NOTE: This disposition is nonprecedential. 

United States Court of Appeals for the Federal Circuit 

2009-1390 

 LAWLER MANUFACTURING CO., INC., 

Plaintiff-Appellant, 

v. 

BRADLEY CORPORATION, 

Defendant-Appellee, 

and 

KEVIN B. KLINE, 

 Defendant. 

Wayne C. Turner, Bingham McHale LLP, of Indianapolis, Indiana, argued for 

plaintiff-appellant. With him on the brief was Shannon D. Landreth. Of counsel on the 

brief was Daniel J. Lueders, Woodard, Emhardt, Moriarty, McNett & Henry, LLP, of 

Indianapolis, Indiana. 

Barry L. Grossman, Foley & Lardner LLP, of Milwaukee, Wisconsin, argued for 

defendant-appellee. With him on the brief was George E. Quillin, of Washington, DC. 

Appealed from: United States District Court for the Southern District of Indiana 

Senior Judge Larry J. McKinney 
NOTE: This disposition is nonprecedential. 

United States Court of Appeals for the Federal Circuit 

2009-1390 

LAWLER MANUFACTURING CO., INC., 

 Plaintiff-Appellant, 

v. 

BRADLEY CORPORATION, 

 

 Defendant-Appellee, 

and 

 KEVIN B. KLINE, 

 Defendant. 

Appeal from the United States District Court for the Southern District of 

Indiana in case no. 1:98-CV-1660,Senior Judge Larry J. McKinney. 

_________________________ 

DECIDED: January 27, 2010 

__________________________ 

Before LOURIE, SCHALL, and BRYSON, Circuit Judges. 

Opinion for the court filed by Circuit Judge SCHALL. Dissenting opinion filed by Circuit 

Judge BRYSON. 

SCHALL, Circuit Judge. 

DECISION 

 Lawler Manufacturing Co., Inc. (“Lawler”) appeals the order of the United States 

District Court for the Southern District of Indiana in Lawler Mfg. Co., Inc. v. Bradley 
Corp., No. 1:98-CV-1660-LJM-JMS (S.D. Ind. April 29, 2009) (“Order”). In the Order, 

the district court denied Lawler’s motion for an order terminating the license agreement 

between Lawler and Bradley Corporation (“Bradley”). We affirm. 

DISCUSSION 

I. 

 Lawler sued Bradley in the Southern District of Indiana for patent infringement 

and misappropriation of trade secrets. Eventually, the parties settled the suit. As part 

of the settlement, Lawler and Bradley entered into a license agreement. The license 

agreement granted Bradley the right to manufacture and sell valves covered by Lawler’s 

patents in exchange for royalty payments. Several provisions of the license agreement 

are pertinent to the present dispute. 

Under Section 2.4 of the agreement, Bradley was required to mark licensed 

products with the patent numbers of applicable Lawler patents. Section 5.3 of the 

agreement gave Lawler the right to appoint an independent certified public accounting 

firm to investigate and analyze Bradley’s records and those of its affiliates to determine 

whether Bradley was accurately and correctly reporting the amount of royalties due 

under the agreement. Section 5.3 also provided that if the accounting firm’s 

investigation revealed an underpayment in excess of $ 5,000, Bradley would be liable 

for the costs of the investigation. Section 5.4 of the agreement provided that if the 

accounting firm’s investigation found an underpayment of royalties by Bradley and/or an 

affiliate, Bradley was required, within thirty days, to pay Lawler the additional royalties 

found to be due, plus interest. Finally, Section 8.1 of the agreement provided for 

termination of the agreement upon a party’s default. It read as follows: 

2009-1390 2
Any one or more of the following events shall constitute an event of default 

under this License Agreement: (i) the failure of Bradley or an Affiliate to 

pay any Royalties when due hereunder and the expiration of fifteen (15) 

days after receipt of a written notice from Lawler requesting the payment 

of such Royalties; and (ii) the failure of a party to perform any other 

obligation required to be performed hereunder, and the failure to cure 

within sixty (60) days after receipt of notice from the other party specifying 

in sufficient detail the nature of such default. Upon the occurrence of any 

event of default, the non-defaulting party may deliver to the defaulting 

party written notice of intent to terminate, such termination to be effective 

thirty (30) days after the date set forth in such notice. 

A203. 

II. 

 On December 22, 2003, Lawler sent Bradley a letter stating that, based upon the 

investigation report of the accounting firm KPMG, Lawler had concluded that Bradley 

had underpaid royalties for the years 2001 and 2002. Bradley wrote: “Under Section 

5.4 of the License Agreement, Lawler demands that Bradley pay within thirty (30) days 

additional royalties of $ 22,018.41 plus interest in the amount of $ 5,911.87 for a total of 

$ 27,930.28.” In addition, citing section 5.3 of the agreement, Lawler wrote that Bradley 

was required to reimburse it for the costs of KPMG’s investigation. Lawler’s letter 

further stated that the KPMG investigation had revealed that “Bradley continues not to 

mark its valves with all pertinent Lawler patent numbers.” The letter referred to this 

alleged conduct of Bradley as “a serious breach of the License Agreement.” The letter 

concluded with the following sentence: “All of these matters need to be addressed and 

resolved or Lawler will have no choice but to resort to the default and termination 

provisions of the License Agreement.” 

 By letter of counsel dated January 15, 2004, Bradley responded that it had not 

underpaid royalties, and it requested further information from Lawler concerning its 

2009-1390 3
claim that Bradley had failed to mark its products with the numbers of Lawler’s patents. 

This letter was followed by further correspondence between Lawler and Bradley, 

culminating in an exchange of letters in the latter part of June 2004. On June 21, 2004, 

Lawler sent Bradley the following two-sentence letter: “Enclosed is the detail you 

requested supporting KPMG’s bill. Lawler’s demand made in its December 22, 2003 

letter stands.” Bradley responded on June 29, 2004. Bradley’s letter stated that, as it 

had explained it its previous letters, it had not underpaid royalties and was not required 

to reimburse Lawler for the costs of the KPMG audit for calendar years 2001 and 2002. 

On September 9, 2004, Lawler sent Bradley a letter stating that Bradley’s August 16, 

2004 refusal to allow Lawler’s auditor to review royalties payable for 2003 constituted 

“an event of default under the License Agreement.” 

On August 26, 2005, Lawler sent Bradley a letter stating that, on July 22, 2005, 

Lawler had provided Bradley with specific marking instructions and that subsequently, 

on August 17, 2005, Bradley had informed Lawler that it would not comply with those 

instructions. Lawler concluded its letter with the following statement: “Please be 

advised that Bradley’s refusal to mark . . . , despite Lawler’s specific instructions, 

constitutes an event of default pursuant to Section 2.4 of the . . . License Agreement.” 

 Four months later, on December 20, 2005, Lawler sent Bradley a letter with the 

following caption: 

Re: Bradley’s Continued Failure To Follow Lawler’s Patent Marking 

 Instructions; Termination of License Agreement

In the December 20 letter, Lawler recited what it characterized as Bradley’s election “not 

to engage in the required patent marking or to correct its prior patent marking 

2009-1390 4
deficiencies in a manner that complies with the License Agreement.” After doing so, 

Lawler informed Bradley that is was terminating the license agreement: 

Given Bradley’s continued default under the License Agreement, Lawler 

hereby notifies Bradley that, pursuant to Paragraph 8.1 of the License 

Agreement, the License Agreement is hereby terminated by Lawler. This 

termination will be effective thirty days from the date of this letter, on 

January 19, 2006. Pursuant to Paragraph 8.2, this termination will not 

relieve Bradley of its responsibility for breaches of the royalty payment and 

other provisions of the License Agreement. 

A208-09. 

III. 

 On July 15, 2008, Lawler moved in the district court for an order enforcing 

termination of the license agreement and determining royalties and damages owed to 

Lawler by Bradley. This motion came on the heels of the decision by this court that 

reversed and remanded the June 22, 2007 order of the district court denying Lawler’s 

earlier February 8, 2006 motion to terminate the agreement. See Lawler Mfg. Co., Inc. 

v. Bradley Corp., 280 Fed. Appx. 951, 956 (Fed. Cir. 2008) (noting there was 

“insufficient evidence before this court to determine whether Lawler properly notified 

Bradley of its failure to pay any royalties or of its intent to terminate the license 

agreement.”).

As noted above, the district court denied Lawler’s motion on April 29, 2009. 

Order. In so doing, the court rejected Lawler’s contention that it had properly notified 

Bradley on December 20, 2005, that it was terminating the license agreement for 

underpayment of royalties and that the license agreement expired pursuant to its terms 

thirty days later on January 19, 2006. Relevant to our disposition of the case, the court 

determined that Lawler’s December 20 letter to Bradley did not inform Bradley that 

2009-1390 5
Lawler was terminating the agreement for underpayment of royalties. Order at 5-6. The 

court thus concluded that Lawler had failed to comply with Section 8.1 of the license 

agreement. Lawler has timely appealed the Order. We have jurisdiction pursuant to 28 

U.S.C. § 1295(a)(1) 

IV. 

 The answer to this case lies in the sequence of events set forth above. 

Thereafter, on December 22, 2003, Lawler wrote Bradley presenting a demand under 

Section 5.4 of the license agreement for the payment of royalties. Significantly, in the 

last paragraph of the letter, referring to the royalties issue and Bradley’s alleged failure 

to patent mark, Lawler stated: “All of these matters need to be addressed and resolved 

or Lawler will have no choice but to resort to the default and termination provisions of 

the License Agreement.” We read this statement as Lawler telling Bradley that it was 

not then terminating the license agreement but that if the matters noted in the letter 

were not resolved, Bradley would proceed to terminate the agreement under Section 

8.1. 

 Thereafter, following Lawler’s December 22, 2003 letter, there ensued 

correspondence between Lawler and Bradley concerning royalties. This 

correspondence continued through June of 2004. On June 21, 2004, Lawler reiterated 

the demand made in its December 22, 2003 letter. On June 29, 2004, Bradley 

responded that it had not underpaid royalties. We do not read any of the 

communications from Lawler during this period or thereafter during 2004 as signaling to 

Bradley that it was “resort[ing] to the default and termination provisions of the License 

Agreement.” 

2009-1390 6
 The next pertinent correspondence in the record before us is Lawler’s letter to 

Bradley dated August 26, 2005. In that letter, Lawler complained to Bradley about what 

Lawler described as Bradley’s refusal to comply with Lawler’s patent marking 

instructions. Subsequently, on December 20, 2005, Lawler gave Bradley notice that, 

pursuant to Section 8.1 of the license agreement, it was terminating the agreement for 

failure to follow Lawler’s marking instructions. (This ground for termination was rejected 

by the district court in its June 22, 2007 order, and Bradley did not appeal that ruling.) 

The letter made no mention of termination for underpayment of royalties. 

 We see no error in the decision of the district court. In our view, the critical point 

is that in its letter of December 22, 2003, Lawler expressly stated that if the matters 

discussed in the letter—one of which was the alleged underpayment of royalties—were 

not resolved, Lawler would exercise its default and termination rights under the license 

agreement. Lawler thus informed Bradley that if, in the future, circumstances 

warranted, it would proceed under the notice and termination provisions of Section 8.1 

of the agreement. As seen, however, Lawler never pursued that course with respect to 

the underpayment of royalties. It only did so with respect to patent marking. 

 Lawler argues that its December 20, 2005 letter did give notice that it was 

terminating the license agreement for underpayment of royalties. It also argues that, in 

any event, in its February 8, 2006 motion for an order enforcing termination of the 

agreement it gave the required notice and that the agreement was therefore terminated 

under Section 8.1. 

 We do not agree with either of Lawler’s arguments. It is true that in its December 

20 letter Lawler stated that its termination action “[did] not relieve Bradley of its 

2009-1390 7
2009-1390 8

responsibility for breaches of the License Agreement.” However, this statement, to 

which Lawler points, was in our view a reservation of rights rather than a notice of 

termination. Moreover, we think the statement underlined the fact that Lawler was only 

terminating the agreement based upon Bradley’s alleged failure to mark. 

 Neither do we think Lawler fares any better with its argument based upon its 

February 8 motion. It is true that the brief submitted in support of the motion 

referenced, among other things, Bradley’s alleged underpayment of royalties. The fact 

remains, however, that the February 8, 2006 motion arose from Lawler’s December 20, 

2005 letter, which was limited to patent marking. We are not prepared to hold that, 

having stated in December of 2003 that it would proceed under the default and 

termination provisions of the license agreement if certain matters were not resolved, 

and then having done so solely with respect to patent marking in December of 2005, 

Lawler then could piggyback a notice of default termination for underpayment of 

royalties onto its February 2006 motion. 

For the forgoing reasons, the Order is affirmed. 

 Each party shall bear its own costs. 
NOTE: This disposition is nonprecedential. 

United States Court of Appeals for the Federal Circuit

2009-1390 

LAWLER MANUFACTURING CO., INC., 

Plaintiff-Appellant, 

v. 

BRADLEY CORPORATION, 

 Defendant-Appellee, 

and 

 KEVIN B. KLINE, 

 Defendant. 

Appeal from the United States District Court for the Southern District of Indiana 

in case no. 1:98-CV-1660, Senior Judge Larry J. McKinney. 

 

BRYSON, Circuit Judge, dissenting. 

 Section 8.1 of the License Agreement at issue in this case defines an event of 

default to include Bradley’s failure to pay royalties when due, followed by a written 

notice from Lawler requesting payment of the royalties. That section of the Agreement 

further provides that upon the occurrence of any event of default, “the non-defaulting 

party may deliver to the defaulting party written notice of intent to terminate, such 

termination to be effective thirty (30) days after the date set forth in such notice.” 

 Although Lawler’s efforts to give notice of default and notice of termination were 

inelegant, they were sufficient to satisfy the requirements of the agreement. The 
2009-1390 2 

December 22, 2003, letter from Lawler advised Bradley that it had underpaid royalties 

(an assertion that was subsequently determined to be true). Because the License 

Agreement merely required written notice requesting payment of royalties in order to 

provide notice of default, that letter was sufficient. And even if it was not, the 

subsequent letter sent by Lawler on June 21, 2004, which stated that Lawler continued 

to press the demand made in its December 2003 letter, was surely sufficient notice of 

default. 

 As for the required notice of termination, the December 20, 2005, letter advised 

Bradley of Lawler’s intent to terminate the agreement, which is all that section 8.1 of the 

agreement required. The district court, and now this court, have found the December 

20, 2005, letter insufficient because it failed to identify, with sufficient specificity, the 

shortfall in royalty payments as the cause of the claimed default. But the License 

Agreement does not require the termination letter to specify the cause of the default as 

long as a sufficient notice of default has previously been sent. 

 Even if specificity were required, the December 20, 2005, letter referred to 

Bradley’s “continued default under the License Agreement” and alluded to Bradley’s 

“breaches of the royalty payment and other provisions of the License Agreement.” And 

even if that constituted insufficient notice of termination, the February 8, 2006, pleading 

filed by Lawler, which contained a lengthy section complaining of the underpayment of 

royalties, satisfied any requisite specificity as to the reason for termination. 

 For the foregoing reasons, I would rule that Lawler’s notice of default and notice 

of termination were sufficient to satisfy the requirements of the License Agreement and 

would reverse the contrary decision of the district court. I therefore respectfully dissent.