P.R. Chunk, Inc. v. Martin Marietta Materials, Inc.

170 F. App'x 288
CourtCourt of Appeals for the Fourth Circuit
DecidedMarch 8, 2006
Docket05-1090
StatusUnpublished

This text of 170 F. App'x 288 (P.R. Chunk, Inc. v. Martin Marietta Materials, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
P.R. Chunk, Inc. v. Martin Marietta Materials, Inc., 170 F. App'x 288 (4th Cir. 2006).

Opinion

PER CURIAM:

P.R. Chunk, Inc. and Paul Westmeyer (collectively, “Plaintiffs”) entered into a Technology Transfer Agreement (the “Agreement”) with Martin Marietta Materials, Inc. (“Martin Marietta”) to develop and market patented microwave technology used in the removal of hardened concrete. After a dispute arose concerning the payment of royalties, the parties sued each other for breach of contract and fraud. Plaintiffs recovered nothing at trial and now appeal. We affirm.

I.

In the Agreement, Plaintiffs transferred ownership of domestic patent rights in their technology to Martin Marietta. 1 Martin Marietta agreed to pay Plaintiffs minimum royalties for the first five years of the Agreement. In turn, Plaintiffs warranted that the technology would “remove hardened concrete from metal containers, including concrete trucks, at an average rate of one (1) cubic yard per hour using reasonably optimized microwave generator wattage and ancillary equipment.” J.A. 39. Martin Marietta also paid for an option to acquire Plaintiffs’ international patent rights. The Agreement granted Martin Marietta the right and discretion to file patent applications in foreign countries prior to exercising the option. After paying the first year of minimum royalties, Martin Marietta claimed the technology would not work as Plaintiffs warranted and ceased any further payment of royalties, prompting this litigation.

The parties litigated several issues in the district court, but only a few are germane to this appeal. First, Plaintiffs argue that the district court should have granted them judgment as a matter of law on their claim for minimum royalties. Second, they contend that the district court improperly ruled that Martin Marietta had not exercised the option for international patent rights. Finally, Plaintiffs submit that the district court should not have awarded costs to Martin Marietta.

II.

We first address Plaintiffs’ argument that the district court should have granted their motion for judgment as a matter of law on the issue of minimum royalties. We review de novo the district court’s decision, viewing the evidence in the light most favorable to the nonmoving party. See Babcock v. BellSouth Adver. & Publ’g Corp., 348 F.3d 73, 76 (4th Cir.2003).

*290 Martin Marietta agreed to two alternative royalty structures. Under the first scenario, found in section 3.1 of the Agreement, Martin Marietta would pay Plaintiffs a percentage of gross revenue generated from the sale of units employing the technology after attaining a certain sales volume. The alternative royalty structure provided for “minimum” royalties in the event of insufficient sales. These minimum royalties, covered in section 3.2 of the Agreement, were due annually for the first five years of the Agreement. The parties agree that Martin Marietta never sold any units employing the technology. As a result, Plaintiffs only sought minimum royalties under section 3.2.

In section 12.5 of the Agreement, Plaintiffs expressly represented and warranted that their technology “will remove hardened concrete ... at an average rate of one (1) cubic yard per hour.” J.A. 39. Furthermore, section 3.3 of the Agreement explained that, if the rate of removal Plaintiffs warranted in section 12.5 could not be “maintained,” the previous royalty structures would no longer apply and the parties would be required to meet and renegotiate in good faith a new royalty structure. J.A. 26.

Plaintiffs argue on appeal that the district court should have granted judgment as a matter of law in their favor and awarded minimum royalties. They explain that, as long as Martin Marietta owned the domestic patent rights, it owed minimum royalty payments under section 3.2.

We disagree. As an initial matter, Plaintiffs never moved for judgment as a matter of law on this issue prior to sending the case to the jury. Their failure precludes our review. See Fed.R.Civ.P. 50(a)(2) (“Motions for judgment as a matter of law may be made at any time before submission of the case to the jury.”) (emphasis added); Pittman v. Grayson, 149 F.3d 111, 120 (2d Cir.1998) (“Rule 50(a) requires that, to be timely, the motion for judgment as a matter of law must be made ‘before submission of the case to the jury.’ ”) (quoting rule).

Additionally, Plaintiffs did not object to the jury instructions or the jury verdict form, which clearly prohibited Plaintiffs from recovering any minimum royalties under section 3.2 of the Agreement if the jury found a breach of Plaintiffs’ warranty. We therefore agree with the district court that Plaintiffs cannot raise this argument.

Even if we consider this issue on its merits, the jury found that Plaintiffs breached their warranty under sections 3.3 and 12.5 of the Agreement. There was ample evidence to support such a finding. Plaintiffs’ breach was material and excused Martin Marietta from further performance under the Agreement. See Coleman v. Shirlen, 53 N.C.App. 573, 281 S.E.2d 431, 434 (1981) (“The general rule governing bilateral contracts requires that if either party to the contract commits a material breach of the contract, the other party should be excused from the obligation to perform further.”). 2 Moreover, as Plaintiff Westmeyer admitted at trial, if the warranted rate of removal could not be “maintained” as stated in section 3.3, the previous royalty structures under sections 3.1 (sales-based royalties) and 3.2 (minimum royalties) would no longer apply. J.A. 26, 335. In other words, the jury’s finding of a breach of the warranty precludes any claim to minimum royalties under section 3.2.

Thus, we find no error in the district court’s denial of Plaintiffs’ motion for judgment as a matter of law.

*291 III.

We now turn to Plaintiffs’ argument that the district court should not have granted judgment as a matter of law to Martin Marietta on Plaintiffs’ claim concerning the international patent rights option.

In section 4.1 of the Agreement, Plaintiffs granted Martin Marietta an option to acquire any rights to the patented technology in foreign countries, which the parties generally refer to as “international patent rights.” Martin Marietta agreed to pay additional royalties to Plaintiffs if it exercised the option. The Agreement allowed Martin Marietta to file patent applications in foreign countries before exercising the option.

Plaintiffs contend that Martin Marietta’s “ownership” of certain foreign patents indicated its intention to exercise the option. This argument fails. The Agreement allowed Martin Marietta “sole control and discretion” to file foreign patent applications, and such foreign filings would not be an exercise of the option. For example, the Agreement required Martin Marietta to give Plaintiffs notice of the countries where it had filed applications.

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Related

Coleman v. Shirlen
281 S.E.2d 431 (Court of Appeals of North Carolina, 1981)
Teague v. Bakker
35 F.3d 978 (Fourth Circuit, 1994)
Bly v. McLeod
605 F.2d 134 (Fourth Circuit, 1979)

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170 F. App'x 288, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pr-chunk-inc-v-martin-marietta-materials-inc-ca4-2006.