Opinion ID: 416558
Heading Depth: 1
Heading Rank: 5

Heading: Claims of Fraud

Text: 66 In part, Novamont bases its claim of fraud on Ziegler's nondisclosure of the paragraph of the 1970 letter to Diamond promising that recovery for past infringement would be additively credited to the down payment under the 1970 Diamond license; on nondisclosure of the 1970 copolymer option granted to Diamond; and on several statements by Ziegler representatives in 1971 which may have artfully led Novamont's people to believe that Ziegler would exact more substantial damages from Diamond for past infringement than Ziegler truly did and that there were no agreements with Diamond other than those disclosed to Novamont. 67 We have concluded, as did the district court, that Novamont's MFL clause did not entitle Novamont to information on these subjects nor to the benefit of the undisclosed agreements. 518 F.Supp. at 575-76. It follows that these nondisclosures and allegedly misleading statements did not constitute fraud on Novamont with respect to its enforcement of its MFL rights. 68 In further part, Novamont bases its claim of fraud on Ziegler's refusal to furnish the full text of the 1972 Hercules agreement and on allegedly false representations on the discounts allowed in arriving at the $1.6 million lump sum for the Hercules pre-paid license. In particular the 20% so called contingency discount was not disclosed. The district court found that there was no misrepresentation in characterization of the lump sum payment and that Novamont failed to establish knowing misrepresentation of the manner of calculation of the lump sum. 518 F.Supp. at 575-76. We do not consider these findings clearly erroneous. 69 In any event we have concluded that Novamont's MFL clause did not entitle Novamont to information as to the method of calculation of the lump sum nor to the benefit of a customized pre-paid license for a different quantity. 70 Novamont appears to argue that, apart from any effect on its MFL rights, the nondisclosures and alleged misrepresentations fraudulently induced Novamont to make the July 1, 1974 agreement with SGK on which this action was brought. Novamont contends that the fraud provided a complete defense and a basis for punitive damages. 71 The district court did not deal with this argument, either in its published opinion after trial, 518 F.Supp. 557, nor in its unpublished opinions on post-trial motions. In view of the care with which the court dealt with the issues, this point may not have been urged with much force. 72 Novamont and Ziegler carried on negotiations from time to time from the fall of 1970 until July 1, 1974 after the appellate decision in the Phillips case, when the existing agreement was signed. Shortly before that, Novamont became aware of the full text of the Hercules agreement, previously denied it. 73 We can understand that if Novamont had been aware of the terms of the infringement settlement with Diamond, Novamont would have included that treatment in its arguments during the course of negotiations. In that general sense the information may be considered material. 74 Novamont has failed, however, to point out that the treatment of Diamond or Hercules in these respects is material to any provision of the 1974 agreement, or that Novamont relied to its detriment on any misconception of these facts in making the agreement. 75 Insofar as the judgment awarded Novamont damages on its counterclaim and provided that each party shall bear its own costs, it is reversed, and the cause remanded with directions to restore the full award to plaintiff, without offset, and to reconsider the matter of costs in the light of the outcome of these appeals. In all other respects, the judgment is affirmed. Plaintiff shall recover its costs on appeal.