Berthold Types Ltd. v. Adobe Systems, Inc.

• Decision Date: 12 June 2000
• Docket Number: No. 00 C 1490.,00 C 1490.
• Parties: BERTHOLD TYPES LTD., an Illinois corporation, Plaintiff, v. ADOBE SYSTEMS, INCORPORATED, a Delaware corporation, Defendants.
• Court: U.S. District Court — Northern District of Illinois

Page 697

101 F.Supp.2d 697

BERTHOLD TYPES LTD., an Illinois corporation, Plaintiff, v. ADOBE SYSTEMS, INCORPORATED, a Delaware corporation, Defendants.

No. 00 C 1490.

United States District Court, N.D. Illinois, Eastern Division.

June 12, 2000.

Douglas N. Masters, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, for Plaintiff.

James A. McGurk, Attorney at Law, Robert A. Filpi, Stack, Filpi & Kakacek, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

BUCKLO, District Judge.

Berthold Types, Inc., of Chicago, Illinois, markets typefaces; Adobe Systems, Inc., of San Jose, California, markets computer software, including software for computer typefaces. The Adobe Type Library, a collection of typefaces, is included in a piece of software in Adobe's repertoire (the "Library"), and it incorporated, among others, Berthold typefaces under a 25-year agreement executed in 1990. In October 1997, the 1990 agreement was replaced by a new typeface license agreement (the 1997 agreement). Berthold alleges that it has learned that Adobe has removed all the Berthold typefaces from the Library, no longer grants license extensions for the Berthold typefaces to purchasers of the Library, and falsely represents orally to customers that Berthold sells Adobe fonts software containing Berthold typefaces at higher prices than Adobe sells or sold these typefaces. Berthold also alleges that Adobe contacted Freydank Koerbis Pillich Talke GbR of Germany ("FKPT") about settling a claim against Adobe that FKPT assigned to Berthold as part of a settlement agreement (in another lawsuit) providing in part that FKPT would let Berthold use its best efforts to collect consideration from Adobe.

In its first amended complaint, Berthold sued Adobe for breach of contract (Count I), false advertising under the Lanham Act, 15 U.S.C. § 1125(a) (Count II), and consumer fraud and deceptive trade practices under Illinois law (Count III), as well as unjust enrichment (Count IV). In the second amended complaint, Berthold dropped the unjust enrichment claim, and substituted as Count IV a claim of intentional interference with contract. Adobe moves to dismiss Berthold's first amended complaint, and Berthold moves to file a second amended complaint. I grant these motions in part and deny them in part.

Berthold's breach of contract count fails to state a claim because the term that Adobe allegedly breached, to continue to include Berthold typefaces, by its own admission is not within the four corners of the contract. Illinois uses in general a "four corners" rule in the interpretation of contracts. Bourke v. Dun & Bradstreet, 159 F.3d 1032, 1036 (7th Cir. 1998). When there is no ambiguity, contract terms must be determined "from the language of the [contract] alone." Flora Bank & Trust v. Czyzewski, 222 Ill.App.3d 382, 164 Ill.Dec. 804, 583 N.E.2d 720, 725 (1991). Moreover, when an unambiguous contract is fully integrated, extrinsic evidence is not considered. See Air Safety, Inc. v. Teachers Realty Corporation, 185 Ill.2d 457, 236 Ill.Dec. 8, 706 N.E.2d 882, 884-86 (1999).

Berthold admits that the term requiring Adobe to continue to include its typefaces is not in the contractual language and that the 1997 agreement is fully integrated. Nevertheless, Berthold, arguing that this transaction involves a UCC Article 2 sale of goods, wants me to read this term into the contract from the course of dealing between the parties. See Scott v. Assurance Co. of America, 253 Ill. App.3d 813, 192 Ill.Dec. 479, 625 N.E.2d 439, 443 (1994)(Even without ambiguous language, a course of dealing between the parties is admissible to explain, supplement, or add to the agreement, but not contradict a written contract.).

However, the UCC does not apply to this transaction because it involves only granting a license and not a sale of goods. A transaction involving a computer program can involve an Article 2 sale of goods, see Analysts Int'l Corp. v. Recycled Paper Products, Inc., No. 85 C 8637, 1987 WL 12917, at *2 (N.D.Ill. June 19, 1987) (unreported case), but an agreement that does not involve a transfer of title cannot be an Article 2 sale in Illinois. "A `sale' is defined as `the passing of title from the seller to the buyer for a price.'" Lukwinski v. Stone Container Corp., 312 Ill. App.3d 385, 244 Ill.Dec. 690, 726 N.E.2d 665, 668 (2000) (citing 810 ILCS 5/2-106(1)). A pure license agreement, like the 1997 agreement, does not involve transfer of title, and so is not a sale for Article 2 purposes.

Berthold invokes Capitol Converting Equipment, Inc. v. LEP Transport, Inc., 965 F.2d 391, 395 n. 5 (7th Cir.1992), which appears to apply the notion of course of dealing outside the Article 2 context. In Illinois, however, a course of dealing will not "be applied to contravene an established rule of law," Vermilion County Production Credit Assoc. v. Izzard, 111 Ill. App.2d 190, ...