Wildhawk Investments, LLC v. Brava I.P., LLC, No. 21-2496 (8th Cir. 2022)
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Boor and Edson owned Brava, which had intellectual property and technical knowledge related to composite roofing. Wildhawk inquired about purchasing Brava. Boor proposed “an exclusive license for manufacturing current roofing products” with “a right of first refusal on all new product [d]evelopments.” The parties executed asset purchase and license agreements. Wildhawk paid $4 million and obtained an automatic license to “any Improvements” to the technology, whether patentable or not. Before executing the agreement, the parties removed a “New Product” section as required by Wildhawk’s lender but entered into an oral agreement for a right of first refusal. Wildhawk retained Boor and Edson as paid consultants, with non-compete agreements.
Boor notified Wildhawk: “As per our handshake agreement” we offer you first right of refusal “on the below products.” The parties entered into a confidentiality and nondisclosure agreement regarding “possible R&D ‘new or enhanced product’ agreements.” They negotiated but failed to reach an agreement. Boor and Edson formed Paragon while Boor was still employed by Wildhawk. Paragon began producing the new products.
Wildhawk sued. The district court granted Wildhawk a preliminary injunction, prohibiting Paragon from manufacturing or selling composite roofing. The Eighth Circuit vacated. Wildhawk had a fair chance of proving the defendants violated the agreement but the district court erred in rejecting an equitable estoppel defense. Wildhawk waited until Paragon had been producing the products for 10 months before making its claim, failing to show either reasonable diligence or harm that cannot be compensated by damages.
Court Description: [Erickson, Author, with Smith, Chief Judge, and Wollman, Circuit Judge] Civil case - Contracts. The district court erred in granting plaintiff a preliminary injunction barring defendants from manufacturing or selling composite roofing products; the evidence from the preliminary injunction showed defendants likely breached the license agreement by manufacturing roofing products using the technical knowledge exclusively licensed to plaintiff, and the court did not err in concluding plaintiffs had a fair chance of proving defendants violated the terms of the license agreement; that said, however, plaintiff's conduct after executing the license agreement leads the court to conclude that plaintiff is unlikely to succeed on the merits of its breach of contract claim; uncontroverted evidence establishes every element of the defense of equitable estoppel, and the district court erred in rejecting the defense and in finding plaintiff had a likelihood of success on its breach of contract claim; plaintiff failed to show either reasonable diligence or harm that cannot be compensated by money damages, and it did not establish the irreparable harm required under the Dataphase test; the preliminary injunction is vacated, and the matter is remanded for further proceedings. [ February 22, 2022 ]
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