Vr Optics, LLC v. Peloton Interactive, Inc.

Case: 21-1900 Document: 83 Page: 1 Filed: 02/16/2023
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
VR OPTICS, LLC,
Plaintiff-Appellant
VILLENCY DESIGN GROUP, LLC,
Third-Party Defendant-Appellant
ERIC VILLENCY, JOSEPH COFFEY,
Third-Party Defendants-Appellees
v.
PELOTON INTERACTIVE, INC.,
Defendant-Third-Party Plaintiff-Cross-Appellant
______________________
2021-1900, 2021-1901, 2021-1918
______________________
Appeals from the United States District Court for the
Southern District of New York in No. 1:16-cv-06392-JPO,
Judge J. Paul Oetken.
______________________
Decided: February 16, 2023
______________________
MICHAEL DAVID GANNON, Baker & Hostetler LLP, Chi-
cago, IL, argued for plaintiff-appellant. Also represented
by LEIF R. SIGMOND, JR.; CHARLES C. CARSON, Washington,
DC.
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2 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
MARK A. BERMAN, Hartmann Doherty Rosa Berman &
Bulbulia, LLC, Hackensack, NJ, argued for third-party de-
fendant-appellant, third-party defendants-appellees. Also
represented by PAUL S. DOHERTY, III, JEREMY B. STEIN.
STEVEN SCHORTGEN, Sheppard, Mullin, Richter &
Hampton LLP, Dallas, TX, argued for defendant-cross-ap-
pellant. Also represented by JENNIFER AYERS; MATTHEW
G. HALGREN, KARIN DOUGAN VOGEL, San Diego, CA.
______________________
Before LOURIE, REYNA, and STOLL, Circuit Judges.
STOLL, Circuit Judge.
In 2012, Peloton Interactive, Inc. (Peloton) entered a
contract with Villency Design Group, LLC (VDG) under
which VDG would design, develop, and manufacture what
would become Peloton’s stationary exercise bike. The par-
ties agreed to another, similar contract in 2014. Before the
2014 contract expired, Eric Villency and Joseph Coffey (the
sole owners and members of VDG) learned of a patent that
the Peloton bike might infringe. They formed a new com-
pany, VR Optics, LLC, which acquired that patent. About
six weeks after the 2014 agreement expired, VR Optics
sued Peloton for patent infringement. Peloton counter-
sued, bringing various contract and tort claims against VR
Optics, VDG, and Mr. Villency and Mr. Coffey. Among
these was Peloton’s claim that VDG had breached a clause
in the 2014 agreement that obligated VDG to defend Pelo-
ton against patent infringement actions.
The district court granted summary judgment of inva-
lidity of VR Optics’ patent and that VDG breached its duty
to defend Peloton. The district court granted summary
judgment denying Peloton’s remaining claims—for breach
of warranty, breach of the covenant of good faith and fair
dealing, fraudulent concealment, and tortious interference
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VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 3
with contract. Ultimately, the district court entered judg-
ment in Peloton’s favor and ordered VDG to pay Peloton’s
attorney’s fees.
Peloton, VR Optics, and VDG each appeal. For the rea-
sons below, we affirm.
BACKGROUND
I
The business relationship between Peloton and VDG
began in 2012, when the parties signed an agreement un-
der which VDG would design a proprietary indoor cycling
bike for Peloton. J.A. 4132–45. Among other things, the
2012 agreement provided that the design work done by
VDG would “not infringe upon the rights of any third
party.” J.A. 4137 § 2.7(c).
Two years later, the parties executed another, more
comprehensive agreement, titled “Bike Development and
Services Agreement.” J.A. 4362–75. This agreement sim-
ilarly provided that the work done by VDG would not in-
fringe the intellectual property rights of any third party.
J.A. 4370–71 § 8.2(a)(3). This 2014 agreement also con-
tained a provision obligating VDG to “indemnify, defend
and hold harmless Peloton” against claims “arising out of,
or relating to, any violation or alleged violation of any in-
tellectual property rights regarding any of the Bike Intel-
lectual Property 1.” J.A. 4369–70 § 7.1(b).
The 2014 agreement also provided that certain obliga-
tions of the 2014 agreement would survive termination.
Specifically, the contract states that the “termination or ex-
piration of this Agreement shall be without prejudice . . .
[to the] rights under any other provision . . . which
1 “Bike Intellectual Property” was separately defined
in the agreement. As discussed further below, the parties
dispute this term on appeal.
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4 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
expressly and necessarily calls for performance after expi-
ration or termination.” J.A. 4368 § 5.6(c). One such provi-
sion is § 8.3(b), which states that “[a]ll representations and
warranties of Villency and Peloton contained in this Agree-
ment will survive the termination of this Agreement.”
J.A. 4371. The 2014 agreement expired two years after it
was signed, on June 24, 2016. J.A. 4367 § 5.1.
II
During the term of the 2014 agreement, VDG’s princi-
pals and sole members, Mr. Coffey and Mr. Villency, dis-
covered the existence of U.S. Patent No. 6,902,513, titled
“Interactive Fitness Equipment.” The ’513 patent is “gen-
erally directed to computerized fitness equipment,” e.g., a
stationary bike, that simulates “actual race conditions with
other users.” ’513 patent col. 2 ll. 57–59. Claim 1 is repre-
sentative:
A system for interactive fitness comprising:
a server;
a plurality of geographically-separated fitness
equipment configured for communication with the
server via a wide-area network, each of the fitness
equipment comprising:
at least one operating component;
logic configured to obtain first performance
parameters from the at least one operating
component;
logic configured to communicate the first
performance parameters to a remote fit-
ness equipment via the wide-area network
and the server;
logic configured to receive second perfor-
mance parameters communicated from at
least one remote fitness equipment;
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VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 5
a communication interface through which
data may be communicated to and from the
fitness equipment;
a display associated with the fitness equip-
ment; and
logic configured to drive the display in re-
sponse to both the first and second perfor-
mance parameters, such that a
performance comparison between the fit-
ness equipment and at least one remote fit-
ness equipment is visually displayed; and
a computer program executed by the server to con-
figure the server for coordinating the communica-
tion among the plurality of fitness equipment, such
that a plurality of the geographically-separated fit-
ness equipment may simulate interactive exercise
events.
Id. at col. 23 ll. 12–40 (emphasis added to highlight dis-
puted limitation). The specification explains that the bikes
“may include displays . . . to provide visual, audible, or
other information to the users.” Id. at col. 10 ll. 55–57. For
example, Figure 2 illustrates one embodiment of such a
display:
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6 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
Id. at Fig. 2; see also id. at col. 11 ll. 24–28. The display
shown in Figure 2 depicts a “graphic image of a track 202”
that includes “relatively simplistic circles or dots 204 and
206 [that] may be provided to illustrate the respective com-
petitors.” Id. at col. 11 ll. 28–32. According to the specifi-
cation, this display also includes “more detailed data on the
individual competitors and their comparative performance
information,” including “information 208 [which] may re-
late to the performance of the person viewing the display”
and “information 210,” which “may include an instantane-
ous readout of the speed [at which] the competitor is trav-
elling.” Id. at col. 11 ll. 32–47.
The ’513 patent’s specification describes additional
ways competitive performance data can be displayed. For
example, the specification explains that performance data
could be displayed on “a headset of a virtual-reality dis-
play,” allowing a user to “look[] rearwardly over his or her
. . . shoulder.” Id. at col. 11 l. 63–col. 12 l. 21, Figs. 3–4.
In January 2016, Mr. Coffey and Mr. Villency began
negotiating with Microsoft Technology Licensing, LLC, the
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VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 7
’513 patent’s then-owner, to purchase the patent. In June
2016, Mr. Coffey and Mr. Villency formed a new company,
VR Optics. Like VDG, VR Optics is wholly owned by
Mr. Coffey and Mr. Villency. About three weeks after the
2014 agreement expired, Microsoft transferred ownership
of the patent to VR Optics.
On August 11, 2016, about seven weeks after the 2014
agreement expired, VR Optics sued Peloton for infringe-
ment of the ’513 patent. Peloton counterclaimed, seeking
a declaratory judgment that its bikes did not infringe and
that the patent was invalid because it was anticipated by
U.S. Patent No. 6,997,852 (Watterson). Peloton also as-
serted third-party claims against VDG, the company
owned by Mr. Coffey and Mr. Villency and hired by Peloton
to make its stationary bike, including: (1) a claim for
breach of the warranty in the 2012 and 2014 agreements
that VDG’s work would not infringe third-party rights;
(2) a claim for breach of the 2014 agreement’s duty to de-
fend; and (3) a claim for breach of the implied covenant of
good faith and fair dealing. Peloton also asserted claims of
fraudulent concealment and tortious interference against
Mr. Coffey and Mr. Villency in their individual capacities.
VR Optics, VDG, and Mr. Coffey and Mr. Villency each
filed motions to dismiss the claims against them, which the
district court denied. See VR Optics, LLC v. Peloton Inter-
active, Inc., No. 16-CV-6392 (JPO), 2017 WL 3600427(S.D.N.Y. Aug. 18, 2017) (Motion to Dismiss Op.). The
court then held a Markman hearing to construe the dis-
puted claim terms in the ’513 patent claims. See VR Optics,
LLC v. Peloton Interactive, Inc., 345 F. Supp. 3d 394, 411
(S.D.N.Y. 2018) (Claim Construction Op.). Among these
terms was the performance comparison limitation, present
in all of the asserted claims, requiring “logic configured to
drive the display in response to both the first and second
performance parameters, such that a performance compar-
ison between the fitness equipment and at least one remote
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8 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
fitness equipment is visually displayed.” 2 ’513 patent
col. 23 ll. 30–34, col. 24 ll. 2–6. In its Markman order, the
district court construed this performance comparison limi-
tation exactly as VR Optics requested. The parties then
each moved for summary judgment.
III
A
In its summary judgment order, the district court be-
gan with Peloton’s claim that Watterson anticipated the as-
serted claims of the ’513 patent. See VR Optics, LLC
v. Peloton Interactive, Inc., No. 16-CV-6392 (JPO), 2020
WL 1644204, at *3–5 (S.D.N.Y. Apr. 2, 2020) (Summary
Judgment Op.).
Watterson’s specification describes an exercise pro-
gram that can run simultaneously on multiple, geograph-
ically separate exercise machines. See Watterson,
Abstract, col. 1 ll. 31–35. Among other things, Watterson
discloses a “personalized race” between “two or more indi-
viduals . . . where they may race one against the other,
while viewing graphical representations of the distan[ce],
time, and speed of the other competitors.” Id. at col. 44
ll. 32–37. Watterson’s specification explains that the pro-
gram “tracks the exercising activities of competing users,”
allowing “[e]ach competitor [to] compare the total distance
traveled against other competitors.” Id. at col. 43 ll. 29–37.
This comparison can be presented by a “display [that] may
include a racing track that shows a relative position of each
2 In claim 6, the word “drive” is replaced by the word
“control.” ’513 patent, col. 24 l. 2. The court determined
there was no material difference between these words.
Claim Construction Op., 345 F. Supp. 3d at 401–02. The
parties do not dispute this finding on appeal.
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VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 9
competitor one with another, or a trail that each competitor
races along.” Id. at col. 44 ll. 59–62.
At summary judgment, the parties agreed “that the
Watterson patent discloses all” claim limitations in the
claims—save one. Summary Judgment Op., 2020 WL
1644204, at *3. The parties disputed only whether Watter-
son disclosed the performance comparison limitation re-
quiring “logic configured to drive the display . . . such that
a performance comparison . . . is visually displayed.” Id.As discussed above, the court had previously construed this
limitation, just as VR Optics had asked, to require “logic
configured to drive the display to visually display a differ-
ence in performance between the fitness equipment and at
least one remote fitness equipment based on a difference
between the first and second performance parameters.”
Claim Construction Op., 345 F. Supp. 3d at 411–12.
The district court determined that there was no genu-
ine dispute of fact that Watterson disclosed the disputed
performance comparison limitation. Summary Judgment
Op., 2020 WL 1644204, at *3–5. In particular, the court
explained that Watterson displays a “difference in perfor-
mance” as required by the claim construction “because it
contemplates a ‘personalized race’ between ‘two or more in-
dividuals . . . where they may race one against the other,
while viewing graphical representations of the distan[ce],
time, and speed of other competitors,’ and a ‘display [that]
may include a racing track that shows a relative position of
each competitor one with another, or a trail that each com-
petitor races along.’” Id. at *4 (emphasis in original) (quot-
ing Watterson, col. 44 ll. 32–37, 60–62). To emphasize its
point, the court noted that in its claim construction opinion,
it had “cited as an exemplar of the ‘performance difference’
limitation an embodiment” in the ’513 patent’s specifica-
tion: “a visual read indication [that] show[s] where the
particular user is in relation to the user or users that are
operating the coupled fitness equipment.” Id. (quoting ’513
patent, col. 5 ll. 29–33). This embodiment, the court
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10 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
explained, “is materially indistinguishable from that de-
scribed in” Watterson. Id.VR Optics asserted that the report of its technical ex-
pert, Steven Lenz, created a genuine issue of material fact
that precluded summary judgment. Mr. Lenz opined that
Watterson did not display a difference in performance be-
cause Watterson required “users to make their own com-
parisons.” J.A. 6642–43 (Lenz Decl. ¶¶ 87–88). He
explained that Watterson’s display of the relative distance,
time and speed of the user and the competitor requires the
user to make a mental comparison to understand the dif-
ference in performance, and thus Watterson does not actu-
ally display a “difference in performance.” Id.The court disagreed, explaining that “[Mr.] Lenz’s
opinion rests on an unduly cramped reading” of its claim
construction. Summary Judgment Op., 2020 WL 1644204,
at *4. Specifically, the court explained that the “difference
in performance” requirement in its construction does not
require that the user not make a mental comparison, as VR
Optics and Mr. Lenz urged. Id. Instead, the court ex-
plained that the display disclosed in Watterson—showing
the relative position of each competitor on a simulated
track—is “a performance comparison, just as an ordinal
ranking is a numerical representation of the competitors’
relative performance.” Id. The court reasoned that the
“embodiment described in” Watterson “no more requires a
user to manually execute the comparison than any other
conceivable display of relative performance.” Id.Because Mr. Lenz’s opinion was inconsistent with the
court’s construction of the disputed limitation, the court ex-
cluded that portion of Mr. Lenz’s testimony. Id. (citing
Plew v. Ltd. Brands, Inc., No. 08-cv-3741, 2012 WL 379933,
at *3 (S.D.N.Y. Feb. 6, 2012) (expert witnesses may not “of-
fer testimony that conflicts with the Court’s construction of
the claim”)). The court thus entered summary judgment
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VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 11
that the asserted claims of the ’513 patent are invalid as
anticipated by Watterson. 3
B
The court then considered Peloton’s various contract
and tort claims against third parties VDG, Mr. Coffey, and
Mr. Villency. First, the court determined that the “success
of Peloton’s argument for invalidity dooms its claim for
breach of the warranties in the 2012 and 2014 Agreements”
that the bike developed by VDG would not infringe any
third-party intellectual property rights. Id. at *5. Specifi-
cally, because the “alleged violation of those provisions is
. . . premised on the infringement of a valid patent,” the
court’s finding of invalidity rendered those claims for
breach effectively moot. Id. The court thus entered sum-
mary judgment on those claims in VDG’s favor.
The court similarly entered summary judgment in
VDG’s favor on Peloton’s claim for breach of the covenant
of good faith and fair dealing. Id. This claim required Pel-
oton to show that it was “deprive[d] . . . of the right to re-
ceive the benefits under” the agreement. Id. (quoting Don
King Prods., Inc. v. Douglas, 742 F. Supp. 741, 767
(S.D.N.Y. 1990)). But because the court had determined
that Peloton’s bike did not infringe the ’513 patent because
the patent claims are invalid, the court found Peloton had
thus not been “deprived . . . of the fruits of the 2012 and
2014 Agreements: . . . a non-infringing, proprietary indoor
bike.” Id.Peloton’s claim for fraudulent concealment was simi-
larly unsuccessful. Although this claim survived VDG’s
motion to dismiss, see Motion to Dismiss Op., 2017 WL
3 In its summary judgment briefing, Peloton made
other arguments for invalidity and noninfringement that
the district court did not address in view of this determina-
tion. Summary Judgment Op., 2020 WL 1644204, at *5.
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12 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
3600427, at *4–5, the court found it could not survive sum-
mary judgment, Summary Judgment Op., 2020 WL
1644204, at *5–6. Specifically, Peloton had only presented
evidence showing that “VDG knew of the existence of the
’513 patent before entering [into] the 2014 Agreement.” Id.
at *6 (emphasis in original). But Peloton had not presented
evidence that VDG knew about the “threat of an imminent
lawsuit” before entering that agreement. Id. Peloton ar-
gued that, had it known of the impending litigation, it
would have taken alternative actions, like acquiring the
patent itself or ceasing payments to VDG. But the court
found that Peloton had “identified no evidence—let alone
clear and convincing evidence, as New York law requires—
that it ‘actually relied’ on VDG’s omission in forgoing these
potential routes.” Id. The court thus again entered sum-
mary judgment in VDG’s favor on this claim. Id.The court ruled in Peloton’s favor, however, on its claim
that VDG breached the 2014 agreement by failing to defend
it against VR Optics’ infringement suit. In the court’s view,
“[t]he contract’s unambiguous terms . . . obligate[] VDG to
defend Peloton against [VR Optics’] patent action.” Id.Lastly, the court addressed Peloton’s claim that
Mr. Coffey and Mr. Villency tortiously interfered with the
contract between Peloton and VDG by inducing VDG to
breach the contract. Because the court had found that Pel-
oton did not infringe the ’513 patent (because its claims are
invalid), the only remaining breach was VDG’s breach of
the duty to defend. The court explained that Mr. Coffey
and Mr. Villency were employees of a corporate party to the
contract (VDG), so establishing tortious interference under
New York law required Peloton to show that they “ex-
ceeded the bounds of” their authority in allegedly causing
the breach of contract. Id. at *8 (quoting In re MF Glob.
Holdings Ltd. Inv. Litig., 998 F. Supp. 2d 157, 186
(S.D.N.Y. 2014)). The court determined that “Peloton ha[d]
produced no evidence that [Mr.] Villency and [Mr.] Coffey
were acting outside the bounds of their authority or in their
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VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 13
own interest, as distinguished from VDG’s, when they in-
duced VDG to refuse to defend Peloton in this action.” Id.Thus, the court entered summary judgment in favor of
Mr. Coffey and Mr. Villency.
VR Optics, VDG, and Peloton each appealed. We have
jurisdiction under 28 U.S.C. § 1295(a)(1). For the below
reasons, we affirm.
DISCUSSION
VR Optics appeals the district court’s summary judg-
ment that the ’513 patent is invalid as anticipated by Wat-
terson, arguing that the court “apparent[ly] re-
interpret[ed]” its prior claim construction. VR Optics’
Br. 1–2. VDG appeals the court’s summary judgment that
VDG had a contractual duty to defend Peloton against VR
Optics’ patent infringement claims. In VDG’s view, the
duty to defend did not survive the termination of the agree-
ment and, in any event, was not triggered by VR Optics’
infringement suit. And Peloton appeals the court’s sum-
mary judgment denying its claims for breach of the cove-
nant of good faith and fair dealing; fraudulent
concealment; and tortious interference.
We review a district court’s summary judgment under
the law of the regional circuit, here the Second Circuit.
Convolve, Inc. v. Compaq Comp. Corp., 812 F.3d 1313, 1317
(Fed. Cir. 2016). “The Second Circuit reviews the grant or
denial of summary judgment de novo.” Id. (citing Major
League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290,
309 (2d Cir. 2008)). Summary judgment is appropriate
when there is no genuine issue of material fact and may be
granted when no “reasonable jury could return a verdict for
the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986); see Fed. R. Civ. P. 56. We also
apply regional circuit law when interpreting a contract if
the question “is neither unique to patent law nor intimately
involved in the substance of the patent rights.” Deprenyl
Animal Health, Inc. v. Univ. of Toronto Innovations
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14 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
Found., 297 F.3d 1343, 1349 (Fed. Cir. 2002). In the Sec-
ond Circuit, “the interpretation of a contract . . . presents a
legal question . . . reviewed de novo.” Kelly v. Honeywell
Int’l, Inc., 933 F.3d 173, 178 (2d Cir. 2019) (quoting Cap.
Ventures Int’l v. Republic of Argentina, 552 F.3d 289, 293
(2d Cir. 2009)).
I
We begin with VR Optics’ argument that the district
court erred in entering summary judgment of anticipation
in view of Watterson. VR Optics’ Br. 23–29. The parties
agree that Watterson discloses all limitations of the as-
serted claims except displaying a “performance comparison
between the fitness equipment and at least one remote fit-
ness equipment.” See Summary Judgment Op., 2020 WL
1644204, at *3. Further, no party challenges the district
court’s construction of the performance comparison limita-
tion to mean “logic configured to drive the display to visu-
ally display a difference in performance between the fitness
equipment and at least one remote fitness equipment
based on a difference between the first and second perfor-
mance parameters.” See Claim Construction Op., 345
F. Supp. 3d at 411–12 (emphasis added). Rather, the par-
ties challenge the meaning of district court’s claim con-
struction.
We affirm the district court’s summary judgment of an-
ticipation. Contrary to VR Optics’ assertion, the court’s
construction merely requires “visually display[ing] a differ-
ence in performance between the fitness equipment and at
least one remote fitness equipment,” Claim Construction
Op., 345 F. Supp. 3d at 411–12; it does not specify how that
difference may be displayed to the user. Accordingly,
Mr. Lenz’s testimony cannot preclude summary judgment
because it is based on an unduly narrow reading of the dis-
trict court’s claim construction and therefore does not
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VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 15
demonstrate a genuine issue of material fact. 4 See Duncan
Parking Techs., Inc. v. IPS Grp., Inc., 914 F.3d 1347, 1363
(Fed. Cir. 2019) (where the expert’s opinion contradicts the
court’s construction, “the district court is not obligated to
credit [that] expert’s testimony” at summary judgment).
As it did below, VR Optics argues that the district
court’s claim construction, although not explicitly stated,
nevertheless requires a display “that does not require a
mental comparison by the user” to determine “who leads
and who trails.” VR Optics’ Br. 22. We reject VR Optics’
attempt to reinterpret the claim. First, the court adopted
VR Optics’ proposed construction verbatim, id., so VR Op-
tics cannot seek to change that construction on appeal. See,
e.g., N. Telecom Ltd. v. Samsung Elecs. Co., Ltd., 215 F.3d
1281, 1290 (Fed. Cir. 2000) (“[W]e look with ‘extreme dis-
favor’ on appeals that allege error in claim constructions
4 The parties’ briefing phrases this issue as one of
exclusion of expert testimony. See VR Optics’ Br. 29–30;
Peloton’s Br. 55–57; see also Summary Judgment Op., 2020
WL 1644204, at *4 (stating that because Mr. “Lenz’s opin-
ion is therefore inconsistent with the . . . [c]ourt’s prior con-
struction[,] [i]t is thus excluded”). A district court’s
exclusion of expert testimony is an issue both we and the
Second Circuit review for abuse of discretion. Suffolk
Techs., LLC v. AOL Inc., 752 F.3d 1358, 1366 (Fed. Cir.
2014); Sarkees v. E. I. Dupont de Nemours & Co., 15 F.4th
584, 588 (2d Cir. 2021). But the effect of such exclusion on
summary judgment is equivalent to the court determining
that Mr. Lenz’s testimony is based on an incorrect claim
construction and thus cannot create a genuine dispute of
fact to preclude summary judgment. See Clare v. Chrysler
Grp. LLC, 819 F.3d 1323, 1332–33 (Fed. Cir. 2016) (expert
testimony “based on an incorrect understanding of the dis-
trict court’s claim construction” will not preclude summary
judgment).
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16 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
that were advocated below by the very party now challeng-
ing them.”). In any event, the district court’s reading of its
construction is consistent not only with the language of its
construction, but also the specification, which similarly
does not limit how the difference in performance must be
displayed. ’513 patent col. 11 ll. 20–22 (“It should be ap-
preciated from the discussion herein that various types and
configurations of displays may be provided for the user.”).
Indeed, the specification consistently refers to a variety of
possible displays of competitive performance data. See,
e.g., id. at col. 5 ll. 29–33 (“The displays . . . on the various
fitness equipment may provide a visual read indication
show[ing] where the particular user is in relation to the
user or users that are operating the coupled fitness equip-
ment.”); col. 6 l. 55–col. 7 l. 9 (stating that “the display pro-
vided on the fitness equipment may be relatively simple in
nature,” then describing a more complex display of racing
along a virtual track); col. 7 ll. 10–11 (“[V]irtual-reality
technology may be implemented.”); col. 8 ll. 16–17 (“[per-
formance] information could be displayed graphically”).
VR Optics relies on Figure 2, supra p. 6, and its accom-
panying description in the specification for its narrow in-
terpretation of the district court’s claim construction. In
VR Optics’ view, only some portions of Figure 2 show a “dif-
ference in performance.” Specifically, according to VR Op-
tics, the “trail by” and “lead by” lines of “additional textual
information 208 and 210” satisfy the “difference in perfor-
mance” limitation, but the first three lines of 208 and 210
listing the user’s and the competitor’s speed and distance
traveled do not. VR Optics’ Br. 20–21.
The specification wholly undermines VR Optics’ argu-
ment. Contrary to VR Optics’ suggestion, the specification
does not indicate that only the “trail by” and “lead by” lines
in Figure 2 show a difference in performance. Rather, the
specification uses the phrase “detailed data on the individ-
ual competitors and their comparative performance infor-
mation” to refer to all of the textual information 208 and
Case: 21-1900 Document: 83 Page: 17 Filed: 02/16/2023
VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 17
210, which includes the user’s speed and distance and the
competitor’s speed and distance, as well as the graphic im-
age 202 with “circles or dots 204 and 206 . . . to illustrate
the respective competitors.” ’513 patent col. 11 ll. 26–35.
Because we reject VR Optics’ attempt to reconstrue the
claims, we affirm the district court’s summary judgment
that the asserted claims of the ’513 patent are invalid as
anticipated by Watterson.
II
We next address whether VDG had a duty to defend
Peloton in this action. We agree with the district court that
it did. VDG makes three arguments on appeal: (1) that
the duty to defend did not survive the agreement’s termi-
nation; (2) that under New York law, its defense obligation
can be no greater than its indemnification obligation; and
(3) that the duty to defend was not implicated by this case
because the asserted patent does not accuse “Bike Intellec-
tual Property” as defined in the agreement. We take each
argument in turn.
A
VDG asserts that its duty to defend Peloton did not sur-
vive termination of the 2014 agreement. Accordingly, be-
cause VR Optics filed its complaint after the agreement
expired, VDG argues it had no duty to defend Peloton. We
disagree.
As an initial matter, we agree with Peloton that VDG
waived this argument. It is undisputed that VDG did not
make this argument before the district court in opposing
summary judgment. VDG’s Reply Br. 13–16; Peloton’s
Br. 58. “Preservation of appeal rights is a procedural is-
sue[] for which this court looks to the law of the regional
circuit.” Embrex, Inc. v. Serv. Eng’g Corp., 216 F.3d 1343,
1350 (Fed. Cir. 2000). In the Second Circuit, if a party
raises an argument in a motion to dismiss but does “not
renew the argument in [its] motion for summary
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18 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
judgment,” that argument is “not preserved for review and
[is] deemed waived.” Darnell v. Pineiro, 849 F.3d 17,
38 n.17 (2d Cir. 2017); see also Allianz Ins. Co. v. Lerner,
416 F.3d 109, 114 (2d Cir. 2005) (holding arguments that
were available to a party below, but not raised by that
party at summary judgment, were waived on appeal).
VDG reasons that it need not have raised this argu-
ment at summary judgment because it had already unsuc-
cessfully presented this argument in its motion to dismiss.
See VDG’s Reply Br. 14. It argues that because the court
concluded at the motion to dismiss stage that the duty to
defend survived the agreement’s termination, that became
the law of the case; thus, in VDG’s view, it would have been
futile to raise it again at summary judgment. Id. at 14–15.
But the district court did not address whether the duty
to defend survived the agreement’s termination in its de-
nial of VDG’s motion to dismiss. See Motion to Dismiss Op.,
2017 WL 3600427, at *2. It only held that “VDG’s obliga-
tion to provide ‘Bike Intellectual Property’ that does not in-
fringe a third-party patent unambiguously survived the
contract’s termination in June 2016.” Id. The court did not
expressly say that the duty to defend survived termination
of the contract; nor did it provide any rationale for why it
would have survived termination. Put simply, the district
court did not address this issue, and VDG undisputedly did
not raise it in its summary judgment briefing. Accordingly,
VDG has waived this argument. See Darnell, 849 F.3d at
38 n.17; Allianz, 416 F.3d at 114.
In any event, this argument also fails on the merits.
The unambiguous language of the agreement makes clear
that the duty to defend survived termination. Resolving
this issue requires consideration of several terms of the
2014 agreement.
The duty to defend is in Section 7.1 of the agreement.
J.A. 4369–70. In that section, VDG “agree[d] to indemnify,
defend[,] and hold harmless Peloton . . . against any claim
Case: 21-1900 Document: 83 Page: 19 Filed: 02/16/2023
VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 19
. . . arising out of, or relating to, any violation or alleged
violation of any intellectual property rights regarding any
of the Bike Intellectual Property.” Id. § 7.1(b).
Section 5.6 governs the survival of rights after termi-
nation. This section states that the “termination or expi-
ration of this Agreement shall be without prejudice” to the
“rights under any other provision of this agreement which
expressly and necessarily calls for performance after expi-
ration or termination.” J.A. 4368 § 5.6(c). One provision
that expressly calls for such post-expiration performance is
Section 8.3(b), which states that “[a]ll representations and
warranties of Villency [Design Group] and Peloton con-
tained in this Agreement will survive the termination of
this Agreement.” J.A. 4371 § 8.3(b).
The agreement is thus clear: “[a]ll representations and
warranties” made by VDG survived termination. Id. One
such representation and warranty is to “indemnify, de-
fend[,] and hold harmless Peloton” against claims “regard-
ing any of the Bike Intellectual Property.” J.A. 4369–70
§ 7.1(b). Accordingly, the unambiguous terms of the con-
tract clarify that VDG’s duty to defend Peloton survived the
termination of the agreement.
VDG argues that the duty to defend clause is not a rep-
resentation or warranty. According to VDG, Section
8.3(b)’s reference to “representations and warranties” in-
cludes only those provisions contained in Section 8.2., titled
“Representations and Warranties.” We disagree. Section
8.3(b) refers to “[a]ll representations and warranties of
Villency [Design Group] . . . contained in this Agreement”—
not, for example, those “contained in this Article” or “con-
tained in Section 8.2.” This suggests that the “representa-
tions and warranties” described by Section 8.3(b) are not
limited to those enumerated in Section 8.2. If, as VDG ar-
gues, the parties intended for Section 8.3(b)’s survival pro-
vision to apply only to certain representations and
warranties, they could have said so. But as it stands, that
Case: 21-1900 Document: 83 Page: 20 Filed: 02/16/2023
20 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
provision unambiguously states that it applies broadly to
all representations and warranties “in this Agreement.”
See Spinelli v. Nat’l Football League, 903 F.3d 185, 200 (2d
Cir. 2018) (“We must give effect and meaning to every term
of a contract.” (cleaned up)).
This conclusion is further supported by the fact that
Section 8.3(b) does not capitalize the terms “representa-
tions” or “warranties.” J.A. 4371 § 8.3(b). Contrast this,
for example, with the agreement’s use of the capitalized
term “Bike Intellectual Property” to refer back to the term
previously defined in Section 1.7(a), see J.A. 4369–70
§ 7.1(b), and the use of the capitalized term “Bikes” to refer
back to the term previously defined in the preamble, see
J.A. 4364 § 1.7(a). The agreement’s use of defined terms by
using capitalization demonstrates that the parties “were
perfectly capable of using such terms when they wished to
do so.” Sonterra Cap. Master Fund, Ltd. v. Barclays Bank
PLC, 403 F. Supp. 3d 257, 265 (S.D.N.Y. 2019). Their de-
cision not to capitalize the terms “representations” and
“warranties” “should not be ignored and the term should
therefore be accorded its ordinary meaning.” Id. (citing
Sunbelt Rentals, Inc. v. Charter Oak Fire Ins. Co., 839
F. Supp. 2d 680, 688–89 (S.D.N.Y. 2012) (faulting party’s
failure “to draw a distinction between the use of the term
‘equipment’ generically and its use as a (capitalized) de-
fined term”)). Thus, VDG’s duty to defend survived the
agreement’s termination.
B
Citing several New York state law cases, VDG next ar-
gues that, under New York law, its duty to defend can be
no broader than its duty to indemnify. Because Peloton
was not found liable for patent infringement—a prerequi-
site for indemnification—VDG argues that it did not
breach any duty to defend. VDG’s Br. 26–29. VDG’s argu-
ment, however, is based on a misunderstanding of the prec-
edent it cites.
Case: 21-1900 Document: 83 Page: 21 Filed: 02/16/2023
VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 21
In New York, “the ‘duty to defend’ is presumed only in
insurance policies, [and] the common law imposes no such
duty on contractual indemnitors more generally. Accord-
ingly, an indemnitor’s obligation to defend must emanate
(if at all) from the language of the contract.” Dresser-Rand
Co. v. Ingersoll Rand Co., No. 14-cv-7222, 2015 WL
4254033, at *7 (S.D.N.Y. 2015). Dresser-Rand clarified
that this presumption is not meant to undermine unambig-
uous contract language. “If a contractual defense obliga-
tion is, by its own terms, exceedingly broad, a court will not
artificially circumscribe it simply because the indemnitor
is not an insurer.” Id.; see also McCleary v. City of Glens
Falls, 819 N.Y.S.2d 607, 609 (N.Y. App. Div. 2006) (“Alt-
hough [Defendant] contends that its duty to defend is no
broader than its duty to indemnify because it is not an in-
surer . . . , that distinction has no significance here, where
the [plaintiff] is due the full benefit of the bargain it
reached . . . under the clear and unambiguous terms of the
contract.”).
The contracts at issue in Dresser-Rand and McCleary
are instructive. In Dresser-Rand, the court determined
that a contract provision requiring Ingersoll Rand (a non-
insurer) to “indemnify [and] defend” Dresser-Rand “from
. . . any and all . . . claims . . . relating to . . . Products Lia-
bilities Losses” “could be broad enough to trigger a defense
obligation.” 2015 WL 4254033, at *8. There, however, the
court declined to adjudicate the precise bounds of Ingersoll
Rand’s defense obligations because the case was not yet
ripe. Id. at *8–9. In McCleary, the contract provided that
the South Warren Snowmobile Club would “defend, indem-
nify and hold harmless [Warren] County . . . from any and
all claims . . . which the County . . . may suffer as a result
of . . . the Club’s activities.” 819 N.Y.S.2d at 609. The court
determined that this broad contractual provision obligated
the Club to defend the County even in the absence of a find-
ing of liability. Id.Case: 21-1900 Document: 83 Page: 22 Filed: 02/16/2023
22 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
In this case, VDG agreed to “indemnify, defend and
hold harmless Peloton” against certain intellectual prop-
erty claims. J.A. 4369–70 § 7.1(b) (emphasis added). VDG
characterizes this provision as a “garden variety defense
and indemnity clause,” VDG Br. 28, asking us to interpret
it as nothing more than an agreement to indemnify Pelo-
ton. But as the district court explained, the language of
this provision “admits of no limiting construction.” Sum-
mary Judgment Op., 2020 WL 1644204, at *7. Here, VDG
agreed to “indemnify, defend and hold harmless Peloton”—
not just “indemnify.” Just as in McCleary—where the court
interpreted an almost identical contract provision obligat-
ing one party to “defend, indemnify and hold harmless” the
other—the agreement here shows that the parties under-
stood the duty to defend was distinct from the duty to in-
demnify. 819 N.Y.S.2d at 609. VDG thus cannot escape
the express language of the contract. Accordingly, VDG
also had a duty to defend Peloton that was separate and
distinct from its duty to indemnify.
C
Finally, VDG argues that its duty to defend was not
triggered by VR Optics’ suit because VR Optics does not
accuse “Bike Intellectual Property,” as defined in the agree-
ment, of infringing the ’513 patent. VDG’s Br. 29–35. The
duty to defend clause obligates VDG to “indemnify, defend
and hold harmless Peloton . . . against any claim . . . aris-
ing out of, or relating to, any violation or alleged violation
of any intellectual property rights regarding any of the
Bike Intellectual Property.” J.A. 4369–70 § 7.1(b). VDG
argues that “Bike Intellectual Property” is “limited to in-
tellectual property that VDG created,” VDG’s Br. 32, which
it asserts is only the bike’s physical frame. Because VR
Optics’ suit targeted the interactive fitness technology, not
the bike’s physical frame, VDG argues that it was not obli-
gated to defend Peloton against that suit. Id. at 29–35.
Peloton argues that the plain language of the contract con-
firms that the term “Bike Intellectual Property” is not
Case: 21-1900 Document: 83 Page: 23 Filed: 02/16/2023
VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 23
limited only to that intellectual property contributed by
VDG. Peloton’s Br. 64–68.
In its summary judgment order, the district court did
not resolve the parties’ dispute about the definition of “Bike
Intellectual Property.” Instead, the court considered the
language of the duty to defend clause and observed that the
clause was drafted broadly. Summary Judgment Op., 2020
WL 1644204, at *6–8. The district court concluded that VR
Optics’ “claims rest in part on the assertion that the bike
frame itself satisfies some limitations of the ’513 patent.”
Id. at *7. For example, the limitations of the asserted
claims include: “geographically-separated fitness equip-
ment” comprising “at least one operating component,”
’513 patent col. 23 ll. 14, 18 (claim 1); “fitness equipment
. . . selected from the group . . . [including] an exercise
bike,” id. col. 23 ll. 41–43 (claim 2); the system defined in
claim 1 wherein the operating component “is one selected
from the group consisting of . . . a flywheel,” id. col. 23
ll. 52–53 (claim 4); and “fitness equipment” comprising “at
least one operating component configured to provide an as-
pect of exercise for the user of the fitness equipment,” id.col. 23 ll. 59–61 (claim 6). The court thus determined it
was unnecessary to resolve the parties’ dispute about the
meaning of the term “Bike Intellectual Property,” because,
even under VDG’s restrictive view of that term, VR Optics’
suit still “regard[s] Bike Intellectual Property” and thus
triggered the duty to defend. Summary Judgment Op.,
2020 WL 1644204, at *7.
We agree with the district court that the duty to defend
clause is broad. VDG’s duty to defend explicitly extends to
“any claim,” “arising out of . . . any violation or alleged vio-
lation . . . regarding any of the Bike Intellectual Property.”
J.A. 4369–70 § 7.1(b) (emphasis added); see Cook v. Wilkie,
908 F.3d 813, 818 (Fed. Cir. 2018) (“As the Supreme Court
has recently observed, ‘the word “any” naturally carries “an
expansive meaning.”’” (quoting SAS Inst., Inc. v. Iancu,
138 S. Ct. 1348, 1354 (2018))). But we are inclined to
Case: 21-1900 Document: 83 Page: 24 Filed: 02/16/2023
24 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
instead resolve this issue by considering the meaning of
“Bike Intellectual Property.” The agreement defines “Bike
Intellectual Property” as:
all intellectual property relating to the Bikes, 5 in-
cluding, without limitation, all designs (including,
without limitation, those created by Villency prior
to or during the Term of this Agreement), inven-
tions, improvements, discoveries, data, concepts,
ideas, processes, methods, techniques, know-how,
and information respecting the Bikes conceived,
made, or produced by Villency prior to and/or dur-
ing the course of performing the Product Develop-
ment Services and/or Manufacturing Services
under this Agreement, or made or produced as the
result of the joint efforts of Peloton and Villency
prior to or during the Term of this Agreement.
J.A. 4364 § 1.7(a) (emphasis added).
This language broadly defines “Bike Intellectual Prop-
erty” to include “all intellectual property relating to the
bikes, including, without limitation,” the intellectual prop-
erty contributed by VDG. This provision expressly includes
VDG’s contributions, but does so “without limitation,” thus
clearly contemplating intellectual property beyond those
contributions. See, e.g., In re Enron Creditors Recovery
Corp., 370 B.R. 64, 75 (S.D.N.Y. 2007), aff’d in part, rev’d
in part, 380 B.R. 307 (S.D.N.Y. 2008) (the word “includes”
“operates as a nonrestrictive modifier”); Willow Wood Rifle
& Pistol Club, Inc. v. Town of Carmel Zoning Bd. of Ap-
peals, 496 N.Y.S.2d 548, 551 (N.Y. App. Div. 1985) (the
words “include” and “including” are terms of enlargement,
not of limitation, and their use indicates there are other
items that can be included even if they are not specifically
5 “Bikes” was defined as Peloton’s “proprietary in-
door cycling bikes.” J.A. 4362.
Case: 21-1900 Document: 83 Page: 25 Filed: 02/16/2023
VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 25
enumerated). We do not see a basis to read out the lan-
guage “all” or “without limitation,” as VDG would have us
do; indeed, it would be inappropriate for us to do so. See
Spinelli, 903 F.3d at 200 (“We must give effect and mean-
ing to every term of a contract.” (cleaned up)); 150 Broad-
way N.Y. Assocs., L.P. v. Bodner, 14 A.D.3d 1, 6 (N.Y. App.
Div. 2004) (courts must “interpret a contract so as to give
meaning to all of its terms”). We thus agree with Peloton
that this provision’s broad, clear language extends beyond
the intellectual property contributed by VDG to include “all
intellectual property relating to the Bikes.” J.A. 4364
§ 1.7(a).
This conclusion is bolstered by consideration of how the
term is used throughout the contract. For example, VDG
agreed that “[a]ll Bike Intellectual Property provided by
[VDG] will be originally created exclusively by” VDG.
J.A. 4370–71 § 8.2(a)(3) (emphasis added). If the term
“Bike Intellectual Property” were already limited to that
provided by VDG, this provision’s use of the qualifier “pro-
vided by [VDG]” would be redundant. But we must assume
that every term of the contract has meaning, Spinelli, 903
F.3d at 200, and thus that the qualifier was required in this
provision to narrow the broad term. Later in that same
section, VDG represented and warranted “that the Bike In-
tellectual Property does not and will not infringe upon the
rights of any third party.” J.A. 4370–71 § 8.2(a)(3). In this
case, the defined term is used without a qualifier, indicat-
ing the parties intended this portion of the provision to be
broader. See U.S. Fidelity & Guar. Co. v. Annunziata, 67
N.Y.2d 229, 233 (1986) (omission of term in one provision
of contract but inclusion in another “must be assumed to
have been intentional”).
Where the language of the contract is clear, our inquiry
begins and ends with that language. See, e.g., 150 Broad-
way, 14 A.D.3d at 6. Here, the term “Bike Intellectual
Property” is defined broadly and is not limited to the intel-
lectual property provided by VDG. VDG’s duty to defend
Case: 21-1900 Document: 83 Page: 26 Filed: 02/16/2023
26 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
was thus triggered by VR Optics’ infringement suit against
Peloton, which asserted a “violation of [] intellectual prop-
erty rights regarding any of the Bike Intellectual Prop-
erty.” J.A. 4369–70 § 7.1(b).
* * *
In sum, we conclude that VDG had a duty to defend
Peloton; that the duty to defend survived termination of
the agreement; and that VDG was obligated to defend Pel-
oton in this action. We thus affirm the district court’s sum-
mary judgment on this issue.
III
We now address the remaining contract and tort claims
at issue in this appeal: Peloton’s claims against VDG for
fraudulent concealment, breach of the implied covenant of
good faith and fair dealing, and breach of warranty, and
Peloton’s claim against Mr. Coffey and Mr. Villency for tor-
tious interference with contract. The district court entered
summary judgment against Peloton for each of these
claims. We affirm.
We turn first to the fraudulent concealment claim
against VDG. “The elements of a fraudulent concealment
claim under New York law are: (1) a duty to disclose ma-
terial facts; (2) knowledge of material facts by a party
bound to make such disclosures; (3) failure to discharge a
duty to disclose; (4) scienter; (5) reliance; and (6) damages.”
DeSole v. Knoedler Gallery, LLC, 974 F. Supp. 2d 274, 314
(S.D.N.Y. 2013) (cleaned up). Each of these elements “must
be shown by clear and convincing evidence.” Banque Arabe
et Internationale D’Investissement v. Md. Nat’l Bank, 57
F.3d 146, 153 (2d Cir. 1995). Peloton asserts that VDG
knew of the threat of impending infringement litigation but
did not disclose that threat to Peloton. Peloton’s Br. 76–77.
Peloton argues that, had it known that the ’513 patent
would soon be asserted against it, it would have “immedi-
ately terminated the 2014 Agreement” or “negotiated with
Case: 21-1900 Document: 83 Page: 27 Filed: 02/16/2023
VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 27
Microsoft to purchase the ’513 patent itself.” Id. at 77. In
its summary judgment order, the district court found that
“conjecture notwithstanding, Peloton has identified no evi-
dence—let alone clear and convincing evidence, as New
York law requires—that it ‘actually relied’ on VDG’s omis-
sion in forgoing these potential routes.” Summary Judg-
ment Op., 2020 WL 1644204, at *6.
We agree with the district court. Peloton presents only
attorney argument that it would have taken action to ter-
minate the agreement or purchase the ’513 patent had
VDG informed it of the impending litigation. See Peloton’s
Br. 76–77. Regarding Peloton’s claim that it would have
“immediately terminated the 2014 Agreement,” not only
does Peloton not cite to any evidence supporting this claim,
but the contract itself also suggests that Peloton did not
actually have the right to terminate the contract unilater-
ally. See J.A. 4367 § 5.2 (allowing termination by Peloton
if VDG “fails to perform,” if Mr. “Villency ceases to be em-
ployed by or otherwise associated with” VDG, or for force
majeure); § 5.3 (allowing partial termination by Peloton for
any reason after a set period of performance). And regard-
ing Peloton’s assertion that it would have “purchase[d] the
’513 patent itself,” Peloton’s Br. 77, Peloton again cites no
evidence. As the district court put it, “[m]erely hypothesiz-
ing a road not taken is not enough . . . . Peloton has failed
to create a genuine dispute.” Summary Judgment Op.,
2020 WL 1644204, at *6. We thus affirm the district court’s
summary judgment on this issue.
Next, we consider Peloton’s claim against VDG for
breach of the implied covenant of good faith and fair deal-
ing. To succeed on that claim, Peloton must show that VDG
has acted “in a manner that, although not expressly forbid-
den by any contractual provision,” has deprived Peloton “of
the right to receive the benefits under their agreement.”
Don King Prods., 742 F. Supp. at 767. The district court
correctly observed that, because of the summary judgment
of invalidity, Peloton has not been deprived “of the fruits of
Case: 21-1900 Document: 83 Page: 28 Filed: 02/16/2023
28 VR OPTICS, LLC v. PELOTON INTERACTIVE, INC.
the 2012 and 2014 Agreements”: “a non-infringing, propri-
etary indoor bike.” Summary Judgment Op., 2020 WL
1644204, at *5. Because it has not been deprived of the
right to receive its contracted-for benefits, Peloton thus
cannot bring a claim for breach of the implied covenant of
good faith and fair dealing. We affirm the district court’s
granting of summary judgment on this claim.
We now turn to Peloton’s claim for breach of warranty
against VDG. The district court determined that because
the ’513 patent is invalid—and thus Peloton is not liable
for infringing that patent—VDG did not breach its war-
ranty that its bikes would not infringe the intellectual
property rights of third parties. Id. (citing J.A. 4370–71
§ 8.2(a)(3)). Because we affirm the district court’s invalid-
ity finding, we also affirm the court’s granting of summary
judgment that VDG did not breach its warranty.
Finally, we consider Peloton’s claim for tortious inter-
ference with contract against Mr. Coffey and Mr. Villency.
Under New York law, a claim for tortious interference re-
quires that (1) a valid contract exists; (2) a third party had
knowledge of the contract’s existence; (3) that third party
intentionally and improperly procured the breach of the
contract; and (4) the breach resulted in harm. See TVT
Records v. The Island Def Jam Music Grp., 412 F.3d 82, 88
(2d Cir. 2005). If a tortious interference claim is brought
against an employee or agent of a corporate party to the
contract, that individual is only considered a third party if
he “exceeded the bounds of his [] authority” in inducing the
breach or if his actions were motivated only by his personal
gain. Finley v. Giacobbe, 79 F.3d 1285, 1295 (2d Cir. 1996);
In re MF Glob. Holdings, 998 F. Supp. 2d at 186.
Here, like with its claim for fraudulent concealment,
Peloton has failed to support its arguments with relevant
record evidence. Because, as discussed above, VDG has not
breached any warranty, the only breach Peloton may rely
on for this claim is the breach of the duty to defend. But
Case: 21-1900 Document: 83 Page: 29 Filed: 02/16/2023
VR OPTICS, LLC v. PELOTON INTERACTIVE, INC. 29
Peloton’s cited evidence relates exclusively to the actions
taken by Mr. Coffey and Mr. Villency in purchasing the
’513 patent—evidence that is unrelated to VDG’s breach of
the duty to defend. See Peloton’s Br. 78–81. As the district
court correctly observed, “Peloton has produced no evi-
dence that [Mr.] Villency and [Mr.] Coffey were acting out-
side the bounds of their authority or in their own interest,
as distinguished from VDG’s, when they induced VDG to
refuse to defend Peloton in this action.” Summary Judg-
ment Op., 2020 WL 1644204, at *8. We similarly affirm the
district court’s granting of summary judgment on this
claim.
CONCLUSION
We have considered the parties’ remaining arguments
and are unpersuaded. For the above reasons, we affirm the
district court’s summary judgments.
AFFIRMED
COSTS
No costs.