Ride the Ducks of Philadelphia, LLC v. Duck Boat Tours, Inc.
138 F. App'x 431 (2005)
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Rule of Law:
A party with an exclusive license to possess and use real property is likely to succeed on claims of tortious interference with contract and trespass against a third party who threatens to use the property without permission, thereby justifying a preliminary injunction to prevent such use.
Facts:
- Ride The Ducks of Philadelphia, LLC (Ride The Ducks) operates amphibious vehicle tours in Philadelphia.
- Ride The Ducks entered a ten-year license agreement with Penn’s Landing Corporation, which empowered Ride The Ducks to build a boat ramp on the Delaware River.
- The agreement granted Ride The Ducks exclusive use of the ramp, which it constructed at a cost of approximately $585,000.
- In addition to building the ramp, Ride The Ducks pays Penn's Landing Corporation an annual license fee and a portion of its revenues.
- A competitor, Duck Boat Tours, Inc. (Super Ducks), sought to negotiate shared use of the ramp, but Ride The Ducks declined.
- After being rejected, Super Ducks sent a letter to Penn's Landing Corporation stating its intent to begin using the ramp on a specific date, with or without consent.
Procedural Posture:
- Ride The Ducks filed a motion for a preliminary injunction and a petition for a temporary restraining order against Super Ducks in the United States District Court for the Eastern District of Pennsylvania.
- The plaintiff's complaint alleged tortious interference with contract, trespass, and conversion.
- The district court (trial court) granted a temporary restraining order pending a hearing.
- Following the hearing, the district court granted Ride The Ducks's motion for a preliminary injunction, enjoining Super Ducks from using the ramp.
- Super Ducks, as the appellant, appealed the district court's grant of the preliminary injunction to the U.S. Court of Appeals for the Third Circuit.
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Issue:
Does a competitor's threatened use of a boat ramp, which the plaintiff built and possesses under an exclusive license agreement, justify a preliminary injunction based on the plaintiff's likelihood of success on claims of tortious interference with contract and trespass?
Opinions:
Majority - Nygaard, Circuit Judge
Yes. A competitor's threatened use of the boat ramp justifies a preliminary injunction because Ride The Ducks demonstrated a strong likelihood of success on its tortious interference and trespass claims, along with irreparable harm. The court applied the four-factor test for preliminary injunctions. Ride The Ducks was likely to succeed on its tortious interference claim because Super Ducks purposefully acted to harm the existing exclusive contract. It was also likely to succeed on its trespass claim, as even a licensee with exclusive possession can bring a trespass action to protect its rights. The court found that Ride The Ducks would suffer irreparable harm through loss of market share, while any harm to Super Ducks was self-inflicted by purchasing boats without securing river access. Finally, the public interest favors the enforcement of lawful contract and property rights.
Analysis:
This decision solidifies the principle that a licensee with exclusive possession rights can employ legal remedies like trespass, traditionally associated with property ownership, against third-party infringers. It serves as a strong affirmation of the enforceability of exclusivity clauses in license agreements. Furthermore, the court's treatment of the defendant's 'self-inflicted' harm sets a precedent that may weaken the position of defendants in future injunction hearings if their potential injury results from their own risky or tortious business decisions.
