The U.S. District Court for the District of Columbia has sided with DesignwarePro, LLC in a case against Retail Pro Software Pty Ltd, confirming an arbitral award and granting a default judgment. The ruling, issued by Judge Amy Berman Jackson, stems from a breach of contract dispute involving software licensing and distribution.
The core of the case revolves around a license agreement between DesignwarePro, a Colorado-based company that owns “Windowware Pro” software, and Retail Pro, an Australian company. The agreement granted Retail Pro exclusive rights to market and distribute the software in several territories, including Australia, New Zealand, and parts of Asia.
The Agreement and the Breach
The license agreement, signed in June 2017, outlined the terms for Retail Pro to sell and market Windowware Pro. However, according to court documents, Retail Pro breached this agreement. Instead of adhering to the terms, Retail Pro modified and rebranded Windowware Pro as “Smartpad Pro” and began selling it in the United States, United Kingdom, and Canada, outside of its designated territories. This modified software allegedly had the same look and feel as Windowware Pro and even directly referenced it in its source code. Retail Pro also allegedly used DesignwarePro’s customer list, which it gained access to through the agreement, to target those customers directly.
Arbitration and the Award
DesignwarePro initiated arbitration against Retail Pro on January 19, 2023, citing several claims, including breach of contract, copyright infringement, and misappropriation of trade secrets. Retail Pro, however, allegedly hindered the arbitration process from the start. The court documents detail instances where Retail Pro failed to respond to requests, provide necessary documents, and even canceled a scheduled deposition.
Despite these challenges, the arbitration panel issued a final award on May 24, 2024, ruling in favor of DesignwarePro on all claims. The panel found that Retail Pro had breached the license agreement and the covenant of good faith and fair dealing, infringed on DesignwarePro’s copyright, and misappropriated trade secrets. The arbitration panel awarded DesignwarePro damages, attorney fees, and a permanent injunction to prevent Retail Pro from selling the software outside the licensed territories. The total damages awarded amounted to $1,452,649.16 AUD.
Default Judgment and Confirmation of Award
DesignwarePro filed a petition in the U.S. District Court for the District of Columbia to confirm the arbitral award, as allowed under the Federal Arbitration Act (FAA). Retail Pro was properly served with the petition but failed to respond, oppose the petition, or otherwise participate in the court proceedings. As a result, the Clerk of Court entered a default against Retail Pro. DesignwarePro then moved for a default judgment.
The Court’s Decision
Judge Jackson, after considering the evidence and the record, granted DesignwarePro’s motion for default judgment and confirmed the arbitral award. The court’s decision was based on several key factors.
Subject Matter Jurisdiction
The court first established that it had subject matter jurisdiction over the case under the FAA. The FAA implements the New York Convention, which provides a framework for enforcing foreign arbitral awards. The court applied the “Titan test,” a four-part test used to determine if an agreement to arbitrate exists under the New York Convention. The court found that all four elements of the test were satisfied:
* There was a written agreement (the license agreement).
* The agreement provided for arbitration in a signatory of the convention (the United States).
* The subject matter was commercial.
* The subject matter was not entirely domestic in scope.
Because all these elements were met, the court determined it had the authority to hear the case.
Personal Jurisdiction
The court also determined that it had personal jurisdiction over Retail Pro. The license agreement included a forum selection clause, which specified that any legal action related to the agreement would be brought in the District of Columbia. The court found no evidence that this clause was unreasonable or unjust, therefore establishing personal jurisdiction over Retail Pro.
Confirmation of the Award
The court emphasized the limited discretion it has under the FAA to refuse to confirm an arbitral award. The FAA mandates that courts confirm an award unless specific grounds for refusal or deferral exist under the New York Convention. The court found that none of the grounds for refusal applied in this case. Retail Pro, the party against whom the award was invoked, had not appeared in the case and had not presented any arguments for the court to deny the award.
In conclusion, the court granted DesignwarePro’s motion for default judgment and confirmed the arbitral award, effectively upholding the arbitration panel’s decision and the remedies awarded to DesignwarePro.