Susteen Inc. v. Sourcenext Corp.

MEMORANDUM *

Plaintiff Susteen, Inc., brought suit against Defendant Sourcenext Corporation to recover $1,545,286.17 plus prejudgment interest, which represents the remaining minimum royalties Plaintiff asserts are owed by Defendant under a two-year computer software license agreement. Plaintiff terminated the license agreement *691 about six months after its execution, alleging that Defendant had breached the agreement by engaging in unauthorized sublicensing of the software. The district court granted summary judgment in favor of Defendant, holding that Plaintiff was not entitled to post-termination royalty payments. Plaintiff timely appealed. On de novo review, Universal Health Servs. Inc. v. Thompson, 363 F.3d 1013 , 1019 (9th Cir.2004), we affirm.

Under California law, which the parties agree controls enforcement of the agreement, if a licensor elects to terminate a license agreement upon the licensee’s breach, the obligation to pay future royalties ceases as well. See Fageol & Tate v. Baird-Bailhache Co., 138 Cal.App. 1 , 5 P.2d 75, 76 (1931) (denying post-termination royalties, notwithstanding a guaranteed-minimum-royalties provision, because, “[h]aving elected to…