## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 08

- 2479 S MS D EMA G A KTI ENGES ELL S CHAFT, P laint if f , v. M ATERIAL S CIEN CE S C ORPO RA T I ON, D efend a nt-A pp ellee.

A PP E A L OF : T ERRO NIC S D EVELOPMENT C ORPO RA T I ON, Inte rve nor-App el lant. Appeal from the United States District Court fo r the C entral D istricto f Illino is. No . 2:06- cv-02065

—Mi ch ael P . M cC us key, Chief Ju dge .
A RG UE D D ECE MBE R 12, 2008

— D ECI DE D M AY 8, 2009

Befo re C UDAH Y, F LA UM, a nd W OO D , C ircu it Judges. C UDAH Y, C ircu it Judge. I n thi s di ver si ty acti on, Ter ro ni cs Devel opm ent Cor pora ti on ( TD C) s ues M ate ri alS ci ences Cor po r at i o n ( M S C) f o r br ea ch o f co nt r ac t, se ek i ng2 N o. 08

- 2479 dam age s a nd the re turn o fcer tain p atents TDC had ass i gned to M SC. The di str i ct c ourtgr anted M SC’ s m oti on f o rs um m ary j udg m en t i n i ts ent i r ety . W e affi r m the di smi ss alo fTDC ’s dam ag es c l ai m s, b utr ev er se the dism i ssa lo fTDC ’ s c laim se eking the r eas si gnm ent o f i ts patents.

I. M SC is on e o f th e la rg es t liq u id co at in g c om p an ies in N orth A m erica. I t pr e -p a ints th e raw m aterials that are used by com m er ci aland i nd ustr i alm anufa cture rs i n car s, bui l ding supp l i es, i nd ustr i alequ ipm ent a nd co nsum er pr o duct s. Be g i nningi n the 1 99 0s , M S C b egan wor k i ng wi th TD C

— a smal lr es ea r cha nd e n g in ee r i ngc o m pany

— to dev el op a new pr o ce ss f o rc o at i ngmeta lmate r i al s us i ng po wder

-ba se d pa i nt
. Li k e tr adi ti o na lpo wderc o at i ng m etho ds, TDC ’ s pro cess

— whi ch th e par ti es ca ll the “P ow d erCl oud” proc ess

— i nv olv es ele c tr os ta tic ally c oa tin g s h ee t m et al b y im p ar tin g d iffer en t e lec tr ic charg es to the powd erpa in t and the m eta lsubst ra te. A l so l i ke othe r pow der c oat i ng m etho ds, the Pow der C lou d p ro c es s w as te s l e s s c oa tin g m at er ial th an tra d iti onal, l i quid co ating m etho ds and el i m i nates the need f o rs o l ve nt s, thus min i m i zingthe g en er at i o n o fha za r do us w as te . TD C ’s P ow d er C lou d p ro c es s w as ap p ar en tly i nnovati ve because i t enabl ed a si ngl e apparatus to co at p rod uc ts of d if fe r e n t shap es, an d to coat both sides of a m eta lsur f ace si m ult aneously. A s a res ult, TDC ’ s Po w der C lou d t e c h n olo gy se em ed to p ro m ise bo th gre at er flex ibi l i ty and fa st erpro cess i ng tha n tr aditi onalpow der coa ti ng pro cess es.N o. 08

- 2479 3

SM S w as the o r i g i n a l p lain tiff in th is action , b u t is no t a 1 p arty to this ap p eal. I n 199 4, TDC gr anted M SC an e xcl usi ve l i cense to use and subl i cense the Po w der Cl oud technol ogyi n exchange for a fi xe d ann u a l fe e plus a variable fee based on M SC ’s sa les . Th e p ar tie s re n ew ed th ei r l ice n sin g a gr ee m en t in 1 9 9 6 , a n d TD C assigned i ts tech nology for a fi xe d term to M SC in 1998. I t i s thi s thi rd “t echnol ogyas si gnm ent” agr ee m en t ( he nc efo r ththe Agr ee m en t) tha t i s ati ss ue he r e. The Agr ee m en t was ne ve rf o r m al l y e xecu te d, b ut M S C c o nc ede s f or th e p ur po se o fthi s appe altha t th e agr eem ent i s e nfo rce abl e. Fo ur pro visi ons ofthe A gr eem ent ar e w or th m enti oni ng at the outse t: ( 1) TD C assi gned M S C t i tl e to fi ve pa te nt s an d s i x pa te nta ppl i ca ti o ns re l ating to the Pow der Cl oud process ; (2 ) M SC w as re quir ed to purchase i ts pow der c oat i ng equi pm ent fro m TD C unles s TDC was unabl e to provi de i t; ( 3) M SC ag re ed to pur ch ase a fi xe d m i ni m um a m o unto fc o ns ul ting se r vi ces an d equi pm en t fr o m TDC dur i ngthe y ea r s th e A gr ee m en t w as in e ffec t; an d (4) t h e a gr ee m en t w ou ld expir e in 2002 , but coul d be r enewed atM SC’ s di scr etio n an d w ou ld be ren ew ed au to m at ica lly if ce rt ain sal es goa l s were m et. I n 1996 , M SC subl i censed the Powd erCl oud technol ogy to S MS De ma g Ak t i e n g e s e l l s c h a ft ( S MS ) , g i v i n g S MS th e excl usi ve ri ght t o m ar ket thi s technol ogy outsi de ofN or th Am e r i c a . A ft e rth i s i n i t i a ls u c c e s s , h o we v e r, th e c o m-

1 m er ci al i zati on o fthe Pow der Cl oud technol ogydi d not p roceed as the p arties h ad exp ecte d

. For one thin g, M SC4 N o. 08

- 2479 did notm eetany ofthe sal es goa l s that would have tr igg er ed th e A gr ee m en t’s au to m at ic re n ew al or va ria b le fee provi si ons. F urther, bec ause the t echnol ogywas a gr ea t d ea l m or e e x p er im en ta l th a n t h e p ar tie s h ad an tic ip at ed , TD C ex p er ien c ed sign ific a n t c os t o ve rru n s in s up pl y i ngthe e qui pme nta nd s e r v i c e s MS C n e e de d. ( As TDC’ s CEO Ed Esca l l o n wo ul d l at err emar k, “ [ t] he H ubb l e’ s o pti cs wer en ’ t co r r ec t o n l au nc h. ”) In 19 96 a nd ag ain in 1 99 7, T DC ch o se t o meetthe se c o sto ve r r uns by bor ro w i ng ag ai nst i ts expectat i on o f future profi ts, ex ecu ting tw o prom is s o ry notes i n favor of M SC

— th e seco nd supers edi ng the fi rs t

— f ora total of$2 58, 484 to g ethe rwi tha 7 % a nnua lr at e o fint erest. Underthe ter m s o fthe seco nd N ote , M SC w as perm i tte d “at i ts so l e di sc r et i o n” t o c r edi t th e fee s due t o TDC und er the Agr ee m en t ag ains t th e o ut st an di ngb al an ce unde rthe N ote afterA pri l20 01. I t appe ar s th atb y 1 99 8, M S C b eg anha vings er i o us second thoughts about i ts com m i tm ent t o the Po w der Clo ud te chnol ogy . Com pany r ecords ind i cate thatas a re su lt of “ ov er c ap ac ity ” a n d “low er th an ex p ec te d s a les ,” M SC d ec id ed to m er ge its “ ap p lied te c h n olo gy gro u p ,” whi chha d b ee n r espo ns ibl e f o rc o m m er ci al i zingthe Po wderCl o ud te chno l o g y, i nt o i ts l i qui d co at i ngdi vi si o n. I n a ddi t i o n, MS C p o s t po ne d p l a ns t o c o nstr uct a s t a nd

a l o ne p owd e rc o a t i ngf a c i l i ty, e l e c t i ngi ns t e a d t o a dd a pow der coa ti ng l i ne to an exi sting, l i quid coa tin g fa ci l i ty i n M i dd l eto w n, Ohio

. The part i es re ferto thi s M id d l eto w n fac ility as “L in e 1 5.” T D C ele c te d n otto su p p ly M SC w i th the equi pm ent forLi ne 15
.N o. 08

- 2479 5 T h e p ar tie s’ re lat ion sh ip c am e t o a n u n p lea sa n t e n d in 20 02
. In l at e 20 01 , Ed Esc al l o n se ntM S C a l et te rpur po r ting to m em or i al i ze an o ra lag re em ent pr ovi ding f orM SC to can cel $100,000 of TD C ’s deb t u nd er the N ote. E scallon’s l ett erstate d that M SC ag re ed to f or gi ve thi s debtto com pensate TD C a fter M SC el ecte d no t to pu rch as e it s equi pm ent forL i ne 15 fro m TDC
. M SC did notr espond to Escal l o n’ s l e t t e r . In Apr i l2 0 0 2 , MS C s e ntT DC a l e tte r i nfo rm i ng i t that M SC w as exer ci si ng i ts ri ght under th e N o te t o c r edi t t he $ 25 0, 00 0 te chno l o g y a ss i g nm en t fee M S C o wed T D C for 200 2 ag ains t th e ba l an ce o fthe N ote , wh i ch at the t i m e was abo ut $3 50,0 00. Final l y, i n M ay 2002, T D C s en t M SC a l ett ernot i fyi ng i t that it w ou ld “n o lon ge r p ro vid [e] s u p p or t t o M SC ac tiv itie s.” S M S, the o r i g i na ls ub- l i ce ns ee f o rthe Po wder Cl o ud te c h n olo gy , c o m m en c ed th is a c tio n ag ain stM SC in fe d e r a ld i s t r i c tc o u r t
. T DC i n t e r ve ne d , a d d i n gi t s o wn b re ac h ofco ntra ct c l ai m se eking $2 , 153, 400 i n dam age s as w ellas the reas signm en t of four o f its pate nt s. M SC counter cl ai m ed aga i nst TDC f or$1 03, 843. 52, bas ed on the o utsta nd i ng b alance on the N ote as wellas the cos t o f the r epai r w or k forwh i ch T D C w as pai d but f ai l ed to perf or m . The di str i ct c ourtgr anted M SC’ s m oti on for su m m ary j udg m en t i n i ts e nt i r ety, di smi ss i ngTD C ’s damag es a nd e qui tabl e cl aim s and g r an tingj udg m en t f orM SC on its countercl ai m s. On thi s a pp eal, TDC has chal l enged o nl y the di sm i ssa lo fi ts cl ai m s.

II. S um m ary j udg m en t i s appr o pr i at e when th er e ar e no ge n u in e fac tu al d isp u te s th at re q u ire a t ria l. See Fed. R. Ci v.6 N o. 08

- 2479 P. 5 6( c) ; Wal dr i dgev. Am e r i ca n Hoechs tCorp. , 24 F. 3d 918, 920 (7th Cir. 1994). I n ev aluat ing a m otion for su m m a ry j udg m en t, c o ur ts mustvie w the e vi den ce i n the l i g ht m os t fa vo ra b le t o th e n on -m ov in g p ar ty
. Ree ve s v. S anders on P lum bing Products, Inc. , 530 U
. S. 133, 150 (2000 ). H ow ever, before a non -m ovan t can ben efi t from a f avorab le v iew of th e e vid en c e, it m u stsh ow th atth er e is so m e gen u in e evid en tia ry d isp u te
. “G en u in e,” inth is conte xt, m eans “r eas onably co ntest abl e. ” Wa l l a c ev . S MC P neum a ti cs , Inc. , 1 03 F
. 3d 13 94, 1 39 6 ( 7th Ci r . 1 99 7)
. Put othe rwis e, a f actualdi spute i s “ genui ne” o nl y i fa re aso n ab le jur y c ou ld find for e ith er p ar ty
. R eeves , 530 U
. S. at 148; de la R a m a v. Ill . D ep’t o f H um a n S ervs. , 54 1 F
. 3d 681, 685 (7th Cir. 2008). I n the pre se ntc as e, TDC s o ughta n o r derc o m pel l i ng M SC to rea ss ign T D C ’s p at en ts as w ell as ap p ro x im at ely $2. 15 m ill i on in dam age s. TDC ’ s dam age s cl ai m was c o mpr i s e d o fthr ee s ub

- c l a i ms: ( 1 ) $ 2 5 0 , 0 0 0 , wh i c h TD C al l ege s i t was o w ed as an “a ssi gnm ent fee” f or20 02; ( 2) $1 43, 400, wh i ch w as the am ount o fco nsul ti ng se rv i ces and equipm ent M SC w as re quir ed to purchase fro m TDC i n 2 00 2; a nd ( 3) $ 1, 76 0, 00 0, whi chrepres en ts the fee s TDC woul d ha ve b ee n due fr o m 2 00 3 to 2 00 6 i fthe Ag r e e men th a d b e e n r e ne we d. T he district cou rt gra n t e d sum m ary j ud gm en t for M SC o n a l lo fTDC’ s claim s. W e r ev i ew thi s dec i si o n deno vo . G ates v. Ca te rpil lar, Inc. , 513 F.3d 680 , 685 (7th C ir. 2008). U nd erthe ter m s o fthe A gr eem ent, I l l i noi s l aw co ntro l s. W e w il l con side r TD C ’s cl aim s in reverse ord er.N o. 08

- 2479 7 A. $1

. 76 mil l i o n o fTDC’ s cl ai m ed damag es r epr esent s th e m oneyi t would have bee n owed i fthe A gr ee m en t had been re new ed. By its te rm s, the A gr eem ent r an fro m A pri l19 98 to A pr il 2 00 2. M SC w as em pow er ed to r enew the Agree m ent fora n ad dit i onalfour- yea r ter m “a t i ts sole discretion .” W hile there is no disp ut e tha t M SC did note x press l y r enew the A gr eem ent, TDC ar gues th at M SC rene w ed th e agreem en t im p li citly “by p e r form an c e.” T D C m ak es tw o a lleg at ion s in s u p p o r t o f th is cl ai m : fi rs t, it al l ege s that M SC extend ed SM S’ s s ub-l i cense i n 200 4; se con d , it cl ai m s that M SC co nti nued to m ar ket the Po w der Cl oud technol ogyafterthe A gr ee m en t had l a ps e d. A s to the f ir s t a ll egation, there is no evid en ce th at M SC affi rm ativel y “ extended” SM S’ s s ub-l i cense after20 02. I nd eed, the cop y ofthe sub- l i censing ag re em ent that was m ade parto fthe re cor d on ap pealsho w s that M SC had n o need to “e xtend” the sub- l i cense because the subl i cense w oul d be r enewed au to m ati cal l y unti li t was c an c ell ed. N orwas M SC r equi re d to ter m i nate the s ubl i cense i n 200 2, wh en TDC r ep u d i ate d the Agree m ent. S ec ti o n 1 0. 6( a) o fthe Agr ee m en t pr o vi des tha t the e xpir ati on o r non- re new alo fthe A gr eem ent woul d have no e ffect on e xi sting sub- l i censes . There i s a l so no e vi dence to support TD C’s al l ega ti on th atM S C i m p li ci tly r en ewe d the Agr ee m en t byc o nt i nu i ngt o m ar ke tT DC’ s t e c hn o l o g y a ft e r2 0 0 2
. T DC po i nt s t o wh a ta pp e a r s t o b e a p r i nt o utfr om a 2 0 0 4 t r a de p ub li cation, w hich i t sub m itt ed i n op p ositi on to M SC ’s8 N o. 08

- 2479

m oti on forsum m ar y j ud gm ent, but w h i ch i t di d not au th en ti ca te
. Ev eni fwe wer e to a ss um e th atthe pr i nt o ut is w ha t it p urp orts to be, th e print ou t lend s no su p p ort to TD C’s cause. The publi cati on des cribes, am ong othe r thi ngs, how M SC w or ked with TD C to devel op a pow der coa ti ng syste m , how M SC’ s a pp l i cati on pro cess “use s severa lpatent ed el em ents to achi eve . . . hi gh- speed ca pab i l i ti es ” an d ho w M S C c o nt i nue s to a tt empt t o fi nd m ar ket s forco at ed products. A ssum i ng tha t thi s publ i cati on i s a uthenti c, i t doe s no t s u gg est thatM SC w as conti nui ngt o e xp l o i tthe s pe c i fi c p a t e nt s tha tT DC ha d ass i gned to M SC thr ough the A gr eem ent. The non- m oving par ty i s e nti tl ed to have onl y re as onableinfe re n c es d ra w n in it s fa vo r. See O m osegb on v. Wel ls , 335 F. 3d 668, 67 7 (7th Ci r. 20 03)
. In the prese nt cas e, ev en i fM S C ha d c o n t i n u e d t o u s e i t s e q u i p me n tt o ma k e a nd sel lpow der- coa ted steel pro du cts, as the pu bl i cati on i nd i cate s, there i s no evi dence to sugg est

— and i t w oul d be un r e a s o nab l e t o i nf er

— that M SC w as i nfr i ngi ng o n TD C’s patents i n or der t o do so

. S ecti on 1 0. 2 o fthe A gr eem en t r equi r es M S C t o s to p m anuf ac tu r i nga nd s el l i ng TD C’s equi pm ent t o othe rs afterthe A gr eem ent e xpir es; it d oe s not r equi re i t t o sto p usi ng equi pm ent i t had al re ady pai d fo r to m an u f actur e powd er - coa ted pro du cts to sel lto thi rd part i es. I n shor t, th er e is no ge nuine i ssue off act as to w hether MS C r e n e we d th e A g r e e me n t
. A c c o r d in g l y, th e s u mm ar y di sm i ssa lo fTDC ’ s cl ai m f orfees fro m 20 03 to 2006 w as p rop er.N o. 08

- 2479 9 B. TDC’ s cl ai m f o r$ 14 3, 40 0 i n dam ages b as ed o n the consulti ng se rv i ces and equipm ent that M SC w as re quir ed to purchase i n 200 2 i s e qually without m er i t. Se c tio n 4.4 o f th e A g re em en t p ro vid es th at“M SC w ill guar antee m i ni m um annual spending w i th [ TD C ] to pr o vi de co ns ul tings er vi ce s, e qui pm en t and e ng i ne er i ng f or the non- re new abl e ter m ofthe agr eem ent. ” S peci fi cal l y, M S C was r equi r ed to pur ch as e $1 43 , 36 0 i n s er vic es a nd equi pm ent fro m TDC i n 2 002. H owever, i n M ay 2002 , TD C sent M SC a lett erdecl ar i ng tha t i t was “no l onge r p ro vid in g s u p p or t t o M SC ac tiv itie s. ” U n d er Il lin ois l aw , “in the f ace ofcl earev i dence ofan in tent to re pu diat e, the non- re pu diat i ng par ty i s no l onge r u n d er an o bl i gat i on t o perfo rm . ” In reC & S Grai n Co. , 47F. 3d 233, 23 7 ( 7th Ci r. 19 95) ( ci ti ng B uild er’s C o nc rete C o . v. Fred Faubel & Sons, Inc. , 37 3 N .E .2d 8 63 , 8 68 ( I l l

. A pp . Ct. 3d Dist
. 19 78) )
. A fterTDC decl ar ed i ts unw i l l i ng n es s t o perf or m under th e A gr eem ent, i t was qui te cl ear l y no t enti tl ed to paym ents i t would o ther w i se have been du e under the Agree m ent. I nd eed, ev en i fM SC had been the firs t p ar ty to bre ach th e Ag r e e men t

— as we disc uss be l ow, i t was not

— T D C ’s com ple te re pu diat i on of the A gr eem ent w oul d have r e l i e v e d MS C o f i t s o b l i g a t i o n t o a t t e mpt t o p u r c h a s e th e equi p m ent a nd se rv i ces TD C d ecl ar ed i tse l funw i l l i ng to p ro vid e. Se e Ahe r n v . Kne ch t, 5 6 3 N. E. 2 d 7 8 7, 7 9 2 ( I l l

. App
. C t. 2d D ist . 199 0) (“ [S]u b st an tia l no n p er for m a n c e . . . w arran ts rescission.”).10 N o. 08

- 2479 C. The fi nalpor ti on o fT DC ’ s d am age s cl ai m i s for$2 50, 000, w hi ch r epres ents the “ guar an te ed m i ni m um fi xed fe e” TDC a l l eg es i t i s st i l low ed f o r2 00 2. S ec ti o n 3
. 1 o fthe A gr eem ent c alls f or M SC to pay TD C a fi xed fe e o f $250 , 000 by A pri l2 002. H owever, i n 199 7, TDC bo rr owed $ 2 58, 484 fr o m M S C t o c o v e ri t s c o s to v e r r un s . By Apri l2 00 2, the b al an ce unde rthe N o te was $ 34 9, 773. And on Ap ri l9, 20 02 , M SC ga ve TD C w ri tte n noti ce o fi ts dec i si o n t o “ ex er ci se i ts di sc r et i o n [ to ] c r edi t th e Guar an te ed M i ni m um ( F i xe d) F ee s o f$ 25 0, 00 0 d ue u nde ro ur l i ce ns e ag r eem en t f o rthi s y ea ra g ains t th e o ut st an di ng bal ance [ und er the N ote ]
. ” The N ote pro vi des that“[ a] fter A p r i l 1 s t 2 00 1, M SC m ay atits so le d isc re tio n cr ed it m i ni m um fees due f orthatye arto any re m ai ni ng o utst an di ngb al an ce . ” Thus , M S C’ s dec i si o n t o c r edi t th e $250 , 000 i t owed TD C for 2002 aga i nst the b al ance un d er the N ote w as en tirel y prop er. A s be st w e ca n tel l, TDC has affi rm ati vel y wai ved i ts cl ai m th at i t i s st i l l o wed th e ful l $2 50 , 00 0 fee , ad m i tt i ng that i t “m ay have er re d in the am ount [ i t ha d orig inal l y] dem anded

. ” ( TD C B r. at1 2. ) H owever, TDC co nti nues to ar g ue tha ti ti s s t i l lo we d $ 1 0 0 , 0 0 0 o fthi s $2 50, 000 lice n se fee . U n f o r tu n at ely , TD C ’s a c c ou n t o f w h y it is sti l lo w ed thi s m oneyi s a l m ostco m ple tely incom prehensibl e. In its a p p el l ate br i ef, TDC sugg est s that i t was owed thi s m oneyf or“co nsul ti ng se rv i ces” under Se c tio n s 6 .4 an d 6.5 o f th e A gr ee m en t. B u t t h er e is n ot h in g in S e c t i o n s 6 .4 or 6.5

— o ra ny wher e el se i n the Agr ee m en t

— that va lidates TDC ’ s cl ai m thati t i s o w edN o. 08

- 2479 11

There i s no m erit to TD C’ s argum ent thatM SC is es topp ed 2 fr om r e l yi ngo n the U. C. C. be c a us e i t f a i l e d t o pl e a d the U. C. C. (co n tin u ed ...) thi s s peci fi c am ount; the plead in gs gi ve the i m press i on th atTDC made th i s numberup o uto fwho l e cl o th

. E v e n mo r e p u z z l i n gt h a n t h i s i s t h e f a c tth a tT D C c l a i ms th atthi s al l eg ed $1 00 , 000 d eb t i s r el at ed to M S C’ s co ns t r uc t i o n o fLine 1 5
. I ti s un di s pu t e d tha tT DC e l e c t e d not t o s up pl y e qu i pme ntf o rLine 1 5
. As T DC’ s CE O E d E s c a l l o n wo ul d l a t e r ex p l a i n, “ [ T D C ] h a d s o me i m po r ta ntmar k eto pportuni ti es i n de si g ni nga nd bui l di nge qui pm en t unr el at ed to M S C, a nd di d no t want t o f o r g o the m. ” Th us , e v e n tho ugh TD C ha d the r i g ht to supp l y M SC w i th equi pm ent, i t wai ved thi s r i ght, w hi ch und erthe ter m s o fthe A gr eem ent l eft M SC fre e to supp l y Li ne 15 as i t s aw fi t. T D C ’s c l a im be c om es sligh tly m or e in te lligib le

—but on ly slig h tly

— w hen cons i dered in th e conte xt o f E scallon’s O ctob er 2001 letter to M SC
. I n his le tter, Es c a l l o n s t a t e s thati n Apr i l1 9 9 9 , T DC g r a nt e d MS C a l i cense to build Line 1 5 without TDC ’ s hel p i n exchange f or“cl osing o ut t he fi rs t 1 00, 000 dol l arnot e. ” Thi s was apparentl y a n or alag re em ent. I nd eed, wh en Escal l on i nv i te d M S C t o f o r m al l y e xe cut e th i s al l eg ed ag r ee m en t years later, M SC refused

. Th us , even i f t h ere w ere ev i den ce o fthi s al l eg ed o r ala g r ee m en t, the a g r eem ent w ou ld be inva li d un d er Illi n o is’ s version of the U niform C om m ercial C od e, w hich requ ires that can cellati on of a N ote m u st be i n wr i t i ng . See 810 I l l

. Com p. S tat
. § 5/3- 604(a). 212 N o. 08

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(
. . . c on t i nu e d) 2 as an affir m ati ve d efense in it s answ er. T D C’ s se cond am ended com plaint gav e no noti ce of a se parate cl aim f or $100, 000 b ased on this alleg ed ora l ag reem en t. N or d id T D C ob ject to MS C ’ s i n v o c a t i o n o fth e U. C
. C
. b e l o w. N or, f or that m att er, i s ther e any m eri t t o TD C’ s argum ent that thi s U
. C.C. prov is ion does notap p ly here because M SC c anc el l ed o nl y a por t i on ofT D C ’ s d ebt

. The s t atut e does no t d i st i n g u i sh b e t w e e n to t a l a n d p a r t i a l d i sc h a r g e o f a p a r t y ’s obligati ons und er a N ote . D uring oral argum ent, TD C’ s att orney w as not able to pointto any aut h o ri ty f or i ts cl aim that the s t atut e s houl d be re ad t o a p p l y on l y t o a t ot al di s c har ge of a d eb t. H owever, ev en i fEscal l on had al l ege d m erel y that M S C h a d m a d e a n o r a l pr o mi s e t o p a y T DC $100 , 000

— i nstea d ofal l eging tha t M SC or al l y pr om i sed to f or gi ve a por ti on o fthe N ote

— sum m ary j ud gm ent for M SC st i l lw oul d have been proper

. T he princi pal probl em w ith TD C ’s cl aim i s th a t t h e r e is no ev iden ce th at M SC ev erpr o m i se d TDC anyt hi ng . C o n t r a r y t o T D C ’ s c l a i ms to the c ontr ar y, Escal l on’ s s tat em en ts thathe was p ro m ise d $1 00 ,00 0 is n otev id en c e. S ee d el a R a ma , 54 1 F.3d at 6 85 ( bar e a l l ega ti ons i nsuffi ci ent t o defe at a m otion for su m m ary j ud gm en t); D rakev. M i nn. M inin g & M f g . Co. , 1 34 F. 3d 87 8, 8 87( 7th Ci r . 1 99 8) (ba l d a ss er ti o ns d o n otgiv e ris e t o ge n u in e is su es of fac t); M cDonne l l v. C ournia , 9 90 F
. 2d 96 3, 9 69 ( 7th Ci r . 1 99 3) ( sel f

- se r ving ass er ti ons w i thout m or e w i l lnotdefeata m oti on for su m m ary j ud gm en t).N o. 08

- 2479 13 TD C atte m pts to avo i d this concl usi on byr el yi ng o n Illino is’s d oc tr in e o f “p as t p er for m an c e.” U n d er th is do c t r i ne , p e r f o r man c e u nd e ra n o r a la g r e e men tc an re n d er su c h an ag r e em en t e n for c ea b le. Se eM eye rv. Logu e, 4 27N. E. 2d 12 53 , 1 25 6 ( I l l

. App. Ct
. 1 stDi st
. 1 98 1) ; H i l l s v. Hopp , 1 22 N
. E. 510, 51 2 ( I l l

. 19 19)
. TDC ar gues that the o ra lag re em en t cal l ed f ori t t o f or ego i ts ri ght t o supp l y e quipm ent forLi ne 15 i n exchange f or$1 00, 000. ( To put thi s point l ess char i tably, TDC alleg es that i t was pr o mi s e d $ 1 0 0 , 0 0 0 i n e xc hang e f o rdo i ngn o thing . ) T DC cl ai m s t ha t i t l i ve d up t o i ts pa r t o fthe a l l eg ed ba r g ain: it re fra in ed from su p p lyin g M SC w ith eq u ip m en t. It ar gues that thi s “ perfo rm an ce, ” s uch as i t i s, i s e nough to re nd erM SC’ s a l l ege d or alpro m i se enf or ceabl e. This ar gum ent, o fco urse , i s unavai l i ng. The j usti fi cati on fo r the p ast p erform an ce d octrine is at l east in p art th at perf or m ance under an o ra lag re em ent typi cal ly const i tutes ev i dence thatthere actual l y w a s an ag re em ent. See M eyer, 42 7 N .E .2d at12 56 (“W h en on e p ar ty fu lly perf or m s hi s p ar t ofthe al l ege d or alcontra ct .
. . the cour ts re cogni ze that thi s v er y per for m an ce s tr ongl y ind i cate s th e ex i st en ce o fa c o nt r ac t. ”) ( ci ting2 Co rbin on Co ntr ac ts § 43 0 (1 95 0)); se e also Carl A. Haas Au to. Im ports, Inc. v. Lo l a Car d L t d. , 93 3 F
. S u p p . 1381, 13 88 ( N
. D. I l l

. 19 96) ( not i ng tha t the past perf or m ance doct rine appli es to per f o r m an ce tha t i s “c l ea rly m o r e co ns i st en t wi ththe exi ste nce o f the agr eem ent than with som e o therar ra ngem ent. ” )
. W he r e , a s he r e , the a l l e g e d pe r f o r man c e c o s t s a par tyno th i ng

— orwh er e the s am e par ty actual l y b enefi ts fr o m i t s o wn a l l e g e d “ pe r f o r man ce”

— t he n th is perform ance i s no ev i dence atal lo fthe exi ste nc e of the ag re em ent.14 N o. 08

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The f ol l owin g e xc han ge oc c ur re d duri ng MSC’ s depo s i t i on of 3 TD C’ s CE O : “Q uest ion: N ow , the m inim um cons ulti ng f ees an d e n g inee ring fees tha t yo u are ch arg ing
. . . tha t w asn ’ t all p ro fit, co rr ec t? A n sw er : O h, m y G o d . T h a t w a s m o stl y lo ss . . . Ques t i on: Had you a gr eed t o pr ovi de $ 14 3, 40 0 wor th o f s e r vi c e s f orMSC
. . . y ou ’ r e s a yi ngy ou r pr ofi twou l d h a ve b een 15 to 20% , or a l o t le ss than tha t? A nsw er: A lot less. Q u es tio n : M a yb e n o th in g ? A n sw er : M a y b e n o th in g .” I n the prese nt cas e, TD C a lleg es that i t per f or m ed by f ai l i ng to exer ci se i ts ri ght t o supp l y e quipm en t for Li ne 1 5. Howev er, Es ca l l o n adm it te d tha t TDC ha d no i nter esti n supp l yi ng the Li ne 15 equi pm ent b ecause “[T D C ] h ad s o m e im p or ta n t m ar ke t o p p or tu n itie s in des i g ni ng an d bui l di ng equi pm en t unr el at ed to M S C, a nd di d n o twa ntt o f o r g o the m. ” He a l s o a dmi t ted tha tT DC actually los t m on ey su p p lyin g e q u ip m en t t o M SC. Because 3 TD C adm i ts that i t be nefi tte d b y forgo i ng i ts ri ght t o supp l y e qu i pme ntt o Line 1 5 , n e i the ri t s “ pe r f o r man ce” un d er the alleged or a l agreem en t, nor E scallon’s self

se rv in g in sis te n c e t h atth er e w as su c h an ag re em en t, is en o ugh t o g i ve ri se t o a t r i ab l e i ss ue c o nc erni ng w hetherM SC owes TDC $1 00, 000.

D. W hile the d istri ct cou rt prop erly gran ted su m m a ry j ud gm ent forM SC on TD C’s dam age s c laim s, i t was er r o rf o rthe c ou rt to di smi ss TDC’ s cl ai m s ee k i ngthe r ea ss i g nm ent of cer ta i n o fi ts pa te nt s. S ec ti o n 1 0. 2 o fthe A gr eem ent pr ovi des tha t “ [i]f th is A gr ee m en t is te rm in at edN o. 08

- 2479 15

o re xpi r es , M S C s ha l li m m ed i at ely c ea se manuf ac tu r i ng and s e l l i ngthe Equi pme nt
. . . a nd s ha l lr e turn t o [ TD C] al lthe Technol ogycapabl e o fbeing r etur ned. ” S ecti on 1
. 12, i n turn, pro vi des that“Technol ogy in c l ud es but i s no t l i m i ted to the patents .
. . [ and] pate nt appli cati ons, ” which w er e i denti fi ed i n exh ibits to the A gr eem ent. Read to

g eth er, the se pr o vi si o ns r equi r ed M S C t o r ea ss i g n the pat en ts tha t wer e as si g ne d t o i t unde rthe Agr ee m en t w hen the A gr eem ent was t er m i nated i n M ay 2002
. M SC argue s tha t it is not requ ired to r e a s s ig n T D C ’s patents because a differ ent s ecti on o f t h e Agree m ent, se ct i o n 1 0. 6(b) , r equi r es i t to r ea ss i g n the pa ten ts “ifthe agr eem en t i s t er m i nated byM SC. ” Thi s pro vi si on does n ot saythatM SC i s r equi re d to re ass i gn the patent s only if MS C i s th e p a r ty b r e a c h i n g th e Ag r e e me nt
. Howev er , M SC arg u es th atth e in se rt ion of th is s p ec ific p ro visi on r el ating to the pa te n ts, i n additi on t o the g ener al p ro vis ion co n c er n in g “ te c h n olo gy ” re as sig n m en t, is evid en ce that th e p arties inten d ed to p rotect TD C ’s in t eres ts i f, b uto nl y i f, M S C was the pa r tyi n b r ea ch

. W h ile th is m ay h av e b ee n w h att h e p ar tie s in te n d ed , th is i s not w hat they s ai d. U nd erI l l i noi s’ s “ f our corners ” r ule , i f a wr i t t e n a g r e e me n t i s u n a mb i g u o u s , th e n th e s c o pe o fthe pa r ti es ’ o bli g at i o ns mustb e det er m i ne d fr o m the c on tr ac t la n gu ag e w ith ou t re fer en c e t o e x t rin sic ev id en c e. AirSafety, Inc . v. Te ac he rs Re al ty Corp. , 70 6 N
. E.2 d 882, 88 4 ( I l l

. 19 99)
. H er e, byi ts te rm s, the Agree

m en t r equi r es M SC t o r ea ss i g n TDC’ s pat en ts i fthe A gr eem ent e xpir es. S i nce these t erm s a re unam bi guous, we muste nf o r ce the Agr ee m en t as wri tt en .16 N o. 08

- 2479 U nfo rtunatel y, ther e s eem s t o be s om e uncer tainty a s to whi ch pat en ts , pr ec i se l y, TDC as si g ne d to M SC , a nd w hi ch patents M SC st i l lr eta i ns. The A gr ee m ent was neverf or m al l y e xecuted. W hi l e the part i es concede f or th e pur po se s o fs um m ary j udg m ent t ha t th e Agr ee m en t i s e nfo rce abl e, ther e ar e tw o differ ent dr afts ofthe A gr eem en t th at w ere includ ed in th e record on ap p e a l. T D C ’s seco nd am ended com pla i nt at taches wh at app ea rs to be th e ea r l i ero fthe t wo dr afts , whi ch list s fi ve pa te nt s an d si x patent appli cati ons that TD C pu tati vel y a ssi gned to M SC
. H ow ever, TD C i d en tifies fou r diff erent patents i n i ts seco nd am ended com pla i nt, none ofwh i ch w er e t ra nsfe r r e d t o MS C u nd e rth e dr a fto fth e A g r e e men ttha tT DC att ached to i ts com pla i nt. Fur ther, the re cor d on appeal sh ow s tha t M SC has ab an d one d at l east five ofTD C ’s patents w i th TDC ’ s co nsent, and that a s ix th patenthas alread y been reassigned to TD C
. Th us , w e c an not de term in e b as ed on th is re c or d w h et h er M SC h as ac tu ally re tained ti tl e t o any of the patents TD C a ssi gned to i t, nor c an w e d et er m in e if th e p at en ts T D C id e n t i f ies in i t s c o mpl a i nta c tua l l y e v e rb e l o ng e d t o T DC. A l thou gh we re m and thi s ca se f orfurtherpro c e e d i n g s , we do s o i n th e e x p e c t a t i o n th a tth e i s s u e s we h av e id en tifie d ca n be r es olv ed ex p ed itio u sly . Th er e is fac tu al s u p p or t fo r T D C ’s cla im th atit as sig n ed M SC tit le to ce rt ain p at en ts in 1 9 9 8. T h e s ole qu es tio n s t h atrem ain t o b e de t e r mi ne d a r e : fi r s t, wh i c h patent s di d T DC ass i gn to M SC; and secon d , has M SC r eta i ned ti tl e t o any of these patents. The di str i ct c ourthas bro ad dis cre tio n to deter m i ne the bes t m etho d fo r re sol vi ng the se qu e s t i o ns o n r e man d.N o. 08

- 2479 17 III. We a ffi r m th e d i s t r i c tc o u r t ’ s d i s mi s s a lo fT D C ’ s c l a i ms for d am ag e s , b u t re ve rs e it s d ism iss al of T D C ’s e q u ita b le cl ai m f o rthe r ea ss i g nm en t o fi ts pa te nt s and r emand f o rfur th erpr o ce eding s co ns i st en t wi ththi s o pi ni o n.

A FFI RMED I N P ART, R EVER S ED IN P ART AND R EMAND ED

5- 8- 09