The litigation involved an issue of Pennsylvania law regarding the enforceability of an acceleration clause relating to the amount of Guaranteed Royalty payments owed upon the breach and termination of a commercial licensing agreement.

In October of 2011, American Outdoorsman entered into a Licensing Agreement with Shadow Beverages and Snacks, LLC. American Outdoorsman is a small media company that creates hunting, fishing and outdoor adventure programming for television. Under the Agreement, Shadow Beverages bargained for the right to use American Outdoorsman’s name and logo in marketing and selling certain food products. In return, inter alia, Shadow Beverages agreed to make Guaranteed Royalty payments to American Outdoorsman on a quarterly basis for a ten-year period.

By failing to make any of the required payments, Shadow Beverages forced American Outdoorsman to terminate the Agreement on March 18, 2013. American Outdoorsman promptly initiated an action against Shadow Beverages for breaching the Licensing Agreement, seeking more than $5 million in unpaid guaranteed royalties. American Outdoorsman maintained that all unpaid Guaranteed Royalties were due upon termination of Agreement, which resulted from Shadow Beverages’ material breach. On the other hand, Shadow Beverages contended, unsuccessfully, that it was only responsible for three (3) payments – the payments that were owed prior to American Outdoorsman’s termination of the Agreement.

Chief United States Magistrate Judge Maureen P. Kelly granted the Motion for Summary Judgment filed by American Outdoorsman. She held that, under “the only reasonable interpretation,” the Licensing Agreement contained an acceleration clause “that obligates Shadow Beverages to pay American Outdoorsman all ten years of Guaranteed Royalty payments as set forth in the Agreement.” Judge Kelly addressed each argument raised by Shadow Beverages and systematically explained why each argument was unpersuasive. She explained that the Guaranteed Royalties were, by definition, “‘compensation’ to American Outdoorsman for granting Shadow Beverages the right to use the American Outdoorsman name and logo in the development, manufacture and sale of certain products and merchandise.” American Outdoorsman was not seeking to recoup “lost profits from anticipated, but unrealized, future sales.” According to Judge Kelly, the parties intended that Shadow Beverages “would be obligated to pay American Outdoorsman all of the Guaranteed Royalty payments set forth in the Agreement in the event that Shadow Beverages breached the Agreement and American Outdoorsman exercised its right to terminate the Agreement as a result.”

To calculate the exact amount of damages, Judge Kelly has instructed American Outdoorsman to submit an accounting by January 9, 2014 of all Guaranteed Royalty Payments due under the Licensing Agreement, which includes attorneys’ fees, costs and expenses. The total damages will most likely be more than $6 million dollars.

Mr. Goldman, a sole practitioner, has 25 years of practice experience in his mainly business-related practice, focusing on employment law, commercial litigation, civil rights, and real estate law. Mr. Rodgers, also a sole practioner, is a frequent collaborator with Mr. Goldman in the same areas of law.