Bose Corporation v. Ejaz
732 F.3d 17
| 1st Cir. | 2013Background
- Bose sued Salman Ejaz for breach of a Settlement Agreement and trademark infringement after Ejaz sold Bose US-made products abroad without Bose's consent.
- Settlement Agreement (Jan 27, 2007) and Consent Order (British High Court, Mar 9, 2007) barred Ejaz from selling Bose products worldwide.
- Settlement Agreement included a liquidated damages clause of $50,000 per violation and took effect Feb 26, 2007.
- Ejaz violated the agreement by selling Bose products in Australia soon after signing, prompting Bose's suit.
- Massachusetts law governs interpretation and performance of the Agreement; the district court granted summary judgment on breach and infringement; Ejaz appeals.
- Court addresses contract validity, enforceability of liquidated damages, trademark infringement, and discovery-related issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the Settlement Agreement | Ejaz argues lack of consideration, no meeting of the minds, unconscionability, and duress. | Ejaz contends the contract or its liquidated damages term is unenforceable due to these defects. | Contract valid; consideration, meeting of the minds, unconscionability, and duress defenses fail. |
| Enforceability of the liquidated damages clause | Bose contends the clause is a reasonable forecast of damages and enforceable. | Ejaz argues the per-violation $50,000 with no cap is disproportionate and punitive. | Liquidated damages enforceable; clause reasonable forecast and not a penalty. |
| Trademark infringement - likelihood of confusion | Bose must prove likelihood of consumer confusion due to gray-market sales. | Ejaz claims material differences and lack of actual confusion. | Presumption of confusion in gray-market contexts; Bose established likelihood of confusion. |
| Discovery extension ruling | Ejaz sought Rule 56(d) extension to obtain more facts. | Delay unjustified; discovery extension denied. | District court did not abuse discretion in denying 56(d) before ruling on summary judgment. |
Key Cases Cited
- NPS, LLC v. Minihane, 886 N.E.2d 670 (Mass. 2008) (test for enforceability of liquidated damages; reasonableness and foreseeability)
- Mass. vers. Singarella v. City of Boston, 173 N.E.2d 290 (Mass. 1961) (elements for breach of contract and damages)
- Awuah v. Coverall N. Am., Inc., 703 F.3d 36 (1st Cir. 2012) (signed contract binding regardless of reading; fraud defense absent)
- Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315 (1st Cir. 2008) (two-part unconscionability inquiry (procedural and substantive))
- Happ v. Corning, Inc., 466 F.3d 41 (1st Cir. 2006) (duress requires unlawful act/threat and coerced choice)
- Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633 (1st Cir. 1992) (presumption of confusion in gray goods cases)
- NPS, LLC v. Minihane, 886 N.E.2d 670 (Mass. 2008) (liquidated damages reasonableness focus on actual forecast)
- Honey Dew Assocs., Inc. v. M&K Food Corp., 241 F.3d 23 (1st Cir. 2001) (liquidated damages enforceability – reasonableness factors)
- Ismert & Assocs., Inc. v. New Eng. Mut. Life Ins. Co., 801 F.2d 536 (1st Cir. 1986) (duress—choice to litigate defeats duress claim)
- Kelly v. Marx, 705 N.E.2d 1114 (Mass. 1999) (damages forecast relevance to enforceability of liquidated damages)