United States District Court, D. Massachusetts
MEMORANDUM AND ORDER DENYING MOTION FOR JUDGMENT AS A
MATTER OF LAW OR NEW TRIAL AND/OR AMENDMENT TO EQUITABLE
CLAIM ORDER AND MARCH 1 JUDGMENT
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.
Plaintiff
ITyX Solutions AG (“ITyX Solutions”) and
Defendant Kodak Alaris, Inc. (“KAI”) entered into
a strategic partnership to develop and market
“intelligent document recognition” software
products. After the relationship soured and a commercial
dispute arose between them, ITyX Solutions filed this lawsuit
against Kodak for breach of contract, declaratory judgment,
and injunctive relief. [ECF No. 1 (“Complaint”)].
KAI in turn brought counterclaims for breach of contract,
breach (and aiding and abetting the breach) of a fiduciary
duty, tortious interference with contractual and business
relations, and declaratory judgment against ITyX Solutions as
well as the related parties ITyX Systemwicklung OHG
(“ITyX OHG”), ITyX Technology GMBH (“ITyX
Technology”), ITyX Solutions's CEO Süleyman
Arayan, and ITyX Solutions's co-founder Heiko Groftschik
(collectively with ITyX Solutions, “ITyX”). [ECF
No. 122 (“Counterclaims”)]. From November 5
through November 26, 2018, the parties presented their cases
to an eleven-member jury, which returned a verdict in favor
of ITyX and awarded $7, 466, 045 to ITyX Solutions. [ECF No.
323]. On March 1, 2019, the Court issued findings on the
parties' equitable claims and entered a final judgment in
the amount of $9, 211, 699.20. [ECF Nos. 348, 350].
Now
pending before the Court is KAI's motion for judgment as
a matter of law pursuant to Federal Rule of Civil Procedure
50, a new trial or remittitur pursuant to Rule 59, or to
amend the Court's March 1, 2019 equitable claim order
pursuant to Rule 52. [ECF No. 366]. For the reasons explained
herein, the motion is DENIED.
I.
FACTS AND CONCLUSIONS OF LAW
KAI
argues that the Court should amend its March 1, 2019 findings
pursuant to Rule 52(b), which provides, “On a
party's motion filed no later than 28 days after the
entry of judgment, the court may amend its findings-or make
additional findings-and may amend the judgment accordingly.
The motion may accompany a motion for a new trial under Rule
59.” Fed.R.Civ.P. 52(b). “Rule 52(b) is intended
to reduce the frequency of appellate remands by permitting
the correction of errors in the district court[.]” 9C
Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure, § 2582 (3d ed. 2019). Rule
52(b) does not provide a party an opportunity to relitigate a
point, but rather to “raise questions of substance by
seeking reconsideration of material findings of fact or
conclusions of law to prevent a manifest injustice or reflect
newly discovered evidence.” Id. The rule gives
district courts “considerable discretion . . . subject
to circumstances developed in the case law.”
Feliciano-Hernandez v. Pereira-Castillo, 663 F.3d
527, 536 (1st Cir. 2011). KAI has not demonstrated any error
in the Court's March 1, 2019 findings of facts or
conclusions of law. The Court therefore denies KAI's
motion to amend the March 1 order pursuant to Rule 52(b). For
ease of reference, the Court restates its findings of fact
and conclusions of law here. See ITyX Sols., AG v. Kodak
Alaris Inc., No. 16-cv-10250-ADB, 2019 WL 1005497 (D.
Mass. Mar. 1, 2019).
ITyX is
a German software company that created an intelligent
document recognition (“IDR”) software suite. IDR
software products interpret documents, extract text-based
content from them, and organize that content for the user.
ITyX Solutions' software suite uses an ITyX
Solutions-created platform to carry out IDR processes. In
2011, ITyX Solutions and Eastman Kodak Company
(“EKC”) began discussing a potential business
relationship and, on January 18, 2012, entered into a
contract titled the “Master Agreement, ” which is
governed by New York law. The day after executing the Master
Agreement, EKC filed for bankruptcy. One and a half years
later, in September 2013, KAI stepped into the shoes of EKC
as the counterparty to the Master Agreement.[1]
Pursuant
to the Master Agreement, the parties entered into an
arrangement whereby ITyX Solutions licensed certain software
to KAI, and KAI integrated that software into a Kodak-branded
product. The Master Agreement refers to the Kodak-branded
product, which was eventually marketed under the name
“Info Insight, ” as the “Kodak
Product” or the “Kodak IDR Product.”
Section 1.2 of the Master Agreement defines the “Kodak
Product” as:
the product, product family, and components of products, more
particularly described as the Kodak IDR Product, that Kodak
intends to distribute to [end users] and will include or
incorporate the Licensed Software but only as described in
Appendix A Exhibit 1 . . . (but not any Licensed Software
described in [Appendix A Exhibit 2]) supplied by [ITyX
Solutions] and as developed pursuant to this Agreement.
The
technical and functional features of the “Licensed
Software” are described in more detail in Appendix A to
the Master Agreement.
Under
Section 3.1 of the Master Agreement, KAI agreed to
“solely distribute the Kodak Product” and to
“not develop a product functionally equivalent to the
Kodak Product” while the Master Agreement was in
effect. The Master Agreement also contained exceptions to
KAI's exclusivity obligations. In relevant part, under
Section 3.2(iii) (the “Exit Provision”), KAI,
“in its sole good faith business judgment, ” was
permitted to “decide to abandon the IDR business
represented by the Kodak Product.” If the Exit
Provision was triggered, KAI agreed not to sell a “new
Kodak-IDR product” that was not supplied by ITyX
Solutions for a period of two years after leaving the IDR
business.
In
addition, Section 2.0 of the Master Agreement provided that
it had an initial term of five years, which commenced on
January 18, 2012, and would “automatically renew on its
anniversary date for successive two-year periods . . .
thereafter unless otherwise terminated as provided [in the
Master Agreement].” Pursuant to Section 4.1 of the
Master Agreement, either party was entitled to terminate the
Master Agreement for cause “after a material breach by
the other Party” by giving written notice to the
defaulting Party that “specif[ied] the default in
reasonable detail, ” unless “the defaulting Party
cure[d] the default within 30 days after receipt of the
[default notice] or, if such default [could not] be cured
within such time, the defaulting Party [did] not promptly
start diligently and continuously in good faith to cure the
default.”
Section
29.0 of the Master Agreement provides that ITyX Solutions
“shall act as an independent contractor and nothing
herein shall be construed to make [ITyX Solutions] or any of
its employees, officers, directors or representatives, the
agent employee or servant of Kodak.” ITyX Solutions
introduced evidence at trial demonstrating that, by entering
into the Master Agreement, the parties did not intend or
agree to form a partnership or joint venture.
Further,
under Section 8.1 of the Master Agreement, the parties
anticipated that ITyX Solutions would “provide
additional services as stated in one or more Statements of
Work, ” such as training or “other services in
connection with further software development.” Between
March 20, 2012 and December 17, 2014, the parties entered
into fourteen Statements of Work. On August 20, 2015, ITyX
Solutions and KAI entered into the PS Transfer Pricing
Agreement (“PS Agreement”), with an effective
date of June 1, 2015. ITyX Solutions and KAI agreed to an
amendment to the PS Agreement (“PS Amendment, ”
collectively with the PS Agreement, the “PS
Agreements”), which was signed by KAI on September 11,
2015 and by ITyX Solutions on October 9, 2015. The PS
Agreements further defined the relationship between the
parties, establishing that KAI would focus solely on
marketing and sales, and ITyX Solutions would provide the
technology to deliver and support the product.
In June
2014, KAI's parent company, Kodak Alaris Holdings
(“KAH”) entered into an Investment Framework
Agreement (“IFA”) with ITyX OHG, ITyX Technology,
and Mr. Arayan, the ITyX Solutions CEO, to acquire 25.1% of
ITyX Technology. Neither ITyX Solutions nor KAI is a party to
the IFA. The IFA provided that, in exchange for acquiring
25.1% of ITyX Technology, KAH would make a series of direct
investments with ITyX Technology totaling €12.6 million
over the course of sixteen months. In the event that KAH
defaulted on its payment obligations under the IFA for more
than thirty days, ITyX OHG and ITyX Technology could exercise
a ...