Headset manufacturer GN Netcom accuses electronics reseller Online King of infringing its JABRA and VXI trademarks. GN’s factual allegations are similar to those of its September lawsuit against TelQuest International; here, GN alleges that Online King buys actual GN products manufactured and sold to the international market that were not intended for sale in the United States and that are materially different than GN products intended to be sold in this country. As a general rule, the resale of genuine trademarked goods is not infringement, under an “exhaustion” theory; this does not apply, however, when the accused party is selling goods that materially differ from those sold by the trademark owner. The importation of “gray-market” goods, foreign manufactured goods that bear a valid U.S. trademark but that are imported into the country without the trademark owner’s consent, fall within this exception; it is not immediately clear whether goods actually manufactured in America, and GN’s complaint does not make clear where its goods intended for foreign sale are actually made.
Asigra hired Atlantis to develop and provide software to Asigra, a project that was initially expected to take about a year. After agreeing to the terms for this work, Asigra sought to accelerate the completion of the project. Asigra indicated that it could only do so by incorporating code from Atlantis’ own appliance product. The parties orally agreed to Asigra receiving a limited right to use this code, with the parties disputing the consideration due Atlantis for this right. After completion of the project, when a dispute arose over payment, Atlantis “unilaterally revoked the nonexclusive license” and sued Asigra for breach of contract, trade secret misappropriation, and copyright infringement, among other things. Asigra moved for judgment on the pleadings on all counts. Judge Hennessy granted Asigra’s motion with respect to the copyright claims, while denying it with respect to the other claims. He determined that Atlantis had granted a nonexclusive license to the code by the parties’ oral agreement, which became irrevocable upon the payment of consideration by Asigra. The reasoning is that, upon payment of consideration (regardless of whether it was complete consideration under the agreement) a contract has been formed, and the remedy for the aggrieved party is through contract law, not copyright.
Also of interest, Judge Hennessy determined that Asigra waived its argument that the allegedly misappropriated trade secrets were not adequately identified by raising it only in a footnote; First Circuit case law holds that arguments raised perfunctorily or solely by footnote are waived. He also denied judgment on the pleadings with respect to Asigra’s Ch. 93A claim, finding that one party’s breach of contract for the purpose of gaining leverage over the non-breaching party has been deemed an unfair business practice in Massachusetts.