In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 14-1663

THE GRIGOLEIT COMPANY,

Plaintiff-Appellant,

v.

WHIRLPOOL CORPORATION,

Defendant-Appellee.

____________________

Appeal from the United States District Court

for the Central District of Illinois.

No. 05-CV-2126 — Colin S. Bruce, Judge.

____________________

ARGUED SEPTEMBER 29, 2014 — DECIDED OCTOBER 16, 2014

____________________

Before EASTERBROOK, WILLIAMS, and SYKES, Circuit Judges.

EASTERBROOK, Circuit Judge. For many years Whirlpool 

purchased injection-molded plastic knobs and decorative 

metal stampings from Grigoleit. In 1992 Whirlpool told 

Grigoleit that it would replace its products with those made 

by Phillips Plastics. After concluding that Phillips was using 

a method protected by its patents, Grigoleit demanded that 

Whirlpool switch back. In 1993 they struck a bargain: Grigoleit would license Whirlpool and Phillips to practice the pa-
2 No. 14-1663

tents, and instead of royalties Grigoleit would get some of 

Whirlpool’s business. Paragraph 3 of the contract says:

Whirlpool shall not be obligated to pay Grigoleit any monies as 

royalties ... so long as Whirlpool continues to purchase from 

Grigoleit Whirlpool’s requirement for present styling of knobs 

for the “Estate” and “Roper” brand lines of automatic clothes 

washers and dryers and so long as ... Whirlpool continues to 

give serious consideration to Grigoleit [for other product lines 

when Grigoleit can provide] more than parity in technology, 

quality, service, delivery and price in comparison with other 

qualified suppliers[.]

The agreement expired, with the patents, in 2003.

From 1993 through 2003 Whirlpool bought all knobs for 

the Estate and Roper lines from Grigoleit. But it bought 

some knobs for other lines from Grigoleit’s competitors, and 

Grigoleit concluded that it had not received the “serious 

consideration” to which ¶3 entitled it. That dispute was arbitrated, as the contract provided. The arbitrator concluded 

that Whirlpool had failed to consider Grigoleit’s parts for 

some lines of washers and dryers “and therefore is liable for 

payment of money royalties or damages as the courts may 

determine.” In this suit under the diversity jurisdiction, 

Grigoleit demanded damages calculated by a contract measure: the profit it would have made had Whirlpool purchased 

its requirements of knobs exclusively from Grigoleit. The 

district court held, however, that Whirlpool had not promised to give Grigoleit’s knobs serious consideration; instead 

it had promised to pay royalties if it failed to do so. 2010 U.S. 

Dist. LEXIS 45524 (C.D. Ill. May 10, 2010). Unfortunately, the 

contract failed to specify the royalty Whirlpool would owe if 

it did not meet the conditions for a royalty-free license. The 

court concluded that a reasonable royalty falls in the range 
No. 14-1663 3

of 1¢ to 12¢ per part and scheduled proceedings to produce a 

definitive royalty. 2014 U.S. Dist. LEXIS 686 (C.D. Ill. Jan. 3, 

2014). The parties then agreed that royalties computed under 

the district court’s approach come to $140,000, but Grigoleit 

reserved its right to contest the two rulings on appeal.

Grigoleit’s principal argument in this court is that, once 

Whirlpool took advantage of the royalty-free license under 

¶3, it became bound for the duration of the contract to give 

Grigoleit “serious consideration” for all of its requirements 

for parts that Grigoleit could supply. Paragraph 3’s language 

forecloses that contention. It says, twice, that Whirlpool gets 

a royalty-free license “so long as” it purchases Grigoleit’s 

knobs for two product lines and gives it “serious consideration” for the rest. The phrase “so long as” permitted Whirlpool to change how it performed, getting a royalty-free license in some periods and paying royalties in others. Whirlpool failed to keep its promise; for some periods it neither 

gave Grigoleit “serious consideration” nor paid royalties. 

This allowed Grigoleit to seek compensation, which it has 

done. But what it is entitled to are “royalties” rather than 

contract damages under a theory that once Whirlpool took a

royalty-free license for any period it was bound to meet the 

conditions of ¶3 until the patents expired.

Grigoleit protests that the district court’s approach treats 

the contract as an option, held by Whirlpool, rather than as

bilateral and binding. Grigoleit accuses the district judge of 

ignoring ¶1, which grants Whirlpool a non-exclusive license 

and releases it from liability for pre-agreement infringement. 

But the district court did not ignore Grigoleit’s promises; instead it read the contract as including Whirlpool’s promise 

to pay royalties—without any need for Grigoleit to show 
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that its patents were valid and infringed—unless it met the 

conditions in ¶3. That’s a substantial promise by Whirlpool.

Paragraph 7, which says that the contract terminates if

Whirlpool stops buying Grigoleit’s products for the Roper 

and Estate lines, does not imply that Whirlpool must give 

“serious consideration” to Grigoleit’s parts for all lines, indefinitely, once it buys even one of Grigoleit’s knobs; instead 

it reinforces the inference that the contract continues, but 

Whirlpool must pay royalties, if it stops giving “serious consideration” to Grigoleit’s offerings for other lines.

Nonetheless, Grigoleit contends that even if Whirlpool 

was entitled to change its mind and shift from buying knobs 

to paying royalties, the amount it owes still should be calculated under the lost-profits method of contract law. The 

main reason that it gives for this contention is that during 

their negotiations the parties decided not to set a per-piece 

royalty. Only a contract measure of damages then is possible, the argument concludes. Yet ¶9 of the contract is an integration or entire-agreement clause, in which Grigoleit and 

Whirlpool disclaim any understandings that do not appear 

in the contract’s final text. What the text tells us is that 

Whirlpool owes “royalties,” and lost profits differ from royalties. The caption on the contract is “LICENSE 

AGREEMENT” and the heading on ¶3 is “Royalties”. The 

district court therefore was not obliged to treat ¶3 as a requirements contract; the deal is a patent license.

AFFIRMED