Navajo Air, LLC v. Crye Precision, LLC

318 F. Supp. 3d 640
CourtDistrict Court, S.D. Illinois
DecidedJuly 9, 2018
DocketNo. 16-cv-9873 (CM)
StatusPublished
Cited by3 cases

This text of 318 F. Supp. 3d 640 (Navajo Air, LLC v. Crye Precision, LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Navajo Air, LLC v. Crye Precision, LLC, 318 F. Supp. 3d 640 (S.D. Ill. 2018).

Opinion

McMahon, Chief Judge

Plaintiffs Navajo Air, LLC ("Navajo") and Santee Print Works, ("Santee") (collectively, "Plaintiffs") brought this suit against Defendants Crye Precision, LLC and Lineweight, LLC (collectively "Crye" or "Defendants") under the (i) trademark laws of the United States, Lanham Act, 15 U.S.C. § 1051 et seq. , and the (ii) patent laws of the United States, 35 U.S.C. § 1 et seq. ; 28 U.S.C. § 1338(b) with respect to unfair competition; and (iv) under the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq.

Before this court is Plaintiffs' motion for summary judgment and Defendants' cross-motion for summary judgment on Counts Three, breach of contract and Count Four, tortious interference, pursuant to Fed. R. Civ. P. 56. (Dkt. No. 54.); (Dkt. No 61.)

For the reasons discussed below, Plaintiffs' motion is GRANTED and Defendants' cross-motion is DENIED.

Background1

Parties and Background Facts; Patents and Relevant Licensing Agreements

Defendant Crye, the licensor in this dispute, is a limited liability corporation and *643creator of a camouflage pattern known as MultiCam. (Pls.' 56.1 ¶¶ 6-10.) MultiCam is subject to at least one United States utility patent, Utility Patent No. D 592,861, which is owned by Defendant Lineweight, an entity related to Crye. (Defs.' 56.1 ¶¶ 67-68; Thompson Decl. ¶ 7.) Defendants will be referred to collectively as "Crye".

Prior to 2014, the Government required Army Combat Uniforms ("ACU") to be printed in the MultiCam pattern. (Pls.' 56.1 ¶ 9.) Defendant licensed textile printers to print and sell fabric in MultiCam for orders placed on behalf of the United States Government ("USG"). Defendants also licensed MultiCam for commercial uses. (Thompson Decl. ¶ 11.)

Plaintiff Navajo is a textile converter. It sells fabric to contractors ("Prime Contractors") who make ACU's for the Government ("USG"). (Chornyei Decl. ¶ 2.)

Plaintiff Santee, the licensee, is a commissioned fabric printer and finisher. (Pls.' 56.1 ¶¶ 4-5.) It was Navajo's source for the fabric at issue in this case. From 2012 until 2016, Santee was licensed to use Crye's patented MultiCam pattern, pursuant to two successive licenses. (Pls.' 56.1 ¶¶ 11-12, 35.)

Navajo sent its fabric to Santee to be printed with a camouflage pattern; the fabric was then returned to Navajo to be sold to the uniform manufacturers. Navajo used Santee as its exclusive fabric printer. (Chornyei Decl. ¶¶ 4-5.) While not itself a Crye licensee, Navajo plainly benefitted from that license; indeed Navajo alleges that Santee entered into the agreement at the behest of its customer, Navajo. (Chornyei Decl. ¶ 10.)

The first of the two licensing agreements between Santee and Crye was executed in 2012.2 (Chornyei Decl. ¶ 12.) Per the 2012 License, Santee paid royalties to Defendant for use of the MultiCam design. (Pls.' 56.1 ¶ 12.) Although it was not a party to the licensing agreements, Navajo alleges that all payments due to Crye under the licenses were actually paid by Navajo, in that Navajo reimbursed Santee for all royalties paid to Crye. (Chornyei Decl. ¶ 11.)

Crye and Santee entered into a second two year licensing agreement on October 27, 2014, after the 2012 license expired. (Chornyei Decl. ¶ 19.) The new agreement (hereinafter, "the 2014 License") also provided for the payment of royalties to Defendants, and Navajo again reimbursed Santee for payments that were remitted to Crye. (Chornyei Supp. Decl. ¶ 10.) The 2014 Agreement expired on October 28, 2016. (Pls.' 56.1 ¶ 39; Thompson Decl. ¶ 30.)

The 2014 license includes two covenants that are of potential relevance to this case. Section 6.3 of the 2014 License Agreement provides:

Upon termination of this Agreement for any reason, any and all rights acquired by Licensee relating to the practice of the IP shall terminate and cease absolutely, and Licensee shall immediately cease all sales of the Products. In addition, within thirty (30) days after the termination of this Agreement, Licensee shall remit to Crye any unpaid and outstanding License Fees and submit a written statement sworn by an officer of Licensee attesting that the obligations set forth in this Section 6.3 have been met. (Thompson Decl. ¶ 25, Ex. B § 6.3.)

Section 7 of the 2014 License Agreement provides:

*644Restriction on Similar Products. Except for the Products for which Crye shall be entitled to receive Licensing Fees, Licensee agrees that it shall not, at any time during the term of this Agreement or at any time thereafter, make or provide, or assist or encourage others to make, products which are confusingly similar in design or appearance (i.e., color palette, arrangement or placement of elements) to, or which constitute derivative works of, any of the IP. (Thompson Decl. ¶ 25, Ex. B § 7.)

Schedule B attached to the 2014 License lists the "Products" that are covered by the license, and which are referred to in the two clauses quoted above. One is Multi-Cam; another is a second camouflage pattern, Scorpion W2, better known as "OCP". (Thompson Decl. Ex. B, Schedule B.). Santee agreed to license OCP as a product because Crye represented that it owned intellectual property rights in OCP. (Sheehan Decl. ¶ 4.)

OCP is also listed on Schedule E, which identifies the "Licensing Fees" for particular products. (Thompson Decl. Ex. B, Schedule E.) OCP is only identified in the section headed "Government Sales," and the licensing fee is specifically identified as a "Government Sale Licensing Fee."

However, as it turns out, Crye does not own OCP - the USG does, at least insofar as the United States Patent and Trademark Office and the United States Army are concerned. (Clark Decl. Ex. 2, Ex.3, Ex.4, Ex.5.)

In December 2014, the Government (in the person of the Secretary of the Army) applied for two patents - one for the camouflage OCP, and one for uniforms made from OCP. Those two patents - Numbers 9,062,938 B1 and 9,074,849 B1 - issued on June 23, 2015 and July 7, 2015, respectively. (Clark Decl. ¶¶ 2-3, Ex.1, Ex.2.) (Pls.' 56.1 ¶ 15.) The listed inventors designated the United States of America, as represented by the Secretary of the Army as a sole assignee. (Clark Decl. Ex.1, Ex.2.)

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318 F. Supp. 3d 640, Counsel Stack Legal Research, https://law.counselstack.com/opinion/navajo-air-llc-v-crye-precision-llc-ilsd-2018.