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Yetter Coleman Wins Australian Licensing Dispute for iFLY in ICDR Arbitration

In an arbitration administered by the International Centre for Dispute Resolution, the tribunal issued an across-the-board award in favor of our client SkyVenture International Ltd., an affiliate of iFLY Indoor Skydiving, the world leader in vertical wind tunnel equipment and operations. The dispute involved issues of contract compliance and antitrust defenses involving our client’s longtime Australian licensees. SkyVenture alleged that the licensees breached their license agreements when their affiliates bought tunnel equipment for a Malaysian indoor skydiving facility from a SkyVenture competitor. The license agreements require licensees and their affiliates to buy and use tunnels exclusively from SkyVenture for the 20-year term of the agreements, plus two years after termination. The licensees raised a variety of challenges to SkyVenture’s claims, including that the exclusive-supply terms violate U.S. and Australian competition law, and that the signatory licensees could not be liable for breach based on conduct of non-signatory affiliates. At stake for our client was its overall business model which has helped it grow to become the leading global provider in this new entertainment industry.

After a final hearing that included testimony from both side’s founders as well as financial, economic, and foreign law experts, the tribunal divided the matter into liability and remedy phases and issued a liability award for our client. The tribunal ruled that the license agreements are clear, reasonable, and enforceable as written and require licensees and their affiliates to use only SkyVenture tunnel equipment. The tribunal concluded that the exclusive-supply terms are not anticompetitive, but rather provide significant benefits to the parties, consumers, and the market. Prior to a ruling on damages, the parties announced a negotiated resolution of the dispute. A press release describing the public aspects of the settlement can be found here.

Our attorneys Paul Yetter, Kim McMullan, Rhuju Vasavada, and Shane Pennington handled discovery, briefing, and the final hearing before the tribunal, and assisted our client in post-award business negotiations that resulted in the favorable resolution.