Summary
This New York Appellate Division decision reviews a trial court's rulings on cross-motions for summary judgment in a commercial dispute over a technology license agreement between DivX and Harman. The court affirmed the denial of summary judgment regarding the scope of licensed products and a separate release agreement carveout, finding genuine issues of material fact. However, it reversed the trial court's invalidation of a liquidated damages provision, holding that under governing California law, the provision was presumptively valid and its enforceability should be determined by a factfinder.
Topics
Practice areas
Questions Presented
- Whether the scope of the amended license agreement extends to products sold under a Licensee Brand beyond the Hyundai‑only definition.
- Whether the carve‑out in the separate release agreement preserves DivX's claims relating to the technology license agreement.
- Whether the liquidated damages provision in the license agreement is enforceable under California law.
Holdings
- The lower court properly denied Harman's summary judgment on the scope of the license agreement because the agreement is susceptible to multiple interpretations and factual issues remain.
- The lower court properly denied Harman's summary judgment on the release agreement because the carve‑out expressly preserves any dispute relating to technology licensing agreements.
- The liquidated damages provision is presumptively valid under California law; the party seeking to invalidate it bears the burden of showing unreasonableness, which Harman failed to meet.
Key quotations
“California's liquidated damages law reflects the statutory policy which favors the validity of such agreements. Under California law, a liquidated damages provision is presumptively valid unless "the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made" (Cal. Civ. Code § 1671(b); see also Weber, 52 Cal. App. 4th at 656).”
Factual background
DivX and Harman entered an amended license agreement, governed by California law, under which Harman paid royalties and was restricted to certified products. Disputes arose over the scope of the license (whether it covered non‑Hyundai products), a separate release agreement carve‑out, and the enforceability of a liquidated damages provision.
Procedural history
The Supreme Court, New York County denied Harman's summary judgment on the scope of the license agreement and the release agreement, granted partial summary judgment to DivX on the release issue, denied DivX's summary judgment on the liquidated damages provision, and granted summary judgment to Harman on that provision. The Appellate Division affirmed the order except reversing the portion that invalidated the liquidated damages provision.