A ruling that awarded $43 million to a small software developer was reversed this week by a federal appeals court in Denver.
Jeppesen Sanderson, the Englewood division of The Boeing Company that makes aviation terminal charts, won its appeal against SolidFX, the Massachusetts developer that accused Jeppesen of stealing its idea for an iPad app.
“We are gratified with the decision of the court in the matter,” said Mike Pound, a Jeppesen spokesman. “The next step would be for them to respond.”
SolidFX’s legal firm, Davis Graham & Stubbs in Denver, did not respond to requests for comment. Jeppesen was represented Kirkland & Ellis in Denver.
, released Monday, Tenth Circuit Court of Appeals judges Paul J. Kelly Jr., Carolyn B. McHugh and Monroe G. McKay wrote that the contract between the two companies didn’t allow for the recovery of lost profits, which was the bulk of the $43 million.
It all started in November 2008, when SolidFX began discussing a way to digitize Jeppesen’s paper terminal charts used by pilots to navigate and land at airports. The result was the SolidFX’s iRex device preloaded with Jeppesen’s charts. The two companies finalized a five-year contract in December 2009.A month later, Apple introduced the iPad and SolidFX began the process of turning Jeppesen data into an iPad app. But Jeppesen, which wouldn’t share its data with SolidFX, in May 2010. and breach of contract. Its lawyers argued that the contract included future devices like iPads.
“There was never a doubt in their mind that the iPad was covered,” SolidFX attorney Shannon Stevenson, of Davis Graham & Stubbs, said during closing arguments, about the case.In 2014, a in damages, which included $20.9 million in lost profits and $21.4 million in lost business.
In its appeal, Jeppesen lawyers challenged only the part about recovering lost profits — the entire $43 million sum.
Tom Russell, a law professor at the Sturm College of Law at the University of Denver, said the appeals judges did the right thing by reversing the award. The original jury decision was based on what is called “consequential damages,” or future business and profits SolidFX would lose because Jeppesen breached the contract.
“But in this case, the contract makes clear that lost profits are excluded from damages in the event of a breach,” Russell said. “My view is that the 10th Circuit gets that right. That’s a tough day’s work for the plaintiff’s lawyers.”
SolidFX has 14 days to seek a rehearing.
It’s very common for large jury awards to be reduced. Russell said that about three-quarters of jury awards higher than $1 million are reduced.
“What fraction get eliminated, I can’t say. But when you read about a big award, you can think that 75 percent of the time, it will be reduced. It’s not like the plan is to walk out with a big bag of money,” said Russell, who specializes in contracts.
With any contract, Russell advises that you read the fine print.
“Just as we ordinary consumers don’t read rental car agreements or click-through licenses on the internet, in similar fashion, businesses don’t read the contracts they sign,” Russell said. “Another thing we like to say is large print giveth and the small print taketh away.”
