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RELIABILITY RESEARCH INC. v. COMPUTER ASSOCS. INTL

December 29, 1993

RELIABILITY RESEARCH INCORPORATED, Plaintiff,
v.
COMPUTER ASSOCIATES INTERNATIONAL, INC., successor to University Computing Company, Defendant.



The opinion of the court was delivered by: JOHN R. BARTELS

 Bartels, U.S. District Judge.

 Plaintiff Reliability Research, Inc. ("Reliability") brings this action against defendant Computer Associates International, Inc. ("Computer Associates"), for breach of a licensing and marketing agreement. Defendant now moves pursuant to Federal Rule of Civil Procedure 39(a)(2) to strike plaintiff's demand for a jury trial. For the reasons set forth below, defendant's motion is granted in part and denied in part.

 FACTS

 Reliability is a closely held corporation whose sole asset is a computer program called Reliability Plus ("R"). monitors, analyzes and reports on computer hardware failures. In 1979, Reliability entered into a License and Marketing Agreement with University Computing Company ("University Computing"); in 1984, Reliability and University Computing modified the 1979 Agreement and replaced it with a new License and Marketing Agreement ("the 1984 Agreement"). The 1984 Agreement granted University Computing the right to use, sub-license, market and distribute R for a period of 99 years within the territory of North America, Central America and South America ["the Territory"]. In August 1987, University Computing was acquired by Computer Associates, which assumed University Computing's rights and obligations under the 1984 Agreement.

 The second amended complaint ["complaint"] in this action, dated December 2, 1992, alleges that Computer Associates has made "offerings in the area of computer reliability" in violation of the 1984 Agreement. *fn1" Specifically, Reliability alleges that defendant has developed and marketed at least 39 computer programs which, under the terms of the Agreement, are now the property of Reliability and for which Reliability is entitled to payment from defendant for revenues received from license and maintenance fees. On July 15, 1993, the court denied the parties' cross-motions for summary judgment, holding that the central issue of the meaning of the phrase "offerings in the area of computer reliability" as used in the 1984 Agreement is a question of fact for trial.

 In the second amended complaint, Reliability seeks three types of relief as a result of defendant's breach of the licensing agreement:

 
1. A declaration that Reliability is the sole and exclusive owner of Computer Associates' right, title and interest of the offerings identified in the complaint;
 
2. an award of the profits Computer Associates has earned from marketing those offerings outside of the Territory; and
 
3. an award of the revenues that have not been paid under the 1984 Agreement.

 Defendant now moves to strike plaintiff's timely jury demand, arguing that the relief sought is essentially equitable, and therefore that plaintiff is not entitled to a jury trial. In the alternative, defendant asserts that any legal relief claimed by plaintiff is merely incidental to the equitable relief sought, and therefore does not entitle plaintiff to a jury trial.

 Plaintiff concedes that the second category of relief, the claim for profits earned by Computer Associates outside of the Territory, is equitable. However, plaintiff maintains that the third remedy, monetary damages for breach of contract, constitutes a legal claim with respect to which Reliability is entitled to a trial by jury. In order to preserve Reliability's right to a jury trial on the legal claim, plaintiff argues that a jury should determine: (1) which of the computer programs stated in the complaint are "offerings in the area of computer reliability" and therefore the property of Reliability; and (2) the amount of revenues owed by defendant for licensing and maintenance fees for those offerings under the 1984 Agreement. At that point, plaintiff agrees with defendant that the court should determine the amount of profits Computer Associates earned outside of the Territory on those programs which the jury has found Reliability owns.

 DISCUSSION

 The Seventh Amendment to the United States Constitution guarantees the right to trial by jury for all claims asserting legal rights. See, e.g., Chauffeurs, Teamsters and Helpers, Local No. 391 v. Terry ["Local 391 v. Terry"], 494 U.S. 558, 564-65, 108 L. Ed. 2d 519, 110 S. Ct. 1339 (1990). In contrast, no jury trial is required for claims that are equitable in nature. See, e.g., Tull v. United States, 481 U.S. 412, 417, 95 L. Ed. 2d 365, 107 S. Ct. 1831 (1987). To determine whether an action is legal or equitable, the court must ...


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