United States District Court, S.D. New York
OPINION & ORDER
PAUL A. CROTTY, District Judge.
Plaintiff WiAV Solutions LLC ("WiAV") sues Defendant Skyworks Solutions, Inc. ("Skyworks") for breach of representations and warranties made in connection with Skyworks' sale of rights in a set of patents to WiAV in 2007. For the reasons set forth below, Skyworks' Fed.R.Civ.P. 12(b)(6) motion to dismiss the complaint is denied.
On September 25, 2007, WiAV and Skyworks entered into a Patent Rights Purchase Agreement (the "PRPA"), under which Skyworks sold certain patent rights to WiAV. Compl. ¶¶ 5-6. The agreement represented and warranted that the patent rights conveyed were "free of any encumbrance or licenses (including, without limitation, covenants not to sue, government grants, identification to standard committees, or any other restriction on the rights)." Id. ¶ 7 (the "Encumbrance Representation and Warranty"). The agreement also stated that "Skyworks has the full, sole, and exclusive right and authority to enter into this [Agreement] and to carry out its obligations hereunder without any consent being required from a third party." Id. (the "Authority Representation and Warranty"). Skyworks intended for WiAV to rely upon these representations, and they were an essential part of the parties' bargain in reaching the agreement. Id. ¶¶ 8-9.
In the late 1990s, Rockwell International Corporation, the original owner of the patent rights, participated in the standard setting procedure for a global system for mobile communications in Europe. Id. ¶¶ 16-17. During the standard setting process, Rockwell represented to the European Telecommunications Standards Institute that it would not enforce its patent rights necessary for compliance with the standards established in the process, nor would any of its successors. Id. ¶ 18. Rockwell's statement, a covenant not to sue, constitutes an encumbrance or license within the meaning of the PRPA's Encumbrance Representation and Warranty. Id. ¶ 20. Skyworks was aware of this statement, and the fact that it constituted an encumbrance, when it entered into the PRPA with WiAV. Id. ¶¶ 21-22. WiAV would not have entered into the agreement had it known that any of the representations and warranties were false, and this encumbrance diminished the value of the patent rights. Id. ¶¶ 22-25.
In 2010, the United States Court of Appeals for the Federal Circuit addressed the scope of a 2003 license between Conexant Systems, Inc. and Skyworks. Id. ¶ 11. Pursuant to that license, the Court held that Skyworks had retained the right to license and sue Qualcomm Inc. under the patents in all fields of use (the "Qualcomm Rights"), as Skyworks could not assign the Qualcomm Rights without written consent from a third party. Id. ¶ 12. These rights include the right to license and sue for past, current, and future infringements. Id. ¶ 13. WiAV alleges that this constitutes a breach of the Authority Representation and Warranty because Skyworks could not assign the Qualcomm Rights without the written consent of a third party, and that this breach diminished the value of the patent rights. Id. ¶¶ 14-15.
On January 29, 2009, WiAV and Skyworks entered into a "Joint Defense Agreement, " which stipulated that:
... WiAV hereby covenants that, for as long as Skyworks is in the process of timely curing any subsequent allegation of a breach of the terms of the PRPA that it will not make or assert against Skyworks any claim for breach of the PRPA... [except] if Skyworks fails to cure said subsequent allegation of a breach of the terms of the PRPA within a period of one hundred and eighty (180) days. Notwithstanding anything in this Agreement to the contrary, Parties acknowledge that this Section 11 shall not be interpreted as WiAV's waiver of any remedies available to it for any uncured breach of any of Skyworks' obligations with respect to the PRPA.
Id. ¶¶ 26-27. On January 12, 2011, WiAV's President sent a letter to Skyworks advising Skyworks of the breach of the Authority Representation and Warranty. Id. ¶ 31. On September 21, 2011, WiAV's counsel advised Skyworks of the potential breach of the Encumbrance Representation and Warranty. Id. ¶ 32. In a telephone call, Skyworks' Vice President and General Counsel advised WiAV it would address the issue, but Skyworks has not done so. Id. On November 16, 2011, WiAV requested a meeting with Skyworks to discuss the January 12 and September 21 letters, and Skyworks responded that it was uncertain about what action, if any, was merited at that time. Id. ¶ 33. Skyworks made no effort to cure its breaches following receipt of WiAV's letters. Id.
WiAV filed its Amended Complaint on February 14, 2014. (Dkt. 20). WiAV alleges that the patent rights are substantially less valuable than they would have been had the Authority and the Encumbrance Representations and Warranties been true. Id. ¶¶ 36-37. In addition, WiAV asserts that the contract's limitation of liability for breach of the contract is not applicable because the breach constitutes an instance of fraud, misrepresentation or gross negligence, and therefore WiAV is entitled to direct damages, lost profits, and consequential damages. Id. ¶¶ 38-43. WiAV also asserts a claim for indemnity against Skyworks. Id. ¶¶ 44-47.
I. Applicable Law
Motions to dismiss for failure to state a claim, under Fed.R.Civ.P. 12(b)(6), require the Court to "accept as true all of the factual allegations contained in the complaint" and construe the complaint in the light most favorable to the plaintiff. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 572 (2007) (internal quotation marks omitted). The Court only "assess[es] the legal feasibility of the complaint"; it does not "assay the weight of the evidence which might be offered in support thereof." Lopez v. Jet Blue Airways, 662 F.3d 593, 596 (2d Cir. 2011) (internal quotation marks omitted). To state a facially plausible claim, a plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." ...