56. digEcor never tendered the $25,000 payment for the DRM technology until after e.Digital had notified digEcor that it had breached the DRM Agreement. (Exs. 123, 139.) On July 28, 2006, citing digEcor’s rejection of the ordered digEplayers, e.Digital’s counsel notified digEcor that it was officially terminating the DRM Agreement.
Due to digEcor’s breaches, e.Digital never accepted any payment from digEcor under the DRM Agreement.
58. The DRM technology used in e.Digital’s eVU player is different from that specified in the DRM Agreement, and therefore outside the scope of the exclusive license granted to digEcor under the DRM Agreement. The Court finds the testimony of e.Digital’s expert credible and persuasive on this point, illustrating that the eVU’s DRM technology differs from the DRM technology licensed to digEcor with respect to cryptography (Tr. 723-24, 726), physical barriers (Tr. 726-27), authentication (Tr. 728-29), license recovery process (Tr. 729-31),
master key recovery (Tr. 731-32), and license decryption (Tr. 733-34; see also, generally, Ex.
59. Damages for breach of the DRM Agreement are “limited to money damages, specifically, the lesser of the actual amount paid under [the DRM Agreement] or $25,000.”
The Minnesota appellate decision in Selland Pontiac-GMC, Inc. v. King, which presents facts very similar to those in this case, illustrates this principle. 384 N.W. 2d 490 (Minn. Ct. App. 1986). In Selland-Pontiac, the parties contracted for defendant to deliver four school bus bodies, specifically naming the supplier. When the supplier became insolvent and could not deliver, the seller immediately informed the buyer of the problem, and the transaction was never consummated. Id. at 492. The buyer sued for damages under the contract, and the trial court found for the defendant. The appellate court upheld the trial court’s finding that the seller’s performance was rendered impracticable because the supplier was designated by both parties in the original agreement and neither party had any knowledge of the supplier’s “questionable financial circumstances.” Id. at 492-93.
18. Likewise, any delay in e.Digital’s delivery was excused as impracticable after Maycom announced that it had misappropriated the funds advanced for production of the 1250 players and, therefore, no longer had the resources necessary to produce the 1250 players.
A non-breaching party is not entitled to any consequential damages that it could have reasonably prevented “by cover or otherwise.” Utah Code Ann. § 70A-2-715(2). digEcor failed to mitigate its damages by refusing to accept delivery of the 1250 players in July 2006, by entering into agreements with customers when it knew that Maycom was not producing the players on schedule, and by failing to inform e.Digital of the inspection report. Perhaps most significantly, digEcor might have avoided any damage at all by simply specifying the branding information for the 1250 players in time for the players to be shipped on January 10, 2006.
Finally, digEcor failed to prove any damages for the alleged violation of the October 2002 Agreement with reasonable certainty.
