Apeldyn Corp. v. Eidos, LLC

• Citation: 943 F.Supp.2d 1145
• Decision Date: 08 April 2013
• Docket Number: Case No. 3:12–cv–00722–SI.
• Parties: APELDYN CORPORATION, Plaintiff, v. EIDOS, LLC, Defendant.
• Court: U.S. District Court — District of Oregon

943 F.Supp.2d 1145

APELDYN CORPORATION, Plaintiff,

v.EIDOS, LLC, Defendant.

Case No. 3:12–cv–00722–SI.

United States District Court, D. Oregon.

April 8, 2013.

Don H. Marmaduke, Jon P. Stride, and Anna K. Sortun, Tonkon Torp LLP, Portland, OR, for Plaintiff.

Frank V. Langfitt, Ater Wynne LLP, Portland, OR, for Defendant.

OPINION AND ORDER

SIMON, District Judge.

Plaintiff Apeldyn Corporation has sued Defendant Eidos, LLC, seeking declaratory and injunctive relief relating to the enforceability of the 2008 Patent Agreement (“Patent Agreement”) entered into between the parties and alleging breach of contract relating to a separate agreement between the parties. Dkt. 3. Eidos counterclaimed for breach of the Patent Agreement and for fraud; Eidos also seeks declaratory and injunctive relief and the appointment of a receiver. Dkt. 12. Apeldyn has moved for partial summary judgment, seeking a declaration that: (1) the Patent Agreement expired on April 23, 2012, and for all purposes relevant to this action has no force or effect after that date; and (2) the expiration of the Patent Agreement extinguished all claims of Eidos against Apeldyn based on any potential settlements or judgments that were not in effect as of April 23, 2012. Dkt. 62. Eidos has cross-moved for partial summary judgment, seeking dismissal of Apeldyn's claim for declaratory relief. Dkt. 86.

For the reasons discussed below, Apeldyn's motion is granted in part and denied in part, and Eidos's motion is denied. The Court finds that: (1) Paragraph 11.1 (the “Expiration Clause”) of the Patent Agreement is unambiguous and the Patent Agreement expired as of April 23, 2012; and (2) Paragraph 11.5 (the “Preservation Clause”) of the Patent Agreement is ambiguous as to whether Eidos has any “accrued rights” under the Patent Agreement that survive the expiration of the Patent Agreement.

SUMMARY JUDGMENT STANDARD

A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir.2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge ... ruling on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient....” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quotations and citation omitted).

BACKGROUND

Apeldyn is the owner of U.S. Patent No. 5,347,382 (“the Patent”). Apeldyn and Eidos are parties to the Patent Agreement, under which, among other things, Eidos agreed to assist Apeldyn in its enforcement efforts against potential infringers of the Patent and in licensing the Patent's technology, and Apeldyn agreed to compensate Eidos for its efforts and expenditures through a share of any enforcement or licensing revenues generated under the Patent Agreement. Pat. Agm. ¶¶ 1.5, 3.1, 6.2, 6.3. Under the Patent Agreement, Eidos further agreed to pay all licensing and litigation costs and fees, with reimbursement being owed to Eidos from Apeldyn only through licensing or litigation revenues generated under the Patent Agreement. Pat. Agm. ¶¶ 1.5, 3.3, 4.1, 6.4, 6.5.

The law firm of McKenna Long & Aldridge LLP (“MLA”) negotiated the Patent Agreement on behalf of Eidos and drafted the Patent Agreement. After the Patent Agreement was signed, MLA entered into the joint representation of both Eidos and Apeldyn in enforcing the Patent. The parties designated MLA as “Licensing Counsel” under the Patent Agreement, and MLA commenced enforcement actions against the alleged primary infringers of the Patent.

The disputed provisions of the Patent Agreement are the Expiration Clause and the Preservation Clause. The Expiration Clause provides:

Unless earlier terminated as provided in Sections 11.2 or 11.6, or as a result of arbitration under Part 12 of this Agreement, this Agreement will remain in full force and effect until the last claim of the Apeldyn Patent expires or is invalidated.

Pat. Agm. ¶ 11.1 (emphasis added). It is the last part of the Expiration Clause that is in dispute in this action. The Preservation Clause states:

The following Sections of this Agreement will survive termination or expiration according to their terms: Sections 8 (Confidentiality), 12 (Arbitration or Disputes), 18 (Notice), 20 (Choice of Law) and 21 (Miscellaneous). Termination or expiration of this Agreement will not extinguish a claim or right that has accrued prior to termination or expiration.

Pat. Agm. ¶ 11.5 (emphasis added). It is the final sentence of the Preservation Clause that is in dispute in this action. The parties further agreed that Oregon law shall govern the Patent Agreement. Pat. Agm. ¶ 20.

DISCUSSION

A. Contract Interpretation Under Oregon Law

Under Oregon law, the objective in contract interpretation is to give effect to the parties' agreed-upon intentions. See, e.g., Connall v. Felton, 225 Or.App. 266, 201 P.3d 219, 224 (2009) (“The goal [of contract interpretation] is always to give effect to the parties' intentions.”). Oregon courts have established a three-step process for interpreting the provisions of a contract. First, the court determines whether, as a matter of law, the relevant provision is ambiguous. McKay's Mkt. of Coos Bay, Inc. v. Pickett, 212 Or.App. 7, 157 P.3d 291, 294 (2007). In considering whether a contractual provision is ambiguous, a court is limited to considering only the plain meaning of the words used by the parties in their contract and any extrinsic evidence showing the circumstances under which the contract was made. See Batzer Constr., Inc. v. Boyer, 204 Or.App. 309, 129 P.3d 773, 777 (2006); Fogg v. Wart, No. CV–06–160–ST, 2006 WL 3716745, at *5–7 (D.Or. Dec. 14, 2006); see alsoOr.Rev.Stat. § 42.220. “A contractual provision is ambiguous if its wording can, in context, reasonably be given more than one plausible interpretation.” Williams v. RJ Reynolds Tobacco Co., 351 Or. 368, 271 P.3d 103, 109 (2011) (citation omitted). In addition, “[t]he court must, if possible, construe the contract so as to give effect to all of its provisions.” Id. If the provision is unambiguous, the analysis ends. Id.

Where a contractual provision is ambiguous, however, the factfinder must look beyond the four corners of the contract to discern, as a matter of fact, whether there is a mutual and common intention. See Peace River Seed Co-op., Ltd. v. Proseeds Mktg., Inc., 253 Or.App. 704, 293 P.3d 1058, 1070 (2012) (“If the provision in question is ambiguous, the trier of fact will ‘ascertain the intent of the parties and construe the contract term consistent with the intent of the parties.’ ... To resolve that question, the trial court may receive and consider extrinsic evidence relating to intent.”) (quoting Yogman v. Parrott, 325 Or. 358, 937 P.2d 1019, 1022 (1997)). Because Oregon follows the objective theory of contracts, direct evidence at this stage may include expressions of any such common understanding actually communicated among the parties. See Holdner v. Holdner, 176 Or.App. 111, 29 P.3d 1199, 1203 (2001) (quoting Real Estate Loan Fund Or. Ltd. v. Hevner, 76 Or.App. 349, 709 P.2d 727, 730–31 (1985)). Statements of a party's subjective intent that were not expressed or communicated at the time the contract was formed are not permissible evidence of intent. See, e.g., Fogg, 2006 WL 3716745, at *9;c.f. Holdner, 29 P.3d at 1203.

In the absence of such direct evidence, the parties' course of dealing or their performance during the term of the contract may provide circumstantial, or inferential, evidence of their mutual and common understanding, if any, concerning the ambiguous provision. See Yogman, 937 P.2d at 1022 (the parties' “practical construction of an agreement may hint at their intention” (citing Tarlow v. Arntson, 264 Or. 294, 505 P.2d 338, 341–42 (1973) (“How the original parties and their successors conducted themselves in relation to the agreement is instructive in our determination of what must have been intended.”))); Goodman v. Cont'l Cas. Co., 141 Or.App. 379, 918 P.2d 438, 443 (1996) (parties' performance is persuasive evidence of meaning). In the absence of any such direct or circumstantial evidence, or if the contract remains ambiguous after considering any such evidence, the third step is to apply any relevant maxims of construction. See Yogman, 937 P.2d at 1022.

When a contractual provision is ambiguous, ascertaining its meaning at steps two and three of the Yogman analysis is a question of fact generally not appropriate for summary judgment. See Dial Temp. Help Serv., Inc. v. DLF Int'l Seeds, Inc., 255 Or.App. 609, 298 P.3d 1234, 1235–36 (2013) (the “general rule” is that the meaning of a contract may be disposed of by way of summary judgment only if its terms are unambiguous); Madson v. W. Or. Conference Ass'n of Seventh–Day Adventists, 209 Or.App. 380, 149 P.3d 217, 222 (2006) (“Because the contract is ambiguous, ascertaining its meaning is a question of fact, and the trial court therefore erred in granting defendant's motion for summary judgment.”).

B. The Expiration Clause (Paragraph 11.1) of the Patent Agreement

Based...