Foley Secures Summary Judgment and Favorable Jury Verdict for Kids II, Inc. in Contract Dispute Over Royalties

Foley & Lardner LLP secured summary judgment and a jury verdict in a royalty contract dispute on behalf of Kids II, Inc., an infant and toddler toy and product manufacturer, before the U.S. District Court for the Northern District of Georgia Atlanta Division.

In January 2016, plaintiffs, Kids, II, Inc. and subsidiary GOT I, LLC, sought a declaratory judgment as to their rights under a royalty agreement between Kids II, GOT I and the defendants, XRT, Inc. and David E. Silverglate, signed in December 2010. In November 2015, the defendants alleged that GOT I failed to pay certain alleged royalties totally $230,173. And, the defendants claimed that they were entitled to certain royalty rates under the agreement for several products sold by Kids II. Disputing the claims, Kids II and GOT I requested declarations that (1) GOT I did not owe the unpaid royalties, and (2) that the royalty rates the defendants claim are incorrect.

After XRT filed a counterclaim for $100 million in the declaratory judgment action over royalty rates in July of 2016, Kids II replaced its existing counsel with Foley partner and intellectual property lawyer, Matthew B. Lowrie.

After more than 20 depositions in a two-month period, including seven expert depositions, Kids II secured summary judgment in February of 2018 against XRT’s material breach claim, thereby eliminating the large damages claim. And, after a trial to determine the proper rates, the jury determined on March 25, 2019 that the rates were proper for 90 percent of the disputed products, covering more than 98 percent of the sales revenues associated with the products.

In addition to Matthew Lowrie, the Foley team representing Kids II included senior counsel Ruben J. Rodrigues and Lucas I. Silva, and associate Sarah E. Rieger.