686 Fed.Appx. 198 (4th Cir. 2017), 16-1672, Evans v. PlusOne Sports, LLC

Docket Nº:16-1672, 16-1720
Citation:686 Fed.Appx. 198
Opinion Judge:PAMELA HARRIS, Circuit Judge:
Party Name:CURTIS A. EVANS; WHIPGOLF, LLC, Plaintiffs - Appellants, v. PLUSONE SPORTS, LLC, a Massachusetts limited liability company; ALEX VAN ALEN, Defendants - Appellees. CURTIS A. EVANS; WHIPGOLF, LLC, Plaintiffs - Appellees, v. PLUSONE SPORTS, LLC, a Massachusetts limited liability company; ALEX VAN ALEN, Defendants - Appellants
Attorney:Laurin Howard Mills, LECLAIR RYAN, PC, Alexandria, Virginia, for Appellants/Cross-Appellees. Bernard Joseph DiMuro, DIMUROGINSBERG, P.C., Alexandria, Virginia, for Appellees/Cross-Appellants. Jonathan R. Mook, DIMUROGINSBERG, P.C., Alexandria, Virginia, for Appellees/Cross-Appellants.
Judge Panel:Before GREGORY, Chief Judge, and THACKER and HARRIS, Circuit Judges. Judge Harris wrote the opinion, in which Chief Judge Gregory and Judge Thacker joined.
Case Date:April 26, 2017
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 198

686 Fed.Appx. 198 (4th Cir. 2017)

CURTIS A. EVANS; WHIPGOLF, LLC, Plaintiffs - Appellants,

v.

PLUSONE SPORTS, LLC, a Massachusetts limited liability company; ALEX VAN ALEN, Defendants - Appellees.

CURTIS A. EVANS; WHIPGOLF, LLC, Plaintiffs - Appellees,

v.

PLUSONE SPORTS, LLC, a Massachusetts limited liability company; ALEX VAN ALEN, Defendants - Appellants

Nos. 16-1672, 16-1720

United States Court of Appeals, Fourth Circuit

April 26, 2017

Argued January 25, 2017.

Page 199

UNPUBLISHED

Editorial Note:

Unpublished opinions are not binding precedent in this circuit. (See Federal Rule of Appellate Procedure Rule 32.1)

Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria. (1:15-cv-00683-CMH-TCB). Claude M. Hilton, Senior District Judge.

Evans v. PlusOne Sports, LLC, (E.D. Va., May 16, 2016)

ARGUED:

Laurin Howard Mills, LECLAIR RYAN, PC, Alexandria, Virginia, for Appellants/Cross-Appellees.

Bernard Joseph DiMuro, DIMUROGINSBERG, P.C., Alexandria, Virginia, for Appellees/Cross-Appellants.

ON BRIEF:

Jonathan R. Mook, DIMUROGINSBERG, P.C., Alexandria, Virginia, for Appellees/Cross-Appellants.

Before GREGORY, Chief Judge, and THACKER and HARRIS, Circuit Judges. Judge Harris wrote the opinion, in which Chief Judge Gregory and Judge Thacker joined.

OPINION

Page 200

PAMELA HARRIS, Circuit Judge:

The parties to this breach of contract dispute are in the business of selling sports equipment for the new sport of " fling golf" or " throw golf." In 2014, PlusOne Sports, LLC, and its owner, Alex Van Alen, learned that Curtis Evans was seeking a patent for a " throw golf stick" -- the throwing apparatus that is the key piece of equipment in this modified version of golf. Van Alen reached out to Evans, and after negotiations, the parties signed a " Term Sheet" roughing out an agreement under which PlusOne would utilize Evans's patent in exchange for royalty payments. But although the Term Sheet provided that the parties would " work in good faith" toward a " binding" licensing agreement, negotiations broke down, and the contemplated final agreement was never executed.

When PlusOne, located in Massachusetts, refused to make the royalty payments outlined in the Term Sheet, Evans sued for breach of contract in federal district court in Virginia, home to Evans and his company, WhipGolf, LLC. The district court granted summary judgment to PlusOne, applying Virginia law and finding that the Term Sheet was not a binding contract. We now affirm that holding. Although the parties dispute whether Virginia or Massachusetts law applies, the Term Sheet is unenforceable under the law of either state as a provisional " agreement to agree." We also find that the district court properly granted summary judgment to Evans on PlusOne's counterclaims against him. Accordingly, we affirm the district court's judgment in all respects.

I

.

A

.

To play " throw golf" or " fling golf," 1 participants use a " stick" similar to a lacrosse stick -- rather than the standard set of golf clubs -- to " fling" a golf ball around a standard golf course; once the ball has advanced to the green, players may use the end of the stick to putt the ball into the hole. Throw golf incorporates many of the rules of traditional golf. But unlike traditional golf, throw golf allows the inexperienced to play, given that little practice is needed to throw a golf ball down a fairway.

Both Evans and Van Alen were early entrants to the field, and each independently conceived of and developed their respective versions of throw golf and throwing sticks. Evans, for his part, began work in Virginia in 2011 on a prototype of his throwing apparatus, and in 2012 filed a provisional application with the United States Patent and Trademark Office (" USPTO" ). A year later, Evans filed a patent application; published in May of 2014, it was that patent application that caught the attention of Van Alen and brought the parties together.

Meanwhile, Van Alen had himself been working in Massachusetts on a throwing device that he called the " FlingStick," used to play a game he termed " FlingGolf." After forming PlusOne in Massachusetts, Van Alen filed a provisional application for the FlingStick in 2013 and a patent application in 2014. PlusOne began selling the

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FlingStick in July of 2014, and to avoid the possibility of a dispute over Evans's earlier patent application, it contacted Evans to discuss a licensing agreement.

Discussions began in August of 2014 and were in full swing by September and October. The parties communicated primarily by phone and email, but also met once in person over a game of throw golf in Virginia, using PlusOne's FlingStick. During these negotiations, PlusOne shared information with Evans regarding the FlingStick, including sample products, projected earnings, and a marketing plan. Unbeknownst to PlusOne, Evans was communicating simultaneously with a mechanical engineer, to whom he provided pictures of the FlingStick, along with product specifications, in an effort to develop a competing throwing apparatus.

On November 2, 2014, after exchanging several drafts, the parties executed the Term Sheet that is the basis for Evans's breach of contract claim. The four-page document lays out certain terms for a non-exclusive licensing agreement, under which PlusOne would utilize Evans's patent to sell the FlingStick, a " Licensed Product," in exchange for the payment of royalties. J.A. 285. Royalties are set at " 7.5% of gross sales" for the years from November 1, 2014 to November 1, 2016 -- an initial period during which PlusOne would be the only licensee -- and range from 5% to 7%, depending on the number of sales, for " each year after Nov. 1, 2016." J.A. 284. The Term Sheet does not define " gross sales" or specify a time period for the contemplated license -- that is, the number of " year[s] after Nov[ember] 1, 2016" during which PlusOne would be required to pay royalties to Evans. Id. But for each year during which the license was in effect, PlusOne would be required to make a minimum royalty payment of $10,000 by January 5.

The Term Sheet also outlines other contemplated terms, including certain covenants and default provisions, restrictions on assignment rights, and clauses covering acceleration of payments, confidentiality, arbitration, and choice of law. Several of those provisions, however, are either rudimentary or altogether lacking in content. The arbitration clause, for example, appears to be a placeholder, stating only: " Arbitration clause, attorneys' fees and costs to party prevailing in event of breach." J.A. 287. Similarly, as to severability, the Term Sheet leaves space for a " standard severability provision." Id.

Critically, the Term Sheet closed with the following: " The undersigned parties agree to work in good faith to record the terms of this Term Sheet in a binding Non-Exclusive License Agreement." Id. And following execution of the Term Sheet, the parties indeed began to negotiate and draft a binding licensing agreement. Those negotiations stalled, however, when the parties could not agree on new terms not previously included in the Term Sheet. Evans prepared a twenty-page draft that added several new provisions and sought to fill in some of the Term Sheet's gaps, providing a definition of " gross sales," specifying a term (twenty years) for the license, and spelling out a detailed arbitration clause. PlusOne objected to many of these terms, including the twenty-year license period (which, it argued, could extend beyond the term of Evans's patent) and the calculation of royalties without an...

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