubs , materi als , patterns, prototypes, logos, trademarks, service marks, clothing, merchandise, educational products, marketing and promotional data and tools, packaging and advertising, modifications, updates and variations, an d all oth er items associated ether in singular or plural EXHIBIT Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 21 of 38 ............ B . -- LICENSOR. agrees to .indemnify-and hold harmless -LICENSEE; its officers ; directors,agents and employees, against all costs, expenses and losses (including reasonable attorneys' fees and costs) incurred through claims of third parties against LICENSEE based on or arising from (i) any infringement, misappropriation or other related action involving the Licensed Intellectual Property or Licensed Trademarks ; or (ii) any breach of LICENSOR's obligations, representations, warranties or duties under this agreement . C . With respect to any claims falling within the scope of the foregoing indemnifications : (i) each party agrees promptly to notify the other of and keep the other fully advised with respect to such claims and the progress of any suits in which the other party is not participating ; (ii) each party shall have the right to assume, at its sole expense, the defense of a claim or suit made or filed against the other party ; (iii) each party shall have the right to participate, at its sole expense, in any suit instituted against it ; and (iv) a party assuming the defense of a claim or suit against the other party shall not settle such claim or suit without the prior written approval of the other party, which approval shall not be unreasonably withheld or' delayed . XIII . LIMIT ATION OF LIABILITY A. IN NO EVENT WILL EITHER PARTY BE LIABLE UNDER THIS AGREEMENT FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH OR ARISING OUT OF THIS AGREE MENT (INCLUDING LOSS OF PROFITS, USE, DATA, OR OTHER - ECONOMIC ADVANTAGE), NO MATTER WHAT THEORY OF LIABILITY, EVEN IF THE EXCLUSIVE REMEDIES PROVIDED FOR IN THI S AGREEME NT FAIL OF THEIR ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OR PROBABILITY OF SUCH DAMAGES . THE PROVISIONS OF THIS SECTION "LIMITATION OF LIABILITY" ALLOCATE THE RISKS UNDER THIS AGREEMENT BETWEEN LICENSOR AND LICENSEE AND THE PARTIES HAVE RELIED UPON THE LIMITATIONS SET FORTH HEREIN IN DETERMINING WHETHER TO ENTER INTO T HIS AGREEMENT . B . EACH PARTY'S LIABILITY TO THE OTHER UNDER THIS AGREEMENT FOR CLAIMS RELATING TO THIS AGREEMENT, WHETHER FOR BREACH OF CONTRACT OR IN TORT, SHALL BE LIMITED TO THE AGGREGATE ROYALTY FEES PA ID BY LICENSEE TO LICENSOR DURING Z TWELVE MONTH PERIOD PRECEDING THE CLAIM. XIV. IN SURANCE' LICENSEE shall, throughout the Term of this Agreement, obtain and maintain at its own cost and expense from a qualified insurance company licensed to do businessas required by state and federal law(s), standard Product Liability Insurance naming LICENSOR as an additionally named insured . Such policy shall provide protection against any and all claims, demands and causes of action arising out of any defects or failure to perform, alleged or otherwise, of the Licensed Products or any material used in connection therewith-or-any-use thereof-adze-amount-of coverage-shall-be- trs^specified rr "Hchedufie A'~ attach hereto . LICENSEE agrees to furnish LICENSOR a certificate of insurance evidencing same within ninety (90) days after issuance of same, and, in no event, shall LICENSEE manufacture, distribute or sell the Licensed Products prior to receipt by LICENSOR of such evidence of insurance . XV . FORCE MATEURE LICENSEE shall not be liable for any failure of performance hereunder due to causes beyond its reasonable control, including but not limited to acts of God, fire, explosion, vandalism, strikes, lockouts, work stoppages, other labor difficulties, supplier failures, storm or other similar catastrophes, any law, order, regulation, direction, action or request of the state, local or federal government or of any government agency, commission, court, bureau, corporation or other instrumentality of any one or more of such governments, or of any civil or military authority, national emergencies, insurrections, riots, or wars . Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 22 of 38 --- B: -LICENSOR-hereby- grants-to LICENSEE-for the-term-of this- Agreement as recited in "Schedule A" attached hereto, the exclusive ( even as to LICENSOR), worldwide, sub licensable right and license to use the Licensed Trademarks on or in association with the Licensed Products as well as on packaging, promotional, and advertising materi al associated therewith . C . LICENSEE shall have the right to sublicense LICENSEE's rights under this Agreement ; provided that any and all such sublicenses shall be subject to the terms and conditions of this Agreement . D . No licenses will be deemed to have been granted by either party to any of its Intellectual Property Rights, except as otherwise expressly provided in this Agreement . E . LICENSEE agrees to place on all Licensed Products, where practicable, the phrase "created by Steven A . Silvers" or other similar wording. If. TERM OF THE AGREEMENT This Agreement and the provisions hereof, except as otherwise provided, shall be in full force and effect commencing on the date of execution by both parties and shall extend for a Term as recited in "Schedule A" attached hereto (the "Term") . III. COMPENSATION A . In consideration for the licenses granted hereunder, LICENSEE agrees to pay to LICENSOR, during the Term of this Agreement, a royalty in the amount recited in "Schedule A" attached hereto (the "Royalty") based on LICENSEE's Net Sales of Licensed Products . "Net Sales" shall mean the gross revenues on a cash basis (i .e., actually collected by LICENSEE but without counting any gross revenues twice) excluding shipping and handling charges, sales taxes, VAT, and other taxes imposed upon sales less (i) customary trade discounts, (ii) allowances actually shown on the invoice (except, cash discounts not deductible in the calculation of Royalty) (iii) bona fide returns, charge backs, refunds or credits (net of all returns actually made or allowed as supported by memoranda actually issued to the customers), (iv) sales of remainder inventory made at less than the total of LICENSEE's actual cost of goods and actual direct selling costs solely for purposes of liquidation or close-out, (v) other uncollectible accounts, (vi) cooperative advertising allowances, (vii) sales commissions paid . B . The Royalty owed LICENSOR shall be calculated on a quarterly calendar basis on collected funds (the "Royalty Period") and shall be payable no later than thirty (30) days after the termination of the preceding full calendar quarter, i .e., commencing on the first (1st) day of January, April, July and October with the exception of the first and last calendar quarters which may be "short" depending upon the effective date of this Agreement . C . act yy Pay en , -CLr s ial pl `rovidetTCEN - i a written royalty statement in a form acceptable to Licensor . Such royalty statement shall be certified as accurate by a duly authorized officer of Licensee, reciting on a country-by-country basis , the stock number, item, units sold, description, quantity shipped, gross invoice, amount billed to customers less discounts, allowances, . returns and reportable sales for each Licensed Product . Such statements shall be furnished to Licensor whether or not any Licensed Products were sold during the Royalty Period. The LICENSEE hereby farther agrees to provide the LICENSOR with a list of all of it's sub licensees added during the current royalty period . D . If LICENSEE sells any Licensed Products to any party affiliated with LICENSEE, or in any way directly or indirectly related to or under the common control with LICENSEE, at a price less than the average weighted price charged to other parties, the Royalty payable to LICENSOR shall be computed on the basis of the averaged weighted price charged to other parties if the Licensed Products are not ultimately resold to unaffiliated third parties . Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 23 of 38 payments due hereunder . shall be .made .in .United States-currency . -drawn on a United. .._ . . ..- . States bank, unless otherwise specified between the parties and may offset or be offset from any othe r payments due to LICENSEE under this or any other agreement-between the parties , F . Late payments shall incur interest at the rate of ONE PERCENT (1%) per month from the date such payments were originally due . TV . AUDI T A . LICENSOR shall have the right, .at its own expense, to have a nationally recognized certified public accounting firm, upon at least thirty (30) days written notice and no more than twice per calendar year, to inspect during normal business hours, LICENSEE's books and records and all other documents and material in the possession of or under the control of LICENSEE with respect to the subject matter of this Agreement at the place or places where such records are normally retained by LICENSEE . B . In the event that such inspection reveals an underpayment discrepancy greater than 5% of the amount of Royalty owed LICENSOR from what was actually paid, LICENSEE shall have the opportunity to' conduct its own audit . If LICENSEE agrees to the amount, if any, of any discrepancy, LICENSEE shall pay such discrepancy, plus interest, calculated at the rate of ONE AND ONE-HALF PERCENT (1 1/2%) per month. Upon settlement of any underpayment discrepancy, no further audit by LICENSOR shall be requested that year . That period end date shall represent the new period start date for future audits for underpayment discrepancies . In the event that such discrepancy is in excess of TEN THOUSAND UNITED STATES DOLLARS ($10,000 .00), LICENSEE shall also reimburse LICENSOR for the cost of auditing fees in connection therewith . C. All books and records relati ve to LICENSEE's obligati ons hereunder shall be maintained and kept accessible and available to LICENSOR for inspection for at-least three (3) years after the expiration of the initial or any subsequent term . D . In the event that an investigati on of LICENSEE'S books and records is made, certain confidential and proprietary business information of LICENSEE may necessarily be made available to the person or persons conducting such investigation . It is agreed that such confidential and proprietary business information shall be held in confidence by LICENSOR and shall not be used by LICENSOR or disclosed to any third party for a period of two (2) years from the date of disclosure, or without the prior express written permission of LICENSEE unless required by law, except LICENSOR may not disclose at any time to any third party any such confidential and proprietary business information which are trade secrets of LICENSEE . It is understood and agreed, however, that such information may be used by LICENSOR in any proceeding based on LICENSEE's failure to pay its actual Royalty obligation . V. WARRANTIES AND OBLIGATION S . A LIGEN,SOR-represents-and-war-rants-t-hat (i) the execution, delivery and performance of this Agreement have been duly authorized by all necessary action of LICENSOR and this Agreement is a valid and binding obligation of LICENSOR, enforceable in accordance with its terms ; (ii) the execution, delivery and performance by LICENSOR of this Agreement will not violate or conflict with any applicable U .S . law or regulation, or any order, writ, judgment or decree of any court or governmental authority to which LICENSOR is subject, or result in a violation, breach of, or default under any contract, lease, or other agreement binding on LICENSOR; (iii) ^ENS v Li %.r,r .aO.;; v rr ns W e ;zcl : :~iv e rib hand to the Licensed Intellectual .s in Property, Licensed Trademarks, Licensed Patents and Licensed Copyrights necessa ry to effectuate the granting of the Licensing Rights from the LICENSOR to the LICENSEE as contemplated herein . Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 24 of 38 (iv) the..Licened Intellectual. .Property and. Licensed .._. Trademarka ._do. .not. .. . . .._r infri nge the ri ghts, including without limitation , Intellectual Property Rights, of any third party ; and (v) except as set forth in Schedule B attached hereto, LICENSOR has not received any notice from any third party of any alleged or actual infringement of the Licensed Intellectual Property or Licensed Trademarks and the Licensed Intellectual Property and/or Licensed Trademarks are not the subject, and has not been the subject, of any previous or pending litigation with the exception of the Ganz litigation which has been resolved . B . LICENSEE represents and warr an ts that : (i) the execution, delivery and performance of this Agreement have been duly authorized by all necessary action of LICENSEE and this Agreement is a valid and binding obligation of LICENSEE, enforceable in accordance with its terms ; (ii) the execution, delivery and performance by LICENSEE of this Agreement will not violate or conflict with any applicable U.S . law or regulation, or any order, writ, judgment or decree of any court or. governmental authority to which LICENSEE is subject, or result in a violation, breach of, or default under any contract, lease, or other agreement binding on LICENSEE ; and (iii) it will use its commercially reasonable efforts to promote, market, sell and distribute the Licensed Products . C. Disclaimer of Warran ti es . EXCEPT AS EXPRESSLY PROVIDED ABOVE, NEITHER PARTY MAKES ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND,' EITHER EXPRESS OR IMPLIED, REGARDING THIS AGREEMENT AS TO ANY MATTER INCLUDING, BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, D . LICENSEE shall be solely responsible for the manufacture, production, sale and distribution of the Licensed Products or to have such Licensed Products manufactured, produced, sold and distributed, and will bear all related costs associated therewith . VI . NOTICES, QUALITY CONTROL, AND SAMPLE S A . The Licensed Products, as well as all promotional, packaging and advertising materi al relative thereto, shall include all approp riate legal noti ces . B . The Licensed Products shall be of a high quality which is at least equal to comparable products manufactured and marketed by LICENSEE and in conformity with a standard sample provided ti. LIC NSEE . C. Prior to the commencement of manufacture and sale of the Licensed Products, LICENSEE shall submit to LICENSOR for his input, at no cost to LICENSOR, a reasonable number of samples of all Licensed Products which LICENSEE intends to manufacture and sell and of all promotional and advertising material associated therewith . -VIL NOTICES AND PAYMEN T A . Any notice required to be given pursuant to this Agreement shall be in w riti ng and delivered personally to the other designated party at th e above-stated address or mailed by certified or registered mail, retu rn receipt requested or delivered by a recognized national overnight courier se rv ice , B . Either party may change the address to which notice or payment is to be sent by written notice to the other in accordance with the provisions of this paragraph . Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 25 of 38 VIII. INTELLECTUAL PROPERTY PROTECTIO N A . LICENSOR hereby grants LICENSEE all right, power and interest to seek, obtain and maintain all Intellectual Property Rights associated with the Licensed Intellectual Property and Licensed Trademarks, Licensed Copyrights and any other Intellectual Property Rights granted herein . LICENSOR further agrees to assist LICENSEE as may be required to apply for and obtain recordation of and from time to time enforce, maintain and defend such Intellectual Property Rights . LICENSOR hereby grants LICENSEE an irrevocable power of attorney for the initial and any subsequent terms of this Agreement to act for and on LICENSOR's behalf and instead of LICENSOR, at LICENSEE' s expense , to execute and file any such document(s) and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by LICENSOR . B . LICENSOR shall retain all rights, title and interest in the Licensed Intellectual Property and Licensed Trademarks and any modifications thereto based solely on such Licensed Intellectual Property . LICENSEE acknowledges LICENSOR's exclusive rights in the Licensed Intellectual Property and, further, acknowledges that the Licensed Intellectual Property and/or the Licensed Trademarks rights are unique and original to LICENSOR and that LICENSOR is the owner thereof . LICENSEE shall not, at any time during or after the effective Term of the Agreement, dispute or contest, directly or indirectly, LICENSOR's exclusive right and title to the Licensed Intellectual Property and/or the Licensed Trademarks(s) or the validity thereof. C . LICENSEE agrees that its use of the Licensed Intellectual Property and/or the Licensed Trademarks(s) inures to the benefit of LICENSOR and that the LICENSEE shall not acquire any rights in the Licensed Intellectual Property and/or the Licensed Trademarks(s) except for the license granted herein . D . LICENSOR shall retain all rights, title and interest in and to the Licensed Intellectual Properties . The LICENSOR owns th e exclusive ri ghts to th e Licensed Intellectual Proper ty . LICENSOR hereby waives and releases LICENSEE from any and all current or future claims or causes of actions by third parties , wheth er known or unknown, ari sing out of or relating to such Licensed Intellectual Properties including , but not limited to, an y claim that Licensed Products violate , infr inge on or misappropriate any of LICENSOR ' s Intellectual Proper ty Rights . E . Each party shall execute all papers, testify on all ma tt ers , and otherwise cooperate in . every way necessary an d desirable to effect any of the provisions under this Section (Intellectual Proper ty Protection ). The par ty requesting such shall reimburse th e other party for the expenses incurred as a result of such cooperation . The pa rties agree to take any actions or prepare or execute any documents reasonably requested by the other party . Furthermore, duri ng the term of this agreement, LICENSOR shall not initiate or maintain any relationship or conversations with LICENSEE' S current or prospective clients,-vendors;any-Eompanyrelationship -c W'ress tom) withv Ut die prim cpresswritten request by LICENSEE . IX . TERMINATIO N A . Right to Terminate on No tice . This Agreement may be terminated by either par ty upon sixty (60) days writt en notice to the other party in th e event of a breach of a material provision of this Agreement by the other party, provided th at, duri ng the sixty ( 60) days pe ri od , the breaching par ty fails to cure such breach . 0! n .P Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 26 of 38 B LICENSEE shall have the ri ght to terminate this Agreement at any time on thirty (30) _ days written notice fo LICENSOR , In such event, all moneys paid to LICENSOR shall be deemed nonrefundableand LICENSEE ' s obligation to pay any unpaid royalties shall be accelerated and shall become immediately due and payable . C. Additionally, if, after five years of th e initial intellectual property license, th ere are three consecutive years du ri ng which royalty payments to LICENSOR are less th an one hundred thousand dollars ($100,000 .00), LICENSOR has the option to cancel this Agreement in accordance with Section IX . TERMINATION, Para . A . X . POST TERAIII .NATION RIGHTS A . Not less th an thirty (30) days prior to the expirati on of this Agreement or immediately upon termination th ereof, LICENSEE shall provide LICENSOR with a complete schedule of all invento ry of Licensed Products then on hand or on order (the "Inventory ") . B . Upon expiration or terminati on of this Agreement , LICENSEE shall be entitled, for an additi onal peri od of six (6) mon ths , to continue to sell such Invento ry . Such sales shall be made subject to all of the provisions of this Agreement and to an accounting for and the payment of a Royal ty thereon . Such accounti ng and payment shall be due and paid wi thin thirty (30) days of the quarterly calendar'cited as the period basis for royalty calculati on . LICENSEE shall have the right to continue the use of the name ( s) associate wi th the products and articles that encompass this A greement for so long as LICENSEE is actively selling its invento ry of articles an d products. At the conclusion of LICENSEE ' S efforts in this regard, LICENSEE agrees to disconti nue th e use of names, trademarks , signs, advertising and anything else that might make it appear that the LICENSEE is still h an dling the arti cles and products of LICENSOR C. Upon the expirati on or termination of this Agreement, all of the license rights of LICENSEE under this Agreement shall fo rthwith terminate and immediately reve rt to LICENSOR and LICENSEE, except as detailed above in Section (B) of the "Post Termination Rights" Secti on, shall immediately discontinue all use of the Licensed Proper ty and the like, at no cost whatsoever to LICENSOR . D . . Upon termination of this Agreement for any reason whatsoever, LICENSEE agrees to immediately retu rn to LICENSOR all material rela ti ng to th e Licensed Intellectual Proper ty . Furthermore, upon termination or expirati on of this Agreement, LICENSEE a grees to immediately inform all of it's sub licensees regarding th e said termination or expiration of this Agreement . XI. INFRINGEMENTS A . Du ri ng the Term of this Agreement and any and all option/renewal pe ri ods, LICENSEE shall have th e sole right, in its discretion and at its expense , to take any and all ac ti ons against th ird persons to protect the Intellectual Property Rights licensed in this Agreement . B . Upon request by ei th er party to th e oth er, the other party shall execute all papers, tes ti fy on all matters , and otherwise cooperate in every way necessary and desirable for the prosecu ti on of any such lawsuit . Each party shall reimburse the other party for the expenses incurred as a result of such cooperation . XII. INDEMNITY A . LICENSEE agrees to indemnify and huld harm less LICENSOR its agents , heirs, assigns and representa ti ves , against all costs, expenses and losses (including reasonable attorn eys' fees and costs) incu rr ed through claims of third parties against LICENSOR based on product liability but excluding any claims based solely upon th e use of th e Licensed Intellectual Property or Licensed Trademarks by LICENSEE in accordance with the terms of this Agreement . Case 9:05-cv-80393-DTKH Document 13 Entered on FLSD Docket 05/23/2005 Page 27 of 38 .-.- XVI . JURISDICTION AND DISPUTE S A . This Agreement shall be govern ed in accordance with the laws of th e State of Florida without regard to its p ri nciples of conflicts of laws . B . All disputes under this Agreement shall be resolved by th e cou rt s of the State of Flo ri da including the United States District Court for Florida and the parties all consent to the ju ri sdiction of such cou rts , agree to accept service of process by mail , and hereby waive any ju ri sdictional or venue defenses oth erwise available to it . XVIL AGREEMENT BINDING ON SUCCESSOR S The provisions of the Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their heirs, administrators, successors and assigns . XVIII . WAIVE R No waiver by either party of any default shall be deemed as a waiver of p ri or or subsequent default of the same or other provisions of this Agreement . XIX . SEVERABILITY If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction , .such invalidity shall not affect the validity or operati on of any oth er term , clause or provision and such invalid term , clause or provision shall be deemed to be severed from th e Agreement . XX. NO JOINT VENTURE Nothing contained herein shall constitute th is arrangement to be employment , a joint venture or a partnership . XXI. ASSIGNABILITY Neither party may assign by any act or operation of law the ri ghts and obligations of this Agreement unless in connection wi th a tran sfer of substanti ally all of th e assets of LICENSEE and/or wi th th e consent of LICENSOR, wh

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?