Court Opinion

ID: 6554406
Source: CourtListenerOpinion
Date Created: 2022-07-20 17:00:41.237442+00
Date Added: 2024-06-11T13:28:13.634313
License: Public Domain

Appellate Case: 21-1345     Document: 010110713664      Date Filed: 07/20/2022   Page: 1
                                                                                 FILED
                                                                     United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                        Tenth Circuit

                              FOR THE TENTH CIRCUIT                          July 20, 2022
                          _________________________________
                                                                        Christopher M. Wolpert
                                                                            Clerk of Court
  DAVID L. HILDEBRAND,

        Plaintiff - Appellant,

  v.                                                         No. 21-1345
                                                 (D.C. No. 1:19-CV-00067-RM-NRN)
  WILMAR CORPORATION, a                                       (D. Colo.)
  Washington corporation,

        Defendant - Appellee.
                       _________________________________

                              ORDER AND JUDGMENT*
                          _________________________________

 Before TYMKOVICH, Chief Judge, MATHESON, and EID, Circuit Judges.
                  _________________________________

       David L. Hildebrand, proceeding pro se,1 appeals the district court’s entry of

 judgment in favor of Wilmar Corporation. Exercising jurisdiction under 28 U.S.C.

 § 1291, we affirm.

       *
         After examining the briefs and appellate record, this panel has determined
 unanimously that oral argument would not materially assist in the determination of
 this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
 ordered submitted without oral argument. This order and judgment is not binding
 precedent, except under the doctrines of law of the case, res judicata, and collateral
 estoppel. It may be cited, however, for its persuasive value consistent with
 Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
       1
         Because Hildebrand proceeds pro se, we construe his filings liberally but do
 not serve as his advocate. See Garrett v. Selby Connor Maddux & Janer, 425 F.3d
 836, 840 (10th Cir. 2005).
Appellate Case: 21-1345     Document: 010110713664        Date Filed: 07/20/2022     Page: 2

                                      I. Background

        Hildebrand patented a device for removing damaged threaded fasteners, such

 as lug nuts, in 1998.

        In 2009, Hildebrand sued Wilmar for patent infringement. The parties settled

 the matter via a written agreement. “Wilmar agree[d] to compensate Hildebrand with

 $25,000.00 for past and current infringing acts.” Supp. R., vol. II at 112. Wilmar

 also agreed to “pay Hildebrand an ongoing royalty in the amount of 15% of the Gross

 Selling Price of Products sold and covered by” Hildebrand’s patent. Id. at 113. This

 “15% royalty” was to “continue until the expiration date of the” patent in 2015. Id.

 at 114. And “Wilmar agree[d] to continue to pay Hildebrand an ongoing reduced

 royalty/fee of 5% following the expiration of the” patent. Id. The agreement also

 required Wilmar to pay these royalties quarterly, with each payment “accompanied

 by a report of gross sales of Products sold during the quarter being reported.” Id.

        Hildebrand brought this action in 2018, alleging that Wilmar breached the

 contract in several ways, including by its failure to pay royalties for sales occurring

 after the patent expired in 2015, and seeking an accounting.

        The magistrate judge recommended that Hildebrand “be barred from seeking

 damages for unpaid royalties after . . . the date the [patent] expired.” R., vol. I at 73.

 The magistrate judge reasoned that the settlement agreement’s provision requiring

 these payments was unenforceable under Brulotte v. Thys Co., 379 U.S. 29 (1964)

 and Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015), which bar royalty

 payments on expired patents. R., vol. I at 68–69.

                                             2
Appellate Case: 21-1345    Document: 010110713664        Date Filed: 07/20/2022   Page: 3

       The district court accepted this recommendation. It found Hildebrand waived

 an argument the parties had intended the 5% post-expiration payments to compensate

 Hildebrand for past infringements by failing to raise that argument with the

 magistrate judge. See id. at 110. And it found in the alternative that even if

 Hildebrand had not waived his argument, it lacked merit because the parties’ “‘intent

 must be determined from [the] contract language itself,’” and the plain language of

 the agreement undermined this argument. Id. at 111 (quoting Denver Found. v. Wells

 Fargo Bank, N.A., 163 P.3d 1116, 1126 (Colo. 2007)).

       The district court then held a bench trial on Hildebrand’s remaining claims and

 found Hildebrand did not meet his burden of proof. It found that Wilmar fully paid

 the 15% royalties due to Hildebrand during the relevant period before the patent

 expired. It further found that Wilmar had substantially complied with its reporting

 obligations under the agreement and that even if Wilmar had not, Hildebrand failed

 to prove damages resulting from any reporting breach. And it found Hildebrand’s

 claim for an accounting failed because he failed to establish his claim for breach of

 contract.

                                     II. Discussion

       “In an appeal from a bench trial, we review the district court’s factual findings

 for clear error and its legal conclusions de novo.” Sw. Stainless, LP v. Sappington,

 582 F.3d 1176, 1183 (10th Cir. 2009) (internal quotation marks omitted).

                                            3
Appellate Case: 21-1345    Document: 010110713664        Date Filed: 07/20/2022       Page: 4

 A. Enforceability of Section 2.8 of the Settlement Agreement

       The district court concluded Hildebrand could not enforce section 2.8 of the

 settlement agreement because it required Wilmar to make royalty payments for

 selling products covered by an expired patent.2 We agree with the district court.

       “In Brulotte . . ., [the Supreme] Court held that a patent holder cannot charge

 royalties for the use of his invention after its patent term has expired.” Kimble,

 576 U.S. at 449. Kimble observed that “[a] court need only ask whether a licensing

 agreement provides royalties for post-expiration use of a patent. If not, no problem;

 if so, no dice.” Id. at 459. But Kimble also clarified Brulotte’s rule does not bar

 parties from charging fees for non-patent rights or from deferring compensation owed

 “for pre-expiration use of a patent into the post-expiration period.” Id. at 453–54.

       Hildebrand argues Brulotte and Kimble do not apply because the 5% payments

 contemplated by the agreement were not royalties on the expired patent but were

 instead deferred compensation for Wilmar’s prior infringement. He surmises that

 because the agreement denominated the 15% pre-expiration payments as a “royalty”

 and the 5% post-expiration payments as a “reduced royalty/fee,” Supp. R., vol. II at

       2
         The district court also found in the alternative that Hildebrand waived any
 argument the parties had intended the 5% post-expiration payments to compensate
 Hildebrand for past infringements by failing to raise it with the magistrate judge. We
 need not address this alternative finding given our disposition. See Griffin v. Davies,
 929 F.2d 550, 554 (10th Cir. 1991) (“We will not undertake to decide issues that do
 not affect the outcome of a dispute.”).

                                            4
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 114, the 5% payments must have been “part of a deferred compensation,” Aplt.

 Opening Br. at 10. We are not persuaded.

       The agreement expressly states that the compensation being paid “for past and

 current infringing acts” was a $25,000 lump sum payment. Supp. R., vol. II at 112.

 Nothing in the agreement suggests the 5% post-expiration payments were for

 anything other than the ongoing license to sell products covered by the expired

 patent. And Hildebrand does not challenge the district court’s conclusion that it

 could not consult extrinsic evidence to reach a different result.

       Hildebrand also asserts that Wilmar wrote the settlement agreement. To the

 extent Hildebrand intends to make an argument based on this alleged fact, his record

 citation does not show he made any argument based on this alleged fact in the district

 court and he does not argue for plain-error review. See United States v. Leffler,

 942 F.3d 1192, 1196 (10th Cir. 2019) (“[T]he failure to argue for plain error and its

 application on appeal surely marks the end of the road for an argument not first

 presented to the district court.” (ellipses and internal quotation marks omitted)).

 And in any event, he does not sufficiently develop an argument based on this alleged

 fact in his opening brief to invoke appellate review. See Femedeer v. Haun, 227 F.3d

 1244, 1255 (10th Cir. 2000) (“Perfunctory complaints that fail to frame and develop

 an issue are not sufficient to invoke appellate review.” (brackets and internal

 quotation marks omitted)).

                                             5
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 B. Alleged Breach of the Reporting Obligation

        Hildebrand argues the district court erred by finding Wilmar did not breach the

 settlement agreement by failing to provide adequate quarterly reports. But the

 district court found that even if Wilmar breached its reporting duty, Hildebrand’s

 breach-of-contract claim nonetheless failed because “Hildebrand fail[ed] to establish

 any damages.” R., vol. I at 390.

        Hildebrand responds to this point by arguing, without citation, that the district

 court’s legal conclusion that he had to show damages “is without merit.” Aplt. Reply

 Br. at 12. We disagree. See, e.g., W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058

 (Colo. 1992) (“It has long been the law in Colorado that a party attempting to recover

 on a claim for breach of contract must prove . . . resulting damages to the

 plaintiff.”).3

        Hildebrand also asserts that he suffered damages from Wilmar’s alleged

 reporting failures because he “had to pay for the filing of two additional lawsuits to

 get any compliance.” Aplt. Reply Br. at 12. Yet he fails to support this assertion

 with a citation showing he made this damages argument to the district court or

 introduced any evidence supporting it. See Birch v. Polaris Indus., Inc., 812 F.3d

 1238, 1249 (10th Cir. 2015) (“It is obligatory that an appellant, claiming error by the

 district court as to factual determinations, provide this court with the essential

        3
         The agreement states that it is “governed by the laws of the State of
 Colorado,” Supp. R., vol. II at 116, and neither party challenges the district court’s
 finding Colorado law in fact governs the agreement.
                                             6
Appellate Case: 21-1345    Document: 010110713664         Date Filed: 07/20/2022       Page: 7

 references to the record to carry his burden of proving error.” (internal quotation

 marks omitted)). He also fails to provide a citation or argument showing that his

 costs incurred in an unsuccessful prior suit or this suit could count as damages under

 Colorado law. Cf., e.g., Allstate Ins. v. Huizar, 52 P.3d 816, 818 (Colo. 2002) (“In

 the absence of an express statute, court rule, or private contract to the contrary,

 attorney fees generally are not recoverable by the prevailing party in a contract or tort

 action.”). We therefore affirm the district court’s finding that Hildebrand’s

 breach-of-contract claim fails because he did not establish damages.4

                                     III. Conclusion

       We affirm the district court’s entry of final judgment.

                                              Entered for the Court

                                              Allison H. Eid
                                              Circuit Judge

       4
         Given our disposition, we need not address whether the district court erred by
 finding Hildebrand failed to establish that Wilmar had breached its reporting
 obligation. See Griffin, 929 F.2d at 554.
                                             7