MPEG LA v. Toshiba Corp., Defendant–Respondent. (2018)

Order, Supreme Court, New York County (Charles E. Ramos, J.), entered September 1, 2017, which granted defendant Toshiba Corp.'s motion for summary judgment dismissing the breach of contract cause of action against it, unanimously affirmed, with costs.

The claim that Toshiba under-reported and underpaid royalties under the parties' license agreement was correctly dismissed because plaintiff failed to comply with the agreement's audit provision, a condition precedent to suit (see e.g. Rio Algom v. Sammi Steel Co., 168 A.D.2d 250, 562 N.Y.S.2d 486 [1st Dept. 1990], lv denied 78 N.Y.2d 853, 573 N.Y.S.2d 466, 577 N.E.2d 1058 [1991] ).

Plaintiff's contention that Toshiba did not comply with a certification requirement contained in the license agreement is unpreserved and, in any event, unavailing.  Plaintiff seeks not to compel certification but to recover for under-reporting and underpayment of royalties, and that claim, as indicated, is premature absent an audit.

Plaintiff's argument that the parties' actions and informal understandings of the mechanics of the audit procedures demonstrate that it would have been futile to pursue an audit relies on parol evidence and therefore is foreclosed by the license agreement's general merger clause (see Matter of Primex Intl. Corp. v Wal–Mart Stores, 89 N.Y.2d 594, 599–600, 657 N.Y.S.2d 385, 679 N.E.2d 624 [1997] ).  Plaintiff's contention that its informal efforts to commence an audit complied with the license agreement's notification procedures is without merit.  It is undisputed that plaintiff did not comply with the clear notice provisions set forth in the agreement.

We have considered plaintiff's remaining contentions and find them unavailing.