On February 22, 2022, the First Department issued a decision in Innovative Concepts & Design, LLC v. AL Infinity, LLC, 2022 NY Slip Op. 01122, upholding a dispute resolution clause that gave a licensor the sole discretion to determine the scope of a license, explaining:
Plaintiff commenced this action for breach of contract and fraud, alleging that although defendant had granted it an exclusive license to sell certain speakers, it had entered into a conflicting license agreement with Sakar where it also granted Sakar many of the same exclusive rights. Defendant moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint, arguing that the dispute resolution provision in the parties’ agreement gave it the right to resolve the scope of the license dispute, in its absolute and sole discretion, and that the fraud claim was duplicative of the contract claim. The motion court dismissed both claims, concluding that they were barred by the dispute resolution clause, and noting that plaintiff had not alleged that defendant’s discretion was exercised in bad faith to enrich itself at the expense of plaintiff. . . .
We agree with the motion court that plaintiff’s breach of contract claim based upon its allegation that defendant issued conflicting exclusive license agreements to plaintiff and Sakar is barred by the dispute resolution clause. . . . As for any dispute over the scope of the licenses, the parties’ agreement contemplates that the precise definition of products is not always possible, and specifies that defendant will resolve disputes over such definitions in its sole discretion. In accordance with the dispute resolution clause, defendant determined that plaintiff has a license to produce speakers deemed by defendant to fit within the “DJ Pro Audio Speakers and Turntables” category. Thus, defendant simply exercised the authority given to it under the agreement.
(Internal citations omitted).