HUMETRIX, INC., V. GEMPLUS S.C.A.
268 F.3d 910 (9th Cir. 2001)
NATURE OF THE CASE: This was an appeal from an award of damages for lost future profits
related to a new venture.
FACTS: Humetrix, Inc.(P) contracted with Gemplus S.C.A. (D) to provide portable patient
data storage solutions to the United States health care market. It all started when D spoke
at a U.S. meeting over applications of smart cards to health care. D had no presence to
speak of in the United States. P and D began negotiations that spanned a year. Initially
both parties envisioned P only as a U.S. reseller of D's Smart Card products because D
already had a U.S. subsidiary, Gemplus Card International Corp.
('Gemplus USA'). P negotiated an Agency Agreement with Gemplus USA. D became impressed with
P's ingenuity and resourcefulness in exploiting those opportunities. The parties began to
negotiate a new role quietly so as not to hurt Gemplus USA. D had come to the conclusion
that Gemplus USA did not have the right initiative to market the concept and products. The
parties were soon engaged in partnership and collaboration activities. A new agreement was
drafted reflecting their 'partnership' and a new compensation scheme in which P was to keep
the full margin of each unit sold in the United States. P drafted the agreement entitled the
Representative Agreement and sent it to D to be signed but it was never signed. P was also
directed to develop a name. P developed the name Vaccicard and registered it in the U.S. P
labored industriously to capitalize on this opportunity, raising finances, increasing its
sales staff, and developing a client base in the United States. Events at D were to sabotage
those efforts. P had registered the trademark 'Vaccicard' in the United States. Guistini, a
manager at Gemplus was a 45% shareholder in Inovaction S.A.R.L. ('Inovaction'), a French
company that held the French trademarks 'Vaccicarte' and 'Vaccicard.' D also acquired a new
U.S. subsidiary that could perform many of the functions that P was to have performed as D's
American partner. D's cooperative efforts with P came to a grinding halt. For more than a
month, D ignored P's requests to honor the parties' agreements. D eventually explained that,
contrary to its prior representations, it viewed P not as its partner, but merely as a
reseller. P had already invested significant time and resources in market research, client
development, and product development, and had closed contracts with two California counties.
P sued D for breach of contract and breach of its fiduciary duty as P's partner. P also sued
Guistini for intentional interference with contractual relations and Inovaction seeking a
declaration that P was entitled to use the 'Vaccicard' trademark in the United States. Since
the Representative Agreement had never been signed P alleged that the discussions between P
and D resulted in the formation of two oral contracts. D countered that the Agency Agreement
constituted the sole agreement and moved to compel arbitration in accordance with the Agency
Agreement's mandatory arbitration clause. The district court denied D's motion. We affirmed
in that only Gemplus USA and P were parties to the Agency Agreement. The jury awarded P $15
million in damages for breach of contract and breach of fiduciary duty. The jury also
declared that P was entitled to use the trademark 'Vaccicard' in the U.S. market. D
appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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