Meeker R&D, Inc. v. Evenflo Co., Inc
52 N.E.3d 1207
Ohio Ct. App.2016Background
- Meeker R&D (Meeker) sued Evenflo for breach of contract and fraud, claiming Evenflo stopped paying royalties due under consulting/license agreements for ExerSaucer products; Evenflo counterclaimed for overpaid royalties and sought declaratory relief.
- The License Agreement required Evenflo to pay royalties on “Licensed Articles” that “result from Meeker’s consultation” and are “covered by” licensed patents (royalties continue until the patent expires).
- Disputed products included ExerSaucer Triple Fun, Portable Fun, Bounce & Learn, and an earlier Johnny Jump Up product; key patent at issue was the ‘246 ExerSaucer patent.
- Trial court (bench trial) found Meeker entitled to royalties on Triple Fun and Portable Fun (credited Meeker’s expert on coverage under the ‘246 patent) and denied Evenflo recovery for alleged overpayments.
- Evenflo appealed on five grounds (jurisdiction, partial summary judgment, manifest-weight/patent coverage, apportionment, and overpayment recovery); Meeker cross-appealed two rulings (Bounce & Learn not covered; Johnny Jump Up royalties duration).
Issues
| Issue | Plaintiff's Argument (Meeker) | Defendant's Argument (Evenflo) | Held |
|---|---|---|---|
| Subject-matter jurisdiction — whether state court could decide contract dispute involving patent issues | State court may decide; contract claim only requires applying patent principles | Federal courts have exclusive jurisdiction when resolution requires patent law; Gunn/Grable test favors federal jurisdiction | State court jurisdiction proper: Gunn four-part test not met (federal issue not substantial to federal system; patents expired; state resolution won’t affect federal balance) |
| Partial summary judgment re: Triple Fun — whether Triple Fun is a Licensed Article covered by the ‘246 patent | Triple Fun evolved from Meeker’s ExerSaucer work and is covered by the ‘246 patent; royalties owed | Triple Fun was conceived years after Meeker’s consulting and materially different (4 legs, converts to table); not a Licensed Article | Denied Evenflo summary judgment: fact dispute about patent coverage; court credited Meeker’s expert that Triple Fun resulted from consultation and was covered by ‘246 |
| Apportionment of royalties for Triple Fun — whether royalties must be apportioned given noninfringing stages | Agreement pays royalties on Licensed Articles until patent expiration; Meeker argues full royalty under agreement | Evenflo argues only the patented stage(s) should bear royalties because product has multiple nonpatented stages | No apportionment: contract unambiguously sets percentage on Net Sales of Licensed Articles until patent expiry; court will not rewrite agreement to apportion royalties |
| Recovery for alleged overpayments / unjust enrichment — whether Evenflo may recoup mistaken royalty payments | Overpayments were mistakes (fact mistakes) by accounting employees; unjust enrichment/recoupment permitted | Payments were voluntary or errors of law; Evenflo failed to prove mistake of fact or entitlement under contract; invoices required by contract to show deductions | Denied Evenflo recovery: insufficient evidence of mistake of fact; voluntary-payment/mistake-of-law doctrine bars recovery where appropriate; unjust enrichment not proven |
Key Cases Cited
- Gunn v. Minton, 133 S. Ct. 1059 (U.S. 2013) (articulates four-part test for when state-law claims that implicate patent law are removable to federal court)
- Grable & Sons Metal Prods. v. Darue Eng’g & Mfg., 545 U.S. 308 (U.S. 2005) (federal-question jurisdiction may exist where embedded federal issue is substantial)
- Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (U.S. 2006) (limits on federal jurisdiction for certain state-law claims implicating federal law)
- Mirowski Family Ventures, LLC v. Boston Scientific Corp., 958 F. Supp. 2d 1009 (S.D. Ind. 2013) (royalty dispute; court dismissed for lack of federal jurisdiction where patents expired and issue lacked broader federal importance)
- Firestone Tire & Rubber Co. v. Central Nat’l Bank, 159 Ohio St. 423 (Ohio 1953) (money paid under mistake of fact may be recoverable; contrast with mistake of law)
- Cincinnati v. Gas Light & Coke Co., 53 Ohio St. 278 (Ohio 1895) (payment made due to wrong construction of contract is mistake of law and not recoverable)
- State ex rel. Dickman v. Defenbacher, 151 Ohio St. 391 (Ohio 1949) (money voluntarily paid under claim of right cannot be recovered merely for a mistaken view of law)