Waterloo Furniture Components v. Haworth, Inc.

• Decision Date: 06 December 2005
• Docket Number: No. 05 C 507.,05 C 507.
• Citation: 402 F.Supp.2d 950
• Parties: WATERLOO FURNITURE COMPONENTS, LTD. Plaintiff, v. HAWORTH, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

402 F.Supp.2d 950

WATERLOO FURNITURE COMPONENTS, LTD. Plaintiff, v. HAWORTH, INC., Defendant.

No. 05 C 507.

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

December 6, 2005.

Rhett R. Dennerline, David Powers Berten, Gregg Smith, Competition Law Group LLC, Chicago, IL, for Plaintiff.

David C. Brezina, Daniel P. Albers, Jonathan Paul Froemel, Barnes & Thornburg LLP, Chicago, IL, Andrew A. Wittenstein, Stuart I. Friedman, Friedman, Wittenstein & Hochman PC, New York City, for Defendant.

MEMORANDUM OPINION AND ORDER

BUCKLO, District Judge.

Plaintiff Waterloo Furniture Components, Ltd. ("Waterloo") alleges that defendant Haworth, Inc. ("Haworth") breached a contract entered into by the parties in 1992. Haworth moves for summary judgment. I grant that motion, for the reasons stated below. Waterloo's motions to strike, to refuse application for judgment, and to deem allegations admitted are denied.

Summary judgment is appropriate where the record and affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1090 (7th Cir.1999); Fed.R.Civ.P. 56(c). I must construe all facts in the light most favorable to the non-moving party and draw all reasonable and justifiable inferences in favor of that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Haworth owned U.S. Patent No. 4,616,798 (" '798 Patent"), which was for an adjustable support for a computer keyboard. In December 1992, Haworth and Waterloo entered into an agreement ("Contract") granting a license to Waterloo for use of the '798 Patent. Under Section III of that contract, entitled "Grant and Term," the effective date of the contract was October 1, 1992. Under that same section, the parties stated that:

This Agreement shall be effective only when executed by both parties and shall continue for the full term of said Licensed Patent, unless this Agreement is earlier terminated pursuant to the provisions hereof.

The '798 Patent expired on October 14, 2003. The contract also contained a "most favored nations" provision, which stated in relevant part:

If, during the term of this Agreement, Haworth grants a license... to a direct competitor of Waterloo at a more favorable royalty ... then such more favorable royalty will be automatically offered to Waterloo... The intent of Haworth and Waterloo is to provide that Waterloo is treated no less favorably than direct competitors of Waterloo in regard to licensing of the '798 Patent.

The Contract provided that it was entered into under Michigan law, and that Michigan law would control any dispute over the Contract.

In 1997, Haworth and a third party entered into litigation over the '798 Patent. The third party sought a declaratory judgment that its product did not infringe the '798 Patent; Haworth filed a counterclaim alleging that the third party had infringed the patent. In March 2004, Haworth and the third party entered into a settlement agreement ("Agreement"). Waterloo alleges that the Agreement constitutes a licensing, triggering the terms of the "most favored nations" provision. Haworth argues that the Agreement does not constitute a license, and even if it did, that the "most favored nations" provision was not triggered because the Contract had expired.

The Contract expired on October 12, 2003, when the term of the '798 Patent expired. Section III of the Contract clearly states that the term of the Contract is "the full term of said Licensed Patent," barring earlier termination. Waterloo argues that despite this clear statement of the term of the Contract, the "most favored nations" provision continued to be in effect, as that provision did not itself state a defined term. However, the "most favored nations" provision of the Contract states that the obligation of Haworth to provide notice to Waterloo was triggered only if a license for the '798 Patent was granted to one of Waterloo's direct competitors "during the term of this Agreement," which, as stated above, expired when the '798 Patent expired.

Waterloo argues that the...