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Symbol Technologies v. METROLOGIC INSTRUMENTS
Citations: 417 F. Supp. 2d 421; 2006 U.S. Dist. LEXIS 7588; 2006 WL 465375Docket: 05 Civ. 7648(JSR)
Court: District Court, S.D. New York; February 28, 2006; Federal District Court
Petitioner Symbol Technologies, Inc. seeks to confirm a final arbitration award, while respondent Metrologic Instruments, Inc. cross-moves to vacate that award and two interim awards. Both companies are involved in the laser scanner device industry and have a longstanding patent cross-licensing agreement, which has been amended three times since its inception in 1996. Under the agreement, Metrologic is authorized to use certain Symbol patents for specific products, such as the MS950 scanner, for which it must pay a fixed royalty of $10 per unit sold. In December 1999, Metrologic announced plans to introduce two new products, the MS9500 and MS6200, asserting they did not infringe on Symbol's patents. However, pending resolution, Metrologic made over $2 million in interim royalty payments as if these products were modifications of the MS950. In February 2002, Metrologic stopped these payments, prompting Symbol to file a lawsuit in federal court for breach of contract, claiming that the payments implied an agreement covering the new products. The court ruled in favor of Metrologic, finding no such agreement. Subsequently, Metrologic initiated arbitration in June 2002, leading the arbitrator to ultimately determine that the new products fell under the licensing agreement, entitling Symbol to royalties. On August 26, 2005, Symbol sought confirmation of a final arbitration award in court, while Metrologic sought to vacate that award and two earlier interim awards. The central issue is whether a prior dismissal of Symbol's declaratory judgment action in the Eastern District of New York precludes the arbitration awards. The arbitrator concluded it does not; the court's finding of no breach does not equate to a determination that no royalties are owed. The court indicated that the lack of agreement on royalties does not negate potential royalty obligations, and the question of product coverage under the agreement remains arbitrable. The arbitrator emphasized that the court's ruling pertained solely to contract breach, asserting that arbitrability and coverage issues must be resolved through arbitration. Metrologic's assertion that Symbol attempted to relitigate the issue of voluntary payments as implicit agreement is incorrect, as the arbitrator's decision focused on whether new products are covered by the agreement, a matter previously designated for arbitration. Therefore, Symbol's petition to confirm the arbitration award is granted, and Metrologic's motion to vacate the awards is denied. The court ordered the final judgment to be entered.