Opinion ID: 153734
Heading Depth: 3
Heading Rank: 2

Heading: The post-Agreement conduct of the parties

Text: 47 The court also found that the post-Agreement conduct of the parties supports Mid-West's interpretation of the License Agreement as Webb unconditionally accepted royalties for all of Mid-West's domestic and foreign projects, including royalties for jobs in Canada and China. Webb offers two explanations for how accepting payments for these projects is consistent with its belief that the Mid-West held only a United States patent license. First, regarding the Canadian projects, Webb argues that there was no evidence that the materials for the conveyor systems were not produced in the United States. Therefore, according to Webb, no Canadian license was necessary. However, as discussed above, this argument is inconsistent with the argument Webb advanced when Mid-West asserted the right to use the wide dog technology in France, Australia and other countries where Webb similarly held foreign patents on the same technology. In those later instances, Webb argued that patents held in each nation affirmatively limit a U.S. patent licensee's ability to use the technology in that particular country. 9 Second, regarding the China project, Webb argues that Mid-West did not need to obtain a China-specific license because Webb does not hold a patent in China. The flaw in this argument is that Webb should not have accepted Mid-West's royalty payments if it did not believe that it was necessary for Mid-West to license the technology for a China setup. 10 48 Webb does point out that Mid-West intra-office correspondence suggests that Mid-West did not consider the License Agreement applicable to projects outside the United States. For example, after inquiring whether Webb had a patent on the wide dog technology in Australia and learning of Webb's interpretation of the License Agreement, McClellan sent a memo on January 27, 1992, to two Mid-West employees stating that, It will be necessary for us to use another method of transfer for the conveyor than the wide dog technology. Terry Cauley, a Mid-West employee, later prepared a memorandum on February 10, 1992, to Mid-West's officer in charge of international marketing, stating, With what we now know about our agreement w/Webb for Wide Dog transfers, we do not have the right to sell except in Canada & U.S.A. 49 However, this evidence does not conclusively establishes that Mid-West did not believe it had bargained originally for a worldwide license. The intraoffice correspondence reflects that Mid-West appears first to have questioned what it thought was the worldwide scope of its license only after Webb informed Mid-West that the license applied only to the United States and Canada. Clark testified that at the time the bidding for the Australian project was occurring, Clark had discussed competitive reasons with Webb officers concerning why the License Agreement should be restricted in scope: 50 Q. Now, when this dispute arose, you will agree with me, won't you, Mr. Clark, that you did discuss competitive reasons with your people at Webb why the License Agreement should be restricted in scope; isn't that true? 51 A. In terms of where it could be utilized on international projects, yes, that is true, we talked about that. 52 Q. And specifically that if Mr. [sic] Mid-West couldn't use the wide dog, it might add to the price if they had to use an alternative method on jobs that both Webb and Mid-West were bidding; isn't that true? 53 A. That is true. 54 (R.O.A. B198.) Clark then told Mid-West that it considered the License Agreement applicable only to the United States and Canada. Mid-West's actions in response appear to suggest that they were proceeding cautiously because they were uncertain whether their interpretation or Mid-West's interpretation was correct. However, we do not interpret these actions as necessarily suggesting, as Webb argues, that Mid-West believed at the time the Agreement was entered into that the License Agreement did not apply outside the United States and Canada. In fact, Mid-West states that it decided not to include the wide dog technology in Mid-West's bid for the Australian project only in order to avoid confrontation between Mid-West and Webb and because the small project did not require the wide dog technology. 55 In all, we believe that Webb's acceptance of royalty payments for foreign projects supports the court's conclusion that post-negotiation conduct by the parties indicates they considered the License Agreement applicable worldwide. Although Webb presented some evidence which might suggest that Mid-West believed the license applied only to the United States and Canada, Clark's testimony that he discussed the competitive advantage in limiting the scope of the License Agreement with Webb officials, and the fact that Mid-West's conduct appears to be a reaction to Webb's efforts to limit the Agreement, prevents us from having a definite and firm conviction that a mistake has been made. See Las Vegas Ice & Cold Storage Co. v. Far West Bank, 893 F.2d 1182, 1185 (10th Cir.1990).