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Biotronik v. Conor Medsystems

Court of Appeals of New York

January 7, 2014, Argued; March 27, 2014, Decided

No. 8

Opinion

 [**677]  [*801]  [***528]  Rivera, J.

In this breach of contract action, plaintiff sought lost profits from an exclusive distribution agreement as general damages. We hold that lost profits were the direct and probable result of a  [*802]  breach of the parties' agreement and thus constitute general damages.

In May 2004, plaintiff Biotronik A.G., a manufacturer and distributor of medical devices, and defendant Conor Medsystems Ireland, Ltd., the developer and manufacturer of CoStar, a drug-eluting coronary stent, entered an agreement designating plaintiff as the exclusive   distributor of CoStar for a worldwide market territory excluding the United States and certain other countries.1 The geographic territory covered by the agreement included countries  [****2] in which plaintiff had an existing direct sales business.2 The agreement allowed defendant to take advantage of plaintiff's distribution business and sales force in order to penetrate the market.

Under the agreement, plaintiff served as defendant's "distributor . . . with respect to [CoStar] for sale to any purchasers for use (or for re-sale in the case of [plaintiff]'s sub-distributors)" in the designated territory. The agreement required plaintiff "[t]o use commercially reasonable efforts to promote, market, and distribute [the stents]" in the territory. Plaintiff agreed to supply defendant with "all reasonably required support to comply with any local regulatory law and requirement" and to assist defendant with the registration of its trademarks. Thus, defendant  [****3] relied on plaintiff's expertise in handling a wide range of regulatory matters in order to make sales of CoStar possible.

Nonetheless, defendant maintained direct involvement in the marketing and sale of CoStar. For example, the agreement [**678]  required that plaintiff use only defendant's sales and technical literature, which had to display references to defendant and plaintiff [***529]  in equal prominence. Plaintiff's translations of these materials were subject to defendant's final approval. Defendant would supply training support and sales samples, including free initial training, and would provide additional sales training, for a fee, as requested by plaintiff. Thus, defendant retained considerable influence over the quality and nature of CoStar's sales and marketing.

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22 N.Y.3d 799 *; 11 N.E.3d 676 **; 988 N.Y.S.2d 527 ***; 2014 N.Y. LEXIS 575 ****; 2014 NY Slip Op 2101; 2014 WL 1237514

 [1]  Biotronik A.G., Appellant, v Conor Medsystems Ireland, Ltd., et al., Respondents.

Subsequent History: On remand at, Remanded by Biotronik A.G. v Conor Medsystems Ireland, Ltd., 117 AD3d 551, 986 NYS2d 437, 2014 N.Y. App. Div. LEXIS 3545 (N.Y. App. Div. 1st Dep't, May 15, 2014)

Prior History: Appeal, by permission of the Appellate Division of the Supreme Court in the First Judicial Department, from an order of that Court, entered May 29, 2012. The Appellate Division (1) affirmed a judgment of the Supreme Court, New York County (Bernard J. Fried, J.), which had dismissed the complaint; and (2) dismissed the appeals from an order of that court (op 33 Misc 3d 1219[A], 939 NYS2d 739, 2011 NY Slip Op 51980[U] [2011]) which had denied defendant's motion for summary judgment. The following question was certified by the Appellate Division: "Was the order of this Court, which affirmed the Judgment and dismissed appeals from orders of the Supreme Court, properly made?"

Biotronik A.G. v Conor Medsystems Ireland, Ltd., 95 AD3d 724, 945 NYS2d 258, 2012 N.Y. App. Div. LEXIS 4056 (N.Y. App. Div. 1st Dep't, 2012), reversed.

Disposition:  [****1] Order reversed, with costs, case remitted to the Appellate Division, First Department for further proceedings in accordance with the opinion herein, and certified question not answered upon the ground that it is unnecessary.

CORE TERMS

lost profits, stent, damages, consequential damages, transfer price, profits, general damages, resale, parties, sales, seller, tires, prices, non-breaching, calendar quarter, manufacturer, collateral, contracts, buyer's, consequential, natural and probable consequence, breaching party, customers, measure of damages, agree to pay, calculated, provisions, terminate, territory, resell

Contracts Law, Remedies, General Overview, Defenses, Unconscionability, Damages, Types of Damages, Consequential Damages, Compensatory Damages, Evidence, Burdens of Proof, Allocation, Measurement of Damages, Foreseeable Damages, Lost Profits, Commercial Law (UCC), Seller Remedies