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Feld Motor Sports, Inc. v. Traxxas, L.P.

United States Court of Appeals, Fifth Circuit

June 30, 2017

FELD MOTOR SPORTS, INCORPORATED, Plaintiff - Appellee
v.
TRAXXAS, L.P., Defendant-Appellant TRAXXAS, L.P., Plaintiff
v.
FELD MOTOR SPORTS, INCORPORATED, Defendant

         Appeals from the United States District Court for the Eastern District of Texas

          Before STEWART, Chief Judge, and WIENER and PRADO, Circuit Judges.

          CARL E. STEWART, Chief Judge

         Traxxas, LP ("Traxxas") appeals the district court's order rendering judgment in conformity with the jury verdict that found it owed Feld Motor Sports, Inc. ("FMS") additional royalties under a licensing agreement. Traxxas argues that the district court erred in submitting the New York law contract to a jury because the contract is unambiguous. FMS first contends that we lack jurisdiction over the appeal and alternatively that we should uphold the district court's legal conclusion in denying summary judgment. We hold that this court has jurisdiction and AFFIRM.

         I. BACKGROUND

         This case pits the maker of radio control ("RC") vehicles against the producer of a monster truck show. Traxxas builds RC vehicles, while FMS owns and promotes a live monster truck show, Monster Jam ("MJ").[1] Traxxas makes a wide range of RC vehicles, including the Stampede line of hobby-grade RC trucks.

         In 2010, the parties entered into the Monster Jam Merchandise License Agreement ("the Agreement"). Under the Agreement, Traxxas would produce and sell certain Stampede trucks branded with FMS's MJ intellectual property. The Agreement had a fixed term, running from October 1, 2010 to December 31, 2013. The parties do not dispute that the Agreement covers the base model Stampede, with or without the MJ branding. This base Stampede was the only one sold with MJ-branded variations. The Stampede is a model truck that wholesales for $150. In addition to the standard Stampede truck, Traxxas makes other RC trucks that comprise its Stampede line of products, which it argues are not covered by the Agreement. The Stampede line of RC trucks is distinguishable from other RC vehicle lines Traxxas sells.

         Four different RC trucks in the Stampede line are at issue: the Stampede Nitro, the Stampede VXL, the Stampede 4x4, and the Stampede 4x4 VXL. These premium models are considerably more expensive, wholesaling from anywhere between $220 to over $300. The premium models differ from the base Stampede in power source, parts, design, and method of control. For instance, the Stampede Nitro is liquid-fuel powered, instead of battery powered. Additionally, the Stampede 4x4 and 4x4 VXL were introduced after the parties entered into the Agreement, in 2010 and 2013 respectively.

         The Agreement's Licensed Articles and Royalty Rate provisions form the basis of the parties' dispute. Clause 2 defines "Licensed Articles":

2. Licensed Articles: Hobby-grade battery-operated remote control operated monster truck vehicles ("R/C Vehicle Units") and monster truck vehicle bodies ("R/C Bodies") branded with the Property.[2] Licensed Articles shall include a minimum of four (4) different monster truck molds of R/C bodies each year, for each year during the Term other than 2010.

         Clause 5 sets out the royalties to be paid.

5. Royalty Rate: In determining the number of Licensed Articles on which [FMS] will receive royalties, "Licensed Articles" shall be deemed to include all R/C Vehicle Units and R/C Bodies manufactured with the Stampede chassis and/or Stampede body, whether or not branded with the Property or "Stampede."

         The Agreement also exempted the first 30, 000 "Licensed Articles" sold from royalties. Over the term of the Agreement, Traxxas paid FMS royalties only on the standard Stampede and MJ-branded Stampedes. After the Agreement expired, FMS hired an outside firm to conduct an audit, pursuant to an audit provision in the Agreement. The audit concluded that Traxxas likely owed additional royalties on other Stampede line vehicles that approached $1 million.

         II. ...


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