Alexx, Inc. v. Charm Zone, Inc., No. 2011–1445 (Fed. Cir. May 14, 2012) (Chief Judge Rader, and Judges Dyk and Prost) (per curiam)
This case reminds me of a scene from the movie Harvey. Jimmy Stewart plays Elwood P. Dowd, and it’s one line of his in particular that seems appropriate:
You know, years ago, my mother used to say to me, she’d say, “In this world, Elwood, you must be —” she always called me Elwood. “In this world, Elwood, you must be oh, so smart or oh, so pleasant.” Well, for years I was smart. I recommend pleasant. You may quote me.
Charm Zone should have listened.
Alexx sued Charm Zone for patent infringement, copyright infringement, and a few other claims, because of the key locators Charm Zone sold. As part of settlement negotiations, Alexx turned down a $100,000 cash payment and opted instead to get Charm Zone’s remaining inventory. Charm Zone agreed to get out of the key locator market within seven days.
Charm Zone then sold its entire remaining inventory within those seven days. When Alexx complained to the court that Charm Zone had breached the agreement, Charm Zone argued that it had seven days in the market, so it used them to sell its inventory.
The district judge wasn’t amused, and found Charm Zone in breach. The Federal Circuit didn’t much care for Charm Zone’s clever argument, either. Seven days was intended to give Charm Zone time to wind things down, not liquidate.
In the end, it seems that Elwood was right. Charm Zone would have been better off being pleasant.
Photo credit: vtdainfo