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Toshiba Corp. v. Cdi Media, Inc.

United States District Court, S.D. New York

February 19, 2014

CDI MEDIA, INC., Defendant.

Carey Ramos, Esq., Rachel Epstein, Esq., Quinn Emanuel Urquhart & Sullivan LLP, New York, NY, Plaintiff.

Royce B. Covington, Esq., Chad S. Pehrson, Esq., Terry E. Welch, Esq., Parr Brown Gee & Loveless, Salt Lake City, UT, For Defendant.


SHIRA A. SCHEINDLIN, District Judge.


Toshiba Corporation ("Toshiba") brings this breach of contract action against CDI Media, Inc. ("CDI") in connection with a 2003 Licensing Agreement which granted CDI a non-exclusive license to make, use and sell DVD products utilizing various patents owned by the DVD Patent Licensing Group (the "Group"), of which Toshiba is a member and authorized licensor.[1] On January 31, 2014, Toshiba moved for summary judgment. On February 7, 2014, CDI submitted a pre-motion conference letter seeking additional discovery on five topics pursuant to Federal Rule of Civil Procedure 56(d).[2] For the following reasons, CDI's request is DENIED.


A. Contract Termination by Toshiba

CDI claims that it "is aware of one letter sent by Toshiba to a CDI customer stating that CDI was no longer a licensee of Toshiba"[3] The letter, dated November 27, 2011, is from Koichiro Endo, a regional contact for Panasonic, to Mac Christianson, President of the Mormon Tabernacle Choir. This letter includes a list of licensees in North America and the list does not include CDI. CDI also cites a July 22, 2008 email from Tatsuta Ii, also a representative of Panasonic, [4] to CDI. The July 22, 2008 email warns CDI that it will be "de-list[edr from the Group's public licensee list as a result of its failure to pay royalties and fees.[5] Toshiba's response is simple. First, both emails are from Panasonic and cannot bind Toshiba even though Panasonic was a member and regional representative of the Group. Second, neither letter is a valid termination notice as required by the Licensing Agreement. Finally, the public licensee list, including the list circulated to potential customers, includes only licensees in good standing. Toshiba argues that the fact that CDI was not on the 2011 list merely indicates that it was not in good standing, not that the Licensing Agreement was invalid or terminated.[6]

Toshiba and CDI are the only parties to the Licensing Agreement. Section 5.1 of the Licensing Agreement states that it shall expire on December 31 2007, but will automatically renew unless either party provides written notice of a desire to terminate at least sixty days prior to the expiration date. Section 5.3 of the Licensing Agreement states, in relevant part,

Either party may terminate this Agreement at any time on thirty (30) days' written notice to the other party in the event that the latter shall materially breach or fail to perform any material obligation under this Agreement and such default is not remedied within thirty (30) days after notice is given specifying the nature of the default.

Although Panasonic is a member of the Group, it does not have the authority to terminate the Licensing Agreement. Further, CDI mischaracterizes the substance of both letters because neither indicates Toshiba has terminated the Licensing Agreement, but simply that the Group no longer includes CDI on the public licensee list.

B. Toshiba's "Delay" in Seeking to Enforce the License

CDI asserts that "Toshiba waited more than a decade before initiating the instant lawsuit, and has never provided any explanation for the delay."[7] Toshiba admits that the first alleged breach occurred in 2004, but claims that "laches is not a defense to a contract action for damages" when the case is brought within the statute of limitations period and the party does not seek damages extending past that period.[8] CDI argues that adopting Toshiba's theory would conflate the laches defense and the statute of limitations and allow a party to sit on a claim for decades after the initial breach as long as it only seeks damages for the statutory period.[9]

I need not reach this issue now, [10] because CDI is not entitled to additional discovery on this issue for other reasons. To establish a laches defense under Second Circuit law, a defendant must show "(1) that he lacked knowledge that the claim might be asserted against him; (2) that the plaintiff delayed asserting the claim despite the opportunity to do so; and (3) that he would be prejudiced if the claim were now allowed to go forward."[11] CDI cannot credibly argue that it "lacked knowledge that the claim might be asserted" given the Group's repeated efforts to collect fees and royalties ...

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