22 - memorandum in opposition

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA

ALEXANDRIA DIVISION

CURTIS A. EVANS, WHIPGOLF, LLC

Plaintiffs,

v.

PLUSONE SPORTS, LLC, ALEX VAN ALEN,

Defendants.

Civil Action No. 1:15-cv-683-CMH-TCB

DEFENDANTS OPPOSITION TO PLAINTIFFS

MOTION FOR PRELIMINARY INJUNCTION

Defendants PlusOne Sports, LLC (PlusOne) and Alex Van Alen (Van Alen) submit

this opposition to the motion for preliminary injunction filed by Plaintiffs WhipGolf, LLC

(WhipGolf) and Curtis A. Evans (Evans).

INTRODUCTION

Plaintiffs filed their two-count complaint for breach of contract on May 29, 2015. (Doc.

1.) Defendants moved to dismiss Plaintiffs complaint on June 24, 2015. (Doc. 9.) On July 2,

2015, Plaintiffs filed their motion for a preliminary injunction. (Doc. 14.) Argument on

Defendants motion to dismiss and Plaintiffs motion for a preliminary injunction is set for July

17, 2015. One fact resolves all pending issues there is no contract to enforce.

In November 2014, the parties prepared a Term Sheet. The Term Sheet merely

outlined the provisions of a license agreement the parties expected to negotiate, and it left

numerous material terms and issues unresolved. Under Virginia law, the Term Sheet is precisely

the type of agreement to agree that is invalid. Similarly, under Massachusetts or Delaware

Case 1:15-cv-00683-CMH-TCB Document 22 Filed 07/15/15 Page 1 of 29 PageID# 162

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law, the terms are too incomplete, indefinite, and informal to be enforced. Not only that, but the

last sentence of the Term Sheet recites that the parties were to subsequently negotiate,

memorialize, and execute a written binding Non-Exclusive License Agreement. That language

alone confirms that the Term Sheet was not intended to be binding or anything other than the

starting point for negotiations of a complex license agreement.

Nevertheless, Plaintiffs move the Court for the extraordinary remedy of a preliminary

injunction. Plaintiffs motion must be denied: First, Plaintiffs cannot show that they are likely to

succeed on the merits of their breach of contract claims. There is no enforceable contract.

Second, Plaintiffs cannot show that they would be irreparably harmed in the absence of

injunctive relief. If any relief is due (it is not), monetary damages suffice and are not difficult to

ascertain. Third, Plaintiffs cannot show that the balance of equities tips in their favor. Equity

strongly favors Defendants. Fourth, Plaintiffs have not shown that an injunction is in the public

interest. An injunction would stop PlusOne from filling orders for people relying on PlusOne to

deliver FlingGolf equipment, and it would hinder the advancement of a dynamic, inexpensive,

and fun new sport.

Plaintiffs have to demonstrate that they can satisfy all four of the requirements for a

preliminary injunction. They cannot satisfy one.

FACTUAL BACKGROUND

Set out below is a lengthy factual background, as a detailed description of the parties

relationship and dealings may aid the Courts assessment of certain factors in its preliminary

injunction analysis (e.g. irreparable harm and the balance of equities). It bears noting, however,

that the Term Sheet speaks for itself. Because the Term Sheet is, patently, an agreement to

agree and is incomplete, indefinite, and informal, it is unenforceable. Plaintiffs instant motion


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may be resolved on this basis alone (and Plaintiffs complaint should be dismissed on this basis

as well, see Docs. 9-10, 19).

FlingGolf

FlingGolf is a dynamic new sport. It was invented and developed by Van Alen. (See

Declaration of Alex Van Alen in Support of Defendants Opposition to Plaintiffs Motion for

Preliminary Injunction (Van Alen Dec.) at 2-14, 28.)

FlingGolf is played with a FlingStick, which is shown below:

(Id. at 14.)

In FlingGolf, players fling (i.e., throw) a golf ball along a golf course and putt with the

face of the FlingStick. (Id. at 7.)

In the summer of 2012, Van Alen began developing the FlingStick. (Id. at 3-4.) He

began with a Jai-alai basket, and he spent thousands of hours developing different prototypes

until, finally, he had the FlingStick. (Id. at 3-5, 9-12.) The below image depicts the

evolution of Van Alens product from Jai-alai basket (on left) to FlingSticks (on right).

(Id. at 5.)


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PlusOne is a limited liability company that Van Alen organized on February 1, 2013. (Id.

at 11.) PlusOne began selling FlingSticks in June and July 2014. (Id. at 13.)

Today, FlingGolf is being played in states throughout the country, several provinces in

Canada, and several countries in Europe. (Id.)

Negotiations Between PlusOne And Evans Up To And Including Nov. 3, 2014

On July 29, 2014, PlusOne became aware of U.S. Patent Application No. 13/779,676

(the 676 Application), which names Evans as inventor. (Id. at 15; see also Declaration of

Edward R. Gates in Support of Defendants Opposition to Plaintiffs Motion for Preliminary

Injunction (Gates Dec.) at 4.)

Following review of the 676 Application, PlusOne reached out to Evans to discuss a

potential license, and negotiations commenced shortly thereafter. (Gates Dec. at 5; Van Alen

Dec. at 16.)

In August 2014, Van Alen sent a FlingStick to Evans, at Evanss request. (Van Alen

Dec. at 17.) At this time, Evans was not manufacturing or selling any throw golf products.

(Id.) WhipGolf, formed at the end of October 2014, did not exist. (Id. at 15.)

In September 2014, Van Alen flew to Virginia from Boston to meet with Evans in

person. (Van Alen Dec. at 18.) Shortly after this September 2014 trip, Van Alen sent to Evans

two additional FlingSticks and five FlingGolf hats. (Id. at 19-20.)

On November 2, 2014, Evans and PlusOne signed a Term Sheet. PlusOne emailed a

copy of the signed Term Sheet to Evans on November 3, 2014. (Gates Dec. at 6; id., Ex. A

(Term Sheet)); Van Alen Dec. at 21-22).

The Term Sheet was a framework that was to be used to reach a subsequent, binding non-

exclusive license agreement. (Gates Dec. at 7.) The last sentence of the Term Sheet confirms


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this. It provides, The undersigned parties agree to work in good faith to record the terms of the

Term Sheet in a binding Non-Exclusive License Agreement. (Id., Ex. A.)

In the Term Sheet, the parties failed to address a number of material terms, including:

(1) how royalties were to be calculated; (2) the bounds of access, inspection, and reporting obligations (including audit rights); (3) cooperation in third party infringement suits; (4) whether and how PlusOnes performance would be guaranteed (e.g., by Mr. Van Alen or

other mutually acceptable substitute guarantee); (5) PlusOnes have made rights; (6) the scope of PlusOnes covenant not to sue; (7) when the obligation to pay royalties was to begin; (8) foreign manufacturing; (9) the binding or non-binding nature of any arbitration, and rules for same; and (10) the term of the Term Sheet.

(Gates Dec. at 9-22.)

The parties communications concerning the Term Sheets execution also confirm that

the Term Sheet was a non-binding framework for a subsequent license. On November 3, 2014,

when Van Alen emailed the signed Term Sheet to Evans, he wrote, I look forward to finalizing

these terms in a license agreement with you. (Id., Ex. B.) About an hour and a half later, Van

Alens counsel responded to Van Alen and Evans, offering to help with the next step, i.e.,

drafting a final binding agreement. (Gates Dec. at 24; id., Ex. B.) Evans responded, declining

drafting help. (Id., at 24; id. at Ex. B.) He closed his responsive email with the following, I

look forward to getting this finalized very shortly. (Id., at 24; id. at Ex. B.)

Negotiations Between PlusOne And Evans After Nov. 3, 2014

On November 4, 2014, Evans sent to Van Alen his draft of the final Non-exclusive

License Agreement. (Gates Dec. at 26; id., Ex. B.) Evanss draft was materially different

than the Term Sheet. (Id. at 26; Van Alen Dec. at 25.) It deviated significantly with respect

to at least these terms and issues:


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(1) the definition of Inventor and requirement that Evans be identified as the inventor of PlusOnes FlingStick;

(2) the definition of Licensed Patents; (3) the definition of gross sales; (4) the inclusion of a twenty-year term provision; (5) reporting requirements; (6) audit rights; (7) an Effect of Termination provision that required PlusOne to cease making and selling

licensed products, for all time, if the license was terminated; (8) confidentiality requirements; (9) arbitration requirements; (10) waiver of jury trial; (11) disclaimer of licensor representations and warranties; (12) limitation of liability; (13) indemnification; (14) venue; (15) a provision calling for PlusOne to grant to Evans a security interest in PlusOnes assets; (16) a provision granting Evans the right to use PlusOnes name, logo, and trademarks with

impunity; and (17) a separate, appended Personal Guarantee agreement.

(Gates Dec. at 27-45; see also Van Alen Dec. at 25-26.)

One of the few ways that Evanss draft license tracked the Term Sheet was in its

inclusion of an overbroad covenant not to sue, one that would immunize Evans and/or any

Evans Company from any and all suits except those relating to the license itself. (Gates Dec. at

46.) This is notable because, on November 6, 2014 (i.e., two days after Evans included the

overbroad covenant not to sue), Evans filed a design patent application in the United States

Patent and Trademark Office (the PTO)1 that contained figures bearing an uncanny

resemblance to PlusOnes FlingStick. (Gates Dec. at 46, 50; id., Ex. E.) Additionally, three

months later, when PlusOnes trademarks were abandoned, inadvertently, Evans (who is an

attorney registered to practice before the PTO) filed trademark applications seeking to register

1 The filing date for this design patent application (U.S. Pat. App. No. 29/508,440) was identified using the PTOs Patent Application Information Retrieval service (PAIR), which is available at http://portal.uspto.gov/pair/PublicPair; however the application itself first came to Defendants attention on November 19, 2014. (Gates Dec. at 46, 50; see also Van Alen Dec. at 28.)


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PlusOnes trademarks in WhipGolfs name. (See Van Alen Dec. at 33-38; see also Section

III, below (discussing Evanss applications for PlusOnes FLINGGOLF and FLINGSTICK

marks)).

Below are the figures from Evanss design patent application, which Evans disclosed to

Van Alen on November 19, 2014.

(Van Alen Dec. at 28; Gates Dec. at 46, 50; id., Ex. E)

Van Alen believed that Evans copied the design of PlusOnes FlingStick. (Van Alen

Dec. at 28.) The below images show FlingSticks and figures from Evanss design patent

application side-by-side.


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On November 18, 2014, via email, Van Alens counsel sent to Evans an edited version of

Evanss November 4, 2014 draft license. (Gates Dec. at 48; id., Ex. D) Evans returned another

iteration of the parties license agreement on November 19, 2014. (Id. at 50; id., Ex. E.) He

had, by and large, rejected Van Alens counsels edits from the day before. (Id. at 50.)

On November 24, 2014, Van Alens counsel emailed Evans to explain PlusOnes

objections to Evanss most recent draft license. (Id. at 51-52; id., Ex. F.) Evans was advised

that PlusOne objected to the drafts twenty year term; the requirement that Evans be referred to

as the sole inventor of the Licensed Products; the language allowing Evans to use PlusOnes

name, logo, and trademarks with impunity and without prior consent; the provision calling for a

security interest in PlusOnes assets; the selective limitation of liability; and the deletion of an

edit that would have made clear that while PlusOne would cooperate in a third party

infringement litigation suit, Evans would bear the cost of any such suit. (Id. at 51; id., Ex. F.)

Van Alens counsel wrote to Evans, Your two contract proposals go further and are outside of

what PlusOne agreed to and what PlusOne would be willing to agree to. It appears from your

agreement drafts that the term sheet does not reflect what would be even close to a meeting of

the minds. (Id. at 51; id., Ex. F.) He also expressed PlusOnes disappointment with Evanss

design patent application (discussed above). (Id. at 52.)

Evans responded to Van Alens counsel on November 25, 2014, but his email and

attached revised draft license did little to help faltering negotiations. (Id. at 53; id., Ex. G.)

On December 3, 2014, Van Alens counsel emailed Evans and advised Evans that

PlusOne was disinclined to edit and return another draft license. (Id. at 54; id., Ex. H; Van

Alen Dec. at 30.) Van Alens counsel also detailed why PlusOne felt that Evans had not acted


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in good faith during negotiations. (Gates Dec. at 54; id., Ex. H.) Some pertinent portions of

the email are reproduced below:

PlusOne does not believe you have acted in good faith. PlusOne, among other things, is uncomfortable doing business with someone who

inappropriately copied its product design and sought a design patent on it. [Y]our negotiating tactics have not demonstrated good faith. The only time PlusOne has

made any progress on its legitimate business concerns has been when it got so frustrated with your intransigence and positions, that it had to consider discontinuing the negotiation.

[Y]ou made numerous requests to add material terms that deviated from the term sheet. [Y]our draft agreements have repeatedly sought terms drastically different from those in

the Term Sheet (and always significantly to your advantage). Requiring PlusOne to anoint you as the sole inventor of the Licensed Products is but

one example of advancing a position drastically different and significantly more favorable to you than in the Term Sheet. This was not in good faith.

Asking for royalties beyond the patent term was not in good faith. In each of the three binding agreement proposals you made to PlusOne, you stuck to the

language of your first draft and took almost none of PlusOnes comments in its re-draft seriously. PlusOne raised legitimate concerns in its draft, which concerns any reasonable business would expect to be addressed in a binding agreement. You not only inserted all kinds of protections for yourself in the non-binding term sheet, but then, when the time came to negotiate the actual agreement and PlusOne raised legitimate concerns from its side, you took the view that they were precluded. That is not good faith.

For example, in your termination section you refused a clarification that makes certain that your right to enjoin PlusOne from selling its product disappears in the event it terminates and is fully paid up. Your proposed language seems to leave an implication hanging over PlusOne that by entering into this agreement with you, you could forever enjoin PlusOne from making its product, even if the agreement were properly terminated. That is not a good-faith position to have taken.

The scope of the covenant not to sue is an important issue for PlusOne, and its importance has grown since your disclosure of the design application copying PlusOnes design. PlusOne believes that design was based entirely on its product that it sent to you for a different purpose. The covenant not to sue must be limited in its scope; it was never intended to be a carte-blanche for you to take advantage of PlusOne.

There has not been a meeting of the minds between you and PlusOne over any binding license agreement.

(Gates Dec., Ex. H).


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Several days after Van Alens counsel sent the December 3, 2014 email, Van Alens

counsel and Evanss counsel discussed whether the gap between Evans and PlusOne could be

bridged. This discussion did not close the gap in the negotiations. (Gates Dec. at 55.)

On New Years morning, January 1, 2015, Evans emailed the following message to Van

Alen:

I am writing to wish you a Happy New Year and to let you know Im looking forward to receiving the first guaranteed annual minimum royalty payment of $10,000 by January 5, 2105. If it hasnt been sent already, please send it by FedEx and forward the tracking number by email so I might ensure it is timely received by Jan 5. Thank you.

(Van Alen Dec. at 31; id., Ex. A; Gates Dec. at 56.)

On January 4, 2015, Van Alen terminated the parties negotiations. (Van Alen Dec. at

32; id., Ex. B; Gates Dec. at 57.)

On January 6, 2015, Evanss counsel emailed Van Alens counsel, providing formal

notice of [PlusOnes] breach of the Term Sheet. (Gates Dec. at 58; id., Ex. I.) The alleged

breach identified was PlusOnes failure to pay the first guaranteed annual minimum royalty

payment on January 5, 2015. (Id. at 58; id., Ex. I.)

On March 6, 2015, Evanss counsel sent Van Alens counsel a letter invok[ing] the

acceleration clause of the Term Sheet and declar[ing] the sum of $50,000 to be immediately

due in view of an alleged failure to cure [d]efault in the payment of an annual minimum

royalty payment. (Id. at 58; id., Ex. J.)

Plaintiffs Complaint was filed on May 29, 2015.


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ARGUMENT

A preliminary injunction is an extraordinary remedy never awarded as of right, Winter

v. NRDC, Inc., 555 U.S. 7, 24 (2008) (citing Munaf v. Geren, 553 U.S. 674, 689-90 (2008)), and

it is to be applied only in [the] limited circumstances which clearly demand it. Allegra

Network LLC v. Reeder, 2009 WL 3734288, at *2 (E.D. Va. Nov. 4, 2009) (quoting Direx Israel,

Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 811 (4th Cir. 1991)). This case does not present

circumstances clearly demanding an extraordinary remedy.

To prevail on their motion, Plaintiffs must demonstrate by a clear showing that: (1) they

are likely to succeed on the merits; (2) they are likely to suffer irreparable harm in the absence of

preliminary relief; (3) the balance of equities tips in their favor; and (4) an injunction is in the

public interest. See Winter, 555 U.S. at 20; see also Real Truth About Obama, Inc. v. FEC, 575

F.3d 342, 345 (4th Cir. 2009), vacated on other grounds, 130 S.Ct. 2371 (2010), reinstated in

pertinent part by 607 F.3d 355 (4th Cir. 2010). Plaintiffs must satisfy all four requirements. See

Real Truth About Obama, Inc., 575 F.3d at 346. They cannot satisfy one.

I. PLAINTIFFS CANNOT DEMONSTRATE A LIKELIHOOD OF SUCCESS ON THE MERITS

Plaintiffs cannot show that they are likely to succeed on the merits (regardless of whether

Virginia, Massachusetts, or Delaware law applies), and for this reason alone, Plaintiffs motion

for preliminary injunction should be denied.


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A. There Is No Likelihood Plaintiffs Will Succeed Under Virginia Law

Under Virginia law, which applies to the parties dispute for reasons explained in

Defendants motion to dismiss memoranda,2 there is no likelihood that Plaintiffs can succeed on

the merits of their breach of contract claims.

Under Virginia law, [t]he elements of a breach of contract action are (a) a legally

enforceable obligation of a defendant to a plaintiff; (b) the defendants violation or breach of that

obligation; and (c) injury or damage to the plaintiff caused by the breach of obligation. Sunrise

Continuing Care, LLC v. Wright, 671 S.E.2d 132, 135 (2009) (quoting Filak v. George, 594

S.E.2d 610, 614 (2004)).

1. The Term Sheet Is Not An Enforceable Contract

Here, there is no contract. (See Doc. 10 at 5-11, Doc. 19 at 9-10.) This Court has ruled

that [a] letter of intent or any other writing in which the terms of a future transaction or later,

more formal agreement are set out is presumed to be an agreement to agree rather than a binding

contract, and that an agreement to negotiate open issues in good faith to reach a contractual

objective within [an] agreed framework will be construed as an agreement to agree rather than a

valid contract. Virginia Power Energy Mktg., Inc. v. EQT Energy, LLC, 2012 WL 2905110, at

*4 (E.D. Va. July 16, 2012). The Term Sheet is precisely the type of agreement to agree that

is invalid under Virginia law, see id. at *5, and Plaintiffs only argument to the contrary is

premised on application of a Fourth Circuit case discussing West Virginia (not Virginia) law.

(See Doc. 10 at 5-11, Doc. 19 at 9-10.)

2 See Doc. 10 at 2-5; Doc. 19 at 3-9. Because argument on Defendants motion to dismiss and on Plaintiffs motion for preliminary injunction will be heard by the Court at the same hearing, on July 17, 2015, Defendants do not belabor arguments fully briefed in their motion to dismiss papers. Instead, Defendants incorporate by reference into this opposition the arguments presented in their motion to dismiss memoranda, Docs. 10 & 19.


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Accordingly, Plaintiffs motion for preliminary injunction should be denied. See, e.g.,

Jones v. Bank of Am., N.A., 2012 WL 405053, at *6 (E.D. Va. Feb. 7, 2012) (ruling that because

no contract existed plaintiffs breach of contract claim should be dismissed and their motion for

preliminary injunction should be denied).

2. Because No Guaranteed Annual Minimum Royalty Payment Was Due, Non-Payment Was Not A Breach

Even if the Term Sheet were enforceable under Virginia law, Plaintiffs still cannot

prevail. Plaintiffs have not demonstrated that they are likely to succeed in showing breach. The

following passage is Plaintiffs entire argument concerning likelihood of success:

Defendants failure to make their first guaranteed annual minimum royalty payment of $10,000 on January 5, 2015, and their subsequent failure to cure their breach within 10 business days of the January 6, 2015 delinquency notice, is an unquestionable default. The Agreements acceleration clause permits Evans to accelerate guaranteed royalties and to terminate the license to make, use, or sell the licensed product upon default. Thus, in analyzing Plaintiffs likelihood of success on the merits, the only issue is whether the Agreement is a valid and enforceable contract.

(Doc. 15 at 8 (emphasis added).)

The above passage shows that Plaintiffs have pinned their prayer for injunctive relief on

one alleged breach the supposed failure of PlusOne to pay a guaranteed annual minimum

royalty on January 5, 2015 which Plaintiffs presume is unquestionable default. No other

alleged breach is discussed in Plaintiffs argument. (See Doc. 15 at 7-19.)

A single section of the Term Sheet discusses guaranteed annual minimum royalty

payments. (See Gates Dec., Ex. A at 2). The first sentence of that section reads, PlusOne to

guarantee annual minimum royalty payment of $10,000 each year, for term of issued patent,

paid by January 5 each year, Id. Licensed Patents under the Term Sheet are Patent(s)

issuing on US Patent Application 13/779,676 and continuations of any type. It follows that a

guaranteed annual minimum royalty payment is not due until the term of a patent issuing on U.S.


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Pat. App. No. 13/779,676, or on a continuation thereof, begins. To date, no such patents have

issued. (Gates Dec. at 17; see also Doc. 10 at 9 n.2). PlusOne, therefore, was under no

obligation to make a guaranteed annual minimum royalty payment on January 5, 2015, and

PlusOnes failure to make such a payment is not a breach. Because Plaintiffs instant motion

is premised on only this alleged breach, Plaintiffs motion must be denied.

Indeed, Defendants note that Plaintiffs have made no showing of likelihood of success

with respect to any other alleged breach. Plaintiffs, therefore, have no basis for requesting

preliminary injunctive relief premised on any other alleged breach. No showing of likelihood of

success is not the clear showing required for the extraordinary remedy of a preliminary

injunction. See Real Truth About Obama, 575 F.3d at 345 ([T]he party seeking the preliminary

injunction must demonstrate by a clear showing that it is likely to succeed on the merits);

see also BP Prods. N. Am. Inc. v. Southside Oil, L.L.C., 2013 WL 6493598, at *4 (E.D. Va. Dec.

10, 2013) (denying a motion for preliminary injunction because plaintiff failed to show that it

was likely to succeed in showing breach).

It also bears noting that (a) in Evanss January 1, 2015 email, payment of a guaranteed

annual minimum royalty was the only payment demanded (see Van Alen Dec., Ex. A); (b) the

alleged non-payment of a guaranteed minimum was the only basis for Evanss January 6, 2015

formal notice of [PlusOnes] breach (see Gates Dec., Ex. I); and (c) the alleged failure to cure

non-payment of such a guaranteed minimum was the only basis for Evanss March 6, 2015

invocation of the Term Sheets acceleration clause and declaration that the sum of $50,000

was immediately due (see Gates Dec., Ex. J). All of these actions were misguided in view of the

fact that the Term Sheet did not call for payment of a guaranteed annual minimum royalty on

January 5, 2015.


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B. There is No Likelihood Plaintiffs Will Succeed Under Massachusetts Law

The Court should apply Virginia law to the parties dispute for the reasons set out in

Defendants motion to dismiss memoranda (see Doc. 10 at 3-5; Doc. 19 at 3-8). Massachusetts

law does not govern. (See Doc. 19 at 3-8). Even if the Court were to apply Massachusetts law to

the parties dispute, however, there is no likelihood that Plaintiffs can succeed on the merits of

their breach of contract claims.

The elements for a breach of contract claim under Massachusetts law are (a) the existence

of an agreement supported by consideration; (b) that plaintiff performed or was ready, willing,

and able to perform; (c) that defendant breached the agreement; and (d) that plaintiff suffered

injury as a result. See, e.g., Unum Grp. v. Benefit Pship, Inc., 938 F. Supp. 2d 177, 185 (D.

Mass. 2013); Singarella v. City of Boston, N.E.2d 290, 291 (Mass. 1961).

1. The Term Sheet Is Not An Enforceable Contract

Plaintiffs cannot meet Massachusetts requirement of an agreement supported by

consideration for the same reason they cannot show a legally enforceable obligation under

Virginia law the Term Sheet is unenforceable.

As Defendants explained in their motion to dismiss reply, Massachusetts law, including

the case Plaintiffs rely on most heavily for their enforceability argument (Goren v. Royal

Investments, Inc., 516 N.E.2d 173 (Mass. App. Ct. 1987)), recognizes that a preliminary writing

that is imperfect on points which [a]re material should be considered an agreement to reach

an agreement, which impose[s] no obligation[s]. See Goren, Inc., 516 N.E.2d at 175-76 (citing

Rosenfield v. United States Trust Co., 290 Mass. 210 (1935)); see also Doc. 19 at 10-14.


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The Term Sheet, standing alone, evidences the parties failure to reach agreement on a

number of material terms. Its language shows that the terms and issues left unresolved include:

1. How royalties were to be calculated See Gates Dec. at 9 (The Term Sheet indicates that royalties are based on

gross sales, but it did not define gross sales, which would form the basis for payment.).

2. The bounds of access, inspection, and reporting obligations, and the confidentiality of any information PlusOne might share with Evans See id. at 12 ([The Term Sheet] fails to provide any detail about access,

inspection, and reporting such as would be essential to a binding agreement, including the failure to address the proprietary nature of such information (e.g., customer contact information) and agreement on confidentiality provisions protecting against Evanss disclosure of such information).

3. Cooperation in third party infringement suits See id. at 18 (The Term Sheet is silent regarding which party bears the expense

of any such cooperation or suit.).

4. Whether and how PlusOnes performance would be guaranteed (e.g., by Mr. Van Alen or other mutually acceptable substitute guarantee) See id. at 11 (noting that the Term Sheets guarantee-related language

contemplates further negotiation respecting the identity of the guarantor and the specifics of a guarantee).

5. PlusOnes have made rights See id. at 14 (It is unclear what type of entity qualifies as a manufacturer

under the Term Sheet and whether PlusOne could employ the services of more than one such manufacturer.).

6. The scope of PlusOnes covenant not to sue See id. at 16 (PlusOne never would have formalized a covenant not to sue that

would immunize Evans and any Evans company from suit concerning all potential misconduct unrelated to that agreement. No reasonable party would formalize such a covenant not to sue.).

7. When the obligation to pay royalties was to begin See id. at 10, 17 (The Term Sheet indicates that gross sales includes sales

made from November 1, 2014 to November 1, 2016.; The Term Sheet, however, also contains annual minimum royalty-related language, which treats annual minimum royalties differently.).

8. Foreign manufacturing See id. at 15 (The Term Sheet fails to delimit when a product manufactured

outside the United States would or would not be manufactured for the purpose of avoiding payments.).


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9. The binding or non-binding nature of any arbitration, and rules for same See id. at 21 (Important arbitration-related details are absent, such as whether

the arbitration is binding, the nature of the breach for which arbitration can be invoked, and the rules for any arbitration the parties might enter.).

10. The term of the Term Sheet See id. at 22 (The Term Sheet contains no provision governing its term.).

The conclusion that the Term Sheet did not resolve these issues is further evidenced by

the fact that after the Term Sheet was signed and subsequent negotiations, Evans and PlusOne

still could not reach agreement on some of the above issues (and others). (See Gates Dec. at

26-45 (presenting a list of material changes Evans made in his November 4, 2014 draft of the

final Non-exclusive License Agreement); id. at 48-55 (discussing how negotiations

faltered)). Indeed, the parties tortuous negotiations plainly demonstrate that (a) the Term Sheet

did not resolve all (or even most) material issues, and (b) execution of the binding nonexclusive

license anticipated by the Term Sheet was much more than a mere formality. (It turned out to

be a Sisyphean task.) Massachusetts law recognizes that under such circumstances, preliminary

agreements are unenforceable. See Doc. 19 at 12-14 (discussing and collecting cases).

2. Evans Was Neither Ready Nor Willing To Satisfy His Term Sheet Obligations

Even if the Term Sheet were enforceable under Massachusetts law (it is not), Plaintiffs

cannot show a likelihood of success on the merits because Evans was not ready, willing, and able

to perform.

The Term Sheets last sentence provides that [t]he undersigned parties agree to work in

good faith to record the terms of this Term Sheet in a binding Non-Exclusive License

Agreement. (Gates Dec., Ex. A at 4 (emphasis added).) Evans was not prepared to satisfy at

least this obligation.


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As noted above, after the Term Sheet was signed, Van Alens counsel offered to help

draft the binding non-exclusive license agreement, but Evans rejected that offer and, on

November 4, 2014, returned a draft license that deviated significantly from the framework the

Term Sheet provided. (Gates Dec. at 26; Id., Ex. B, Nov. 4th Draft); Van Alen Dec. at 25)

In his draft, Evans made numerous, material changes, most, if not all, of which were unfavorable

to PlusOne. (See Gates Dec at 27-45 (listing and discussing those changes in detail).) This

was not work, undertaken in good faith, to record the Term Sheets terms in a binding

agreement. It was one of Evanss many acts of bad faith during negotiations. (See Gates Dec.,

Ex. H; see also Factual Background, above (presenting portions of an email detailing Evanss

bad faith in negotiations).)

Plaintiffs motion for preliminary injunction should be denied for the added reason that

Evans was not ready, willing, and able to perform under the Term Sheet.

3. Because No Guaranteed Annual Minimum Royalty Payment Was Due, And Because The Term Sheet Was Terminated, Non-Payment Was Not A Breach

Even if the Term Sheet were enforceable (it is not), and even if Plaintiffs could show that

Evans was ready, willing, and able to perform (he was not), Plaintiffs still cannot prevail, as they

have not demonstrated that they are likely to succeed in showing breach.

As discussed above, Plaintiffs have pinned their prayer for injunctive relief on the alleged

failure of PlusOne to pay a guaranteed annual minimum royalty on January 5, 2015. PlusOne,

however, was under no obligation to make such a payment. (See Section A.2.) Thus, Plaintiffs

have failed to demonstrate that they are likely to succeed in showing breach, and Plaintiffs

motion must be denied for this reason.

Additionally, Defendants did not breach the Term Sheet on January 5, 2015, because Van

Alen terminated the parties relationship the day before, on January 4, 2015. (See Van Alen


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Dec., Ex. B (I will not be making any payment to you. You have not negotiated a definitive

license agreement in good faith and I am terminating further negotiations as a result. To the

extent it is ever determined we had any meeting of the minds and agreement embodied in the

term sheet, I am terminating any such agreement for cause arising from your breach.).) Van

Alen acted well within his rights in terminating. The Term Sheet is of indefinite duration, as it

has no provision delineating term, and under Massachusetts law, a contract of indefinite duration

is terminable at will. See, e.g., Moore v. La-Z-Boy, Inc., 639 F. Supp. 2d 136, 141 n.5 (D.

Mass. 2009) (Where an agreement fails to specify a term of duration, the contract will be

construed as one terminable at will by either party upon reasonable notice. (quoting Mass

Cash Register, Inc. v. Comtrex Sys. Corp., 901 F. Supp. 404, 417 (D. Mass. 1995)). Plaintiffs

motion should be denied for this reason as well.

C. Plaintiffs Concede That Delaware Law Does Not Apply

Plaintiffs discuss Delaware law in their memorandum in support of the present motion;

however, as Defendants explained in their motion to dismiss reply, Plaintiffs have effectively

conceded that Delaware law does not apply to the parties dispute. (See Doc. 19 at 9.) The

arguments Plaintiffs present in support of the present motion are the same as those presented in

Plaintiffs opposition to Defendants motion to dismiss. Thus, for the same reasons the Court

may ignore Plaintiffs Delaware law-related arguments in ruling on Defendants motion to

dismiss, the Court may ignore those arguments here. (See Doc. 10 at 4-5 (explaining why

Delaware law does not apply); Doc. 19 at 9 (discussing Plaintiffs concession that application of

Delaware law would put[] the cart before the horse)).

In any event, the Term Sheet is unenforceable under Delaware law as well. For reasons

discussed above, the Term Sheet does not satisfy Delaware laws requirement that the terms of a

contract be sufficiently definite. See Doc. 15 at 15 (citing Osborn ex rel. Osborn v. Kemp, 91


20

A.2d 1153, 1158 (Del. 2010)). Also, for the same reasons Plaintiffs have not shown that they are

likely to succeed in showing breach under Virginia and Massachusetts law, Plaintiffs are unlikely

to show breach under Delaware law. Accordingly, even if Delaware law did apply (it does not),

Plaintiffs motion for preliminary injunction must be denied.

II. PLAINTIFFS WILL NOT SUFFER IRREPARABLE HARM IN THE ABSENCE OF PRELIMINARY RELIEF

Even if Plaintiffs could demonstrate that they are likely to succeed on the merits at trial,

their motion for preliminary injunction must be denied because Plaintiffs have not made a clear

showing of irreparable harm.

A. No Irreparable Harm Would Result From The Courts Denial Of Plaintiffs Motion

Plaintiffs will not suffer irreparable harm if their motion is denied, for the reasons

discussed below.

[I]t is beyond dispute that economic losses generally do not constitute irreparable harm,

Rio Assocs., L.P. v. Layne, 2015 WL 3546647, at *5 (W.D. Va. June 8, 2015), and [h]arm is not

considered irreparable if it can be compensated by money damages during the normal course of

litigation, McGean v. Montgomery Cnty, 1996 WL 295315, at *1 (4th Cir. June 5, 1996).

Breach of contract claims are prime examples of claims for which monetary damages are

adequate and readily calculable. See, e.g., ATCS Intl LLC v. Jefferson Contracting Corp., 807

F. Supp. 2d 516, 518-19 (E.D. Va. 2011) (holding money damages adequate for a contract

breach); Allegra Network LLC v. Reeder, 2009 WL 3734288, at *4 (E.D. Va. Nov. 4, 2009)

([A]ssuming Defendants breached the contract, any harm Plaintiff suffered from this breach

can be adequately compensated through damages and damages would not be too difficult to

ascertain.).


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In this matter, if any relief is due Plaintiffs, monetary damages will suffice. As noted

above, Plaintiffs motion is premised on PlusOnes alleged failure to pay a guaranteed annual

minimum royalty payment. This is the supposed breach that caused Evans to invoke the

acceleration clause in the Term Sheet. (See Doc. 15 at 6 (On March 6, 2015, Evans, through

counsel, sent formal notice of default to PlusOne, invoking the Agreements acceleration

clause).) In relevant part, the Term Sheets acceleration clause recites:

Acceleration clause In the event of: 1) default in the payment of an annual minimum royalty payment, Licensor may a) declare the entire sum then unpaid immediately due and payable, including future annual minimum royalty payments, said future annual minimum royalty payment portion not to exceed $50,000, and terminate the license and/or suspend Licensees permission to make, use or sell any Licensed Product until all outstanding amounts are paid.

(Gates Dec., Ex. A, Acceleration clause section).

With this clause of the Term Sheet, Evans (1) expressly capped monetary damages at

$50,000 (this is not difficult to ascertain) and (2) explicitly made a right to enjoin PlusOnes

activities subordinate to receipt of $50,000. In other words, if the Term Sheet is enforceable,

then Evans agreed that monetary damages a capped $50,000 would adequately compensate

him for a PlusOne default on guaranteed annual minimum royalties. Further, he agreed that his

receipt of $50,000 would end any contractual right to enjoin PlusOne activities. These facts

belie Plaintiffs claims that they will be irreparably harmed if an injunction is not ordered.

Nevertheless, below, Defendants discuss Plaintiffs other irreparable harm arguments and

explain why Plaintiffs have failed to make a clear showing that they would suffer irreparable

harm if their motion is denied.

Plaintiffs claim that they delayed manufacturing their own product and did not

participate in the PGA Merchandising Show in late January, 2015 in reliance upon the promises

and representations contained in the [Term Sheet] (Doc. 15 at 20), and that [i]n delaying


22

formal entry into the market, and failing to participate in the leading industry trade show,

Plaintiffs missed their chance to garner substantial recognition and goodwill (Id.) To support

these claims, Plaintiffs cite a declaration submitted by Evans, which, in relevant parts, simply

states what Plaintiffs present in their brief. (See Doc. 15-1 at 50-51).

Plaintiffs positions beg numerous questions, including:

To what particular product are Plaintiffs referring? Did it have a name? How long had Plaintiffs worked to develop this product? Was the design for this product developed before or after Van Alen mailed

FlingSticks to Evans?3 Was the design for this product developed before or after Evans filed a design patent

application copying the FlingStick?4 Were manufacturers ready to go into production? At what volumes? Could Plaintiffs unnamed product have been ready for the PGA Merchandising

Show, which took place January 21-23, 2015?5 Relatedly, how is January 4, 2015 the date Van Alen terminated the parties

dealings the eve of the PGA Merchandising Show?

Plaintiffs irreparable harm arguments boil down to the contention that Plaintiffs

sacrificed an opportunity to be the first mover in the sport of throw golf. But before

interactions with Defendants, Plaintiffs were not moving at all. (See Van Alen Dec. at 17.)

Van Alen and PlusOne developed FlingGolf and the FlingStick before they ever met, or dealt

with, Evans, and at least as late as August 2014, Evans was not manufacturing or selling any

throw golf products. (Van Alen Dec. at 17; see also id. (As of the date of this declaration, I

3 See Van Alen Dec. at 16 (In August 2014, Evans received a FlingStick that I sent to him, at his request.); id. at 19 (Van Alen mailed to Evans two FlingSticks and five PlusOne FlingGolf hats in September 2014). 4 See id. at 28 (Evans copied the design of PlusOnes FlingSticks, including those I mailed to him in August and September 2014, at his request.). 5 See http://www.pgashow.com/.


23

am not aware of any actual sale of a throw golf product ever being made by Evans or

WhipGolf.).

Additionally, had Plaintiffs wanted to move (first, second, or otherwise) to secure the

market goodwill their papers indicate they coveted, they could have. The Term Sheet did not

restrict Plaintiffs activities; there are no non-compete provisions. Plaintiffs could have

manufactured and sold their own product, even in direct competition with PlusOne. They chose

not to. It is neither Defendants nor the Courts duty to remedy supposed harm Plaintiffs

brought on themselves.

Plaintiffs also rely heavily on the following language in the Term Sheet: Delinquent

payment, uncured 10 business days from due date, presents irreparable harm to Licensor, and

parties agree to remedy in equity allowing Licensor to enjoin any further manufacture, use, or

sale. (Doc. 15 at 20; see also Gates Dec., Ex. A (Royalty payment section)). This language

is not determinative. [C]ontractual agreements alone do not control the district courts exercise

of its equitable discretion. Bethesda Softworks, L.L.C. v. Interplay Entm't Corp., 452 F. Appx

351, 353 (4th Cir. 2011). Indeed, Plaintiffs and the case upon which they rely acknowledge this.

See Doc. 15 at 20 (noting that such an acknowledgment is not conclusive); see also Dominion

Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 1266 (10th Cir. 2004)

(Although[] EchoStar and Dominion agreed that any breach of the Agreement would constitute

irreparable harm and would warrant an award of injunctive relief, that stipulation without more is

insufficient to support an irreparable harm finding.). Further, as discussed above, the Term

Sheets acceleration clause governs what occurs in the event of royalty payment default, and that

clause explicitly calls for the cessation of any contract-based injunction upon Evanss receipt of

monetary compensation.


24

Lastly with regard to irreparable harm, contrary to what Plaintiffs contend, the

possibility of permanent loss of customers to a competitor or the loss of goodwill, does not

necessarily show the irreparable injury prong is satisfied (See Doc. 15 at 21). After all,

breaches of contract often result in the loss of future business and cause harm to goodwill. If

injunctions were appropriate in all such cases, injunctive relief would cease to be an

extraordinary remedy, and would be available in virtually every case involving a breach of an

agreement that affects future business. Safeway Inc. v. CESC Plaza Ltd. Pship, 261 F. Supp.

2d 439, 471 (E.D. Va. 2003). Indeed, this Court has explained that [a] mere possibility of

irreparable harm is not enough, and that courts considering the irreparable injury prong post-

Winter v. NRDC, Inc., 555 U.S. 7 (2008), often require specific evidence concerning the actual

or potential loss of customers or goodwill before finding irreparable injury, as [t]his approach

is consistent with the requirement that a plaintiff show that irreparable harm is likely and not

merely possible. Pro-Concepts, LLC v. Resh, 2013 WL 5741542, at *21 (E.D. Va. Oct. 22,

2013) (denying motion for a preliminary injunction) (italics in original).

Because Plaintiffs have not made a clear showing that irreparable harm will result if an

injunction is withheld, the Court should deny Plaintiffs motion.

III. PLAINTIFFS CANNOT SHOW THAT THE BALANCE OF EQUITIES TIPS IN THEIR FAVOR

Plaintiffs must show that the balance of equities tips in their favor. Winter, 555 U.S. at

20. They cannot.

This inquiry asks courts to balance the competing claims of injury and [ ] consider the

effect on each party of the granting or withholding of the requested relief. Rio Assocs., 2015

WL 3546647 at *6 (citing Doe v. Pittsylvania Cnty., 842 F.Supp.2d 927, 930 (W.D. Va. 2012);

Winter, 555 U.S. at 24).


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A decision withholding injunctive relief will have little to no effect on Plaintiffs. For

reasons discussed above, if Plaintiffs have been injured at all, they have been injured in the

amount of $50,000. Thats it. Without an injunction, Plaintiffs may still pursue the monetary

damages that would fully redress their alleged injuries. Plaintiffs also can enter the market any

time they are ready, willing, and able.

In stark contrast, an order enjoining Defendants from making, using, or selling

Defendants products would be catastrophic to Defendants business. (Van Alen Dec. at 39.)

Van Alen spent three years, thousands of hours, and hundreds of thousands of dollars,

without taking a salary, to develop FlingGolf and the FlingStick. (Id. at 3-13, 40.) Since long

before the Term Sheet, and until the present, Van Alen and PlusOne have been dedicated to

marketing and selling FlingSticks and introducing FlingGolf to new customers and new markets.

(Id. at 3-13, 40.) As a result of Van Alens and PlusOnes marketing and sales efforts,

FlingGolf, a sport that did not exist prior to Defendants efforts, is now being played in states

throughout the country, in Canada, and in several countries in Europe. (Id. at 13, 40.)

PlusOne, however, is still very much a startup company, and its continued day-to-day

operation is critical to its present and future success. (Id. 41.) An injunction would be

crippling and likely fatal to PlusOne Sports. (Id. 42.)

Moreover, the equities strongly favor Defendants in view of Evanss inequitable acts.

Each one of the following bad acts tips the scales in Defendants favor: A day after Evans

received the signed Term Sheet, he circulated a first draft of a binding non-exclusive license

agreement that deviated significantly and materially from the terms of the Term Sheet; two days

after circulating that draft, Evans filed a design patent application directed to designs copied

from Defendants Flingsticks; Evans consistently tried to imbue draft licenses with terms that


26

were unfavorable to PlusOne; and Evans was unreceptive and intransigent throughout

negotiations, even with regard to minor tweaks (e.g., Evans refused to extend a payment deadline

by five days to accommodate the winter holiday season, see Gates Dec., Ex. H).

Additionally, after Van Alen terminated the parties relationship, and after PlusOne

inadvertently allowed its FLINGGOLF and FLINGSTICK trademark applications to go

abandoned, Evans (who is, as noted, registered to practice before the PTO) swooped in and filed

trademark applications for PlusOnes marks the very next day, to interfere with PlusOnes

ability to remedy those abandonments (as it intended). (Van Alen Dec. at 34.) In doing so,

Evans submitted sworn declarations to the PTO stating that WhipGolf was entitled to use the

FLINGGOLF and FLINGSTICK marks in commerce, that WhipGolf had a bona fide intention to

use those marks, and that Evans believed that no other person had the right to use those marks.

(Id. at 35.) When he submitted these declarations, Evans knew that PlusOne was using and had

been using its FLINGGOLF and FLINGSTICK marks, and he knew, or should have known, that

WhipGolf was not entitled to use PlusOnes marks. (Id. at 36.) (To date, WhipGolf has not

withdrawn those baseless applications and is forcing PlusOne to formally oppose and invalidate

them at great expense. (Id. at 37-38.)) These activities also tip the balance of equities in

favor of Defendants.

Lastly, Plaintiffs contend that an injunction would simply return the parties to the status

quo before Defendants breached the [Term Sheet]. (Doc. 15 at 22.) An injunction, however,

would do the opposite. Before January 5, 2015 when, according to Plaintiffs, Defendants

breached Defendants were manufacturing, marketing, and selling FlingSticks and FlingGolf,

and Plaintiffs were not making or selling anything. The status quo before the alleged breach


27

consisted of Evans obstructing negotiations, and Defendants advancing the cause of an exciting

sport they had developed.

Because Plaintiffs have not made a clear showing that the balance of equities tips in their

favor, Plaintiffs motion must be denied.

IV. THE PUBLIC INTEREST DOES NOT FAVOR AN INJUNCTION

Plaintiffs must establish by a clear showing that the public interest favors granting an

injunction. Rio Assocs., 2015 WL 3546647 at *6. In evaluating this factor, courts must pay

particular regard for the public consequences of granting an injunction. Id. Plaintiffs cannot

show that the public interest favors an injunction. Indeed, in their papers, Plaintiffs barely try.

The claims at issue in this case are breach of contract claims. This case does not, and will

not if it proceeds, involve any determination about intellectual property rights or patent

infringement. Nevertheless, in the first of its two public interest-related arguments, Plaintiffs

contend that the public interest favors an injunction here because the public interest is served by

protecting intellectual property interests, and [t]he public has a strong interest in maintaining

the integrity of the patent system. (See Doc. 15 at 24 (quoting ePlus, Inc. v. Lawson Software,

Inc., 2011 WL 2119410, at *1 (E.D.Va. 2011) (a patent case)). As this is not a patent case,

Plaintiffs first public interest-related argument is misguided.

Plaintiffs second public interest-related argument is relegated to a footnote, and it is

premised on Plaintiffs bald assumption that Defendants have committed trademark misuse.

This argument merits little discussion. Again, this is a contract case (albeit one with no contract

to enforce). The alleged contract at issue the Term Sheet neither includes the word

trademark nor discusses either partys trademark rights, at all. This is not a trademark case.

Because Plaintiffs have fallen far short of establish[ing] by a clear showing that the

public interest favors granting an injunction, their motion should be denied.


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An injunction would be contrary to the public interest as an injunction would stop

PlusOne from filling orders for people relying on PlusOne to deliver FlingGolf equipment, and it

would hinder the advancement of a dynamic, inexpensive, and fun new sport FlingGolf.

CONCLUSION

Plaintiffs motion for preliminary injunction should be denied.

Respectfully submitted,

Dated: July 15, 2015 By: /s/ Craig C. Reilly Craig C. Reilly (VSB # 20942) The Law Office of Craig C. Reilly 111 Oronoco Street Alexandria, VA 22314 Telephone No.: (703) 549-5354 Facsimile No.: (703) 549-5355 [email protected]

Allen S. Rugg (VSB # 15481) Christopher W. Henry (admitted pro hac vice) WOLF, GREENFIELD & SACKS, P.C. 600 Atlantic Avenue Boston, Massachusetts 02210-2206 Telephone No.: (617) 646-8000 Facsimile No.: (617) 646-8646 [email protected] [email protected]

Attorneys for Defendants


CERTIFICATE OF SERVICE

I hereby certify that on July 15, 2015, this document was filed using the CM/ECF system,

which serves counsel for other parties who are registered participants as identified on the Notice

of Electronic Filing (NEF).

/s/ Craig C. Reilly Craig C. Reilly (VSB # 20942) The Law Office of Craig C. Reilly 111 Oronoco Street Alexandria, VA 22314 Telephone No.: (703) 549-5354 Facsimile No.: (703) 549-5355 [email protected]

Allen S. Rugg (VSB # 15481) Christopher W. Henry (admitted pro hac vice) WOLF, GREENFIELD & SACKS, P.C. 600 Atlantic Avenue Boston, Massachusetts 02210-2206 Telephone No.: (617) 646-8000 Facsimile No.: (617) 646-8646 [email protected] [email protected]

Attorneys for Defendants


22 - memorandum in opposition

Documents

plaintiffs motion

llc plaintiffs

plaintiffs whipgolf

plaintiffs complaint

introduction plaintiffs

term sheet

defendants motion

llc plusone