portion of digEcor versus e.DIGITAL claim from DOCKET 370
in response to
by
Message: PACER digEcor
digEcor CLAIM
The amount in controversy exceeds the sum or value of $75,000 as demanded in digEcor’s Amended Complaint (dkt 84). The jurisdiction of the Court is not disputed and is hereby determined to be present.
The Court further finds that it has jurisdiction over the person of e.Digital pursuant to Utah Code Ann. § 78B-3-205(2) because e.Digital contracted to supply goods or services to digEcor in this state. e.Digital does not contest this Court’s exercise of jurisdiction over its person in this matter.
Shortly after requesting the additional players, e.Digital informed digEcor that e.Digital would not be performing under the PO because its subcontractor of the sub-assemblies had encountered financial difficulties.1
e.Digital eventually tendered the 1,250 players for delivery beginning in late-October and finishing with the majority of the players delivered to digEcor’s headquarters in Springville, Utah, in November 2006; eleven months beyond the original January 10 completion date. digEcor accepted this tender because it needed these players to sustain its business
e.Digital eventually tendered the 1,250 players for delivery beginning in late-October and finishing with the majority of the players delivered to digEcor’s headquarters in Springville, Utah, in November 2006; eleven months beyond the original January 10 completion date. digEcor accepted this tender because it needed these players to sustain its business
e.Digital is in breach of this exclusivity provision of this agreement because it has incorporated the DRM technology into its eVU, which e.Digital is offering in the IFE industry. Also, e.Digital is in breach of the license provision of this agreement because the DRM software e.Digital provided to digEcor contains a “time bomb” that causes the software to self-disable at certain intervals.
e.Digital’s breach of the exclusivity provision has caused digEcor substantial damages by allowing e.Digital to reap profits from its use of the DRM technology in the IFE industry in infringement of digEcor’s exclusive license. digEcor has acknowledged the existence of an enforceable damages cap pertaining to breaches of the DRM Agreement, and will therefore only seek monetary damages on this claim up to the $25,000 amount of the cap. In addition to these monetary damages, digEcor seeks an order from this Court requiring e.Digital to honor its obligations under this agreement by (1) enjoining e.Digital from using the DRM technology in devices offered for sale in the IFE industry, and (2) ordering e.Digital to provide the source code to the DRM technology so that digEcor can remove the time bomb and exercise its right to modify and add to the DRM technology at its discretion.
Another issue involve faulty Ethernet boards. digEcor seeks reimbursement for the costs to remedy these warranted defects, in the amount of $88,080.
digEcor’s Objections to Certain Affirmative Defenses.
digEcor objects to the assertion of two affirmative defenses that e.Digital now states it wishes to assert at trial that were not included or properly pled in e.Digital’s pleadings. These are:
• e.Digital’s assertion that it will raise “Commercial Impracticability” under Utah Code Ann. §§ 70A-2-615 as an affirmative defense.
• e.Digital’s assertion that it will seek to allocate fault to Maycom, who was e.Digital’s subcontract manufacturer pursuant to Utah Code Ann. § 78B-5-817 (formerly 78-27-37).
digEcor objects to the assertion of two affirmative defenses that e.Digital now states it wishes to assert at trial that were not included or properly pled in e.Digital’s pleadings. These are:
• e.Digital’s assertion that it will raise “Commercial Impracticability” under Utah Code Ann. §§ 70A-2-615 as an affirmative defense.
• e.Digital’s assertion that it will seek to allocate fault to Maycom, who was e.Digital’s subcontract manufacturer pursuant to Utah Code Ann. § 78B-5-817 (formerly 78-27-37).
e.Digital’s Claims and Defenses
(1) e.Digital Did Not Breach the Purchase Order
Although digEcor Purchase Order CJ5LY9RCW (the “PO”) originally specified that the 1250 players should be shipped on January 10, 2006, e.Digital’s performance was excused because digEcor made that deadline impossible for e.Digital to satisfy.
Although digEcor Purchase Order CJ5LY9RCW (the “PO”) originally specified that the 1250 players should be shipped on January 10, 2006, e.Digital’s performance was excused because digEcor made that deadline impossible for e.Digital to satisfy.
Even after e.Digital made these warnings, and made numerous requests for the branding information, digEcor let the January 10, 2006 deadline pass without ever specifying the case color and logos and without paying in full for the players as required by the PO. digEcor, not e.Digital, breached the PO requiring January 10 delivery, and e.Digital notified digEcor of its material breach of the PO in a March 1, 2006 letter. Only after receiving this notice of its breach did digEcor specify the case branding information.
In June 2006, e.Digital offered to deliver the players by late July, but digEcor would not agree. e.Digital reiterated this possibility in its original Answer, filed June 14, 2006. (See Answer, ¶ 31, dkt. #7.) Later in June, e.Digital offered again to deliver the players, this time by mid-September, but digEcor refused to accept the delivery. digEcor’s refusal to indicate its acceptance of the players was unreasonable and failed to give e.Digital adequate assurances. e.Digital was finally able to convince digEcor to accept the deliveries the week of October 30, 2006.
Accordingly, digEcor’s damages claims under the PO are barred. Moreover, all of digEcor’s damages claims are based on faulty assumptions, improper calculations, improper models, and are unsubstantiated and unsupportable. digEcor’s claimed damages are also caused by their own actions and/or the actions of others, including Maycom
e.Digital Did Not Breach the DRM Agreement
e.Digital offers several defenses to this claim. First, digEcor cannot show that the eVU contains the disputed DRM technology. Further, digEcor has not paid the $25,000 required under the DRM Agreement as payment for the license of DRM technology, and e.Digital terminated the DRM agreement in writing before it was consummated, so e.Digital is not required to honor the license
e.Digital offers several defenses to this claim. First, digEcor cannot show that the eVU contains the disputed DRM technology. Further, digEcor has not paid the $25,000 required under the DRM Agreement as payment for the license of DRM technology, and e.Digital terminated the DRM agreement in writing before it was consummated, so e.Digital is not required to honor the license
As with many software applications, e.Digital’s download software application used on computers that work with the digEplayer 5500—not on the players themselves—included a security feature that the software license expires after a certain period of time. This feature existed in the software well before the PO and the DRM Agreement were signed. digEcor has no claim to prevent e.Digital from using, marketing, or licensing in the IFE industry e.Digital’s own digEplayer content download application, which is separate from RBE and therefore not subject to the DRM Agreement..
EDIGITAL’s breach of this Agreement . . . shall be limited to money damages, specifically, the lesser of the actual amount paid under this Agreement or $25,000 USD;” e.Digital owed no duty, whether of disclosure or otherwise, to digEcor; digEcor’s claims and damages, if any, are barred by their own independent investigations and assumption of the risk; digEcor’s injuries, if any, were caused by its own fault or the fault of others, including Maycom, which bars or reduces any recovery of digEcor under Utah Code Ann. §§ 78B-5-817, et seq.; e.Digital is not responsible under paragraph 12 of the DRM for any delays in delivery of performance caused by failure of digEcor to fulfill its obligations in the DRM or for any failure to meet its own obligations under the DRM to the extent due to any cause beyond e.Digital’s reasonable control
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