bose corporation v. ejaz, 1st cir. (2013)

7/26/2019 Bose Corporation v. Ejaz, 1st Cir. (2013)

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United States Court of AppealsFor the First Circuit

No. 12- 2403

BOSE CORPORATI ON,

Pl ai nt i f f , Appel l ee,

v.

SALMAN EJ AZ,

Def endant , Appel l ant .

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF MASSACHUSETTS

[ Hon. Deni se J . Casper , U. S. Di st r i ct J udge]

Bef or e

Lynch, Chi ef J udge, Tor r uel l a and Kayat t a, Ci r cui t J udges.

Emi l y E. Smi t h- Lee, wi t h whom Sana Abdul l ah and Smi t h LeeNebenzahl LLP wer e on br i ef , f or appel l ant .

J ef f r ey S. Pat t er son, wi t h whom Chr i st opher S. Fi nner t y,Morgan T. Ni cker son, and Nel son Mul l i ns Ri l ey & Scarborough LLPwer e on br i ef , f or appel l ee.

Oct ober 4, 2013



LYNCH, Chief Judge. Pl ai nt i f f Bose Cor por at i on won

summary j udgment on i t s br each of cont r act and t r ademark cl ai ms

agai nst def endant Sal man Ej az. Bose Cor p. v. Ej az, No. 11- 10629,

2012 WL 4052861 ( D. Mass. Sept . 13, 2012) . Ej az admi t t ed t o

sel l i ng home theat er syst ems manuf actur ed by Bose f or use i n t he

Uni t ed St at es t o cust omer s i n ot her count r i es, sel l i ng t hemacr oss

i nt er nat i onal mar ket s t o t ake advant age of hi gher r et ai l pr i ces

abr oad. Bose asser t ed t hat Ej az sol d i t s Amer i can pr oduct s i n

Aust r al i a wi t hout Bose' s consent even t hough he had si gned a

set t l ement agr eement pr omi si ng not t o do so af t er he had made

si mi l ar sal es i n Eur ope. Ej az appeal s, and we af f i r m.

I .

Because t hi s case comes t o us f ol l owi ng Bose' s mot i on f or

summar y j udgment , we r eci t e t he f act s i n t he l i ght most f avor abl e

t o Ej az.

Ej az f i r st began sel l i ng Bose pr oduct s onl i ne t hr ough

eBay as ear l y as 2005. He was not an aut hor i zed r esel l er or

di st r i but or of Bose pr oduct s. Rat her , he sought t o t ake advant age

of t he f act t hat t he pr i ce of el ect r oni cs can var y si gni f i cant l y

bet ween di f f er ent count r i es, and woul d buy el ect r oni cs i n one

count r y and r esel l t hem i n anot her . Pr oduct s sol d i n t hi s way ar e

known as "gray market goods" because t he goods t hemsel ves ar e

l egi t i mat e and unal t er ed pr oduct s of t he cl ai med manuf act ur er , but

t hey ar e sol d out si de of t hei r i nt ended r et ai l mar ket s.

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Throughout 2005 and 2006, Ej az sol d Bose product s

desi gned f or use i n t he Uni t ed St at es t o cust omer s i n ot her

count r i es, most l y i n Eur ope. Bose soon became aware of Ej az' s

act i vi t i es and appr oached hi m i n l at e 2006 wi t h t hr eat s of l egal

act i on. At t hat t i me, Bose i ndi cat ed t hat Ej az coul d be l i abl e f or

r oughl y $250, 000 f or t r ademark i nf r i ngement based on hi s

unaut hor i zed sal es of Bose pr oduct s. Bose t hen went on t o of f er a

set t l ement : i n essence, Bose woul d dr op al l of i t s exi st i ng l egal

cl ai ms agai nst Ej az, i ncl udi ng a sui t t hat i t had al r eady f i l ed i n

t he Uni t ed Ki ngdom, and i n exchange, Ej az woul d not sel l Bose

pr oduct s wi t hout Bose' s per mi ssi on.

Negot i at i ons over t he set t l ement wer e t ense. Ej az chose

t o be unr epr esent ed and l at er st at ed t hat he f ound t he tact i cs

Bose' s l awyer s used "ver y pr essur i zi ng, ver y i nt i mi dat i ng. " He was

r ecent l y mar r i ed, and he and hi s wi f e wer e "anxi ous t o r esol ve t he

di sput e. " Ej az f el t as t hough Bose' s l awyer s wer e i mpl i ci t l y

suggest i ng t hr oughout t he negot i at i ons t hat he woul d go to j ai l i f

he di d not r each an agr eement wi t h Bose, al t hough he never cl ai ms

such t hr eat s of cr i mi nal pr osecut i on wer e act ual l y made. By

J anuar y of 2007, Ej az agr eed t o set t l e t he cl ai ms.

The agr eement was executed t hrough t wo document s. Fi r st ,

t he par t i es agr eed t o the t er ms of a wr i t t en Set t l ement Agr eement .

The Set t l ement Agreement r el eased al l of Bose' s preexi st i ng cl ai ms,

i ncl udi ng t hose not r el at ed t o t he U. K. l awsui t , and pr ohi bi t ed

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Ej az f r om sel l i ng Bose pr oduct s anywher e i n t he wor l d wi t hout

Bose' s pr i or consent . I t f ur t her pr ovi ded t hat Ej az woul d owe Bose

$50, 000 i n l i qui dat ed damages f or ever y vi ol at i on of t he Set t l ement

Agr eement . Ej az si gned t he Set t l ement Agr eement on J anuary 27,

2007. Bose si gned i t on Febr uar y 26, 2007, and i t t ook ef f ect on

t hat date. Second, t he Set t l ement Agr eement i ncl uded a Consent

Or der , t o be f i l ed i n t he Br i t i sh Hi gh Cour t of J ust i ce. The

Consent Or der was f i l ed wi t h that cour t on Febr uary 23, 2007, and

i ssued by t hat court on March 9, 2007. The Consent Or der

t er mi nat ed t he U. K. l awsui t i n exchange f or Ej az' s pr omi se t o st op

sel l i ng Bose pr oduct s i n t he Eur opean Uni on.

Not l ong af t er execut i ng t he Set t l ement Agr eement , Ej az

vi ol at ed i t . As he wr ot e i n an emai l , "gr eed got [ t he] bet t er of

[ hi m] , " and he st ar t ed sel l i ng Bose pr oduct s i n Aust r al i a. I n

r esponse, Bose i ni t i ated t he pr esent case. Bose sought damages

agai nst Ej az f or br each of t he Set t l ement Agr eement on seven

occasi ons. 1 I t al so added f ur t her cl ai ms, of whi ch onl y i t s cl ai m

f or t r ademar k i nf r i ngement i s r el evant her e.

Af t er di scovery, Bose moved f or summary j udgment . Ej az

opposed the mot i on, cl ai mi ng that t here were a number of di sput ed

mat er i al f act s rel at i ng t o sever al cont r act def enses. He f ur t her

1 By hi s own admi ssi on, Ej az sol d at l east seven uni t s i nAust r al i a. For pur poses of t hi s case, Bose has deci ded t o r el y ont hat admi ssi on and seek recover y f or seven vi ol at i ons of t heSet t l ement Agr eement r at her t han t r y t o pr ove a pot ent i al l y muchgr eat er number of sal es.

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mai nt ai ned t hat Bose had not car r i ed i t s bur den of pr ovi ng each

el ement of i t s t r ademar k cl ai m.

Ej az al so asked t he di st r i ct cour t t o ext end di scover y

bef ore r ul i ng on Bose' s mot i on f or summary j udgment . He compl ai ned

t hat Bose' s cor porate r epr esent at i ve had been unabl e t o answer

quest i ons on many of t he t opi cs f or whi ch he had been desi gnated t o

gi ve deposi t i on t est i mony on Bose' s behal f . That i nabi l i t y was

par t i cul ar l y pr obl emat i c, Ej az mai nt ai ned, because Bose had

pr evi ousl y opposed a mot i on to extend di scover y by expl ai ni ng that

Ej az woul d be abl e t o obt ai n al l t he i nf ormat i on he needed by

deposi ng i t s cor por at e r epr esent at i ve. Ej az ar gued t hat Bose had

t hus obst r uct ed hi s di scover y at t empt s, and t hat he shoul d be

gr ant ed mor e t i me f or di scovery as a resul t .

Wi t hout r ul i ng on t he mot i on t o extend di scover y, t he

di st r i ct cour t gr ant ed summar y j udgment i n f avor of Bose on i t s

br each of cont r act and t r ademar k i nf r i ngement cl ai ms. Ej az now

appeal s. He ar gues t hat t he Set t l ement Agr eement , or at l east i t s

l i qui dat ed damages pr ovi si on, i s unenf or ceabl e, and t hat t he

di st r i ct cour t er r ed i n hol di ng hi m l i abl e under i t on summar y

j udgment . He f ur t her ar gues t hat genui ne quest i ons of mat er i al

f act r emai n such t hat summary j udgment on t he t r ademark

i nf r i ngement cl ai mi s i nappr opr i at e. Fi nal l y, he cont ends t hat t he

di st r i ct cour t abused i t s di scret i on i n decl i ni ng t o ext end

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di scover y. We r ej ect t hese cl ai ms and af f i r mt he gr ant of summar y

j udgment .

I I .

We r evi ew t he di st r i ct cour t ' s grant of summary j udgment

de novo, dr awi ng al l r easonabl e i nf er ences i n f avor of t he

nonmovi ng part y. Rockwood v. SKF USA I nc. , 687 F. 3d 1, 9 ( 1st Ci r .

2012) . Summary j udgment i s appr opr i ate "when t here i s no genui ne

i ssue of mat er i al f act and t he movi ng par t y i s ent i t l ed t o j udgment

as a mat t er of l aw. " Cor t és- Ri ver a v. Dep' t of Cor r . & Rehab. of

P. R. , 626 F. 3d 21, 26 ( 1st Ci r . 2010) .

Accordi ng t o Sect i on 8. 4 of t he Set t l ement Agr eement ,

" i nt er pr et at i on and per f or mance of [ ] [ t he] Agr eement " i s gover ned

by Massachuset t s l aw. 2 Under Massachuset t s l aw, a br each of

cont r act cl ai m r equi r es t he pl ai nt i f f t o show t hat ( 1) a val i d

cont r act bet ween t he par t i es exi st ed, ( 2) t he pl ai nt i f f was r eady,

wi l l i ng, and abl e t o per f or m, ( 3) t he def endant was i n br each of

t he cont r act , and ( 4) t he pl ai nt i f f sust ai ned damages as a r esul t .

See Si ngar el l a v. Ci t y of Bost on, 173 N. E. 2d 290, 291 ( Mass. 1961) .

Ej az cont est s onl y t wo el ement s of Bose' s case: whet her a val i d

cont r act exi st ed and whet her t he cont r act ' s l i qui dat ed damages

cl ause i s enf or ceabl e.

2 The par t i es have not r ai sed any choi ce of l aw i ssues andi nst ead assume t hat Massachuset t s l aw appl i es. We wi l l do t hesame.

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A. Cont r act Val i di ty

Ej az of f er s f our ar gument s t o expl ai n why t he Set t l ement

Agr eement i s not a val i d cont r act : ( 1) t her e was no consi der at i on

suppor t i ng t he Set t l ement Agr eement , ( 2) t here was no meet i ng of

t he mi nds when t he part i es si gned t he Agr eement , ( 3) t he Set t l ement

Agr eement i s unconsci onabl e, and (4) he si gned t he Set t l ement

Agreement under dur ess .

1. Consi der at i on

Ej az ar gues t hat t he Set t l ement Agr eement l acked

consi der at i on because, al t hough i t pur por t ed t o r el ease Bose' s

l egal cl ai ms agai nst Ej az, t hat r el ease was i l l usor y, as t he

ear l i er Consent Or der i n t he Br i t i sh cour t s had al r eady r el eased

t hose same cl ai ms. Thi s ar gument i s cont r adi ct ed by t he f act s of

t he case i n t hr ee r espect s: t he Consent Or der was not an "ear l i er , "

separ at e agr eement , but r at her par t and par cel of t he Set t l ement

Agr eement ; t he act ual i ssuance of t he Consent Or der was not

ear l i er ; and t he r el eases wer e not coext ensi ve. Ej az si gned t he

Set t l ement Agr eement on J anuary 27, 2007 and has not i dent i f i ed any

r el eases predat i ng t hat agr eement . The Set t l ement Agr eement became

ef f ect i ve upon Bose' s si gni ng i t on Febr uar y 26, 2007. The Consent

Or der was not i ssued unt i l Mar ch 9, 2007, af t er bot h par t i es had

execut ed t he Set t l ement Agr eement . Addi t i onal l y, t he Consent Or der

r el eased onl y t hose l egal cl ai ms at i ssue i n t he U. K. l i t i gat i on,

whi l e t he Set t l ement Agr eement r el eased al l l egal cl ai ms,

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r egar dl ess of l ocat i on. Ej az di d r ecei ve consi der at i on f or hi s

pr omi ses i n t he Set t l ement Agreement .

2. Meet i ng of t he Mi nds

Ej az of f er s t wo ar gument s f or hi s cl ai mt hat t her e was no

meet i ng of t he mi nds. Fi r st , he cont ends t hat he subj ect i vel y

at t ached a di f f er ent under st andi ng t o the cont r act t han Bose di d:

Bose bel i eved, i n accor dance wi t h t he cont r act ' s expl i ci t l anguage,

t hat Ej az woul d be bar r ed f r om sel l i ng Bose pr oduct s anywher e

wi t hout per mi ssi on, whi l e Ej az bel i eved t hat he woul d be bar r ed

f r om sel l i ng Bose pr oduct s onl y i n t he Uni t ed St at es and Uni t ed

Ki ngdom, l eavi ng hi m f r ee t o sel l i n Aust r al i a. Second, he ar gues

on appeal t hat he never even saw t he t erms of t he Set t l ement

Agr eement bef or e si gni ng i t , and that i nst ead he was mer el y gi ven

a si gnatur e page t hat he t hought cor r esponded t o t he Consent Or der ,

whi ch he had pr evi ousl y r evi ewed.

Ej az ' s subj ect i ve bel i ef i s i nsuf f i ci ent t o i nval i dat e

t he cont r act . Absent f r aud, an i ndi vi dual "who si gns a wr i t t en

agr eement i s bound by i t s t erms whet her he r eads and under st ands

t hemor not . " Awuah v. Cover al l N. Am. , I nc. , 703 F. 3d 36, 44 ( 1st

Ci r . 2012) ( quot i ng St . Fl eur v. WPI Cabl e Sys. / Mut r on, 879 N. E. 2d

27, 35 ( Mass. 2008) ) ( i nt er nal quot at i on mar k omi t t ed) . Ej az f al l s

di r ectl y wi t hi n t he scope of t hi s r ul e.

Ej az' s second ar gument at t empt s t o avoi d t hat r ul e by

asser t i ng that he was def r auded, ar gui ng Massachuset t s bi nds an

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i ndi vi dual t o t he t er ms of t he cont r act he si gns onl y " i n t he

absence of f r aud. " Hauf l er v. Zotos, 845 N. E. 2d 322, 333 ( Mass.

2006) . But t hat argument i s compl etel y unsupport ed by t he r ecor d.

Fr aud i s an af f i r mat i ve def ense t hat must be pl eaded wi t h

par t i cul ar i t y, see Fed. R. Ci v. P. 9( b) , and Ej az f ai l ed t o do so.

I ndeed, hi s answer t o t he compl ai nt never even makes t he cont ent i on

t hat Ej az pr esses i n hi s br i ef , t hat Bose had Ej az si gn t he

Set t l ement Agr eement wi t hout hi s knowl edge; much l ess does i t gi ve

speci f i c det ai l s about any al l egedl y f r audul ent t r ansact i on.

Wi t hout t hose speci f i c det ai l s, Ej az' s f r aud cl ai mcannot pr evai l .

See N. Am. Cat hol i c Educ. Progr ammi ng Found. , I nc. v. Car di nal e,

567 F. 3d 8, 16 ( 1st Ci r . 2009) .

Addi t i onal l y, r egar dl ess of t he qual i t y of Ej az' s

pl eadi ngs, t he evi dence i n t he r ecor d shows t hat Ej az di d have t he

f ul l Set t l ement Agr eement and knew what he was si gni ng: he st ated

i n hi s deposi t i on t hat he "t r i ed [ hi s] best t o r ead i t " and si gned

i t on t he same day he r ecei ved i t ; t hat he had hi s wi f e r evi ew t he

document ; and that he "must ' ve read" t he whol e Set t l ement Agreement

when he si gned i t . As a r esul t , t he cont r act does not f ai l f or a

l ack of meet i ng of t he mi nds.

3. Unconsci onabi l i t y as Def ense t o t he Cont ract

Ej az cl ai ms t hat Bose' s l awyer s used heavy- handed t act i cs

t o get hi m, unr epr esent ed by counsel , t o si gn t he Set t l ement

Agr eement . Unconsci onabi l i t y i s an af f i r mat i ve def ense, pl aci ng

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t he bur den of pr oof on Ej az. See E. H. Ashl ey & Co. , I nc. v. Wel l s

Far go Al ar m Ser vs. , 907 F. 2d 1274, 1278 ( 1st Ci r . 1990) . Under

Massachuset t s l aw, unconsci onabi l i t y r equi r es a " t wo- par t i nqui r y, "

i n whi ch the def endant must pr ove both "pr ocedur al " and

"subst ant i ve" unconsci onabi l i t y. Tr ans- Spec Tr uck Ser v. , I nc. v.

Cat er pi l l ar I nc. , 524 F. 3d 315, 329 ( 1st Ci r . 2008) ( quot i ng

Zapat ha v. Dai r y Mar t , I nc. , 408 N. E. 2d 1370, 1377 n. 13 ( Mass.

1980) ) ( i nt er nal quot at i on mar ks omi t t ed) .

The evi dence does not show subst ant i ve unconsci onabi l i t y

as t o t he maki ng of t he cont r act her e. We di scuss l at er t he

di scr et e i ssue of t he l i qui dat ed damages cl ause. Cont r act s ar e

subst ant i vel y unconsci onabl e i f t hey show a "gr oss di spar i t y" i n

consi der at i on t hat makes themf aci al l y unf ai r . E. g. Wat er s v. Mi n

Lt d. , 587 N. E. 2d 231, 234 ( Mass. 1992) ( f i ndi ng "gr oss di spar i t y"

where annui t y wi t h $189, 000 i mmedi ate cash val ue was sol d f or

$50, 000, and ci t i ng as unconsci onabl e anot her case i n whi ch a t r ust

i nt er est wor t h $1, 100, 000 was sol d f or $66, 000) . The r ecor d i n

t hi s case shows t hat , at t he t i me he si gned t he agr eement , Ej az

under st ood t hat he woul d be r el i eved of l egal l i abi l i t y that coul d

have r eached $250, 000 i n t he U. K. l i t i gat i on al one. 3 Because t he

3 The r ecor d i s uncl ear as t o whet her t he $250, 000 f i gur er ef er s speci f i cal l y t o t he U. K. l i t i gat i on, whi ch was addr essed i nt he Consent Or der . But t hat di st i nct i on i s i mmat er i al , because t heSet t l ement Agr eement set t l ed al l cl ai ms, i ncl udi ng t hose cover ed byt he Consent Or der , and i ncor por at ed t he Consent Or der wi t hi n i t st erms.

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f i nanci al benef i t f or hi m was at l east a quar t er of a mi l l i on

dol l ar s i n l i abi l i t y avoi ded, no r easonabl e f act f i nder coul d

concl ude t hat Ej az has met hi s bur den of pr oof i n hi s at t empt t o

est abl i sh unconsci onabi l i t y.

4. Dur ess

Dur ess i s an af f i r mat i ve def ense f or whi ch Ej az must

pr ove t hr ee el ement s: " ( 1) he has been t he vi ct i mof some unl awf ul

or wr ongf ul act or t hr eat ; ( 2) t he act or t hr eat depr i ved hi m of

hi s f r ee or unf et t er ed wi l l ; and ( 3) due t o t he f i r st t wo f actor s,

he was compel l ed t o make a di sproport i onate exchange of val ues. "

Happ v. Cor ni ng, I nc. , 466 F. 3d 41, 44 ( 1st Ci r . 2006) . Ej az

cont ends t hat Bose act ed wr ongf ul l y by pr essur i ng and i nt i mi dat i ng

hi m usi ng what he says he per cei ved as t hr eat s of j ai l t i me, and

t hat Bose' s at t or neys vi ol at ed t he Massachuset t s Rul es of

Prof essi onal Conduct by advi si ng hi m, as an unr epr esent ed par t y, t o

si gn t he Set t l ement Agr eement . These act i ons, he cl ai ms,

const i t ut ed dur ess.

Ej az mi schar act er i zes t he f act s of t hi s case. Bose' s

l awyer s appr oached hi m, a savvy i nt ernet busi nessman wi t h t otal

annual eBay sal es near $75, 000 and gr owi ng qui ckl y, 4 t o of f er a

set t l ement agr eement t o avoi d a l awsui t . Those l awyer s, accor di ng

t o Ej az, t ol d hi m t hat t her e coul d be "r eper cussi ons" t o hi s

4 Ej az' s sal es t he pr evi ous year , 2005, wer e no hi gher t han$50, 000; by 2010, hi s f i nanci al r ecor ds showed sal es exceedi ng t womi l l i on Br i t i sh pounds annual l y.

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act i ons, whi ch Ej az t ook t o mean cr i mi nal sanct i ons. However , Ej az

does not asser t t hat Bose act ual l y made thr eat s, as opposed t o

st at ement s t hat he subj ect i vel y i nt er pr et ed t o be t hr eat eni ng.

I ndeed, as he descr i bed t he exchange i n hi s deposi t i on, Bose' s

l awyer "mi ght have sai d [ somet hi ng] al ong t he l i nes t hat peopl e do

end up goi ng t o j ai l but I don' t r emember hi m exact l y sayi ng t hat ,

but behi nd t he wor ds was t hat i mpl i cat i on. Or at l east I f el t t hat

way. " Ej az l at er st at ed i n hi s af f i davi t : "I do not r emember t he

pr eci se words t hat t hey used about t he consequences of not si gni ng

t he agr eement , but what I under st ood f r om t hose conver sat i ons i s

t hat I coul d f ace penal t i es of as much as $250, 000 and poss i bl e

i mpr i sonment i f I di d not agr ee t o what t hey were aski ng. " None of

t hese st atement s show t hat Ej az was ever act ual l y thr eat ened or

t hat Bose' s counsel del i ver ed any t hr eat s; r at her , t hey show onl y

t hat Ej az bel i eved he coul d pot ent i al l y f ace l egal penal t i es due t o

hi s unl awf ul sal es. Thi s i s f ar f r omt he "unl awf ul or wr ongf ul act

or t hr eat , " Happ, 466 F. 3d at 44, r equi r ed t o est abl i sh a dur ess

def ense.

Mor e i mpor t ant l y, Ej az has pr ovi ded no basi s t o bel i eve

t hat t he st at ement s by Bose' s counsel "depr i ved hi mof hi s f r ee or

unf et t er ed wi l l , " i d. , and f or ced hi m t o si gn t he cont r act.

I nst ead, t he f act s show t hat Ej az was abl e t o r evi ew t he pr oposed

agr eement at hi s own pace, was f r ee t o seek advi ce f r omot hers ( and

act ual l y di d seek advi ce f r omhi s wi f e) , and vol unt ar i l y si gned and

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r et ur ned i t . As l ong as t he opt i on t o r ej ect t he cont r act

r emai ned, Ej az di d not act under dur ess. I smer t & Assocs. , I nc. v.

New Eng. Mut . Li f e I ns. Co. , 801 F. 2d 536, 549- 50 ( 1st Ci r . 1986)

( not i ng t hat t he opt i on t o r ef use t o si gn a r el ease and t o l i t i gat e

i nst ead woul d def eat a cl ai m f or dur ess, and obser vi ng t hat "a

st r i ct i nt er pr et at i on" of t he concept of "no r eal choi ce" i s "what

t he Massachuset t s cour t s i nt end" as a pol i cy mat t er ) .

B. Enf or ceabi l i t y of Li qui dat ed Damages Cl ause

Apar t f r omt he val i di t y of t he ent i r e cont r act , Ej az al so

chal l enges t he Set t l ement Agr eement ' s l i qui dat ed damages cl ause i n

par t i cul ar . He ar gues t hat i t i s unenf or ceabl e because i t i s not

r easonabl y pr opor t i onal t o Bose' s ant i ci pat ed damages and

di f f i cul t i es of pr ovi ng l oss at t he t i me t he Set t l ement Agr eement

was execut ed. 5 Thi s i s a cl oser quest i on.

5 Ej az al so makes t wo ot her ar gument s, but bot h ar e easi l yr ej ect ed. Fi r st , he cl ai ms t hat t her e i s a di sput e over whet hert he par t i es i nt ended t he cl ause t o serve as l i qui dat ed damages oras a penal t y - - a genui ne di sput e of mat er i al f act t hat pr event s agrant of summar y j udgment . That argument i s si mpl y wr ong. Whet hera cl ause i mposes enf orceabl e l i qui dated damages or an unenf orceabl epenal t y i s a quest i on of l aw. NPS, LLC v. Mi ni hane, 886 N. E. 2d670, 673 ( Mass. 2008) . Even i f t he cl ause' s ef f ect wer e a quest i onof f act , Ej az poi nt s t o no r ecor d evi dence i ndi cat i ng t hat he

bel i eved at t he t i me of cont r act i ng t hat t he cl ause was i nt ended t obe a penal t y. Second, Ej az cl ai ms t hat t he cl ause i s unenf or ceabl ebecause i t i s di spr opor t i onat e to the damages Bose act ual l ysuf f er ed. But t hi s ar gument cannot squar e wi t h Kel l y v. Mar x, 705N. E. 2d 1114 ( Mass. 1999) , whi ch expl i ci t l y st at ed t hat t he damagesact ual l y suf f er ed have no bear i ng on t he enf or ceabi l i t y of al i qui dat ed damages cl ause. See i d. at 1117.

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Massachuset t s l aw al l ows enf or cement of a l i qui dat ed

damages cl ause "so l ong as i t i s not so di spr opor t i onat e t o

ant i ci pat ed damages as t o const i t ut e a penal t y. " TAL Fi n. Cor p. v.

CSC Consul t i ng, I nc. , 844 N. E. 2d 1085, 1093 ( Mass. 2006) . The

i nqui r y depends si gni f i cant l y on t he f act s of t he case, see Honey

Dew Assocs. , I nc. v. M&K Food Cor p. , 241 F. 3d 23, 28 ( 1st Ci r .

2001) , but i n gener al , a l i qui dat ed damages cl ause "wi l l usual l y be

enf or ced, pr ovi ded t wo cr i t er i a ar e sat i sf i ed": ( 1) t he act ual

damages woul d have been di f f i cul t t o ascer t ai n at t he t i me of

dr af t i ng, and ( 2) t he amount was a " r easonabl e f orecast " of damages

t hat woul d act ual l y occur i n a br each. NPS, LLC v. Mi ni hane, 886

N. E. 2d 670, 673 ( Mass. 2008) ( quot i ng Cummi ngs Pr ops. , LLC v. Nat ' l

Commc' ns Corp. , 869 N. E. 2d 617, 620 (Mass. 2007) ) ( i nt ernal

quot at i on mar k omi t t ed) . Ej az bear s t he bur den of pr ovi ng t hat t he

cl ause i s unenf or ceabl e, and r easonabl e doubt s ar e dr awn i n f avor

of Bose, as t he pr ovi si on' s pr oponent . See i d. at 673; Honey Dew,

241 F. 3d at 27.

1. Ascer t ai nabi l i t y

Ej az has not pr oduced any evi dence, or even argued i n hi s

br i ef , t hat Bose' s act ual damages woul d be r eadi l y ascert ai nabl e.

Fur t her , Bose showed t hat i t woul d be di f f i cul t t o cal cul at e i t s

act ual damages f r om a br each: i t i nt r oduced evi dence t hat Ej az' s

act i ons t hr eat ened Bose' s goodwi l l and br and i nt egr i t y, whi ch Bose

cal l s i t s " most i mpor t ant asset , " and showed t hat damage to

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goodwi l l and br and i nt egr i t y i s i nher ent l y di f f i cul t t o quant i f y.

The l aw support s Bose. See Soci et e Des Pr odui t s Nest l e, S. A. v.

Casa Hel vet i a, I nc. , 982 F. 2d 633, 640 ( 1st Ci r . 1992) ( "By i t s

ver y nat ur e, t r ademar k i nf r i ngement r esul t s i n i r r epar abl e har m

because the at t endant l oss of pr of i t s, goodwi l l , and r eput at i on

cannot be sat i sf act or i l y quant i f i ed and, t hus, t he t r ademar k owner

cannot adequatel y be compensat ed. " ) . The l i qui dat ed damages

pr ovi si on does not f ai l on t hi s gr ound.

2. Reasonabl e For ecast

Ej az has pr oduced no recor d evi dence suggest i ng t hat

$50, 000 per sal e was gr ossl y di spropor t i onat e t o or an unr easonabl e

f orecast of t he actual damages Bose woul d have expected. I nst ead,

he cl ai ms t hat t he st r uctur e of t he cl ause i t sel f , pr ovi di ng

$50, 000 i n damages f or ever y br each, wi t hout l i mi t , shows t hat t he

f or ecast i s unr easonabl e. But a hypot het i cal l ar ger r ange,

separ at ed f r om t he act ual f act s and t he amount sought , does not

make a cl ause unr easonabl e. Rather , cour t s exami ne f or

r easonabl eness t he amount of l i qui dated damages act ual l y sought .

See Space Mast er I nt ' l , I nc. v. Ci t y of Wor cest er , 940 F. 2d 16, 16-

17, 20 ( 1st Ci r . 1991) ( denyi ng summary j udgment mot i on of

def endant seeki ng to avoi d l i qui dated damages cl ause even t hough

cl ause pr ovi ded f or per - day l at e f ees wi t hout l i mi t ) ; Per f ect

Sol ut i ons, I nc. v. J er eod, I nc. , 974 F. Supp. 77, 85 ( D. Mass.

1997) ( denyi ng summary j udgment mot i on of def endant seeki ng t o

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avoi d l i qui dated damages cl ause even t hough cl ause pr ovi ded f or

per - vi ol at i on damages wi t hout l i mi t ) . 6

The Rest at ement al so adopts t hi s posi t i on, anal yzi ng

l i qui dat ed damages as t hey ar e act ual l y i mposed r at her t han i n

hypot het i cal s. See Rest at ement ( 2d) of Cont r act s § 356 cmt . b,

i l l us. 3 ( cont empl at i ng val i d enf or cement of l i qui dat ed damages

cl ause pr ovi di ng f or per - day l at e f ees even though f ees wer e

unl i mi t ed, wher e t en days of f ees are sought ) .

Bose ar t i cul at ed a ser i es of har ms showi ng t hat t he

l i qui dat ed damages cl ause i s r easonabl e i n t hi s case.

6 Cour t s i n ot her j ur i sdi ct i ons have f ol l owed t he sameappr oach. See, e. g. , Pr oTher apy Assocs. , LLC v. AFS of Bast i an,I nc. , 782 F. Supp. 2d 206, 218- 19 ( W. D. Va. 2011) ( al l owi ngenf orcement of l i qui dated damages pr ovi si on gr ant i ng uncappeddamages of $10, 000 per br each acr oss f i f t y- seven br eaches) ; El excoLand Servs. , I nc. v. Henni g, No. 11- CV- 00214, 2011 WL 9368970, at*6 ( W. D. N. Y. Dec. 28, 2011) ( r eservi ng deci si on of whet her

l i qui dated damages cl ause pr ovi di ng $25, 000 per br each i senf or ceabl e unt i l pl ai nt i f f act ual l y sought damages under t hecl ause) ; Mat t i ngl y Br i dge Co. v. Hol l oway & Son Const r . Co. , 694S. W. 2d 702, 704 ( Ky. 1985) ( al l owi ng enf orcement of l i qui dat eddamages provi si on gr ant i ng $750 damages per day l ate wi t hout l i mi tbut r educi ng r ecover y f r om unr easonabl e 193- day penal t y t or easonabl e 32 and 2/ 3- day damages) ; Bd. of Cnty. Comm' r s of AdamsCnt y. v. Ci t y & Cnt y. of Denver , 40 P. 3d 25, 32 ( Col o. App. 2001)( " I f a cont r act st i pul at es a si ngl e l i qui dat ed damage amount f orsever al possi bl e br eaches, t he damage pr ovi si on i s i nval i d as apenal t y i f i t i s unr easonabl y di spr opor t i onat e t o t he expect ed l osson t he very br each that di d occur and was sued upon. " ) ; Anonymous

v. Anonymous, 649 N. Y. S. 2d 665, 666- 67 ( N. Y. App. Di v. 1996)( l i qui dat ed damages pr ovi si on al l owi ng $500, 000 per br each of conf i dent i al i t y agr eement not , "i n and of i t sel f , " unenf or ceabl e asagai nst publ i c pol i cy) ; cf . Rex Tr ai l er Co. v. Uni t ed St at es, 350U. S. 148, 151- 152 ( 1956) ( uncapped st atut ory penal t y of $2000 pervi ol at i on enf or ceabl e as l i qui dat ed damages r at her t han cr i mi nalsancti on f or case of f i ve vi ol at i ons) .

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Speci f i cal l y, Bose i dent i f i ed as i t s pot ent i al har ms: l oss of

r evenue f r om each sal e ( Bose' s r et ai l pr i ce f or each uni t was

appr oxi mat el y $6500 (Aust r al i an) ) ; har m t o Bose' s br and name;

downst r eamef f ect s of har mt o the br and name, such as i nt er r upt i ng

Bose' s di st r i but i on chai n and di scour agi ng pur chases by t hi r d

par t i es; enf or cement cost s due t o t he possi bi l i t y t hat Ej az coul d,

per haps successf ul l y, evade l egal pr ocess, t her eby i ncr easi ng

Bose' s cost s ( Ej az had expl i ci t l y t ol d Bose' s l awyer s t hat he "wi l l

r un away f r om t he count r y i f t hey come af t er me f or any money") ;

and t he possi bi l i t y t hat Bose woul d not be abl e t o pr ove al l of

Ej az' s sal es i n cour t ( i n t hi s ver y case, Bose r el i es on pr oof of

seven vi ol at i ons but asser t s t hat t here may have been many more) .

The absence of af f i r mat i ve proof of unr easonabl eness i s

f at al t o Ej az' s ar gument because he bear s t he bur den of pr oof . See

NPS, 886 N. E. 2d at 673. Si nce Ej az has not i nt r oduced any evi dence

t o rebut Bose and show t hat $50, 000 f or each of seven vi ol at i ons

was an unr easonabl e f orecast , he r emai ns bound by the l i qui dated

damages cl ause. See Reed v. Zi pcar , I nc. , No. 12- 2048, 2013 WL

3744090, at *3 ( 1st Ci r . J ul y 17, 2013) ( "Reed' s compl ai nt cont ai ns

no al l egat i ons as t o what a reasonabl e est i mate of damages woul d

be. Thi s i s suf f i ci ent t o def eat [ Reed' s] cl ai m . . . . " ) .

I I I .

Ej az next chal l enges t he di st r i ct cour t ' s gr ant of

summary j udgment agai nst hi m on Bose' s t r ademark i nf r i ngement

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cl ai m. A pl ai nt i f f al l egi ng t r ademar k i nf r i ngement must pr ove t wo

el ement s: ( 1) t he t r ademar ks ar e "ent i t l ed t o t r ademar k

pr ot ecti on, " and ( 2) "t he al l egedl y i nf r i ngi ng use i s l i kel y t o

cause consumer conf usi on. " Bos. Duck Tour s, LP v. Super Duck

Tour s, LLC, 531 F. 3d 1, 12 ( 1st Ci r . 2008) . 7

Ther e i s no di sput e over t he f i r st el ement i n t hi s case.

Bose' s t r ademar ks ar e r egi st er ed on t he Pr i nci pal Regi st er of t he

Uni t ed St at es Pat ent and Tr ademar k Of f i ce. Regi st r at i on serves as

pr i ma f aci e evi dence t hat t he t r ademar ks ar e ent i t l ed t o

pr ot ect i on, see 15 U. S. C. § 1057( b) , and Ej az has not cont est ed

t hat evi dence.

On t he consumer conf usi on el ement , Ej az ar gues t hat t here

was a genui ne di sput e of mater i al f act over whet her hi s sal es of

Bose pr oduct s wer e l i kel y t o cause consumer conf usi on f or t wo

r easons: any di f f er ences bet ween t he pr oduct s sui t abl e f or use i n

par t i cul ar count r i es wer e t r i vi al , and hi s cust omer s on eBay woul d

have been aware of any di f f erences bef ore maki ng thei r pur chases of

pr oduct s meant f or use i n ot her count r i es. I n a gr ay mar ket goods

7 Bose st at ed cl ai ms under bot h f eder al st at ut or y l aw andst ate common l aw but di d not i dent i f y whi ch st ate' s common l awwoul d gover n. Regar dl ess, t he anal ysi s her e may be col l apsed i nt o

t he f ederal cl ai mst r uct ur e because t he common l aw t r ademark cl ai msi n both Massachuset t s and New J ersey - - Ej az' s home st ate and t heonl y ot her pl ausi bl e candi dat e f or t he choi ce of l aw her e - - bot hr equi r e t he same el ement s as t he f eder al cl ai m. See J enzabar , I nc.v. Long Bow Gr p. , I nc. , 977 N. E. 2d 75, 82 n. 11 ( Mass. App. Ct .2012) ; Bar r e- Nat ' l , I nc. v. Bar r Labs. , I nc. , 773 F. Supp. 735, 746( D. N. J . 1991) .

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case, "a mat er i al di f f er ence bet ween goods si mul t aneousl y sol d i n

t he same mar ket under t he same name cr eat es a pr esumpt i on of

consumer conf usi on as a mat t er of l aw. " Soci et e Des Pr odui t s

Nest l e, S. A. , 982 F. 2d at 640. Rel yi ng on t hi s pr esumpt i on, Bose

poi nt s t o sever al mat er i al di f f er ences bet ween i t s Aust r al i an

pr oduct s and t he Amer i can pr oduct s t hat Ej az sol d i n Aust r al i a.

Those di f f er ences i ncl ude r egi on codi ng, whi ch wi l l keep an

Amer i can DVD pl ayer f r om pl ayi ng Aust r al i an DVDs and vi ce ver sa;

el ect r i cal power r equi r ement s, whi ch pr event Amer i can el ect r oni cs

f r om f unct i oni ng on Aust r al i an power suppl i es and vi ce ver sa;

capabi l i t i es of t he r emot e cont r ol s; dur at i ons of t he pr oduct s'

war r ant i es; and t he desi gn and f unct i onal i t y of t he pr oduct s' r adi o

t uner s. 8 Evi dence i n t he r ecor d, such as Bose' s cor por at e

8 Ej az i ni t i al l y cont ended t hat evi dence of t hese di f f er enceswas not pr oper l y bef ore t he di st r i ct cour t on summary j udgment

because st at ement s f r om Bose' s cor por at e repr esent at i ve not madebased on per sonal knowl edge woul d not have been admi ssi bl e att r i al . See, e. g. , Novi el l o v. Ci t y of Bost on, 398 F. 3d 76, 84 ( 1stCi r . 2005) ; Fed. R. Ci v. P. 56( c) ( 2) ( "A par t y may obj ect t hat t hemat er i al ci t ed t o suppor t or di sput e a f act cannot be pr esent ed i na f or mt hat woul d be admi ssi bl e i n evi dence. ") . Speci f i cal l y, Ej azar gued t hat Bose' s onl y evi dence on t hi s poi nt came f r om i t s Fed.R. Ci v. P. 30( b) ( 6) cor por at e r epr esent at i ve; whi l e an opposi ngpar t y may or di nar i l y of f er t he cor por at e r epr esent at i ve' s t est i monyas a st at ement of a par t y- opponent , see Fed. R. Evi d. 801( d) ( 2) ,Ej az has argued i ncor r ect l y t hat Bose had pr esent ed no basi s f ormaki ng t he t est i mony of i t s own r epr esent at i ve admi ss i bl e, because

he was t est i f yi ng t o mat t er s out si de hi s per sonal knowl edge.However , t he evi dence shows t hat Bose' s r epr esent at i ve t est i f i ed onhi s per sonal knowl edge about di f f er ences i n t echni calspeci f i cat i ons and war r ant i es f or di f f er ent pr oduct s. Fur t her ,t her e was ot her r ecor d evi dence, such as Ej az' s own admi ssi ons,t hat at l east one of t he di f f er ences Bose i dent i f i ed - - t he vol t ager equi r ement s - - was i n f act a mat er i al di f f er ence.

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r epr esent at i ve' s t est i mony based on hi s per sonal exper i ence and

Ej az' s t est i mony i n hi s deposi t i on, as wel l as Ej az' s l at er

admi ssi ons, suppor t s t hat t her e ar e mat er i al di f f er ences i n t he

pr oduct s.

Ej az at t empt s t o mi ni mi ze t he evi dence of mater i al

di f f er ences by asser t i ng t hat hi s act ual consumer s wer e not i n f act

conf used. But t hat ar gument mi sses t he mark. The l aw r equi r es

onl y t hat t he i nf r i ngement i s l i kel y t o cause consumer conf usi on,

not t hat i t act ual l y does so. See Soci et e Des Pr odui t s Nest l e,

S. A. , 982 F. 2d at 640 ( " [ A] pl ai nt i f f need onl y show t hat a

l i kel i hood of conf usi on i s i n pr ospect ; a showi ng of act ual

conf usi on i s not r equi r ed. I ndeed, f eder al cour t s have r out i nel y

gr ant ed i nj unct i ons i n gr ay goods cases not wi t hst andi ng an absence

of evi dence of act ual consumer conf usi on. " ( ci t at i ons omi t t ed) ) .

To t hat end, Ej az cl ai ms t hat consumer s on eBay ar e l ess

suscept i bl e t o conf usi on t han consumer s i n t r adi t i onal st or es. Hi s

onl y evi dence i n suppor t of t hi s concl usi on i s hi s own af f i davi t ,

i n whi ch he assert ed t hat based on hi s exper i ence, eBay cust omers

ar e "pr i mar i l y bar gai n hunt er s, and under st and t hat i n exchange f or

si gni f i cant pr i ce savi ngs t hey ar e not pur chasi ng f r om aut hor i zed

r e- sel l er s or di st r i but or s. " That st at ement , however , does not

act ual l y suppor t hi s posi t i on because i t expl ai ns onl y t hat eBay

consumer s woul d not be conf used about t he i dent i t y of t he sel l er s

of t he pr oduct s t hey bought ; i t gi ves no r eason t o bel i eve t hat

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t hey woul d expect t he pr oduct s t o f unct i on di f f er ent l y f r om

pr oduct s sol d by aut hor i zed di st r i but or s. Addi t i onal l y, Ej az' s

gener al i zat i ons f ai l t o count er t he speci f i c pr oof Bose of f er ed, i n

t he f or m of an emai l t hr ead showi ng conf usi on by one of Ej az' s

act ual eBay cust omer s. I n l i ght of t he pr esumpt i on of consumer

conf usi on pl us Bose' s unr ebut t ed evi dence, no r easonabl e f act f i nder

coul d concl ude t hat Ej az had met hi s bur den of showi ng t hat t he

sal es i n quest i on wer e not l i kel y t o cause consumer conf usi on.

I V.

Ej az' s f i nal ar gument on appeal i s t hat t he di st r i ct

cour t er r ed by decl i ni ng t o extend di scover y bef or e gr ant i ng Bose' s

mot i on f or summar y j udgment .

The procedur al hi st or y of t he di scover y i n t hi s case i s

not compl i cat ed. The di st r i ct cour t set an i ni t i al di scover y

deadl i ne of December 23, 2011, and l ater ext ended i t t o J anuary 30,

2012. Ej az ser ved Bose wi t h not i ce of a deposi t i on of i t s

cor por at e repr esent at i ve on August 12, 2011, and act ual l y deposed

t he r epr esent at i ve on J anuar y 27, 2012. At t he deposi t i on, Ej az' s

counsel compl ai ned on t he r ecor d t hat Bose' s Fed. R. Ci v. P.

30( b) ( 6) r epr esent at i ve had not suf f i ci ent l y been abl e t o answer

her quest i ons about sever al t opi cs on whi ch he had been desi gnated

t o speak. Thr ee weeks l at er , on Febr uar y 18, 2012, Ej az f i l ed a

mot i on to reopen di scover y under Rul e 56( d) of t he Feder al Rul es of

Ci vi l Pr ocedur e, cl ai mi ng t hat Bose had obst r uct ed hi s ef f or t s t o

-21-



obt ai n i nf or mat i on i n t he case by pr ovi di ng an i nsuf f i ci ent l y

pr epar ed r epr esent at i ve. The di st r i ct cour t di d not addr ess t he

mot i on t o reopen di scovery and i nst ead rul ed on t he summary

j udgment mot i on. Ej az ar gues t hat t he cour t er r ed i n doi ng so.

We r evi ew a di st r i ct cour t ' s r ef usal t o r eopen di scover y

f or abuse of di scr et i on. Vi neber g v. Bi ssonnet t e, 548 F. 3d 50, 55

( 1st Ci r . 2008) . The same st andar d of r evi ew appl i es to t he

deci si on t o pr oceed wi t h a summary j udgment mot i on whi l e a

di scover y r equest r emai ns out st andi ng. See Ni eves- Romer o v. Uni t ed

St at es, 715 F. 3d 375, 380 ( 1st Ci r . 2013) .

Her e, t he di st r i ct cour t was wel l wi t hi n i t s di scr et i on

i n r ul i ng on t he summary j udgment mot i on f i r st . A Rul e 56( d)

mot i on r equi r es i t s pr oponent t o show vi a "an af f i davi t or ot her

aut hor i t at i ve document " :

( i ) good cause f or hi s i nabi l i t y t o havedi scover ed or mar shal l ed t he necessar y f act sear l i er i n t he pr oceedi ngs; ( i i ) a pl ausi bl ebasi s f or bel i evi ng t hat addi t i onal f actspr obabl y exi st and can be r et r i eved wi t hi n ar easonabl e t i me; and ( i i i ) an expl anat i on of how t hose f act s, i f col l ect ed, wi l l suf f i ce t odef eat t he pendi ng summar y j udgment mot i on.

Ri ver a- Tor r es v. Rey- Her nandez, 502 F. 3d 7, 10 ( 1st Ci r . 2007) . I n

t hi s case, Ej az made no showi ng i n suppor t of t he thi r d r equi r ement

f or a 56( d) mot i on - - namel y, how any addi t i onal f act s he col l ect ed

woul d def eat t he pendi ng summary j udgment mot i on. I ndeed, Ej az

even suggest ed t hat no addi t i onal f act s wer e needed, not i ng i n hi s

br i ef opposi ng the mot i on f or summary j udgment t hat "Def endant

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cont ends t hat t he exi st i ng r ecor d i s suf f i ci ent t o deny Pl ai nt i f f ' s

mot i on i n i t s ent i r et y. " The di st r i ct cour t di d not abuse i t s

di scr et i on i n decl i ni ng t o act on t he 56( d) mot i on bef or e

consi der i ng t he summary j udgment mot i on.

V.

For t he r easons st at ed above, t he di st r i ct cour t ' s

deci si on i s AFFI RMED.

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bose corporation v. ejaz, 1st cir. (2013)

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