Opinion ID: 153734
Heading Depth: 3
Heading Rank: 1

Heading: The conduct of the parties during negotiations

Text: 28 The court determined that Clark, the Webb officer authorized to negotiate and contract with Mid-West, was aware that Mid-West intended that the License Agreement apply to all future projects, including projects outside the United States. During the negotiations between McClellan and Clark, McClellan expressed interest to Clark in obtaining a license agreement that would apply not only to the Ste. Therese, Canada, project, but to all future projects as well. In a December 19, 1988 letter to Clark, McClellan stated: 29 Our thought is that the license would initially cover 89 transfers at the General Motors facility in St. Therese and that it could be extended to other projects on the same basis. 30 (R.O.A. A98) (emphasis added). In a January 25, 1989 letter to Clark, McClellan repeated Mid-West's position that the license would encompass the Ste. Therese project, and all future projects: 31 We have reviewed your letter and would like to offer this counter proposal of $1,200 for each transfer and $100 per carrier or 2 1/2% of the total sell price, whichever is lower. This would provide a fee of $194,400 for the St. Therese project and would be applicable to all future projects. 32 (R.O.A. A102) (emphasis added). 33 In response to the January 25 letter, Clark sent McClellan draft copies of a license agreement accompanied by a cover letter dated January 27, 1989. The cover letter stated: 34 Enclosed are two copies of a license agreement incorporating terms as outlined in your letter to me dated January 25, 1989 with the exception that we have deleted the royalty payment based on a percentage of sell price. 35 (R.O.A. A115) (emphasis added). McClellan testified that he interpreted the January 27 letter's incorporation of terms of his January 25 letter--that the agreement would apply to the Ste. Therese project and would be applicable to all future projects--to mean that the License Agreement was for all future Mid-West projects without territorial limitation. Furthermore, at no time during the negotiation process did Clark, or any other representative of Webb, tell McClellan that Webb construed the scope of the License Agreement as limited to the United States or the Ste. Therese project only. 36 Furthermore, Clark testified that he understood during negotiations that Mid-West was seeking a license that would permit Mid-West to use the wide dog technology outside the United States and the Ste. Therese project, that the License Agreement accommodated Mid-West's intentions, and that Clark did not discuss any geographic limits on the license with Mid-West: 37 Q. And you knew, did you not, sir, that Mid-West Conveyor was looking to use the wide dog everywhere, were you not, sir? 38 A. I can't say everywhere. I certainly knew they were looking to use it outside of Ste. Therese in Canada and projects in the United States. 39 (R.O.A. B188.) Later, Clark testified: 40 Q. It's true, isn't it, Mr. Clark, that you believed that the language in Paragraph 2 [of the License Agreement] accommodated Mr. McClellan's desire for a license with respect to any future project by Mid-West Conveyor; isn't that correct? 41 A. That is correct. 42 (R.O.A. B224.) 43 Therefore, Mid-West provided a factual basis from which the court could conclude that the parties intended a license applicable to all future Mid-West projects. Webb responds to the correspondence and Clark's testimony by arguing that the fact the parties never explicitly discussed the territorial application of the License Agreement indicates that only a United States patent license was intended. However, we consider this argument insufficient to rebut the evidence in the record that Clark was aware that Mid-West sought a license that would apply to all future projects, including projects outside the United States and the Ste. Therese project. 7 44 Webb's argument also ignores the fact that the parties entered into the License Agreement in the context of a Canadian project. We find it difficult to understand how the License Agreement can be restricted to the United States when Webb drafted it in the context of knowingly granting Mid-West the ability to use the technology on a project outside the United States. Webb argues that it needed to grant only a United States license for the Canadian project because the components for the Ste. Therese project were made in the United States, thereby triggering the '570 patent. 8 However, we note that Webb maintains a patent on the wide dog technology in Canada. Because Webb agreed that this License Agreement allowed Mid-West to use this technology in Canada, it is not obvious why the License Agreement would not allow Mid-West to use the same technology in other foreign countries where Webb held similar patents. Furthermore, a local content clause in the contract with GM required that Mid-West manufacture as many of the components for the Ste. Therese project as possible in Canada and, according to Mid-West, parts were made both in Canada and the United States for the conveyor system on the Ste. Therese project. 45 Considering the correspondence among the parties, Clark's testimony, and Webb's failure to require Mid-West obtain a license under Webb's Canadian patent, we do not believe that the district court clearly erred in concluding that the negotiations prior to entering the License Agreement indicates that the parties intended for the License Agreement to apply to future Mid-West projects without territorial restriction. 46