voluntary or involuntary bankrupt, then the rights granted herein shall forthwith cease and
terminate upon thirty (30) days notice by Licensor.

These provisions clearly establish that the Agreement was an agreement of indefinite
duration. However, “the rule that contracts of indefinite duration are terminable at will has long
been followed” in Illinois. Jespersen v. Minnesota Mining & Mfg. Co., 700 N.E.2d 1014, 1017
(Ill. 1998) (citing Joliet Bottling Co. v. Joliet Citizens’ Brewing Co., 98 N.E. 263 (I11.1912)).
This reflects an “important public polic[y].” Jespersen, 700 N.E.2d at 1017. Perpetual contracts
are contrary to Illinois public policy because:

‘Forever’ is a long time and few commercial concerns remain viable for even a decade.

Advances in technology, changes in consumer taste and competition mean that once

profitable businesses perish regularly. Today’s fashion will tomorrow or the next day

inevitably fall the way of the buggy whip, the eight-track tape and the leisure suit. Men
and women of commerce know this intuitively and achieve this flexibility needed to
respond to market demands by entering into agreements terminable at will.
Id. Therefore, under Illinois law, “[c]ontracts of indefinite duration,” such as the Agreement
here, “are terminable at the will of either party.” Jd. at 1016.

“An agreement without a fixed duration but which provides that it is terminable only for
cause or upon the occurrence of a specific event is . . . terminable only upon the occurrence of the
specified event and not at will.” Jd. (emphasis in original). However, the Agreement’s provision
here that it “may be cancelled by the Licensor for material breach” does not put the Agreement
within the category of contracts terminable only upon material breach. As the Illinois Supreme
Court in Jespersen explained:

This termination provision is not sufficient to take this agreement of indefinite duration

out of the general rule of at-will termination for two reasons. First, the language of the

termination provision is permissive and equivocal; a party “may” terminate for the stated

grounds — the clear inference being that those grounds are not the sole or exclusive basis
for termination. This is in stark contrast to a case in which the parties included an



integration clause. As the Illinois Supreme Court has explained, “where parties formally include
an integration clause in their contract, they are explicitly manifesting their intention to protect
themselves against misinterpretations which might arise from extrinsic evidence. ... An
integration clause . . . is a clear indication that the parties desire the contract to be interpreted
solely according to the language used in the final agreement.” Air Safety, Inc., 706 N.E.2d at
885-86. The presence of the integration clauses in each of the agreements therefore indicates the
parties’ intent that each document should stand on its own and be interpreted as a complete
agreement unto itself. See Wonderlic Agency, Inc. v. Acceleration Corp., 624 F.Supp. 801, 804
(ND. Ill. 1985)2

For the reasons above, DW’s Motion for Summary Judgment is DENIED, and Baldwin’s
Objection and Motion to Strike Declarations and Deposition Testimony Submitted in Support of

Defendant’s Motion for Summary Judgment is DENIED as moot.

ames)B. Zagel f J
Unitgd States Districtudge

? DW’s argument that the License Agreement should be interpreted “in context” is a
disguised attempt to invoke the doctrine of “extrinsic ambiguity.” Under this doctrine, an
extrinsic ambiguity exists “when someone who knows the context of the contract would know if
the contract actually means something other than what it seems to mean.” Air Safety, Inc., 706
N.E.2d at 885. However, the Illinois Supreme Court has expressly rejected resort to the
“extrinsic ambiguity” doctrine where, as here, the contract at issue has an integration clause. Id.
at 885-86.

of



evidence.” Jd. at 884. In interpreting the contract, I must give the words used their plain
meaning. Srivastava v. Russell’s Barbecue, Inc., 523 N.E.2d 30, 33 (Ill. App. Ct. 1988).

Contractual language is ambiguous only if it is reasonably susceptible to more than one
meaning. Air Safety, Inc., 706 N.E.2d at 884. However, the License Agreement here is not
ambiguous.' The Agreement addresses termination as follows:

13. Except as herein provided, and as provided in Article 14 hereof, this Agreement shall
continue in force without limit of period but may be cancelled by the Licensor for
material breach. In the event of Licensee’s material breach of this Agreement, Licensor
shall notify Licensee of the breach and Licensee shall have ninety (90) days to cure the
breach or to request arbitration by a single arbitrator in accordance with the then current
rules of the American Arbitration Association. If (i) the decision of the arbitrators is in
favor of Licensor or (ii) the material breach has not been cured within the ninety (90) day
period and Licensee has not requested arbitration, the Agreement shall terminate upon
thirty (30) days notice by Licensor. Licensor shall be entitled to withdraw any notice of
breach hereunder.

14. Licensee hereby agrees that (a) if it makes any assignment of substantially all of its
assets or business to an unaffiliated third party without Licensor’s consent, which consent
shall not be unreasonably withheld if the new owner has a demonstrated ability to meet
the financial responsibilities and quality control provisions required of Licensee under
this Agreement, or for the benefit of creditors, or (b) if a trustee or receiver is appointed
to administer or conduct its business or affairs, or if it is finally adjudged to be either a

' Because the Agreement is unambiguous, there is no need to resort to various “rules of
construction” as DW urges. Under Illinois law, “courts resort to tools of construction when the
terms of the contract are ambiguous.” Krause v. GE Capital Mortg. Serv., Inc., 731 N.E.2d 302,
310 (IIL. App. Ct. 2000). “However, a court will not resort to rules of construction when the
language of a contract is clear and its meaning unambiguous . . . In such a case, the parties’
intent is to be gathered from the language of the document itself.” In re Marriage of Belk, 605
N.E.2d 86, 88 (Ill. App. Ct. 1992).

Because the Agreement is unambiguous, there is also no need to consider parol evidence
offered by DW. See Saddler v. Nat’l. Bank of Bloomington, 85 N.E.2d 733, 740 (Ill. 1949) (“The
intention or understanding of the parties, when there is a written contract in evidence, must be
determined not from what the parties thought but from the language of the contract itself”).
However, even if I could consider such evidence, there is strong support for the proposition that
several of the parties to the Agreement intended that the Agreement be of infinite duration (i.e.,
be “perpetual” and last “forever”). As a matter of Illinois public policy, however, such perpetual
contracts are terminable at will.



exclusive and specific right to terminate for cause in a contract otherwise of indefinite

duration. ... Second, the termination [event is itself an instance] of material breach, and

any contract is terminable upon the occurrence of a material breach. ... Where a contract
is indefinite in duration, the delineation of instances of material breach in the context of
permissible and nonexclusive termination provision will not create a contract terminable
for cause.

Jespersen, 700 N.E.2d at 1016-17 (emphasis in original).

Having failed on the argument that the Agreement is terminable only upon material
breach, DW resorts to arguing that because it is “clearly reasonable” to read the Agreement as
terminable only for the grounds specified in Articles 13 and 14, the Agreement is ambiguous thus
justifying the consideration of parol evidence. Nonetheless, DW’s arguments in support of
ambiguity fall short. First, DW argues that Jespersen does not apply to the Agreement here
because of Article 13's use of the opening words “Except as herein provided.” DW asserts that
there was no such limiting language in the termination clause at issue in Jespersen and therefore
concluded that the “except as herein provided” language demonstrates an intent that the
enumerated grounds in Article 13 be the exclusive grounds for termination. Unfortunately for
DW, the Jespersen contract contained language virtually identical to that in the License
Agreement. Section 2.05 of the contract in Jespersen provided, “Unless terminated as
hereinafter provided in Article IV, this Agreement . . . shall continue in force indefinitely and
govern all transactions between the parties.” Jespersen v. Minnesota Mining & Mfg. Co., 681
N.E.2d. 67, 70 (Ill. App. Ct. 1997), aff'd, 700 N.E. 1014 (Ill. 1998) (emphasis added).

Nonetheless, the Illinois Supreme Court held that this contract was terminable at will despite the

presence of such limiting language. Accordingly, the presence of similar limiting language in the



Minute Order Form (0697)

United States District Court, Northern District of Illinois

Na f Assigned Judgs 4 Sitting Judge if Oth
nge Magistrate Judge James B. Zagel than assigned Judge
CASE NUMBER 03 C2105 DATE 1/5/2004
CASE BALDWIN vs. WURLITZER
TITLE

{In the following box (a) indicate the party filing the motion, e.g. plaintil¥, defendant, 3rd parly plaintiff, and (b) state briefly the nature

of the motion being presented.

MOTION:

DOCKET ENTRY:

(1) oO Filed motion of [ use listing in “Motion” box above.]

(2) a Brief in support of motion due

eB) oO Answer brief to motion due___. Reply to answer brief due____

(4) im} Ruling/Hearingon___—_set for at

(5) oO Status hearing[held/continued to] [set for/re-set forlon__——ssetfor at.

(6) Qo Pretrial conference{held/continued to] [set for/re-set for]on__setfor__— at__

(7) i) Trial[set for/re-set for]on at -

(8) a [Bench/Jury trial] [Hearing] held/continued to at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}

OOFRCP4(m) Cl Local Rule 44.1. CUFRCP41(a\(1) CO FRCP41(a)(2).

ao {Other docket entry] | Defendant’s motion (33-1) motion for summary judgment is denied.
Answer brief to motion (21-1) for partial summary judgment due 1-20-04. Reply to answer brief
due 1-27-04,

(11) [For further detail see order attached to the original minute order.)

No notices required, advised in open court

No notices required.
[| uber of notices

Document
Number

Notices mailed by judge’s stafT.
fotives mailed by judge’s sta JAN G a 2004

o | Notified counsel by telephone date docked

Docketing to mail notices. Ky
TN
docket depty inital

Mail AO 450 form.

Copy to judge/magistrate judge.

Hy

9: ve dave mated notice
courtroom 69: iu

pw deputy's
initials

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Agreement here has no effect on my determination that the Agreement is similarly terminable at
will. The Agreement falls squarely within the ambit of Jespersen.

DW’s argument that construing the License Agreement to be terminable at will would
render “meaningless” Article 13's provisions for notice of breach, cure, and arbitration is simply
wrong. Article 13 provides a vehicle for Baldwin not only to terminate the license, but also to
obtain compliance with its provisions. Baldwin may wish to persuade DW to alter its conduct by
declaring a breach. In those instances, Baldwin will resort to the notice and cure provisions of
Article 13. Alternatively, if Baldwin wishes to terminate for breach, it must abide by Article 13's
provisions. The fact that, as a matter of law, Baldwin may elect to terminate the license for other
reasons does not render meaningless Article 13's notice, cure, and arbitration provisions. In
addition, the presence of a notice of breach, cure period, and arbitration requirement does not
substantively alter any rights under the Agreement. See Profile Prods., LLC v. Soil Management
Techs., Inc., 155 F.Supp.2d 880, 884 (N.D. Ill. 2001) (presence of notice of breach and cure
period “adds nothing substantive and does not make the material breach ‘an objective event’”).

Finally, equally unfounded is DW’s argument that construing the License Agreement to
be terminable at will would “thwart” the purpose of the Purchase And Sale Agreement and
produce an “absurd” result. This argument is purportedly predicated upon the rule of
construction that multiple agreements relating to the same transaction and executed at about the
same time should be interpreted together to give effect to the intent of the parties concerning that
transaction. GNB Battery Techs., Inc. v. Gould, Inc., 65 F.3d 615, 622 (7th Cir. 1995).
Accordingly, DW argues that the License Agreement and the Purchase And Sale Agreement

should be “interpreted in harmony” with one another. However, each agreement contains an



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BALDWIN PIANO, INC.,
Plaintiff,
v. No. 03 C 2105
Judge James B. Zagel
DEUTSCHE WURLITZER GMBH d/b/a
WURLITZER JUKEBOX COMPANY,

Defendant.

MEMORANDUM OPINION AND ORDER

Factual Background

Until July 1, 1985, The Wurlitzer Company (“TWC”) manufactured and sold jukeboxes
and vending machines through defendant Deutsche Wurlitzer GMBH (“DW”), which was then a
subsidiary of TWC. In 1985, TWC offered to sell DW to Nelson Tobacco Pty Ltd. (“Nelson
Tobacco”), an Australian company owned by Arthur Nelson. Nelson traveled to Chicago with
his lawyer, Peter Cameron, to negotiate and sign the purchase documents. Representing TWC at
these negotiations were George Howell, the President of TWC; Wallace Borgeson, TWC’s
Senior Vice President, Finance and Administration; and Michael Madda, a partner at the law firm
of Baker & McKenzie. On July 1, 1985, the parties executed a “Purchase And Sale Agreement,”
to which was attached a “Trademark License Agreement” as Exhibit B (“The Agreement”). Both
the documents were prepared by or under the direct supervision of Madda. Since 1985, DW has
manufactured, advertised, marketed, and sold various products bearing the Wurlitzer trademarks

pursuant to the License Agreement with TWC.



Plaintiff Baldwin Piano, Inc. (“Baldwin”) claims to be the successor in interest to the
tights of TWC and thus the owner of several federally registered “Wurlitzer” trademarks.
On March 24, 2003, Baldwin notified DW that the Agreement was being terminated
immediately, that further use of the Wurlitzer trademarks by DW would be unauthorized, and
that a complaint would be filed that day and served to protect its rights, which Baldwin
subsequently did. In response, DW filed its Answer, Affirmative Defenses and Counterclaim, in
which it asserted three claims against DW. On August 4, 2003, I dismissed the Counterclaim
against Baldwin. DW now moves for summary judgment on the ground that Baldwin has not
properly terminated the Agreement under which DW is permitted to use the Wurlitzer trademark.
DW maintains that the Agreement is terminable only upon material breach, whereas Baldwin
maintains that the Agreement is terminable at will. Summary judgment is appropriate if there is
no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(c); NFLC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 234 (7th Cir. 1995).

Analysis

“When enforcing a contract, the primary objective is to construe the contract to ascertain
the intent of the parties and to give effect to that intent.” In re Marriage of Olsen, 528 N.E.2d
684, 687 (III. 1988). However, in determining whether the Agreement here is terminable at will
or only upon material breach, I must initially look to the language of the contract alone because
Illinois follows the “four corners” rule with regard to contract interpretation. Air Safety, Inc. v.
Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999). If this language is “facially

unambiguous,” then I must interpret the contract “as a matter of law without the use of parol