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Prima Tek II, L.L.C. v. Klerk's Plastic Products Manufacturing, Inc.

Licensee did not materially breach royalty agreement authorizing manufacture and sale of specified items by making minor sales outside authorized territories or by manufacturing nonconforming items by accident; further, licensor whose sole business consisted of collecting royalties from sales made by others failed to demonstrate damages from alleged breach where licensee paid royalties and there was no evidence that royalties would have been higher if sales had been licensed to different party.

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ARGUED JANUARY 8, 2008

Before FLAUM, RIPPLE, and MANION, Circuit Judges.

This case involves a licensing dispute between two companies that operate in the pot cover business. Prima Tek II (“PTII”), in essence, gave Klerk’s Plastic (“Klerks”) permission to use its technology to create superior pot covers in exchange for a royalty fee on each sale. The agreement between the parties delineated the type of product that Klerks was to sell, and it limited Klerks’s ability to sell to particular entities in specified regions. PTII claims that Klerks breached this agreement, and, in addition to damages, seeks to have Klerks held in contempt. The district court held that there were no material breaches of the licensing agreements, and that PTII failed to prove damages. We affirm.

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