## Facts

- Bose Corporation sells audio products under the BOSE and LIFESTYLE trademarks through authorized channels.
- Salman Ejaz, not an authorized reseller, bought Bose products intended for the U.S. market and resold them overseas (gray-market sales), exploiting international price differences.
- Bose threatened civil trademark enforcement and asserted Ejaz could face roughly $250,000 in liability based on past sales; Bose also pursued related litigation abroad.
- In 2007, the parties executed a written settlement: Bose released existing claims, and Ejaz agreed not to sell Bose products anywhere in the world without Bose’s express written consent.
- The settlement included a liquidated-damages term requiring Ejaz to pay $50,000 for each violation.
- Ejaz negotiated without counsel and later claimed Bose’s attorneys were intimidating; he alleged an implicit suggestion of possible jail but conceded no explicit criminal threats were made.
- After the settlement, Ejaz sold Bose home-theater systems manufactured for the U.S. market to customers abroad, including in Australia.
- Bose sued in federal court for breach of the settlement agreement and for trademark-related claims; Ejaz raised duress and unconscionability as defenses to enforcement of the settlement and liquidated damages.

## Issues

1. Whether the settlement agreement was unenforceable due to economic duress based on Bose’s negotiation tactics and threatened civil enforcement.
2. Whether the settlement agreement, including the $50,000-per-violation liquidated-damages provision, was unconscionable or an unenforceable penalty.
3. Whether summary judgment for Bose on breach of contract (and related trademark relief) was proper in light of Ejaz’s defenses.

## Decision

- The First Circuit affirmed summary judgment for Bose.
- The court held Ejaz failed to show economic duress because Bose’s conduct amounted to hard bargaining and lawful threats to pursue civil remedies, not wrongful coercion leaving no reasonable alternative.
- The court held the settlement process was not procedurally unconscionable where Ejaz chose to proceed without counsel, had an opportunity to consider the written terms, and did not show deception or emergency compulsion.
- The court upheld the $50,000-per-breach clause as enforceable liquidated damages, not a penalty, because anticipated harms from gray-market sales were difficult to quantify and the amount was a reasonable forecast at the time of contracting.
- Because Ejaz admitted post-settlement sales contrary to the agreement and his defenses failed as a matter of law, no genuine dispute of material fact barred summary judgment.

## Legal Principles

- Economic duress requires an improper or wrongful threat that induces assent and effectively eliminates reasonable alternatives; a threat to pursue lawful civil litigation or remedies generally is not duress.
- Subjective feelings of pressure, intimidation, or anxiety do not establish duress without evidence of objectively wrongful coercion.
- Unconscionability requires more than inequality of bargaining power; voluntary self-representation and a clear written agreement, without concealment or compulsion, typically do not establish procedural unconscionability.
- Liquidated damages are enforceable when actual damages are difficult to estimate at contract formation and the stipulated sum is a reasonable forecast of anticipated loss rather than a punitive amount.

## Conclusion

The First Circuit enforced a settlement restricting worldwide resale of Bose products and upheld a $50,000-per-violation liquidated-damages clause, concluding that threats of lawful civil enforcement did not constitute duress and that the agreement’s terms were not unconscionable.


Bose Corp. v. Ejaz, 732 F.3d 17 (1st Cir. 2013)