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Scanbuy, Inc. v. NeoMedia Technologies, Inc.

Court of Chancery of Delaware

October 31, 2014

Scanbuy, Inc.
v.
NeoMedia Technologies, Inc

Submitted: May 28, 2014

Dear Counsel:

Defendant NeoMedia Technologies, Inc. ("NeoMedia") has moved, pursuant to Court of Chancery Rule 12(b)(3), to dismiss for improper venue Plaintiff Scanbuy, Inc.'s ("Scanbuy") Verified Complaint for Declaratory, Injunctive, and Other Relief (the "Complaint"). NeoMedia relies on a forum selection clause contained in Section 11 of the "Settlement and License Agreement" between Scanbuy and NeoMedia (the "Agreement"), effective October 16, 2009.[1] That clause provides that "any dispute" between the parties must be brought in a federal or state court in Atlanta, Georgia. Scanbuy argues that the Agreement was terminated before it filed the Complaint and, regardless, its claims are not subject to the forum selection clause.

I. BACKGROUND

Scanbuy and NeoMedia are both providers of "Quick Response" or "QR" codes and services. NeoMedia also licenses its patents. The parties entered into the Agreement to resolve then-pending patent infringement litigation. The Agreement granted a license from NeoMedia to Scanbuy, as well as one from Scanbuy to NeoMedia.

The parties agree that Scanbuy's license was terminated in 2013. However, the parties dispute (i) whether the license was terminated on September 17, 2013 or December 2, 2013, and (ii) whether the cancellation of Scanbuy's license terminated the entire Agreement.

In February and March 2014, NeoMedia sent, or caused to be sent, letters to many of Scanbuy's customers, alleging that their use of Scanbuy's services infringed on some of NeoMedia's patents.[2] Scanbuy claims that "[t]hese letters contain false and/or misleading information about Scanbuy and NeoMedia's patents, and have affected Scanbuy's current and expected business relationships with its customers, thereby causing irreparable harm to Scanbuy."[3] The letters have apparently caused many of its largest customers to seek shorter contracts, or fail to renew their contracts altogether.

Scanbuy filed the Complaint with this Court on March 21, 2014, alleging that NeoMedia (i) violated 6 Del. C. § 2532(a)(8), by disparaging the goods, services, or business of Scanbuy through false or misleading representations of fact, (ii) violated 6 Del. C. § 2532(a)(12), by engaging in conduct that creates a likelihood of confusion or of misunderstanding, and (iii) tortiously interfered with Scanbuy's business relationships and expected business relationships. Scanbuy seeks injunctive relief to prevent NeoMedia from sending more letters.

Scanbuy also seeks a declaratory judgment, pursuant to 10 Del. C. ch. 65 and Court of Chancery Rule 57, declaring that Scanbuy and its customers, are covered by a current license agreement between NeoMedia and Microsoft Corporation.

NeoMedia argues that this Court is an improper venue because the Agreement's forum selection clause directs "any dispute" between the parties to Georgia. NeoMedia contends that the Agreement was in effect when Scanbuy filed the Complaint.

II. ANALYSIS

"The courts of Delaware defer to forum selection clauses" and grant Rule 12(b)(3) motions to dismiss "where the parties 'use express language clearly indicating that the forum selection clause excludes all other courts before which those parties could otherwise properly bring an action.'"[4] The Agreement provides: "[t]he parties agree that any dispute . . . shall be brought in a Federal or state court seated in Atlanta, Georgia . . . and the parties hereby consent to the exclusive jurisdiction and venue of such court."[5] Therefore, if (i) the Agreement was effective when Scanbuy filed the Complaint, and (ii) the mandatory forum selection clause encompasses Scanbuy's claims, the Court will dismiss the Complaint.

A. Was the Agreement in Effect When Scanbuy Filed the Complaint?

The parties dispute whether the entire Agreement, or only Scanbuy's license under the Agreement, has been terminated. Section 2 governs the scope of the licenses granted pursuant to the Agreement. Section 2.1 provides, "[s]ubject to the terms and conditions of this Agreement . . . NeoMedia grants to Scanbuy a royalty-bearing, non-exclusive, license . . . ." Section 2.2 provides "[s]ubject to the terms and conditions of this Agreement . . . Scanbuy grants to NeoMedia (a) a ...


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