Executive Summary: Key Legal and Evidentiary Issues

• Aurora Climbing Inc. (B.C.) alleges Kilter, LLC (Colorado) breached an April 2024 Interim Purchase Agreement by sourcing and selling non-Aurora LED kits and reverse engineering Aurora's proprietary technology.

• Kilter challenged the admissibility of the Agreement under U.S. Federal Rule of Evidence 408, arguing it constituted settlement communications; the Court found it admissible as Kilter failed to prove the foreign law.

• Enforceability of forum selection clauses designating British Columbia as the exclusive jurisdiction was central to Kilter's application to dismiss or stay the action.

• Whether a real and substantial connection existed between British Columbia and the dispute under the Court Jurisdiction and Proceedings Transfer Act was contested, with the Court finding presumptive connecting factors unrebutted by Kilter.

• Aurora's bid for interlocutory injunctive relief failed on the irreparable harm branch, as the Court determined monetary damages would adequately compensate Aurora's claims.

• Granting the injunction would effectively put Kilter out of business, as Aurora simultaneously refused to supply LED kits while seeking to bar Kilter from sourcing alternatives, tipping the balance of convenience against Aurora.

The origins of Aurora and Kilter's partnership

Aurora Climbing Inc. was founded in 2017 by Peter Michaux, a software engineer who has been active in the rock-climbing community. Recognizing the growth in the indoor rock-climbing market, Mr. Michaux developed LED light strings, computerized control boxes (the "LED Kits"), and a companion mobile application (the "App") designed to control LED lights attached to holds on indoor climbing walls, enabling climbing gyms or their customers to create and share their own climbing routes. In September 2016, Mr. Michaux approached Kilter, LLC — a well-known manufacturer of holds for climbing walls based in Colorado — through its principals, Ian Powell and Jackie Hueftle, to explore a collaboration. The parties began working together, with Aurora supplying LED Kits to Kilter for use in climbing boards that Kilter manufactures and sells to climbing gyms. The App was released publicly by March 2018 and was available for free, with Aurora generating its revenue from the sale of the LED Kits. Notably, the sale of the LED Kits and the use of the App were not governed by a written agreement between the parties.

The dispute over updated terms and conditions

In 2023, Aurora updated its terms of use for the App, introducing explicit prohibitions on reverse engineering, copying, and use of non-Aurora hardware with the App, as well as specifications of how user data collected by the App would be used. When Aurora attached the new terms and conditions to an April 2023 invoice, Kilter indicated that it would review them but would not make the purchase at that time if it was governed by these new terms and conditions. As a result, Aurora cancelled the shipment. Kilter objected on several grounds: it asserted that Aurora misrepresented that it was the sole owner of the App and all related products, software, data and intellectual property rights; it took issue with Aurora's attempt to restrict Kilter from developing a separate app with the same or similar features; it opposed the requirement to submit to the exclusive jurisdiction of the courts in British Columbia; and it objected to Aurora awarding itself costs and legal fees on a full indemnity basis. On September 14, 2023, Kilter emailed Aurora and asked to purchase LED Kits under the old terms. Aurora declined Kilter's request but restated its willingness to sell the LED Kits under the new terms and conditions.

The first Colorado lawsuit and the Interim Purchase Agreement

On September 29, 2023, Kilter commenced a lawsuit against Aurora in Colorado for among other things, breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment. Kilter also filed a motion for a preliminary injunction, enjoining Aurora from withholding sales of the LED Kits and preventing Kilter from accessing the App. Aurora filed a motion to dismiss the action on jurisdictional grounds. Prior to any judicial determination, on April 4, 2024, the parties reached an Interim Purchase Agreement (the "Agreement") as a partial settlement while agreeing to work toward a final settlement of the dispute. Under this Agreement, Kilter would file a motion to dismiss, without prejudice, the lawsuit it had commenced against Aurora; Aurora would sell Kilter 655 LED Kits at specified dates between April and June 2024 at a price of $682,025 USD plus shipping; and both parties would work in good faith towards a full settlement and release of Kilter's claims against Aurora, which would among other things include a purchase of a further 775 LED Kits. The Agreement incorporated Aurora's Terms of Purchase, Terms of Service, and Privacy Policy as an exhibit, which included forum selection clauses designating the courts of British Columbia as the exclusive jurisdiction and provisions prohibiting Kilter from reverse engineering, copying, or building competitive products using Aurora's technology. The recitals in the Agreement were agreed to be contractual and not merely descriptive.

Kilter's alleged breaches and the breakdown of negotiations

After the Agreement was executed, Aurora provided the LED Kits to Kilter in accordance with the terms of the Agreement. However, the relationship deteriorated further. In July 2025, Mr. Michaux first became aware that Kilter had used non-Aurora controller boxes with its climbing board when Aurora began receiving emails from gyms that had purchased Kilter boards and requested that their board be added to the map feature in the App. When the serial number for the controller box was provided to Aurora, Aurora determined that the controller box had not been manufactured by Aurora. As well, some gyms whose controller boxes were not functioning properly contacted Aurora for assistance; however, these controller boxes were not made by Aurora. Aurora also received a controller box from a customer and discovered that it was very similar in appearance and function to Aurora's LED Kits. The wiring, design and functionality mimicked an Aurora controller box, and it functioned with the Bluetooth communication used between the App and the Aurora LED Kits. Mr. Michaux concluded that whoever manufactured and programmed this controller box must have accessed and reverse engineered the Aurora LED Kits. Mr. Michaux further deposed that he only learned through Ms. Hueftle's affidavits sworn in these proceedings that Kilter began efforts to develop competing LED kits and a competing software application as early as 2022, with LED Kit prototypes completed by 2023. Ms. Hueftle stated that in March 2025, the 2023 prototype was modified to become a possible replacement to Aurora's controller box. Aurora maintains that Kilter did not tell Aurora this at any time prior to this litigation including when the parties negotiated the Agreement. Kilter denied Aurora's allegations, asserting that with the express knowledge and consent of Aurora, in 2022, it engaged an independent software developer to work alongside a controller box production company to design new LED light kits and a new software application, and that from the outset, the developer and control box designers were instructed to create new hardware and software.

The contractual clauses at issue

The Agreement incorporated several pivotal clauses. Clause 3 provided that Aurora was providing the LED Kits to Kilter pursuant to the Terms of Purchase, Terms of Service, and Privacy Policy attached as an exhibit, as modified by the anticipated Settlement Agreement and Release. That clause also contemplated ongoing negotiations toward a Settlement Agreement and Release that would address, among other things, Kilter's ability to test each LED Kit to ensure functionality without voiding any warranty, and Kilter's ability to build a competitive application. The incorporated terms prohibited Kilter from reverse engineering, decoding or otherwise trying to access the source code of any "Aurora IP"; attempting to gain unauthorized access to the App and other software; using the App with non-Aurora equipment; modifying, copying or creating derivative works based on the LED Kits or the App; accessing the LED Kits, the software, or the App to build a competitive product or service, or ones that use similar ideas, features or functions; and using any technology to intercept or decode any packets used to communicate between Aurora's servers, the products, or services. The forum selection clauses stipulated that all disputes would be resolved exclusively by the courts of the Province of British Columbia in the city of Vancouver, governed by the laws of British Columbia, with both parties irrevocably accepting and submitting to the exercise of exclusive personal jurisdiction and waiving defenses based on lack of personal jurisdiction, improper venue and forum non conveniens.

The second Colorado action and the British Columbia proceedings

On July 21, 2025, Aurora's counsel sent a letter to Kilter's counsel demanding that Kilter cease sourcing, manufacturing, marketing, selling, and distributing "Counterfeit" LED Kits. Kilter did not provide a substantive response and instead commenced its second action against Aurora in Colorado, alleging breach of contract and the implied duty of good faith and fair dealing, defamation and libel based on communications to various customers concerning Kilter's alleged sale of "counterfeit LED lights," and violations of the Colorado Deceptive Trade Practice Act, for which Kilter sought treble damages. On August 29, 2025, Aurora filed a Motion to Dismiss this Colorado action on the grounds that the dispute belongs in British Columbia and the Colorado federal court lacks personal jurisdiction over Aurora. Judgment on the dismissal motion was on reserve. On August 27, 2025, Aurora commenced the present action in British Columbia, claiming breach of contract, passing off and breaching the Trademarks Act, and unjust enrichment in the form of proceeds from the sale of "counterfeit" LED Light Kits.

Kilter's jurisdictional challenge and the Court's ruling

Kilter applied to stay or dismiss the British Columbia action, arguing that the Agreement was not admissible in these proceedings as its use is prohibited by Colorado law, that the Agreement no longer governed the parties' relationship as it was a temporary compromise agreement conditional upon a final settlement that never happened, and that British Columbia lacked territorial competence or was forum non conveniens. The Court rejected each argument. On admissibility, the Court accepted that it was Kilter's obligation to prove the foreign law and it had failed to do so; moreover, Aurora was not seeking to adduce evidence about conduct or a statement made during settlement negotiations but was adducing the agreement that was reached following settlement negotiations. On the forum selection clauses, the Court found them valid, clear and enforceable under the two-step test from Douez v. Facebook, 2017 SCC 33, and noted that Kilter had not established strong reasons why the court should not enforce these clauses. Even absent the forum selection clauses, the Court found a real and substantial connection to British Columbia under s. 10 of the Court Jurisdiction and Proceedings Transfer Act, as the LED Kits were developed, manufactured and sold in British Columbia, the Agreement expressly provided that it was governed by the laws of British Columbia, and Aurora was based in British Columbia and maintained the App there. The Court also declined to exercise its discretion to stay proceedings on forum non conveniens grounds, finding that while Colorado was also a convenient jurisdiction, especially for Kilter, Kilter had not established that Colorado enjoyed a significant advantage that outweighed Aurora's prima facie right to the choice of forum.

Aurora's injunction application and its outcome

Aurora sought broad injunctive relief to restrain Kilter from breaching the terms of the Agreement, including the incorporated terms of use and conditions, and from passing off non-Aurora made LED kits as products of Aurora. Applying the three-part test from RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311, the Court found that Aurora had established a serious issue to be tried, as the breach of contract claim was neither frivolous nor vexatious and the passing off claim, while not appearing strong, also met the low merits threshold. However, the Court concluded that Aurora failed to establish irreparable harm, finding that Aurora's evidence fell short of establishing harm that cannot be quantified in monetary terms, that the claims were mainly rooted in the contention that Kilter breached the Agreement, and that monetary damages would be an adequate remedy should that claim succeed. The Court found it speculative to suggest that Kilter had held out that non-Aurora LED kits would function properly with the App, and noted that it was more likely that Kilter would suffer repercussions from using non-Aurora LED Kits than Aurora would. On the balance of convenience, the Court found that Kilter would suffer greater harm if the injunction was granted. Kilter generated approximately $8,000,000 in annual revenue in 2024, primarily from the sale of Kilter boards. Requiring Kilter to purchase LED Kits exclusively from Aurora, when Aurora does not wish to supply Kilter, would effectively mean that Kilter could not assemble its product and would effectively put Kilter out of business.

The ruling and overall outcome

Justice J. Walker of the Supreme Court of British Columbia dismissed both applications. Kilter's jurisdictional application was dismissed: the Agreement was properly before the Court, the forum selection clauses were determinative as the parties agreed that any disputes would be resolved in British Columbia, there was a real and substantial connection between British Columbia and the underlying dispute, and British Columbia was not forum non conveniens. Aurora's application for an interlocutory injunction was also dismissed: while Aurora established a serious issue to be tried, it had not established that it would suffer irreparable harm should the injunction not be granted, and the balance of convenience did not favour granting the injunction, as Kilter would suffer more harm than Aurora. Costs of the applications were ordered to be in the cause, meaning no specific monetary award was made at this stage of the proceedings.