Court Rules in Suit over Stones Blackberry License

The U.S. District Court for the Southern District of New York decided that The Rolling Stones' tour management company didn't breach the exclusivity terms of an agreement for use of Stones intellectual properties in conjunction with the planned development of a limited-edition Blackberry smartphone. RST (2005) Inc. v. Research in Motion Ltd. (RIM), 07 CV 3737(VM).

RST was formed to manage The Rolling Stones' 2005-2007 “A Bigger Bang” tour. RST entered into an agreement in October 2005 to exclusively license to RIM intellectual properties of The Stones ' including trademarks, logos, photos and video clips ' to develop a limited-edition Blackberry. The agreement promised RST a $1 million licensing fee, and that RIM would invest $5 million in developing and promoting the smartphone, or pay RST the difference if less than $5 million was spent. However, in September 2005, Virgin Records, for which The Stones recorded, had struck a deal with SanDisk for use of some of the same Stones intellectual properties to promote a “Gruvi” flash memory card. When Palm used these Stones intellectual properties to advertise an offer of a free Gruvi card with the purchase of a Palm handheld device, RIM informed RST that their agreement was terminated and refused to develop the limited-edition Blackberry.

RST sued RIM, which countered with several claims arising out of the agreement. Granting summary judgment in part to RST, the district court noted: “RIM points out that during the negotiations that resulted in the Virgin-SanDisk Agreement, 'Rolling Stones representatives were explicitly told that the [Gruvi Card] would be played on mobile devices such as PDAs and mobile phones, that Palm (BlackBerry's biggest competitor at the time) was a 'product partner,' and SanDisk planned on instituting joint-marketing campaigns with its product partners, including various handset manufacturers.' ' Even viewing these facts in the light most favorable to RIM, the [c]ourt finds that the availability of this information to Rolling Stones representatives does not amount to a license from RST to Palm, or even a license to SanDisk to permit Palm to use the Licensed Properties. There is no language in the Virgin-SanDisk Agreement authorizing any party other than SanDisk to use Rolling Stones properties. ' The Virgin-SanDisk Agreement cannot be characterized as extending a license to Palm, and it simply does not authorize Palm to hold itself out as a sponsor of the Bigger Bang tour or of The Rolling Stones. In addition, the flash drive authorized by the Virgin-SanDisk Agreement is certainly not [as restricted in the RST/RIM contract] 'any other telephone or PDA,' nor is SanDisk a 'manufacturer of telephones or PDAs.'”

RIM also claimed that RST materially breached the RST/RIM licensing contract by falsely representing that RST “own[ed] or control[led] all rights in and to the Licensed Properties.” But the district court found that “circumstances still leave the exact legal or business relationship between RST and The Rolling Stones very unclear. The extent of RST's control of the Licensed Properties, given Virgin Records's ability to license certain Rolling Stones properties, requires further factual development.”

The U.S. District Court for the Southern District of New York decided that The Rolling Stones' tour management company didn't breach the exclusivity terms of an agreement for use of Stones intellectual properties in conjunction with the planned development of a limited-edition Blackberry smartphone. RST (2005) Inc. v. Research in Motion Ltd. (RIM), 07 CV 3737(VM).

RST was formed to manage The Rolling Stones' 2005-2007 “A Bigger Bang” tour. RST entered into an agreement in October 2005 to exclusively license to RIM intellectual properties of The Stones ' including trademarks, logos, photos and video clips ' to develop a limited-edition Blackberry. The agreement promised RST a $1 million licensing fee, and that RIM would invest $5 million in developing and promoting the smartphone, or pay RST the difference if less than $5 million was spent. However, in September 2005, Virgin Records, for which The Stones recorded, had struck a deal with SanDisk for use of some of the same Stones intellectual properties to promote a “Gruvi” flash memory card. When Palm used these Stones intellectual properties to advertise an offer of a free Gruvi card with the purchase of a Palm handheld device, RIM informed RST that their agreement was terminated and refused to develop the limited-edition Blackberry.

RST sued RIM, which countered with several claims arising out of the agreement. Granting summary judgment in part to RST, the district court noted: “RIM points out that during the negotiations that resulted in the Virgin-SanDisk Agreement, 'Rolling Stones representatives were explicitly told that the [Gruvi Card] would be played on mobile devices such as PDAs and mobile phones, that Palm (BlackBerry's biggest competitor at the time) was a 'product partner,' and SanDisk planned on instituting joint-marketing campaigns with its product partners, including various handset manufacturers.' ' Even viewing these facts in the light most favorable to RIM, the [c]ourt finds that the availability of this information to Rolling Stones representatives does not amount to a license from RST to Palm, or even a license to SanDisk to permit Palm to use the Licensed Properties. There is no language in the Virgin-SanDisk Agreement authorizing any party other than SanDisk to use Rolling Stones properties. ' The Virgin-SanDisk Agreement cannot be characterized as extending a license to Palm, and it simply does not authorize Palm to hold itself out as a sponsor of the Bigger Bang tour or of The Rolling Stones. In addition, the flash drive authorized by the Virgin-SanDisk Agreement is certainly not [as restricted in the RST/RIM contract] 'any other telephone or PDA,' nor is SanDisk a 'manufacturer of telephones or PDAs.'”

RIM also claimed that RST materially breached the RST/RIM licensing contract by falsely representing that RST “own[ed] or control[led] all rights in and to the Licensed Properties.” But the district court found that “circumstances still leave the exact legal or business relationship between RST and The Rolling Stones very unclear. The extent of RST's control of the Licensed Properties, given Virgin Records's ability to license certain Rolling Stones properties, requires further factual development.”