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Jack L. Frolow v. Wilson Sporting Goods Co

December 13, 2010


The opinion of the court was delivered by: Wolfson, United States District Judge:



Presently before the Court is a Second Motion for Summary Judgment Regarding "Licensed Articles" by Defendant Wilson Sporting Goods Co. ("Defendant" or "Wilson") as well as a "Cross-Motion" by Plaintiff Jack L. Frolow ("Plaintiff" or "Frolow")*fn1 . Plaintiff is an inventor who holds numerous patents involving tennis racquets including U.S. Patent No. 4,690,405 (the "405 Patent") and U.S. Reissue Patent No. RE 33,372 (the "372 Patent"). The instant motions arise out of the procedures for an audit of royalties paid by Defendant to Plaintiff, the holder of the 372 Patent, during the period between 2001 through 2004. For the reasons discussed below, Plaintiff's motion is denied and Defendant's motion is granted.


This case has a long and tortured history spanning more than five years and three lengthy opinions issued by two District Judges and one Magistrate Judge. Although this Court has recounted the facts of this case in each of its previous opinions, and is incorporating those facts herein, a brief repetition of the relevant facts as well as a recitation of recently developed facts is necessary to the Court's determination of the instant motions.

In March 1989, Frolow and Wilson entered into a License Agreement ("Agreement") with Plaintiff granting Defendant the exclusive right and license worldwide to use, manufacture, sell or otherwise dispose of tennis racquets covered by the 405 and 372 Patents. In exchange, Wilson agreed to pay Frolow royalties based on five percent of Net Sales of the "Licensed Articles" sold in the United States, and two percent of Net Sales of "Licensed Articles" sold outside of the United States. "Licensed Articles" are defined in the Agreement as: "tennis racquets that are covered by one or more unexpired or otherwise valid claims contained in the Licensed Patents and tennis racquets which are based on use of Frolow's know-how."

On October 3, 2005, Plaintiff filed a Complaint in this Court alleging claims for breach of contract and patent infringement arising out of the License Agreement. On November 23, 2005, Wilson filed a Motion to Compel Arbitration with respect to Count I and to dismiss the remainder of Plaintiff's Complaint. On April 5, 2006, the Honorable Stanley R. Chesler issued an Opinion and Order providing that once the issue of which racquets sold by Wilson were subject to the License Agreement was resolved by the Court, any dispute about the calculation of damages would be subject to the dispute resolution mechanism set forth in Section 4.2 of the Agreement. Frolow v. Wilson Sporting Goods Co., No. 05-4813, 2006 WL 891201, at * 3 (D.N.J. April 5, 2006).

Following an audit, Plaintiff initially identified a total of 58 Wilson racquets that it alleged Wilson failed to report as Licensed Articles and for which Wilson failed to pay royalties. In response, Wilson did not dispute that 26 of the 58 racquets should be Licensed Articles; however, Wilson did dispute the inclusion of 29 of the racquets as well as an additional 9 racquets for which Wilson contended that it mistakenly paid royalties. Thereafter, Plaintiff filed a supplemental expert report which disclosed an additional 4 racquets that Plaintiff alleged were Licensed Articles. These 42 racquets were the subject of a summary judgment motion filed by Defendant on August 24, 2007.

On March 31, 2008, this Court entered an Order denying in part and granting in part Defendant's motion. Specifically, and in relevant part, the Court found that 37 of the 42 disputed racquets were not "Licensed Articles" as defined by the License Agreement. However, the Court denied Defendant's motion for summary judgment as to five of the disputed racquets -- T7067, T7455, T5712, T5832 and T7230 -- finding that there was an issue of material fact as to whether these five racquets fell within the 372 Patent and, thus, came within the definition of a Licensed Article. Frolow v. Wilson Sporting Goods Co., No. 05-4813, 2008 WL 8134447 (D.N.J. March 31, 2008). Plaintiff filed a Motion for Reconsideration which was denied on September 9, 2008.

Thereafter, on November 24, 2008, Magistrate Judge Bongiovanni held a Final Pretrial Conference at which time Plaintiff requested leave to file an Amended Complaint. On December 12, 2008, more than three years after filing his initial Complaint, Plaintiff filed a Motion for Leave to File an Amended Complaint. Plaintiff sought to add five additional counts including, in relevant part, a second breach of contract claim stemming from Wilson's failure to comply with the "Best Efforts" clause of Section 7.13 of the License Agreement. Frolow v. Wilson Sporting Goods Co., 05-4813, 2009 WL 904049, at *1 (D.N.J. April 1, 2009).

On April 1, 2009, Judge Bongiovanni denied Plaintiff's Motion explaining that Defendant would be unduly prejudiced by Plaintiff's proposed amendments. Id. at *7. Specifically, Judge Bongiovanni noted that, "[i]n cases such as this, when the initial complaint was filed in 2005; when discovery has closed years ago; when dispositive motions are complete; and when the final pretrial conference has already been convened, the need for additional discovery would be prejudicial to Defendant." Id.

Plaintiff filed a Motion for Reconsideration of Judge Bongiovanni's Order which was denied on July 7, 2009. No appeal was filed. Thereafter, Judge Bongiovanni held a Final Pretrial Conference on August 5, 2009 and entered a Final Pretrial Order on August 6, 2009. Specifically, and in relevant part, the Final Pretrial Order limited the issue for trial to whether the five disputed racquets sold during the Audit Period of 2001-2004 were "Licensed Articles." Docket Entry. Nos. 81, 82.

By Order dated November 12, 2009, this Court established that Plaintiff had completed the U.S. audit and ordered Plaintiff to complete its audit of foreign sales by January 11, 2010 and Defendant to respond by February 11, 2010. The Court additionally set a trial date of March 15, 2010. However, on January 22, 2010, Defendant informed the Court that the report of foreign sales that Plaintiff provided Defendant was both incomplete and overbroad in violation of this Court's Orders. Docket Entry No. 10. Specifically, Defendant explained that Plaintiff's auditor calculated royalties on all racquets instead of the 128 Included*fn2 and 5 Disputed Racquets as limited by this Court's Summary Judgment Order. As a result, this Court held a telephone conference on January 28, 2010 with all parties and informed Plaintiff's counsel that he was to abide by the Court's determination of what constitutes a "Licensed Article" subject to audit.

On February 5, 2010, Defendant again wrote to the Court and explained that Plaintiff's revised audit and report still failed to comply with this Court's Summary Judgment Order limiting the number of racquets subject to audit. Docket Entry No. 102. Specifically, Defendant advised the Court that the "revised" audit included additional new racquets in violation of numerous Orders of this Court. Id. Thereafter, on May 13, 2010, this Court entered an Order that, in relevant part, granted leave to Wilson to file a second motion for summary judgment regarding the "new" racquets that Frolow sought to add to the list of "Licensed Articles." Docket Entry No. 108. Moreover, the Order reminded that parties that "the issue before this Court is limited to which racquets being sold by Wilson are subject to ...

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