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Monday, May 27, 2024 | Back issues
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Tenth Circuit Overturns|$43 Million Tech Award

DENVER (CN) — The 10th Circuit on Monday overturned a $43 million judgment, finding that Boeing subsidiary Jeppesen Sanderson does not owe Massachusetts-based software company SolidFX the money for lost profits.

Jeppesen Sanderson, which creates terminal charts for Boeing pilots, asked SolidFX in 2008 to develop an electronic app that would act as an e-reader for Jeppesen data for pilots.

After negotiating a licensing agreement, SolidFX began selling the iRex devices that came embedded with Jeppesen's data on a platform created by SolidFX.

After Apple released its iPad in 2010, SolidFX asked Jeppesen for the toolkit used in the app, to adapt it for the iPad. Jeppesen refused.

Months later, Jeppesen announced that it had created its own iPad app, free for its terminal chart users.

SolidFX sued Jeppesen in Colorado Federal Court on breach of contract and antitrust charges, claiming that Jeppesen had concealed its own development of the iPad app.

U.S. District Judge William J. Martinez presided over an eight-day trial in April 2014, in which a jury awarded SolidFX $43 million in lost profits due to Jeppesen's breach of contract.

But the trial court rejected SolidFX's antitrust claims, finding that Jeppesen had simply exercised its right to refuse to license copyrighted work.

Jeppesen appealed the $43 million award, claiming SolidFX could not recover lost profits from its contract claims because the licensing agreement expressly prohibited it.

SolidFX cross-appealed on its antitrust claim, saying Jeppesen illegally monopolized the product SolidFX and Jeppesen created together.

The 10th Circuit reversed on Monday, saying the trial court had incorrectly interpreted section 8.2 of the parties' licensing agreement, which bars recovery of lost profits.

"Even if the license agreement precluded only consequential lost profits, SolidFX's damages fall within that exclusion," U.S. Circuit Judge Carolyn McHugh wrote for a three-person panel.

"The license agreement unambiguously precludes the recovery of lost profits, irrespective of whether they are direct or consequential damages. But we also determine that, even if the agreement could be read to allow the recovery of direct lost profits, the lost profits awarded by the jury here are consequential damages and therefore not recoverable."

The appeals panel also affirmed the partial summary judgment on SolidFX's antitrust claim.

"Even though Jeppesen refused to grant access to the toolkit to create an iPad app and the jury concluded Jeppesen breached the license agreement by its refusal, Jeppesen did not have an independent antitrust duty to share its intellectual property with SolidFX," McHugh wrote.

"Thus, the district court correctly concluded Jeppesen was not liable for antitrust damages because it had established a valid business justification for its refusal to deal."

The vacated award includes $20 million for lost profits from the iPad app sales, $21 million for lost business value, and $615,000 for lost profits regarding work on the iRex device.

U.S. Circuit Judges Paul Kelly and Monroe McKay joined McHugh on the panel.

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