good morning your honour's medleys of court gregory favre for the appellants i would like to reserve three minutes of my time if i could keep track great so i'd like to talk in just a bit about how the district court committed reversible error number one by refusing to apply the unclean hands analysis and in fact refusing to so much as mention much less consider discuss our extensive and uncontroverted evidence that we presented to the district court of the car dash ins rampant blatant and willful violations of my client's rights in the very same marks pursuant to which they seek relief and incidentally these violations to be clear are violations of lanham act section forty three a they are not merely contractual violations and the district court d so based on a standard that the district court itself fashion that is nowhere to be found in this court's precedent and is in fact contrary to it number two by refusing to perform the prior material breach analysis which even the car dash ins now in their answer brief conceded is necessary and refusing to so much as mention once again are evidence of the pr material breaches and did so based on what we feel is a misinterpretation of out of circuit non binding cases stemming from the third circuit's opinion  and so you think you feel the bend i think there was the mcdonald's case maybe from whatever that other circuit is eleventh circuit i think those two cases seem to me to be most on point and you think they're wrongly decided and we shouldn't basically incorporate them as part of our circuits  you which the district court in this is on page twelve twelve of it's opinion said you don't have to consider prior material breach it doesn't matter if the license was validly terminated well let me just walk you through how i read applying here and then you've stopped me to correct me because it's not in your favor so i read those cases as saying there needs to be this record does need to make sure that the license agreement was properly that the terminations was proper i think circumstances and then the question for the district court is do those circumstances exist right so here the your punnets argument is that they terminated because there was nonpayment of royalties right there's no dispute that royalties in fact were not paid you then so you're your position is that no royalties are due under the contract because they had before that breach basically from the get go but i don't know no royalties or do under the contract because they never invoice because number one they express lee announced that they're claiming we're do our amounts that they voluntarily agreed to give up in exchange for the express provisions of the license agreement that require invoices to be sent and govern how and when payments are to come due under the license agreement those have never been complied with now i would also say so just to be there an invoice provided ok because so your position is that we were never under the provisions of the agreement no royalties became do quote unquote due until unless until we got an invoice and they never sent that correct and that's a requirement for wrong and it's disingenuous first of all the payment provisions the car dash ins they're in there for a reason the car dash ins and this is why they haven't taken their forty percent interest in the company that distributes their line if they're worried about tax tax consequences so they they say well we were thwarted from issuing invoices by failure to issue quarterly statements not true we gave them we sent them for the first  quarter the all of the information they needed including the calculation of how much their invoice to us should be they never issue they never issued an invoice to me that record saying something i don't timing of payments for tax reasons so they did what they wanted control over when payments came due that's where in the record with that that was their concern well again this is a preliminary injunction record so the evidence is is more like fuse we have evidence in the record that that was their concern with taking their forty percent interest in haven and i can say from my clients extensive means with them tax concerns are par uncontroverted believe it maybe your seven eleven though my colleague is is checking that out but the extent of the court says well you know what why would they not send invoices there's a good reason for it so designated specific agent for issuance of invoices under the license agreement we proactively contacted them and say said hey how do you want to deal with this what do you want to do given that your agent for issuing invoices is no longer there they never responded we contacted them twice in june of two thousand and fifteen never never a response so they voluntarily chose not to seek to issue invoices they have never asked us for quarterly statements and this is important formally informally or otherwise aside from complaining about this issue in their legal briefs and that is that is telling also under section five easy there is an express provision that says that they have the right at any time to inspect our books for the specific purposes let me just i don't know how much that's what i just ask you about as i just think your interpretation the contract is wrong in the sense that you think because they didn't send you an invoice the the realties never became due there's that little clause this is what i want you to tell me why my reading of this is wrong it says it being understood that any failure let's just focus on failure in generating or delivering an invoice shall not a fact of life some source rights to receive the amount due i read that as saying the amounts are due regardless of whether they send you an invoice and their failure to generate that doesn't in any way relieve you of the obligation to finish the reason i think it's wrong your reading is wrong is because as i understand it when this agreement was originally drafted it was joined with the guaranteed minimum royalty payment provision right and so the assumption was that they are going to be getting a check every quarter no matter what this whole five eve provision is just to figure out what the adjustment to that is whether they're going to get more than the minimum or maybe i guess i think there is a provision where they could get kind of a credit against them if the sales were below right that's not that's not quite right it's an annual guarantee payments were minimum annual payments so they would be made annually and then the separate in every way sorter now what's a if it was every quarter quarterly guaranteed and you could be right and i'm hearing to my right hand side that it was quarterly i did so so my understanding was so what i'm reading this to say when you understand it was in conjunction with the guaranteed royalty payment provision is that sure we're going to generate these invoices that w send to you after you give us the doubt on the sales so that we can figure out what adjustment needs to be made to the guarantee payment that you've already given us but the failure of on our part or a delay on our part to generate the invoice doesn't in any way it doesn't affect and in any way the fact that the amounts are due and owing now it's just that right i would say what is that right you're correct with respect to the guarantee payments because there is a due date for those to come due independently of any invoices being sent but with respect to once they gave up the guaranteed payments in exchange for quintuple in their stake in the company that owns the line from eight percent to forty percent there were no payments that came automatically do under this  under the agreement and the question that the district court and maybe you can ask the car dash ins that no one has answered is if these royalty payments came due when did they come d because under the plain terms of the agreement that the parties struck section five e says these come do five business days i believe it is after the end issu an invoice that's when you have to pay and i would say that part of the provision that years you're talking about was meant to say that any delay doesn't affect the guaranteed payments coming due part of that was also just to make clear that the provision i was reading has nothing to do with the guaranteed payment is in five it's dealing with the regular or whatever you call the regular royalty payments that will you listen to the it to the extent that you're talking about regular royalty payments there is one way for those to become due on under the contract and that's an invoice is sent then they are due five business days after the and the invoices is sent that's why when they can't come do under the contract there is no other provision for their new them to come to and they can't just magically come do under the contract there's no there there is just no provision for that we would have no idea when or in what amount so such payments came to look at why wouldn't a reasonable interpretation of the contract give again given that this guaranteed payment was in there for vision was in there before that the royalties became to every quarter that was the point at which you were obligated to send them the statements and so i mean assuming that  s of covered products occurred right during that quarter that once the quarter ends whether you send them the data necessary to generate the invoice or not if they're owed whatever the percentage is on the wholesale sales simple answer because that's not what the contract says it could have said that payments come due at the end of each quarter automatically if it could have said that fully admit that it does not paragraph on section five he expressly sets when and how payments come due under the contract for ordinary royalty payments and that is tied expressly the timing there is no other timing provided it was something that the parties bargained for their sophisticated parties maybe it's not the best mechanism maybe it is i have i'm agnostic as to that but that's the mechanism that the parties provided for and that's when the payments come due under the bargain that the party struck and i realize i'm way beyond reserving three three corporations i do want to start just where we left off on this invoice issue the contract in five the very specifically says they have to send us accounting statements thirty days at the end after the end of the contract report now they say that we never asked for that on february twenty sixth two thousand and sixteen again on april first two thousand and sixteen and again on june twenty second  two thousand and sixteen and i can give you the record cites for those letters that they're in volume six of the excerpts of our letters we say we want to be paid we list the minimum guarantees and i can talk about that but we also say we want to be paid the earn product  royalty statements now if there was confusion on the part of our licensee about what they needed to pay us they could have picked up the phone they could have emailed us they could have done anything what did they do they sued us for one hundred eighty million dollars twenty days after we sent our first demand for payment in state court in violation of an arbitration clause and that's now in a big arbitration that includes all of this so if there's a specific duty of good faith and fair dealing in every contract but it's actually laid out specifically in this contract that paragraph seventeen so when we ask for payment if there's some confusion on their side and there's a duty of good faith pick up the phone and call us trying to figure out ask you to respond just forget about the you guys have a long history with each other it's obviously pretty acrimonious just as a matter of contract interpretation respond to your opponent's argument that in fact sorry in fact there is no due date paid to anything other than the sending of an  payment is not due and if we think of the duty of good faith and fair dealing where we are in licensing them really valuable intellectual property and we're saying we want to get paid for its use because we haven't been paid in four years and their response is never to raise this invoice issue by the way this invoice issue was was first raised in this lawsuit so we sent our lives there but was never spots well they're responsive is is something that if there's anything you can look at in this case the response is it's just it's unbelievable frankly the response was on july seventh two thousand and sixteen we've given them a ten day notice ten business days no this onslaught on june twenty second giving them ten business days which turned out to be about fifteen days and said please and we actually weighed the guarantees we said forget about the guarantees we know there's a dispute about that we just want our legal fees which is something they can never explain why just as an aside the term sheet that they're saying waves guaranteed minimum royalties homma nor will any be paid unless and until your clients compensate my client for the considerable damage sustained as a result of your client's breaches and in the last sense of that paragraph says until my client is made any monies due to the card ashes are properly withheld as an offset to my client's damages and what are his client's damages look in the records thirteen sixty four where they demanded one hundred eighty million dollars between ten and one hundred eighty million dollars so what he was exceptionally saying was we're never going to pay you a dime until you somehow make up these made up damages claims of one hundred eighty million dollars and what he's saying is we can hold that as an offset ok that's what he told us and that's why we terminated at the next set and he has never or excuse me the defendant has never defended him before judge selma or here that he was entitled to determine that we have they have been damaged by between ten and one hundred eighty million dollars and they keep money as an offset because that kind of argument would be rejected out of hand it's violates the duty of good faith and fair dealing the california courts as do i believe the federal courts don't like self help so basically told us we're never going to pay  ok so your argument is that the royalties became do on february twenty sixth when you sent the demand might my argument would be well in context here the royalties were already do as of let's say thirty days of the of the last quarter of two thousand and fifteen now what had been going on here in reality was both sides were not demanding performance from the other as judge selma specifically held both sides were in a joint effort to try to find you know prince charming to come and rescue them out of this you know marriage of necessity and it didn't happen so we finally said ok guys we're going to have to be in business together so we want you to pay us so the money was already do we just hadn't demanded performance of it and we gave them an opportunity to g if january thirtieth well wait a minute because this is my point let's say that you forget about the actual acrimonious history you guys have here let's say that you never sent them an invoice for two years they never and then you just decided to terminate the contract and today royalties were do you didn't pay i'm sorry you're out of luck i soon that you'd have to at least have done something in the enterable to demand payment right absolutely correct the contract says you have to give a notice an opportunity to cure ok  that's what i'm asking if we were going to determine because i think we have to determine for it to ruin your favor that royalties were in fact to do that's what permits you to terminate the contract on the ground that you asserted so when that's i think it's a fair question from you're going to so when one did the royalties become do iraqis became due at the end of every contract quarter the royalties were due they were also the second thing was they hadn't paid the attorneys fees which were due whenever they say that they're guaranteed minimum somehow disappeared because that term sheet whenever that happened the attorney's fees became too because those were joint those were joined together they can't have their cake and eat it too and they've never explained that so they were do what i would say is they were technically due at the end of every quarter but we could not terminate without first giving them a notice an opportunity to cure we were not doing that because acrimonious yeah it was acrimonious beginning in two thousand and sixteen but in two thousand fifteen we were actually trying to work together and and find a solution to basically both sides bad investment and another company that led to this so it became do it gets it in an esoteric sense it becomes due at the end thirty days of after the end of every calendar court but we have no right to terminate until we give a notice an opportunity care which we give them three notices opportunities to cure we are very patient with them but i do want to say that the injunction could be affirmed even without the terminations and that's because judge selma specifically found that the actual products at issue here had been disapproved by us i mean if you look at the record on that the e mails from our client from our client could not have been more clear he says we are not approving any products and under paragraph seven and this is key to every trademark license because the license or has to exercise control over the products or else it's naked licensing in the trademarks not good we have to approve everything they sent us products to approve and we're scratching our heads because they just told us to go take a hike and we wrote them an email that could because if they the contract required us to consent to all uses of art of our names images in like this which makes sense they don't want them just going out making products without a scene that we expressly disapprove those products so you have the contract was still in effect judged on the specific finding and i just want to make this clear it was at the first volume of the excerpts at page eighty nine twice as we expressly disapproved of those products and then found out they weren't sold to many but even if the contract remained in force your point is that you were still not really sure i agree that the ninth circuit wouldn't have affirmed in that case was a bench trial and in any event that they never asked a cell not to apply that standard below and so i don't think it would be fair to  standard that no one really asked him to apply and i think that the one point that i would i'm happy to close unless you have arguments about questions about the bond or anything like that but the one thing i just want to just make very clear is that i wish we had said ahead and proceeded towards a permanent injunction no so let me explain what's going on in the district court which is actually another good point here that the contract is an arbitration clause that allows for injunctions so we are now in a jam is arbitration that is absolutely proceeding before forward they're making all their arguments there were making all these arguments this injunction is merely in place pending that arbitration assuming we hope that the arbitrators agree with us that we properly terminated we assume that we will get a permanent injunction or this license expires i think by its terms in may of next year so it won't really matter anymore unless they were which i can't imagine they would you know it's going to go forward after the license or well we've we've tried to make clear in our sparse form versus united press that we expect counsel to go ahead below and they shouldn't rely on any decision we make here because they'll be different facts and different standards  but if i understand correctly that you're not going forward on all in that case because you hope to dispose the entire litigation by this arbitration yes so this case this entire case we filed it is a complaint only for injunctive relief and it was then moved into arbitration so what would have been going on in the district court had there not been an arbitration clause is now going on in the arbitration so we are doing what this court has said to do which is to go forward with your case and not rely on the preliminary injunction we're we're definitely going forward our clients are going to test it out they're spending a lot of money on an arbitration about these very issues and is the district court been advised there's time out oh yeah the district court entered a stay of the litigation that is of as instructed us to as that they as they usually do to provide status reports every i think six months and i think we're doing that to the district court so he's fully aware that there's an arbitration going on i think he's he's happy that he's not dealing with a problem thank you for thank you don as is so i think it is extremely telling that counsel just said royalties come came due on january thirtieth twenty sixteen that is i mean the parties could have provided for that but they did not it is nowhere to be found in the license agreement and we still haven't gotten an answer as to when royalties came due if they came due with respect to their claim that they expressly disapproved first of all the all mr comp had sent a letter on april fourth accusing us of breaching the license agreement by failing to launch the updated product line that we were in the process of developing earlier and said that the old line was embarrassing and that it needed a facelift so then we sent to them the updated product line which when we launched it for the couple of days we were able to sell it it got rave reviews and what they did with that was they said well tom wilson sent a letter saying well we got your stuff we were not going to respond but don't take our silence that was his word as approval well if you look at the license agreement some license agreements say that if you don't expressively approve products it's deemed to disapprove this license agreement says if you don't expressly disapprove products within seven days i believe it is they are deemed approved so here they said we're just going to be silent on the matter and that is that was todd that was an email from todd wilson so there is that with respect to the june seventh letter that was a letter from me i can tell you i never said that we are never going to pay he wanted a license agreement i said a couple of true things number one no royalties are due at this time and number two you guys are in prior material breach both parties were rampantly and exchanging letters accusing the other of breach and we just said you're in prior material breach so you're not in a perfect in a position at this  correct and you know they've tried to accuse us of somehow thwarting settlements gusher and that's just simply not true we've participated just as much as they have they've at times wanted to dictate the terms of it we were trying to set up an in person meeting at our offices to discuss and finally a seated to their demands and put the principles got our principles of hilarity and haven on the phone with their principals to try to discuss and settle the matter and  it did not work out so let me let me ask you do you agree with counsel said that they it's all time out below and yes you also agree that this arbitration  set to try and settle everything see one have to go back to the district court with the exception of pot well there are two exceptions possibly the permanent injunction and then also with respect to the claims against individuals judge below i would i would guess that whoever prevails in the underlying arbitration is going to do their thing and then i'm concerned about is is that we're at a stage now where as former chief judge chambers said we're going up the hill without a payload it makes absolutely no difference what we do now because it's time out and in less the arbitration of a both who you are agreeing to an entering into would you be offended if we consider the idea that we'll just hold back further work on this case until we find out that our work is relevant is are something that you need a final decision on a  that's a good question and determination is is vital on our appeal right now the status of haven is it's just a dormant shell that doesn't have anything to do because it has been enjoined from selling the only product that it's ever sold so it would be very vital to us to get a decision here to get a decision here on inclement ery injunction vacating the preliminary injunction yes  injunction which has nothing to do with whether or not the arbitration is going forward and you don't plan to do anything in the district court until there is an arbitration and finalization correct but the preliminary injunction right now prevents us from doing business and so it's vital to get a determination one way or another whether we're able to resume selling the products that we have a license to sell or or we're not and we can't we  judge selma ruled that we were in joined from selling the products that we've been selling now for that we had been selling for a year and i have previously pursuant to the valid license  client base that yes we answer yes you want to resume your operations while the arbitration is ongoing yes yes i believe that's the that's the case and i think you know as in addition to that that that that  believe would help facilitate some sort of a resolution of the issue because it doesn't seem that there are very good feelings between the parties and their duties on both sides to be performed but right now two years