United States District Court, D. Vermont
OPINION AND ORDER GRANTING DEFENDANT ICEBUG USA, INC.'S MOTION TO COMPEL ARBITRATION, GRANTING DEFENDANT ICEBUG USA, INC.'S MOTION TO DISMISS, AND DENYING AS MOOT DEFENDANT ICEBUG USA, INC.'S MOTION TO STAY (DOC. 7)
CHRISTINA REISS, Chief District Judge.
In this patent infringement lawsuit, Plaintiff Sidney Kastner, who sometimes does business under the name Tracktion Canada, Inc., ("Tracktion") alleges that Defendants Vanbestco Scandanavia, AB, ("Vanbestco") and Icebug USA, Inc., ("Icebug USA") have infringed U.S. Patent Nos. 5, 634, 283 and 6, 915, 595 owned by Plaintiff (the "patents in suit"). Plaintiff further alleges that Vanbestco has wrongfully repudiated a licensing agreement (the "License Agreement") regarding the patents in suit which includes an agreement to arbitrate certain disputes.
Pending before the court is Icebug USA's motions to compel arbitration and dismiss Plaintiff's case, or, in the alternative, to stay the case pending arbitration. (Doc. 7.) Icebug USA contends that the License Agreement granting Vanbestco a license to use the patents in suit requires arbitration of Plaintiff's pending claims. Plaintiff opposes the motion to compel, arguing that the License Agreement does not apply to Vanbestco's subsidiary, Icebug USA, who was not a signatory to that agreement, and that Plaintiff can therefore maintain a patent infringement action against Icebug USA. Plaintiff further contends that neither Vanbestco nor Icebug USA can seek to enforce the License Agreement because Vanbestco repudiated it.
The parties waived oral argument. Plaintiff is represented by Brice C. Simon, Esq. Defendants are represented by Lisa B. Shelkrot, Esq. and Philip Buri, Esq.
I. Factual and Procedural Background.
A. Plaintiff's Complaint.
U.S. Patent No. 5, 634, 283, entitled "Resilient, All Surface Sole, " was issued on June 3, 1997, and U.S. Patent No. 6, 915, 595, entitled "Resilient, All-Surface Soles for Footwear, " was issued on July 12, 2005, as an improvement to U.S. Patent No. 5, 634, 283. According to the Complaint, the patents in suit disclose and claim "footwear having metal studs such that, when the footwear is worn, retract under pressure from the weight of the wearer until the tips of the studs are substantially at the plane of the bottom surface of the footwear." (Doc. 1 at 2, ¶ 8.) The Complaint alleges that the patents in suit remain in full force and effect.
According to the Complaint, Vanbestco is a Swedish corporation that sometimes does business in the United States as Icebug USA. The Complaint alleges that Vanbestco and Icebug USA have infringed and continue to infringe the patents in suit by Defendants'"sale, offering for sale, use and importation... of shoes that incorporate footwear having metal studs and other structures as disclosed and claimed in both of the patents in suit." Id. at 2, ¶ 10. The Complaint further alleges that such infringement is "willful and deliberate because Vanbestco, as a former licensee under the patents in suit, and Icebug, [whose agent] was involved with negotiating the license, [are] well aware of [Plaintiff s] patents and their applicability to the products that Vanbestco and Icebug markets and sells." Id. Plaintiff has served Icebug USA with the Complaint. Plaintiff has not yet served Vanbestco, now known as Icebug, AB.
B. Icebug USA's Pending Motion.
In support of the pending motion, Icebug USA represents that Vanbestco is a Swedish footwear company that designs, develops, and distributes insoles and shoes with traction for icy and slippery conditions, that Vanbestco changed its name to Icebug, AB, in 2009, and that Icebug USA is its United States subsidiary.
Effective January 1, 2007, Tracktion (the "Licensor") and Vanbestco (the "Licensee") entered into a ten-year License Agreement that allows the Licensee to manufacture, import, use, or sell any "Licensed Products" that utilize the patents in suit. In exchange, the Licensor receives royalties for products manufactured, imported, used, or sold that "in the absence of th[e] License Agreement would infringe" the patents listed in that Agreement. (Doc. 7-2 at 2, Article I.) While the Agreement "is assignable by [the] Licensor without the prior written consent" of the Licensee, the Licensee may assign its rights and obligations only by written notice, "provided that no objection is made by [the] Licensor." (Doc. 7-2 at 6, Article IX.) The License Agreement states that Tracktion is "a corporation formed under the laws of Canada and having a principal place of business" in Quebec and that Vanbestco has offices in Sweden. (Doc. 7-2 at 1.)
Both the Licensor and Licensee reserve the right to unilaterally terminate the Agreement "at any time for any reason without penalty... upon two (2) years prior written notice to the other party, in which case th[e] License Agreement shall terminate at the end of the quarter two years from the date on which such notice is given." (Doc. 7-2 at 2-3, Article III.) In the event of a dispute, the License Agreement provides as follows:
In case of a disagreement Licensor and Licensee will use their best efforts to settle differences of opinion regarding this Agreement and the interpretation and validity thereof. However, any dispute arising out of or in connection with the present Final Agreement shall be finally settled in accordance with rules of conciliation and arbitration of the International [C]hamber of Commerce, by one or more Arbitrators [designated] in accordance with said rules. The arbitration proceedings shall be governed by the laws of Canada and shall take place in Montreal, Canada.
(Doc. 7-2 at 6-7, Article X.) Icebug USA represents that the License Agreement was "proposed, written and drafted" by ...