settlement agreement all claims -...

SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS

This Settlement Agreement and Release of all Claims (his "Agreement") is entered intothis 7th day of February 2014 (the "Effective Date") by and between the CITY OF PORTLAND,a municipal corporation of the State of oregon (the "city") and RoMTEC, INC.. an oregoncorporation ("Romtec"). The City and Romtec may be referred to jointly in this Agreement asthe "Parties" and individuallv as a'oPartv."

RECITALS

A. The City alleges that it has invested public funds to create, fabricate, market, andsell a toilet kiosk designed to be located on city sidewalks (the "Portland Loo") that has allegedlybeen nationally and internationally recognized for its original and distinctive design. The Cityallegedly completed its design for the Portland Loo in late 2007.

B. The design of the Portland Loo has allegedly been cited as ingenious in terms ofCrime Prevention through Environmental Design ("CPTED") particularly, according to the City,due to the innovative placement of louvers along the bottom making the activity inside somewhatvisible to passersby.

C. The City, as alleged assignee of Charles Randall Leonard, owns a federalcopyright registration for the Portland Loo (Registration No. VA 1-651-870) that was issued onJuly 14, 2008 (the "Copyright"). A copy of the registration certificate and the deposited workunderlying Registration No. vA I -651-870 is attached hereto as Exhibit A.

D. The Copyright, together with any and all statutory and common law rights,whether now owned or hereafter acquired, for the Portland Loo are allegedly owned by the Cityand referred to herein collectively as the "Protected Work."

E. In early 2013, the City, during negotiations for the sale of a Portland Loo. wasallegedly informed by an official with the City of Cincinnati that Romtec was manufacturing andmarketing for sale a restroom allegedly substantially similar to the Portland Loo called the"Sidewalk Restroom."

F. Romtec is the owner of all right, title, and interest in connection with the productdesign depicted in Exhibit B hereto and more commonly known to the parties as the "sidewalkRestroom."

G. In August 2013, the City filed a complaint in the United States District Court forthe District of Oregon, Case No. 3: I 3-cv-01453 alleging violations by Romtec of, among otherthings, the Copyright (the "Lawsuit"). Romtec denies all material allegations and alleges. amongother things, that the City lacks right, title, and interest in connection with valid intellectualproperty rights and that the Romtec product does not infringe, in any manner, the Copyright.Had this instant settlement not been achieved, Romtec had intended to file counterclaimsincluding a claim for a declaration of non-infringement and further affirmative relief from theCitv.

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H.Lawsuit.

The Parties wish to avoid protracted litigation and seek a speedy resolution of the

L The Parties find that the fulfillment, generally, of this Agreement, and theintentions set forth herein, are in the vital and best interest of each Party to this Agreement.

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is herebyacknowledged, the Parties hereby agree as follows:

AGREEMENT

l. Dismissal. In consideration of the covenants and conditions herein, the Cityshall, upon execution and delivery of this Agreement by Romtec to the City, file a Rule 4lVoluntary Dismissal with Prejudice or equivalently shall not challenge the Order of Dismissalwith prejudice entered by the Court, dismissing all claims asserted in the Lawsuit with the Partiesbearing their own attorney fees, costs, and expenses (the "Dismissal").

2. Covenant Not to Sue and Release. The Parties believe that the Protected Workand the Sidewalk Restroom are capable of commercial coexistence. Accordingly, the Citycovenants that it shall not during the Term of the Agreement file any legal action against Romtecor its affrliates, anywhere in the world, based on Romtec's manufacture and/or sale of theSidewalk Restroom or any substantially similar variation thereof, provided that Romtec fulfillsits royalty payment obligations to the City as set forth below in Section 5.1 and does not makeany prohibited design modification to the Sidewalk Restroom as set forth below in Section 5.2.More specifically, the City covenants not to sue and agrees to release and forever dischargeRomtec and each of Romtec's parent, sister, and subsidiary corporations, affiliated entities,predecessors, successors and assigns, and any of their present and former directors, officers,employees, shareholders, agents, partners, licensors, privies, representatives, attorneys,accountants, insurers, and all persons acting by, through, under, or in concert with them, or anyof them, from any and all manner of action, causes of action, claims, demands, rights, suits,obligations, debts, contracts, agreements, promises, liabilities, damages, charges, losses, costs,expenses, and attorneys' fees, of any nature whatsoever. known or unknown, in law or equity,fixed or contingent, which they have or may have arising out of or relating to any of the acts,omissions, or other conduct that have or could have been alleged or otherwise referred to in theLawsuit, or of which the City has or may become aware of after the Effective Date arising out ofor related to the Protected Work so long as Romtec complies with its royalty paymentobligations to the City as set forth below in Section 5.1 and does not make any prohibited designmodification to the Sidewalk Restroom as set forth below in Section 5.2 (the "Covenant").

3. Proprietary Rights. The Parties intend that this Agreement shall not alter oraffect the ownership of intellectual property as between each other, whether before, during, orsubsequent to execution and operation of this Agreement.

3.1. Ownership. The City shall continue to own all right, title, and interest in and tothe Protected Work, including any derivative works the City or a City licenseeauthors, to the extent that such derivations are consistent with this Agreement.The Portland Loo and all variations thereof created by the City or a City licenseewill remain City (or City licensee) products with no attribution to or endorsement

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by Romtec. Romtec shall continue to own all right, title, and interest in and to the

Sidewalk Restroom, including any derivative works it authors to the extent thatsuch derivations are consistent with this Agreement. The Sidewalk Restroom and

. all variations thereof created by Romtec will remain Romtec products with no

attribution to or endorsement by the City.

3.2. Reservation of Defenses and Counterclaims. In the event that either Party

institutes an action against the other Party alleging breach of this Agreement or

otherwise based on alleged infringement of rights associated with the Protected

Work, the Sidewalk Restroom, or any derivative work thereof, the accused Party

shall have the right to raise all possible defenses and counterclaims.

3.3. The Parties further agree and understand that the intellectual property and thegoodwill associated therewith are and remain the Parties' exclusive property, and

understand that the other acquires no right, title, or interest in the intellectualproperty or the goodwill other than the rights described by the express terms ofthis Agreement. The Parties shall not at any time do or suffer to be done any act

which would impair materially the other's proprietary rights in or to, or infringe,the intellectual property or the associated goodwill. Each Party shall retain the

right to assert and enforce all of its intellectual property rights in its owncreations, designs, products, methods and/or services.

3.4. The City, at its own expense, shall execute, file, and record all documents tomaintain, preserve, and renew all applications of and registrations for the

Copyright that are in existence at the time of execution of this Agreement in any

country or other jurisdiction in the world, and take any other action that may be

required to maintain the value, validity, and enforceability of the Copyright. AtRomtec's expense and request, the City shall, within ten (10) business days ofreceipt, execute any documents reasonably requested by Romtec to file, maintain,preserve, and renew all applications of and registrations for, the Copyright in the

name ofthe City in any country or other jurisdiction in the world where the

Copyright is not registered and no application therefor is pending, or where otheraction may be required to maintain protection of the Copyright, including therecordation of this Agreement.

4. City Licensee and Licensee Limitations. The City shall be entitled to license toa third party the right to manufacture and sell the Protected Work, subject to the followingconditions (the "Licensee Limitations"):

4.1 During the Term (as hereinafter defined), the City shall, at any given time duringthe Term, have no more than one (l) licensee (exclusive of Romtec) that is

granted the right to manufacture the Protected Work.

4.2 Duringthe Term, the City shall retain ownership of the Protected Work and of allrights and obligations associated with this Agreement, and shall not grant to itslicensee the right to sue Romtec or any Romtec affiliate or customer based on

alleged infringement of rights associated with the Protected Work or for anyalleged breach of this Agreement.

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4.3 The City's grant of a license to any third party shall not extend to includederivative works based upon or including any design elements first developed byRomtec.

5. Conditions. In consideration of the City's agreement to file the Dismissal and toprovide the Covenant and Licensee Limitations, Romtec shall, during the Term, comply with thefollowing (collectively, the "Conditions"):

5.1. Royalty.

5.1.1. How Calculated. Romtec shall pay to the City royalties equaltoeight percent (8%) of Net Invoice Price for each sale of the SidewalkRestroom or any variation thereof that is substantially similar to theProtected Work by Romtec or by any Romtec sublicensee (the "Royalty").'Net Invoice Price" means the amount actually charged in any purchaseand sale transaction involving the Sidewalk Restroom less sales and/oruse taxes, import/export duties, transportation, insurance, delivery charges,and credits for return or rebates.

5.1.2. Payment Terms. Royalties must be paid net thirty (30) days afterthe close of each calendar quarter, and are payable upon Romtec's receiptof revenue relating to each qualifying sale in the preceding quarter.Romtec shall maintain records sufficient to allow confirmation of theRoyalty calculation and containing data on all deductions to yield NetInvoice Price.

5.1.3. Audits. The City has the right to commission a professional thirdparty accountant or auditor to audit Romtec's accounting records relativeto Royalty payments, at the City's sole expense and no more than once percalendar year. In the eVent an audit reveals a shortfall in any Royaltypayment, Romtec shall compensate the City for the cost of the audit plus110% of the amount of the shortfall.

5.2. Design Modifications,

5.2.1. During the Term, Romtec may make modifications to the SidewalkRestroom or any substantially similar variation thereof, provided suchmodifications do not utilize a curved door and/or any corner panels withan arc percentage greater in size than those depicted in Exhibit B.

6. Term; Termination. The initial term of this Agreement is twenty-five (25) yearsfrom the Effective Date (the "Term"). This Agreement will only terminate upon the occurrenceof one of the following: (i) by written mutual agreement of the Parties; (ii) upon a final and non-appealable ruling of a court of competent jurisdiction invalidating the Copyright; or (iii) uponexpiration of the Term.

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7 . Representations and Warranties of the Parties.

7.1. The City's Representations and Warranties. The City hereby warrants andrepresents to Romtec that as of the Effective Date:

7 .1.r. To the City's knowledge, (a) no third party other than the City'scurrent manufacturer has any right to manufacture or sell the ProtectedWork, either in identical form or in such near resemblance thereto as to belikely, when applied to the goods of any such person, to cause confusionas the source of such goods; and (b) the manufacture, sale or use of theProtected Work as contemplated and permitted by this Agreement doesnot constitute an infringement of, conflict with, or otherwise violate, therights of any third party.

7.r.2. The City has the legal power, right, and authority to enter into thisAgreement; and all requisite action has been taken by the City inconnection with entering into this Agreement and that no further consentof any administrative body, governmental authority or other party isrequired;

7.1.3. This Agreement is a valid, legally binding obligation of andenforceable against the City in accordance with its terms.

7 .t.4. The City has no commitment or legal obligation, absolute orcontingent, to any other person or firm other than Romtec which limits orrestricts the right of the City to license the Protected Work in the mannerspecified in this Agreement, and the City is not a defendant to any action,suit, investigation, or proceeding relating to, or otherwise has beennotified of, any claim that the City's use of the Protected Work inconnection with its business infringes the rights of any third party. To theCity's knowledge, there is no infringement by any third party of theProtected Work;

7 .1.5. The representations and warranties furnished by the City in thisAgreement are accurate, correct, and complete in all respects and do notcontain any untrue statement of fact or, when considered in the context inwhich presented, omit to state a fact necessary to make the statements andinformation contained herein not misleading; and

7 .t.6. The persons executing this Agreement on behalf of the City have' the legal power, right and actual authority to bind the City to the terms andconditions of this Agreement.

7.2. Romtec's Representations and warranties. Romtec hereby warrants andrepresents to the City that as of the Effective Date:

7.2.1. Romtec has full power and authority to enter into and perform thisAgreement in accordance with its terms and all requisite action has beentaken by Romtec in connection with entering into this Agreement and thal

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no further consent of any partner, shareholder, creditor, investor, judicialor administrative body, governmental authority or other party is required.

7.2.2. This Agreement is a valid, legally binding obligation of andenforceable against Romtec in accordance with its terms.

7.2.3. The representations and warranties furnished by Romtec in thisAgreement are accurate, correct, and complete in all respects and do notcontain any untrue statement of fact or, when considered in the context inwhich presented, omit to state a fact necessary to make the statements andinformation contained herein not misleading; and

7.2.4. The persons executing this Agreement on behalf of Romtec havethe legal power, right and actual authority to bind Romtec to the terms andconditions of this Agreement.

8. Copyright Invalidation. During the Term, in the absence of a court order,Romtec shall not initiate, assist a third party, or participate in any other manner in an effort toinvalidate the Copyright. Likewise, the City shall not seek to invalidate, assist any third party,participate in any other manner in an effort to invalidate any of Romtec's right, title or interestconnection with the Sidewalk Restroom.

9. No Admission of Liabilify. This Agreement pertains to the Lawsuit and does notconstitute an admission of liability on the part of any of the Parties, all liability having beendenied, at all relevant times, and which continues to be denied.

10. After-Acquired Facts. The Parties expressly agree to assume the risk of possiblediscovery of additional or different facts, and the Parties agree that this Agreement will be andremain effective in all respects, regardless of such additional or different discovered facts, or anychange in circumstances.

I l. Advice of Counsel. In executing this Agreement, each Party heretoacknowledges that it has consulted with and had the advice of counsel of its own choosing innegotiations for and preparation of this Agreement and was fully advised by counselwith respectto all rights which are affected by this Agreement. Each Party hereto acknowledges that itscounsel played a role in drafting this Agreement and that this Agreement shall be construedneutrally as ifjointly drafted by all Parties, and shall not be construed in favor of or against anyParty based on the origin of the language used. The language in all parts of this Agreement willin all cases be construed as a whole according to its fair meaning and not strictly for or againstany of the Parties.

12. Choice of Law. This Agreement is made and entered into in the State of Oregonand shall in all respects be interpreted, enforced, and governed under the laws ofthe State ofOregon as if entirely performed within the State or Oregon. Oregon law shall apply withoutregard to any conflict of laws. The United States District Court shall retain exclusive jurisdiction(unless the court declines) to determine and decide any disputes arising out of this Agreement.

13. Entire Agreement; Modification. This Agreement is the entire agreementbetween the Parties with respect to the subject matter hereof. It includes all of the terms,

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promises, and representations made by the Parties, and it supersedes any earlier written or oralagreements between the Parties. Modifications to this Agreement must be made in writing andsigned by both Parties.

14. No Assignment. The Parties agree that this Agreement may not be assigned toany other person or entity without the written consent of the other Party to this Agreement,which consent shall not be unreasonably withheld. Any successor or assign shall be bound bythis Agreement and shall be required to further execute this Agreement before consent will beprovided.

15. Cooperation in Implementation. The Parties agree to cooperate and diligentlyperform any further acts, and will execute and deliver any documents, that from time to time maybe reasonably necessary or otherwise reasonably required to consummate, evidence, confirm,and/or carry out the intent and provisions of this Agreement, all without undue delay or expenseand without further consideration.

16. Counterparts and Facsimile/PDF. This Agreement may be executed incounterparts and via facsimile or electronically via .pdf with the same force and effect as ifexecuted in one complete document.

17. Severability. If any clause or provision of this Agreement is held to be illegal,invalid, or unenforceable under any law applicable to the terms hereof, then the remainder of thisAgreement shall not be affected thereby.

18. Notices. Any notice, demand, or request required or permitted to be given underthe provisions of this Agreement shall be in writing and delivered personally or by registered orcertified mail, return receipt requested, with postage prepaid and addressed to the followingpersons and addresses, or to such other addresses or persons as any party may request by noticein writing to the other such party:

To Romtec: Timothy BoganRomtec,Inc.18240 N. Bank Rd,Roseburg, OR97470

Craig J. Mariam Christopher HawkGordon & Rees LLP Gordon & Rees LLP633 West Fifth Street,52nd Floor l2l SW Morrison Street, Suite 1575Los Angeles, CA 90071-2007 Portland, OR97204

Scott Turpen, Faci lities/Adm inistrative S ervices ManagerBureau of Environmental Servicesl120 SW 5ft Ave., Room 1000Portland, Oregon 97204

With copies to:

To the City:

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With copies to: Office of the City Attorney1221 SW 4'n AvenueRoom 430Portland, Oregon 97204

Shawn KolitchKolisch Hartwell, P.C.520 SW Yamhill Street, Suite 200Portland, OR97204

19, Binding Effect. This Agreement shall be binding upon and inure to the benefit ofthe Parties and their respective representatives, successors, and assigns.

WHEREFORE, the Parties have signed this Agreement on the Effective Date.

CITY OF PORTLAND

APPWORM

Jdta-Citv AttonGRY ATTORNEY

ROMTEC,INC.

By:

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Certificate of Registration

This Certificate issued under the seal of the CopyrightOfrce in accordance with title v,United States Code,

attests that registration has been made for the workidentifred below. The information on this certificate has

been made a part of the Copyrigbt Ofrce records.

A'tAP-6bf Copyrights, United States of America '

Regisfration Number:

vA 1-651-870

Efrective date ofregistration:

July 14 2008

Titlefitle of Work:

Previous or Alternative fi fl e:

The Portland tooThe Portland Public Reshoom Prototype

Com pletion/ Publicat ionYearof Completion:

Date of lct Publication:

2W7

December 5,2007 Nation of lst Publication: United States

Authorr Author:

Author Created:

Work made for hire:

Citizen of:

The City of Portlm( Oregon

architectxal work

Yes

United Stales Ilomiciled in: United States

Copyright claimant

Rights and

Copyright Claimrnt The City of Portlan( Orcgon

PermissionsOrganization Name:

Name:

Addres:

The City of Portland, Orcgon

To whomit may concem

Office of the City Afiomey, City Hall Suite 430

l22l SW4thAve

Porttan4 OR 97204 United States

Nsme: PeterAHsas

Date: July 14,2008

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