IP Law Daily, COPYRIGHT—S.D.N.Y.: Settlement terms agreed to by email bound parties despite absence of formal writing, (Oct 24, 2022)

By Kevin M. Finson, J.D.

The terms of a settlement agreed to via email were binding even after a party refused to agree to a formal writing because both parties treated the settlement as accomplished.

A seller of a fashion related app was bound by the settlement terms its counsel agreed to via email, the U.S. District Court in New York has held. The party’s attempt to back out of the agreement prior to a formal writing was ineffective (HVN Clothing, Inc. v. Lomeway E-Commerce (Luxembourg) Limited, October 21, 2022, Furman, J.).

HVN Clothing, Inc. and Harley Viera-Newton (HVN) was the owner of the federally registered HVN trademark and owner of a registered copyright in the HVN Cherry Print. HVN brought suit against Lomeway E-Commerce (Luxembourg) Limited, d/b/a Zaful (Zaful) alleging that Zaful violated the Copyright Act, the Lanham Act, and various provisions of New York law by using the mark and copyright protected print on Zaful’s “Zaful – My Fashion Story” app. HVN obtained a temporary restraining order and preliminary injunction against Zaful and using those orders convinced Apple to remove Zaful’s app from the Apple App Store. Zaful and HVN then began settlement negotiations and agreed to certain terms via email, but never signed a formal writing. After negotiations broke down, HVN moved to enforce the terms it asserted were agreed via email.

Settlement. HVN’s counsel sent an email to Zaful’s counsel proposing settlement with four terms, payment of $150,000 by Zaful to HVN, mutual releases, Zaful’s consent to judgment and a permanent injunction substantially similar to the existing preliminary injunction, and upon agreement in principle to the terms, that HVN would notify Apple that HVN no longer objected to the Zaful app. Zaful’s counsel responded with “only” one edit, the addition of an affiliate to the mutual releases. The parties both referred to the agreement as complete in principle. Zaful made payment and requested that HVN contact Apple as discussed, which HVN did the next day. The parties then began exchanging drafts of a formal settlement agreement, but ultimately Zaful ceased responding and filed an answer and counterclaims. The Court held that partial performance by both parties weighed in favor of enforcement, as did the fact that the terms were in writing in the form of emails and that the emails contained all the material terms necessary to resolve the dispute. The Court granted HVN’s motion to enforce the settlement.

The Case is No. 1:22-cv-00027-JMF.

Attorneys: Wesley Martin Mullen (Mullen PC) for HVN Clothing, Inc. Adam Edward Urbanczyk (AU LLC) for Lomeway E-Commerce [Luxembourg] Ltd. d/b/a Zaful.

Companies: HVN Clothing, Inc.; Lomeway E-Commerce [Luxembourg] Ltd. d/b/a Zaful

Cases: Copyright NewYorkNews