Prod. Res. Grp., L.L.C. v. Martin Prof'l

• Decision Date: 27 September 2012
• Docket Number: Case No. 08–CV–6333 (KMK).
• Citation: 907 F.Supp.2d 401
• Parties: PRODUCTION RESOURCE GROUP, L.L.C., Plaintiff, v. MARTIN PROFESSIONAL, A/S and Martin Professional, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

907 F.Supp.2d 401

PRODUCTION RESOURCE GROUP, L.L.C., Plaintiff,

v.MARTIN PROFESSIONAL, A/S and Martin Professional, Inc., Defendants.

Case No. 08–CV–6333 (KMK).

United States District Court, S.D. New York.

Sept. 27, 2012.

James David Veltrop, Esq., Jeremy Chad Lowe, Esq., Axinn, Veltrop & Harkrider LLP, Hartford, CT, for Plaintiff.

James Patrick Doyle, Esq., Axinn, Veltrop & Harkrider LLP, New York, NY, for Plaintiff.

Douglas R. Nemec, Esq., Marti Johnson, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendants.

OPINION AND ORDER

KENNETH M. KARAS, District Judge.

Plaintiff brings this case alleging patent infringement. Defendants move to dismiss on the grounds that the Court lacks jurisdiction due to a binding forum selection clause. For the reasons given herein, Defendants' Motion to Dismiss is granted.

I. Background

A. Factual Background

1. The Parties

Plaintiff Production Resource Group, L.L.C. (“Plaintiff” or “PRG”) is a Delaware limited liability company that designs, manufactures, and sells “sophisticated lighting fixtures, controllers and associated products for use in entertainment and display environments.” (Compl. & Jury Demand (“Compl.”) ¶ 1.) Defendants Martin Professional, A/S and its wholly-owned subsidiary, Martin Professional, Inc. (collectively “Defendants” or “Martin”), are corporations from Denmark and Florida, respectively. ( Id. ¶¶ 2–3.)

2. The Contractual Relationship of the Parties

PRG and Martin entered into two agreements (collectively, the “Agreements”) effective on or about November 1, 2003—a License Agreement and an Agreement for the Provision of Consultancy Services (“Consultancy Agreement”). (Mem. of Law in Supp. of Defs.' Mot. to Dismiss for Lack of Subject Matter Jurisdiction (“Defs.' Mem.”) 2; Pl.'s Mem. of Law in Opp'n to Defs.' Mot. to Dismiss (“Pl.'s Mem.”) 2; Decl. of Douglas R. Nemec dated July 22, 2009 (“Nemec Decl.”) Exs. A & B.) Both Agreements contain choice of law, choice of forum, and dispute resolution provisions. (Nemec Decl. Ex. A (“License Agreement”) ¶¶ 24–25, Ex. B (“Consultancy Agreement”) §§ 13.8–13.9.) The Agreements established that: (1) the Agreements “together constitute the entire agreement between the Parties” (License Agreement ¶ 21), and (2) “[t]o the extent that any clause in [the Consultancy Agreement] is in conflict with any clause in the concurrently-executed License Agreement, [the Consultancy Agreement] will control,” (Consultancy Agreement § 13.7).

On November 9, 2005, Martin notified Plaintiff that it believed that, pursuant to the Agreements, as of November 1, 2005, Martin was no longer obligated to pay a monthly fee outlined in the Consultancy Agreement.¹ (Decl. of Jeremy C. Lowe in Supp. of Pl.'s Mem. of Law in Opp'n to Defs.' Mot. to Dismiss (“Lowe Decl.”) Ex. D.) Plaintiff responded on November 17, 2005, and stated that if Martin ceased making monthly payments, it would be entitled to a royalty payment under the License Agreement, and that failure to make royalty payments would “constitute[ ] a material breach of the License Agreement.” ² ( Id. Ex. E.) On December 19, 2005, Plaintiff “exercise[d] its right to cancel the Consultancy Agreement between PRG and Martin” on the basis of Martin's failure to pay a monthly fee for November 2005. ( Id. Ex. F.) Plaintiff again noted that it believed it was then entitled to royalty payments under the License Agreement, and that Martin should “consider this a notice of deficiency in those royalty payments.” ( Id.) Finally, Plaintiff noted that “[p]ursuant to section 10(d) of the License Agreement, Martin ha[d] 30 days from the date of this letter to cure those royalty deficiencies, including a full accounting of same from November 1, 2003, before PRG has the right to cancel the License Agreement.” ( Id.) On January 6, 2006, Martin notified Plaintiff that its position was that “the Consultancy Agreement has not been terminated,” and that “no [r]oyalties [were] yet due.” ( Id. Ex. I.) On February 16, 2006, Plaintiff “terminate[d] the License Agreement effective immediately” for the reasons outlined on December 19, 2005. ( Id. Ex. J.) On April 26, 2006, Martin notified Plaintiff “that Martin will cease to make the monthly payments under the Consultancy Agreement effective from 1 March 2006,” and that, pursuant to paragraph 3(b) of the License Agreement, any payments due from Martin to Plaintiff would be governed by the License Agreement. ( Id. Ex. K.) According to Martin, “[f]or the two years following this, the [P]arties maintained a sporadic but ongoing discussion as to whether and to what extent Martin owed royalties to PRG.” (Defs.' Mem. 3.) On July 15, 2008, Plaintiff reasserted its position that it terminated the License Agreement on February 16, 2006, and asserted that the License Agreement was “also terminated as of the date of this letter” due to Martin's alleged failure to pay royalties. (Lowe Decl. Ex. L.)

3. The Forum Selection, Dispute Resolution, and Other Relevant Provisions

The heart of this Motion is the extent to which the Agreements might require Plaintiff to bring this action in a court in England or Wales. In this regard, the most pertinent contractual provisions from the License Agreement not quoted above are:

24. Choice of Laws

This Agreement shall be governed by and construed and interpreted in accordance with the laws of England and Wales and the Parties hereby submit to the exclusive jurisdiction of the Courts of England and Wales.

25. Dispute Resolution

In the event of a dispute arising out of or relating to this Agreement, including any question regarding its existence, validity or termination, the Parties shall first seek settlement of that dispute in accordance with the LCIA Mediation procedure ... or pursuant to some method as they may mutually agree. If the dispute is not settled by mediation ... the dispute shall be referred to and finally resolved in accordance with section 24.

(License Agreement ¶¶ 24–25.) Beyond these provisions, Plaintiff notes that the License Agreement also requires that the “scope” of any claims of any of the “Licensed Patents” shall be determined “under the laws of the competent jurisdiction that issued the Licensed Patent.” ( Id. ¶ 1(k).)

The Consultancy Agreement contains the following corresponding provisions regarding dispute resolution, choice of law, and forum selection:

13.8 This Agreement is governed by and shall be construed in accordance with the law of England and Wales. The parties agree to submit to the exclusive jurisdiction of the Courts of England and Wales save as to enforcement where their jurisdiction shall be non-exclusive.

13.9 In the event of a dispute arising out of or relating to this Agreement, including any question regarding its existence, validity or termination, the parties shall first seek settlement of that dispute by mediation in accordance with the LCIA Mediation Procedure, ... or pursuant to such other method as they may mutually agree. If the dispute is not settled by mediation ... the dispute shall be referred to and finally resolved in accordance with clause 13.8.

(Consultancy Agreement §§ 13.8–13.9.) ³ The Consultancy Agreement also contains a provision that for “the term of the Licensing Agreement,” PRG agreed “not to sue Martin or any of its Associated Companies ... for infringement or misappropriation of the Technology in respect of Licensed Products (as defined in the License Agreement) anywhere in the world.” ( Id. § 2.5.) Martin made a similar commitment, promising not to sue PRG “for infringement or misappropriation of any patent or utility model rights of Martin or any of its Associated Companies in respect of any products manufactured by [PRG]....” ( Id.) Under this provision, the covenants not to bring these infringement actions terminated automatically upon termination of the License Agreement. ( Id.)

B. Procedural Background

Plaintiff brought this action on July 15, 2008, alleging infringement of twenty separate patents that it alleges it owns. (Compl.¶¶ 9, 14, 19, 24, 29, 34, 39, 44, 49, 54, 59, 64, 69, 74, 79, 84, 89, 94, 99, 104.) For each count, Plaintiff alleges that Martinhas made, used, imported, offered for sale, or sold products covered by these patents within the United States. ( Id. ¶¶ 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75, 80, 85, 90, 95, 100, 105.) The Complaint does not allege a start date from which Plaintiff alleges patent infringement, but Plaintiff seeks remedies that derive solely from federal patent law. ( Id. ¶¶ A–I.) ⁴ Moreover, in its motion papers, Plaintiff clarified that it is only seeking damages for “Martin's post-termination infringement.” (Pl.'s Mem. 9.) Martin answered on November 6, 2008. (Dkt. No. 13.) The Court granted the Parties' joint motion for a stipulated protective order regarding procedures for handling confidential information on November 18, 2009. (Dkt. No. 22.) The Court held oral argument on March 26, 2012.

II. Discussion

A. Standard of Review

1. Procedural Mechanism of Evaluating a Forum Selection Clause

Martin has styled its motion as one challenging the Court's jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1). As Martin has answered, Martin's Motion is made pursuant to Fed.R.Civ.P. 12(c) (“Rule 12(c)”). “Where a Rule 12(c) motion asserts that a court lacks subject matter jurisdiction, the motion is governed by the same standard that applies to a Rule 12(b)(1) motion.” Xu v. City of New York, No. 08–CV–11339, 2010 WL 3060815, at *2 n. 2 (S.D.N.Y. Aug. 3, 2010); see also S.E.C. v. Rorech, 673 F.Supp.2d 217, 220 (S.D.N.Y.2009) (“The standards to be applied to a motion for judgment on the pleadings pursuant to Rule 12(c) are the same as those applied to a motion to dismiss pursuant to Rule 12(b).”).

Neither the Supreme Court nor the Second Circuit has established a single procedural mechanism for resolving enforcement of a forum selection clause. See Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 822 (2d...