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Britevision Media, LLC. v. Java Jacket

May 10, 2005


The opinion of the court was delivered by: Joseph C. Spero United States Magistrate Judge



On Friday, April 22, 2005, Plaintiff's Motion for Preliminary Injunction (the "Motion") came on for hearing. For the reasons stated below, the Motion is DENIED.*fn1


A. Facts

On January 1, 2001, BriteVision Media, LLC ("BriteVision") and Java Jacket, Inc. ("Java Jacket") entered into a License Agreement that authorized BriteVision to market an insulating sleeve for hot beverages using technology developed by Java Jacket.*fn2 Declaration of Brian Morrison in Support of Motion for Preliminary Injunction ("Morrison Decl."), Ex. A (License Agreement). The License Agreement established royalty rates for specified time periods during the term of the Agreement and provided for an initial term of five years, with automatic renewal for one-year periods thereafter. Id., Sections 3 & 4. The License Agreement could be terminated under a variety of circumstances, including by mutual agreement of the parties. Id., Section 13.

The effect of termination was set forth in section 14, which provides as follows:

14. Effect of Termination

Upon the expiration or termination of this Agreement, the license set forth herein shall automatically terminate and Licensee shall immediately cease, and cause Manufacturer to immediately cease, to manufacture, offer to sell, sell and distribute Licensed Products. Notwithstanding the foregoing, if the term of this Agreement terminates for a reason other than Licensee's breach or Licensee's violation of Section 13.2(b), Licensee may continue to promote, distribute and sell any Licensed Product in their normal and reasonable inventory at the time of the termination or expiration of the term; provided, Licensee shall continue to pay Licensor royalties in accordance with this Agreement.

Licensee acknowledges and admits that there would be no adequate remedy at law for its failure to comply with any of the material terms and conditions hereof, including, without limitation, its failure to cease the manufacture and sale of Licensed Products upon termination of this Agreement, and Licensee agrees that, in the event of any such failure, Licensor shall be entitled to equitable relief by way of temporary restraining order, temporary injunction and permanent injunction and such other and further relief as any Court with jurisdiction may deem proper.

Id., Section 14.

Finally, the License Agreement contains the following arbitration clause:

19. Disputes

In the event of a controversy between the parties or claim arising out of or relating to this Agreement, including, without limitation, the making, performance or interpretation of this Agreement, the parties agree to participate in at least four hours of mediation in accordance with the Mediation Procedures of the United States Arbitration and Mediation of Oregon and to equally split the costs of such mediation. If such controversy or claim is not settled in mediation within ten (10) days after mediation is commenced, it shall be finally settled by arbitration in Portland, Oregon, in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association before a single arbitrator. The non-prevailing party shall pay all arbitration costs of the other party, including reasonable attorneys' fees and costs. The parties agree that all facts and other information relating to any arbitration arising under this Agreement shall be kept confidential to the fullest extent permitted by law.

Id., Section 19.

In April and May 2004, BriteVision and Java Jacket discussed terminating the License Agreement. See Morrison Decl., ¶ 3 (stating that in April and May 2004, BriteVision's president, Brian Morrison and Java Jacket's president, Jay Sorensen, discussed the termination of the License Agreement and the "possibility of forming a new agreement"); Declaration of Jay Sorensen in Opposition to Motion for Preliminary Injunction ("Sorensen Decl."), ¶ 3 (stating that in April 2004, Morrison informed Sorensen that BriteVision "could no longer survive under the 8 percent/$16,000 minimum royalty provision," and that in May 2004, Morrison and Sorensen agreed to terminate the License Agreement effective May 31, 2004, and to "work on renegotiating the compensation provisions"). On May 4, 2004, Morrison sent Sorensen a letter confirming the termination of the License Agreement, stating in part as follows:

This will confirm that, per our conversation of yesterday, we have agreed that the License Agreement between Java Jacket, Inc. ("Java Jacket") and BriteVision Media LLC ("BVM") dated as of January 1, 2001, has been terminated, effective as of June 1, 2004. Accordingly, BVM will be paying royalties to Java Jacket ...

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