United States District Court, D. Colorado
NUTRITIONAL BIOMIMETICS, LLC, Plaintiff/Counterclaim Defendant and Counterclaim Plaintiff,
EMPIRICAL LABS INCORPORATED, Defendant/Counterclaim Plaintiff,
CHARLES BARKER Counterclaim Defendant, and EMEK BLAIR, CLVM, LLC, Counterclaim Defendants/ Counterclaim Plaintiffs,
KELLY GOYEN and ASA WALDSTEIN, Counterclaim Defendants.
KATHLEEN M. TAFOYA, UNITED STATES MAGISTRATE JUDGE
matter is before the court on Defendant/Counterclaim
Plaintiff “Empirical Labs' Motion for Partial
Summary Judgment.” (Doc. No. 94 [“Mot.”]).
Plaintiff/Counterclaim Defendant/Counterclaim Plaintiff
Nutritional Biomimetics, LLC (“NB”) filed a
Response (Doc. No. 106 [“Resp.”]), to which
Defendant/Counterclaim Plaintiff Empirical Labs, Inc.
(“Empirical Labs”) replied. (Doc. No. 113
Labs produces and sells nutritional supplements. From 2010
through 2014, Empirical Labs employed Counterclaim
Plaintiff/Counterclaim Defendant Dr. Emek Blair (“Dr.
Blair”). In November 2012, Dr. Blair created NB and
serves as the sole managing member. While Dr. Blair was
employed by Empirical Labs, NB and Empirical Labs entered
into multiple licensing agreements involving the development,
manufacturing, and selling of liposomal nutritional products.
Dr. Blair and NB contend that NB owns the manufacturing
methodology and formulas related to the liposomal products
and that Empirical Labs could only manufacture and sell
products derived from the same pursuant to a licensing
agreement from NB allowing it to do so. Under the licensing
agreement in place during the time period relevant to the
instant Motion, Empirical Labs was required to pay NB 15% of
its gross profits from the sale of liposomal products covered
by the agreement. Empirical Labs disputes NB's
characterizations of the licensing agreements, contends they
are neither valid nor enforceable, and contends the
manufacturing methodology and formulas related to the
liposomal products are Empirical Labs' trade secrets
stolen and utilized by Dr. Blair and NB.
order to resolve Empirical Labs' Motion for Partial
Summary Judgment, it is not necessary for the court to
determine the proper characterization of the licensing
agreements and their validity, nor the proper owner of the
liposomal manufacturing methodology and formulas. The issue
presented in Empirical Labs' Motion is limited to the
enforceability of a stipulated damages provision contained
within a document entitled “Resolution of Phytalive
product use of structured phophotidycholine and liposomal
iodide” (“Resolution”), executed by NB and
Empirical Labs in June 2014, and related to liposomal
products not previously covered by a licensing agreement.
Empirical Labs seeks summary judgment from this court that
the Resolution's stipulated damages provision is not
enforceable because it serves as a penalty clause rather than
a liquidated damages provision. Empirical Labs further
contends that, if the court concludes the stipulated damages
provision is unenforceable and the trier of fact ultimately
determines Empirical Labs breached the Resolution, the proper
measure of damages would be 15% of Empirical Labs' gross
profits because that was the amount Empirical Labs was paying
NB under the licensing agreement in place at the time the
Resolution was executed.
June 2014, Empirical Labs and NB executed the Resolution,
which provides, “Empirical Labs has manufactured two
products that are under the liposomal agreement .....Due to
miscommunication, [Empirical Labs] will not be required to
make any payments for these products as long as no further
batches will be manufactured past June 25, 2014.” (Doc.
Resolution further provides:
In the future, [Empirical Labs] must get express signed
written authorization via a licensing agreement from NB, LLC
prior to manufacturing any new formulas that are liposomal
products, advanced bioavailability products (aka UltaXorb),
or any of the krill oil processing products as finished
product, bulk, or as an ingredient(s) in another product(s).
Resolution includes the following stipulated damages
provision: “If [Empirical Labs] does not comply, it
will be required to pay the full retail price of manufactured
products to NB LLC, no less than $0.25 per 5mL.”
May 29, 2014, prior to executing the Resolution, Dr. Blair
submitted a draft to Mr. Goyen for his review. (Doc. No. 94-3
reviewing the same, Mr. Goyen replied to Mr. Blair,
“The licensing resolution seems a bit strong on
penalty.” (Doc. No. 94-3 at 1.)
Nevertheless, the Resolution was signed by Counterclaim
Defendant Kelly Goyen (“Mr. Goyen”), President of
Empirical Labs, on June 2, ...