Opinion ID: 1189884
Heading Depth: 1
Heading Rank: 8

Heading: Of Contract Law

Text: The district court also relied on principles of contract law in reading the 1980 escrow agreement and the 1976 license agreement in conjunction with the 1980 license agreement. It looked to the 1980 license agreement's broad definition of Topps Technology to include not just the chewing gum formulas at issue but also all other elements of TOPPS' knowledge and experience. Topps, 454 F.Supp.2d at 104. The court reasoned that for the agreement to be read as prohibiting Stani's continued use of Topps chewing gum formulas, it would also need to be read as prohibiting Stani's use of everything else defined as Topps Technology, since the agreement does not differentiate between these groups. Id. This reading, the court found, would have put Stani out of business or at least forced it to start over entirely in the gum business, with new plants, new methods, new processes, and all the technical components involved in the making of chewing gum. Id. Such an outcome seemed in the trial court's view inconsistent with the existence of the escrow agreement, which suggested the parties' assumption that Stani would continue to manufacture and sell chewing gum using the `specialized knowledge and experience' it had acquired from Topps over the course of a 39-year relationship. Id. The district court also focused on the contrast, noted in Part II A. above, between the 1980 license agreement's express language cutting off Stani's right to use Topps Technology in the event of early termination, and the absence of such a cut-off provision in the contract language establishing the April 1996 expiration date. Id. at 105. Further, it looked to (1) the absence of the words utilizing Topps technology in paragraph 2 of the 1980 licensing agreement as compared to paragraph 2 of the 1976 licensing agreement, (2) the fact that the 1980 licensing agreement was set to expire on a date certain whereas the 1976 agreement had the option of renewal, and (3) the fact that Stani had limited rights to terminate the 1980 licensing agreement as compared to its rights to terminate the 1976 licensing agreement. Id. at 105-07. The court took all of these things as signs of the parties' intent for Stani to continue using Topps Technology, including chewing gum formulas, after April 1996. Id. at 107. There is no question that with respect to Stani's rights after April 1996 the 1980 license agreement could have been more clearly written. However, the extrinsic evidence in the record does not weigh so overwhelmingly in Stani's favor as to permit resolution of the agreement's ambiguities on a motion for summary judgment. Quite the contrary, as already noted, Stani's own pleadings and the statements of one of its experts strongly undercut the district court's finding that the company could not remain in business without using Topps Technology. While the differences in the language of the 1976 and 1980 license agreements do support Stani's position to some extent, they do not plainly resolve the question for purposes of summary judgment.