Virginia Lawyers Weekly VA Lawyers Weekly
Where the parties’ contract stated that late payments were subject to 10% interest, that provision did not expressly apply to post-judgment interest. As such, the prevailing party was entitled only to the statutory post-judgment interest rate in 28 U.S.C. § 1961.
Background
On March 31, 2020, the court granted plaintiff’s motion for summary judgment, finding that defendants breached the patent license agreement, or PLA, when they failed to report sales and pay royalties on their products that fall under the PLA’s definition of “container products and services.”
The court ordered defendants to “pay Plaintiff all royalties due under” the PLA, and ordered defendants to file with the court “delinquent quarterly reports consistent with the rulings in this order within 30 days” if the parties could not reach a stipulation on the amount of damages owed to plaintiff.” Now before the court are defendants’ motion to stay disputed royalty payments during appeal and plaintiff’s motion to enforce the court’s March 31, 2020, order.
Motion to enforce
Plaintiff argues that defendants have failed to comply with the court’s March 31 order because the quarterly reports defendants were ordered to file did not include all “sales” of the container products and services but only included “new unique end users.”
The court previously resolved plaintiff’s motion to enforce during the July 1 hearing. There, it ordered that (1) defendants must pay royalties on each monthly payment for the managed service provider, or MSP, program and (2) defendants must comply with its March 31 Order and “furnish the requested information as to the MSP programs within 10 days, and [must] continue to[] report [said information about the MSP programs] quarterly.”
To the extent there are any remaining questions as to the court’s ruling on plaintiff’s motion to enforce, the court hereby grants plaintiff’s motion to enforce and orders defendant to furnish quarterly reports that list all sales including the MSP program’s monthly payments and that defendants must certify under penalty of perjury that the quarterly reports are complete and accurate.
Proposed judgment
The parties filed competing motions for entry of final judgment on July 15, 2020. Based on the parties’ filings there are two disputes pending before this court.
First, whether defendants are required to pay the one dollar royalty for all sales of the MSP program which includes when the “new unique end-user” purchases an initial license, and each time a monthly fee is paid based on usage of the technology in that license. The second issue is whether post-judgment interest should be calculated based on statutory rate enumerated in 28 U.S.C. § 1961(a) or at the pre-judgment enumerated rate of 10% in the PLA.
The court agrees with plaintiff that defendants are required to pay plaintiff a one dollar royalty for each monthly payment Sophos receives from the end-users of the technology in the MSP program as well as when the “new unique end-user” purchases an initial license through Sophos’ MSP program. The court reaches such conclusion in accordance with its findings during both the July 1, 2020, hearing and March 30, 2021, hearing as well as in the March 31, 2020, order where this court held that the PLA is clear and unambiguous and therefore the court is required to “afford those terms their plain and ordinary meaning.”
Defendants have conceded that the 10% rate applies to prejudgment interest in the manner described in the PLA. Defendants argue that the PLA is silent on a post-judgment interest and the provision which plaintiff relies on is “general language does not amount to an ‘express intent to agree on a post-judgment interest rate.’” The court agrees.
Section 4.3.3 of the PLA simply states “[a]ny fees or payments that are made hereunder later than the date on which they are due shall bear interest, compounded monthly at the statutory rate of 10% per annum or the highest rate permitted under applicable law, whichever is lower.” There is no evidence of a “clear, unambiguous and unequivocal” agreement that the 10% applies to post-judgment interest. As a result, the court finds that the statutory post-judgment interest rate enumerated in 28 U.S.C. § 1961 governs post-judgment interest in this action.
Motion to stay
Defendants request that the court stay their royalty payment obligations pending appeal. Defendants, during the March 30 hearing, agreed to increase the amount of the supersedeas bond to $25 million, which is sufficient to cover plaintiff’s total damages including pre-judgment interest as of Feb. 15, 2021. As a result, plaintiff, during the March 30 hearing, stated that it has no objections to defendants’ motion to stay. Because defendants agreed to increase the supersedeas bond to $25 million, the court finds that defendants are entitled to a stay as a matter of right.
Plaintiff’s motion to enforce granted. Plaintiff’s motion for entry of proposed judgment granted. Defendants’ motion to stay granted.
Vir2us Inc. v. Sophos Inc., Case No. 2:19-cv-18, March 31, 2021. EDVA at Norfolk (Morgan). VLW 021-3-171. 17 pp.
