United States District Court, C.D. California
ORDER GRANTING PLAINTIFFS' MOTION FOR PRELIMINARY
INJUNCTION, IN PART [DKT. 54, 61]
D. PREGERSON United States District Judge.
before the court is Plaintiffs' Motion for Preliminary
Injunction. Having considered the submissions of the parties
and heard oral argument, the court grants the motion in part,
denies the motion in part, and adopts the following Order.
James Klein (“Klein”) is the named inventor on
several patents for building materials. (Complaint ¶ 9.)
Klein assigned some of those patents to a company he helped
form, Defendant Blazeframe Industries, Ltd.
(“Blazeframe”). (Id. ¶ 10.) Klein,
Blazeframe, and Plaintiffs California Expanded M Products
Company (“CEMCO”) and ClarkWestern Dietrich
Building Systems LLC (“Clark”) litigated several
questions regarding the ownership, licensing, and alleged
infringement of the patents in a prior case before this
court. (Compl. ¶ 11.) See No. CV
12-10791-DDP(MRWx) (“the prior case”).
parties settled all claims in the prior case. (Compl. ¶
12.) The transcript of a settlement conference constitutes
the settlement agreement. Plaintiffs allege that the settlement
agreement required Blazeframe to assign the patents to CEMCO
in consideration for an up-front payment. (Id.
¶ 16.) Blazeframe retained a royalty-free license to
“commercialize the Patents in a restricted
territory” spanning six states.” (Id.
¶¶ 16-17.) CEMCO also agreed to grant a license to
Clark in exchange for royalty payments, a portion of which
would be paid to Blazeframe. (Id.) The settlement
transcript includes the following colloquy:
[CEMCO]: CEMCO shall grant Blazeframe the right to continue
to sell under the Blazeframe patents in the territory of
Washington, Alaska, Idaho, Montana and Wyoming. And that
license shall be royalty free for the remaining life of the
patents. . . .
[Clark]: The license to [Clark] is an exclusive license as to
the Blazeframe patents but for the six states to Klein and
Blazeframe; is that correct?
[CEMCO]: Correct. . . .
[Clark]: . . . And the limitations on MR. Klein -or on
Blazeframe to the - six state region is that Blazeframe will
only make no sales that will basically cross outside that
six-state region. It will all - the sales and the delivery of
the products will all be within that six-state region; is
[Blazeframe]: That's not my understanding. My
understanding is that that's defined as it is in the
current licensing agreement - the same agreements as exist
now - same agreements as exist now - [Clark]: Well . . . But
- but Klein - Blazeframe has some rights . . . to sell
outside of the six-state region right now.
[CEMCO]: [I]f you'll recall, Mr. Klein specifically
wanted to sell to dealers outside of this area. And we
specifically said no to that and he came back and said
that's okay. So he's aware of that. That was put on
the table, and we didn't accept it and then [Blazeframe]
agreed that it was off the table. So he had no dealers since
those dealers are outside of this area; the sales are within
the - these - this geographic region. That's his
[Blazeframe]: See . . . . That's my understanding too
that all sales have to be within the region.
[Clark]: Okay. How did I say something different?
[Blazeframe]: I don't know. Maybe I wasn't - I -
[Clark]: The sales are all with - confined within that
six-state region. There can't be any sales by ...