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Evans v. Building Materials Corporation of America

United States Court of Appeals, Federal Circuit

June 5, 2017

STEPHEN F. EVANS, ROOF N BOX, INC., Plaintiffs-Appellees
v.
BUILDING MATERIALS CORPORATION OF AMERICA, DBA GAF-ELK CORPORATION, Defendant-Appellant

         Appeal from the United States District Court for the Eastern District of Virginia in No. 1:16-cv-00282-GBL-IDD, Judge Gerald Bruce Lee.

          Gregory N. Stillman, Hunton & Williams LLP, Norfolk, VA, argued for plaintiffs-appellees. Also represented by Wendy Cohen McGraw.

          John Dennis Murnane, Fitzpatrick, Cella, Harper & Scinto, New York, NY, argued for defendant-appellant. Also represented by Robert Scott Pickens; Justin J. Oliver, Washington, DC.

          Before Reyna, Linn, and Taranto, Circuit Judges.

          TARANTO, CIRCUIT JUDGE.

         In September 2009, Roof N Box, Inc. (RNB) and Building Materials Corp. of America d/b/a GAF-ELK Corp. (GAF) entered into an agreement under which GAF would promote RNB's "Roof N Box" product, a three-dimensional roofing model, to building-construction contractors affiliated with GAF. The agreement contains a provision that requires the parties to submit disputes "arising under" the agreement to arbitration. GAF terminated the agreement after about a year, and the validity of that termination is not at issue.

         In March 2016, RNB, together with its founder and president, Stephen Evans, brought the present suit against GAF based on GAF's activities in marketing its own product that competes with the Roof N Box product. The complaint alleges design-patent infringement under federal law as well as trade-dress infringement and unfair competition under federal and state law. GAF moved to dismiss or stay the action pending arbitration based on the 2009 agreement's arbitration provision. The district court denied that motion. GAF appeals. Because GAF's assertion that the arbitration provision covers the claims stated in the complaint is "wholly groundless, " a standard that GAF accepts as applicable in this case, we affirm.

         I

         Mr. Evans is the inventor of the "Roof N Box" product, a three-dimensional roofing model designed to be used by a seller of roofing products and services to display roofing components when making a sales pitch to a homeowner. According to Mr. Evans and RNB, the Roof N Box product allows a salesperson to remove or replace the layers of roofing on the model while explaining the roofing layers, their functions, and their terminologies. In June 2007, Mr. Evans filed a design patent application for the model, which issued as U.S. Design Patent No. D575, 509.

         In September 2009, RNB entered into a promotional agreement with GAF. GAF agreed to promote the Roof N Box product to GAF's network of certified contractors who installed roofing on residential and commercial structures. RNB agreed to sell the Roof N Box product at discounted prices to the GAF contractors and to pay GAF five percent of the total amount that RNB received from those sales. RNB also agreed to maintain the confidentiality of GAF's proprietary information. Unless terminated, the agreement was to remain in effect until September 1, 2016, and would thereafter automatically renew for additional two-year renewal periods.

         The 2009 agreement contains an arbitration provision, which states: "If any dispute or disagreement arises under this Agreement, " and the "dispute or disagreement cannot be settled[, ] . . . then such dispute or disagreement shall be submitted to final and binding arbitration in accordance with the rules of American Arbitration Association . . . unless otherwise agreed to, in writing, by both Parties." J.A. 84. The agreement also contains what GAF characterizes as a survival clause, which states: "[T]ermination for default . . . [shall not] constitute a waiver of any rights or remedies of the non-defaulting Party including, without limitation, the right of the non-breaching Party to seek damages for breaches occurring during the Initial Term or any Renewing Term." J.A. 80. GAF terminated the agreement in 2010.

         In March 2016, Mr. Evans and RNB sued GAF in the Eastern District of Virginia. See Complaint, Evans v. Bldg. Materials Corp. of Am., No. 1:16-cv-282-GBL-IDD (E.D. Va. Mar. 14, 2016), ECF No. 1. The complaint states the following claims: Counts I and II for, respectively, direct and induced patent infringement under 35 U.S.C. § 271(a) and (b); Count III for unfair competition and trade-dress infringement under 15 U.S.C. § 1125(a); Count IV for unfair competition and trade-dress infringement under state common law; and Count V for unfair competition under N.J. Stat. § 56:8-2. The complaint alleges that, after the termination of the 2009 agreement, GAF manufactured and sold an infringing roofing model that competed with the Roof N Box product. GAF does not dispute that it developed and sold a promotional roofing product.

         In May 2016, GAF moved to dismiss or stay the action pending arbitration, invoking the 2009 agreement's arbitration provision. See Defendant's Motion to Dismiss or, in the Alternative, To Compel Arbitration and Stay Proceedings, Evans, No. 1:16-cv-282-GBL-IDD (E.D. Va. May 13, 2016), ECF No. 13. The district court denied the motion. See Memorandum Opinion & Order, Evans, No. 1:16-cv-282-GBL-IDD (E.D. Va. July 6, 2016), ECF No. 32. The court held that the arbitration provision did not cover the claims in the complaint because GAF terminated the agreement before the parties' dispute arose. Id. at 5-8. In the alternative, the court held that the claims were outside the scope of the arbitration provision. Id. at 8-10.

         GAF appeals. We have jurisdiction under 28 U.S.C. § 1292(c)(1). See Microchip Tech. Inc. v. U.S. Philips ...


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