Court Opinion

ID: 2961710
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:46:46.62666+00
Date Added: 2024-06-11T11:42:21.653643
License: Public Domain

USCA1 Opinion

	

          February 17, 1993                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 92-1052                              THE PH GROUP LTD., F/K/A,                                COGNETICS EUROPE LTD,                                Plaintiff, Appellant,                                          v.                               DAVID L. BIRCH, ET AL.,                                Defendants, Appellees.                                _____________________        No. 92-1053                               THE PH GROUP LTD., F/K/A                               COGNETICS EUROPE, LTD.,                                 Plaintiff, Appellee,                                          v.                                   DAVID L. BIRCH,                                 Defendant, Appellee,                                     ____________                                   COGNETICS, INC.                                Defendant, Appellant.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS              [Hon. W. Arthur Garrity, Jr., Senior U.S. District Judge]                                            __________________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                            Brown,* Senior Circuit Judge,                                    ____________________                                Stahl, Circuit Judge.                                       _____________                                 ____________________            Edwin A.  McCabe  with whom  Joseph  P.  Davis, III,  Karen  Chinn            ________________             ______________________   ____________        Lyons, and The McCabe Group were on brief for appellants.        _____      ________________            Robert  J. Kaler  with  whom Gadsby  &  Hannah  was  on brief  for            ________________             _________________        appellees.                                 ____________________                                  February 17, 1993                                 ____________________        _____________________        *Of the Fifth Circuit, sitting by designation.                      STAHL, Circuit Judge.   This case involves a failed                             _____________            attempt to license American-made computer software for use in            Europe.   On appeal,  plaintiff The  pH Group  Ltd., formerly            known   as  Cognetics  Europe  Ltd.  ("PH"),  challenges  the            district court's failure (1) to  award it attorneys' fees and            (2) to rule favorably  on its claims of unfair  and deceptive            trade  practices.   Defendants Cognetics,  Inc. ("Cognetics")            and  David  L.  Birch  cross-appeal, taking  issue  with  the            district court's  denial of their motion  for judgment n.o.v.            or  a  new  trial  on  their   counterclaims  for  breach  of            contract.1    Finding  no   error  in  the  district  court's            rulings, we affirm.                                          I.                                          I.                                          __                       FACTUAL BACKGROUND AND PRIOR PROCEEDINGS                       FACTUAL BACKGROUND AND PRIOR PROCEEDINGS                       ________________________________________                      David  Birch  developed  computer   software  which            analyzes Dun & Bradstreet  data bases for business consulting            purposes.2  In order  to exploit this software in  the United            States, Birch  and his associates  formed Cognetics.   PH was            formed by Rolf Hickmann,  Norbert Reis, and other individuals            principally  to  develop  a  consulting  business  in  Europe            through  the use of the Cognetics software.  PH and Cognetics                                            ____________________            1.  Because  the  interests   of  Birch  and   Cognetics  are            inexorably   intertwined  for   purposes   of  this   appeal,            references  to Cognetics  should  be  construed  as  applying            equally to Birch.             2.  Dun  & Bradstreet  generates  computer data  bases  which            report the financial statistics of private businesses.                                           -2-                                          2            negotiated a license agreement ("the Agreement"), under which            PH  received the right to use the Cognetics name and software            in Europe.   For its part,  Cognetics was to provide  PH with            both Dun & Bradstreet's European data bases and the Cognetics            software  to   analyze  them.     The  parties   agreed  that            Massachusetts law would govern the Agreement's construction.                      The Agreement was signed in January of 1987, and PH            began doing business in Europe.  Shortly thereafter, the same            individuals who  had  formed PH  incorporated Maven  Systems,            Ltd. ("Maven").3  The  record reflects that Maven  was formed            to allow  the individual  owners of PH  to pursue  consulting            business in Europe without using the Cognetics software.  The            Agreement clearly  contemplates and  allows for  such outside            activity.4                        Almost   immediately,   difficulties  between   the            parties  surfaced.    Essentially,  PH  claimed  that  Dun  &            Bradstreet's European  data bases differed  from its American            data bases, and that Birch and Cognetics knew, or should have                                            ____________________            3.  Maven is not  a party  to this appeal.   Cognetics  named            Maven  as  a  defendant-in-counterclaim below,  but  does not            appeal the district  court's ruling that Maven is  not liable            on the counterclaims.              4.  Section   2(e)   of   the   Agreement,   entitled  "Other            Businesses," states:                 [N]othing shall  preclude  [PH] from  conducting  a                 business unrelated to [Cognetics] Software, Related                 Software  or  Products .  .  .  provided that  such                 business is  not  conducted under  the  [Cognetics]                 Name or any variation thereof.                                         -3-                                          3            known, that as  a result  of these  differences the  European            data bases  could not be analyzed  effectively with Cognetics            software.   Cognetics, on the other hand, claimed that PH had            violated the  Agreement by  improperly allowing Maven  to use            the Cognetics name in Maven's  initial business dealings.  By            September  1987,   each  party  was  claiming   that  it  had            terminated the Agreement.                      On April 22, 1988,  PH sued Cognetics in diversity,            alleging  common law fraud,  breach of  contract, negligence,            breach of an implied covenant of good faith and fair dealing,            breach of  an implied  warranty of fitness  for a  particular            purpose, and violation of Mass. Gen. Laws Ann. ch.  93A,    2            and 11 (West  1984 and Supp.  1992) (hereinafter referred  to            collectively  as  "ch.  93A"),  which  proscribe  unfair  and            deceptive trade practices.  PH sought $10 million  in damages            on  these claims.  The complaint also asked for a declaratory            judgment that the Agreement's non-competition clause did  not            preclude  PH  from  pursuing  its  now  established  European            consulting business.5                       Cognetics   counterclaimed,   alleging  breach   of            contract,   misappropriation   of   trade   secrets,   unfair                                            ____________________            5.  PH  also sought to recover  $30,000, a "fixed  fee" to be            paid  to Cognetics  for  certain services  due  PH under  the            Agreement.  PH had  placed this money into an  escrow account            when its relations with Cognetics began to sour, and it began            to question  whether Cognetics would provide  the "fixed fee"            services.  Cognetics never  contested PH's entitlement to the            $30,000, and the district court awarded the funds to PH.                                           -4-                                          4            competition,  violation  of  the  Lanham Trade-Mark  Act,  15            U.S.C.A.   1125(a) (West Supp. 1992), violation of Mass. Gen.            Laws Ann. ch. 110B,   12 (West 1990), which forbids trademark            infringement, and violation of ch. 93A,   11.  Cognetics also            sought injunctive relief  to prevent further use  of its name            and proprietary materials.                         The district  court bifurcated the trial  and tried            all liability issues first.  After directing verdicts against            several  of  the  parties'  substantive  claims,   the  court            submitted  the following claims to the jury:  (1) PH's claims            for fraud, breach of contract, and breach of implied covenant            of good faith and fair dealing; and (2) Cognetics' claims for            misappropriation of  trade secrets,  and breach  of contract.            The  claims and counterclaims under ch. 93A were tried to the            court along with the  requests for declaratory and injunctive            relief.                      The jury  found  against PH  on all  of its  claims            except for the claim of breach of an implied covenant of good            faith and fair dealing.   In the subsequent damages  phase of            the trial,  notwithstanding the  favorable verdict,  the jury            awarded  PH zero  damages  on this  claim.   The  jury  found            against Cognetics on all of its counterclaims.  The  district            court  found no  violations of  ch. 93A  by either  party and            denied all  requests for declaratory  and injunctive  relief.            Finally,  the  court denied  Cognetics'  motion for  judgment                                         -5-                                          5            n.o.v. or new  trial, and denied  PH's motion for  attorneys'            fees.                                         II.                                         II.                                         ___                                      DISCUSSION                                      DISCUSSION                                      __________            A.  PH's Appeal            A.  PH's Appeal            _______________                 1.  PH's Claim for Attorneys' Fees                 1.  PH's Claim for Attorneys' Fees                 __________________________________                      PH argues  that it  is entitled to  attorneys' fees            under  section 21 of the Agreement6 because it "prevailed" on            its covenant  of good faith  and fair dealing claim.7   As an            initial matter, we note that the parties dispute whether this            issue was  properly preserved  for appeal.   Assuming without            deciding that  the issue was preserved,  we find unpersuasive            PH's contention that it was a "prevailing party" below.                                             ____________________            6.  Section 21 of the Agreement states:                  Attorneys' Fees.  In any litigation, arbitration or                 ________________                 court   proceeding   between   the   parties,   the                 prevailing party shall be  entitled to all costs of                 the   proceedings   incurred   in  enforcing   this                 Agreement.            7.  At oral argument, PH seemed to argue that the uncontested            award of  the $30,000  in  escrow entitled  it to  prevailing            party status.  This argument, however, appears nowhere in the            trial record, nor does it appear in PH's appellate brief.  It            is  settled in this circuit that issues adverted to on appeal            in a  perfunctory manner are  deemed to have  been abandoned.            United  States v. St. Cyr, 977 F.2d 698, 701 (1st Cir. 1992).            ______________    _______            As a result, we need not address this argument.                                           -6-                                          6                      Courts, both in  Massachusetts and elsewhere,  have            uniformly  required that  a  party succeed  on a  significant            issue in order to be entitled to attorneys' fees.  See, e.g.,                                                               ___  ____            Handy v. Penal Insts. Comm'r of Boston, 592 N.E.2d 1303, 1307            _____    _____________________________            (Mass.  1992)  (requiring that  party  in  civil rights  case            "succeed[]  on  a  significant   issue"  to  be  entitled  to            attorneys'  fees); Fedele  v. School  Comm. of  Westwood, 587                               ______     __________________________            N.E.2d  757, 761  (Mass. 1992)  (same).   See also  Farrar v.                                                      ___ ____  ______            Hobby, 113 S.  Ct. 566,  569 (1992) (holding  that "[w]hen  a            _____            [civil   rights]  plaintiff  recovers  only  nominal  damages            because of his failure  to prove an essential element  of his            claim for monetary relief,  the only reasonable  [attorneys']            fee  is usually  no fee at  all." (citation  omitted)); Texas                                                                    _____            State Teachers Ass'n  v. Garland Indep. Sch.  Dist., 489 U.S.            ____________________     __________________________            782, 792 (1989) (holding  that civil rights plaintiff seeking            attorneys' fees "must be able to point to a resolution of the            dispute which  changes the legal  relationship between itself            and  the  defendant.    Beyond this  absolute  limitation,  a            technical victory  may be  so insignificant  . .  . as to  be            insufficient to support prevailing party status."); Guglietti                                                                _________            v.  Secretary of Health and  Human Servs., 900  F.2d 397, 399                _____________________________________            (1st  Cir.  1990) (requiring  either  "bottom-line litigatory            success"  or "catalytic  effect in  bringing about  a desired            result"  for  social security  plaintiff  to  be entitled  to            attorneys'  fees).   Moreover,  outside of  the civil  rights                                         -7-                                          7            context, an award  of zero damages,  supported by a  rational            basis in the  record, is generally considered a  judgment for            defendant.   See, e.g., Ruiz-Rodriguez  v. Colberg-Comas, 882                         ___  ____  ______________     _____________            F.2d  15,  17 (1st  Cir. 1989)  (stating  that award  of zero            damages is  "commonly viewed  as, in  effect, a  judgment for            defendant"); Poulin  Corp. v. Chrysler  Corp., 861 F.2d  5, 7                         _____________    _______________            (1st Cir. 1988)  (holding that, upon  award of zero  damages,            "plaintiff has failed to establish  an essential part of  its            proof,   and   judgment   should   have   been  entered   for            defendant.").   Cf. Farrar, 113 S. Ct. at 573-74 ("Of itself,                            ___ ______            `the moral  satisfaction [that]  results  from any  favorable            statement of law' cannot bestow  prevailing party status. . .            .   No material alteration of the  legal relationship between            the parties  occurs until  the plaintiff becomes  entitled to            enforce a judgment, consent  decree or settlement against the            defendant.")  (quoting Hewitt  v.  Helms, 482  U.S. 755,  762                                   ______      _____            (1986).   The thrust  of this authority  renders unpersuasive            PH's argument that the  district court erred in finding  that            it  was  not a  "prevailing party"  under  section 21  of the            Agreement.                      Moreover, PH has not  proffered any evidence of the            parties' intent in drafting section 21 of the Agreement.  Nor            has it argued, let  alone demonstrated, that any construction            other than the ordinary  construction of the term "prevailing            party"  should apply.  Accordingly,  we find no  error in the                                         -8-                                          8            district court's holding that PH was not a "prevailing party"            for purposes of section 21 of the Agreement.                 2.  PH's ch. 93A Claim                  2.  PH's ch. 93A Claim                  ______________________                      PH also  argues that  the  district court's  ruling            that Cognetics did not  violate ch. 93A is inconsistent  as a            matter of law with the jury's verdict that Cognetics breached            the  Agreement's  implied covenant  of  good  faith and  fair            dealing.   Massachusetts  courts have  held, however,  that a            trial  court's ruling on  a ch. 93A  claim may  differ from a            jury's  verdict  on  common  law claims  involving  the  same            evidence.   Chamberlayne Sch. v. Banker, 568 N.E.2d 642, 648-                        _________________    ______            49 (Mass. App. Ct. 1991) ("Although consistency . . . ha[s] a            surface appeal, we think the broader scope and more  flexible            guidelines of ch. 93A permit  a judge to make his or  her own            decisions under  [ch.] 93A  without being constrained  by the            jury's findings.").   See also Turner  v. Johnson &  Johnson,                                  ___ ____ ______     __________________            809  F.2d 90, 102  (1st Cir.  1987) (interpreting  Mass. law)            (holding that jury's determination  is not binding on court's            ch.  93A decision);  Wallace  Motor Sales,  Inc. v.  American                                 ___________________________     ________            Motor Sales  Corp., 780  F.2d 1049, 1063-67  (1st Cir.  1985)            __________________            (interpreting Mass.  law) (finding no reversible  error where            district  court  denied  judgment  n.o.v.   on  jury  counts,            reviewed  same evidence, and  reached conclusion  contrary to            jury's  verdict on the ch. 93A  claim).  Moreover, violations            of ch. 93A  must meet a higher standard of  liability than do                                         -9-                                          9            breaches  of  an  implied covenant  of  good  faith and  fair            dealing.     Compare  Anthony's   Pier  Four,  Inc.   v.  HBC                         _______  _____________________________       ___            Associates,  583  N.E.2d  806,  820-22  (Mass.  1991) ("[t]he            __________            implied covenant of good faith and fair dealing provides that            neither  party shall do anything that will have the effect of            destroying or  injuring  the  right  of the  other  party  to            receive the fruits of the contract . . . .'") (quoting Druker                                                                   ______            v. Roland  Wm.  Jutras Assocs.,  Inc.,  348 N.E.2d  763,  765               __________________________________            (Mass.  1976)) with Tagliente v.  Himmer, 949 F.2d  1, 7 (1st                           ____ _________     ______            Cir. 1991) (stating that under ch. 93A, "`[t]he objectionable            conduct  must attain a level of rascality that would raise an            eyebrow  of someone  inured to  the rough  and tumble  of the            world of commerce.'" (quoting Quaker State Oil Refining Corp.                                          _______________________________            v.  Garrity  Oil Co.,  Inc., 884  F.2d  1510, 1513  (1st Cir.                _______________________            1989)).  As such,  PH's claim that the verdicts  were legally            inconsistent is without merit.8            B.  Cognetics' Cross-Appeal            B.  Cognetics' Cross-Appeal            ___________________________                      Cognetics  appeals the  district court's  denial of            its motion for judgment  n.o.v. or new trial on its breach of            contract  claim.  We must sustain the district court's denial                                            ____________________            8.  Although it is not  clear from its briefs, PH  appears to            argue  that the district court (a) failed to make findings of            fact sufficient  to support  its  ch. 93A  ruling and/or  (b)            inappropriately relied upon the jury's finding that Cognetics            committed no fraud.  Having carefully reviewed the record, we            find  that the  district court's  factual findings  were both            comprehensive and  independent of  the jury's  fraud verdict.            Thus,  PH's   contentions  to  the   contrary  are   entirely            meritless.                                         -10-                                          10            of a motion for judgment n.o.v. unless the evidence, together            with all reasonable inferences in favor of the verdict, could            lead a reasonable person to only one conclusion, namely, that            the  moving  party was  entitled  to judgment.    Luson Int'l                                                              ___________            Distribs.,  Inc. v.  Fabricating and  Prod. Mach.,  Inc., 966            ________________     ___________________________________            F.2d 9, 10-11 (1st Cir. 1992).   On the other hand, we review            denial of a motion for new trial under an abuse of discretion            standard,  with a view  toward whether  "`the verdict  was so            clearly against the weight of the evidence as  to amount to a            manifest miscarriage of justice.'"   Pontarelli v. Stone, 930                                                 __________    _____            F.2d 104, 113  (1st Cir. 1991) (quoting Hendricks  & Assocs.,                                                    _____________________            Inc. v. Daewoo Corp., 923 F.2d 209, 217 (1st Cir. 1991)).             ____    ____________                      Cognetics  presented   uncontroverted  evidence  at            trial that the Cognetics name  appeared on two separate Maven            products.  On the first occasion, the Cognetics name appeared            in  a Maven slide presentation  at the bottom  of every page.            On the second  occasion, it  appeared on the  first and  last            pages of  a 43-page Maven  presentation.  On  both occasions,            the Maven products were produced without the use of Cognetics            software.9   Cognetics  argues  that this  evidence can  only                                            ____________________            9.  Cognetics  cites  a  third   and  different  use  of  the            Cognetics name in arguing that section 2(b) was breached.  On            this  third occasion, PH used the Cognetics name in a product            proposal, but  the final  product used neither  the Cognetics            name or software.   We fail  to see how such evidence relates            to sublicensing.  PH's  use of the Cognetics name  in product            proposals  is clearly  contemplated by  the Agreement.   More            importantly,  this third  example  presents no  evidence that            Maven, or any other  alleged "sublicensee," actually used the                                         -11-                                          11            lead  to one  conclusion,  namely, that  PH breached  section            2(b),10  the   Agreement's   sublicensing  provision.      We            disagree.                      In  determining whether a breach of the Agreement's            sublicensing provision has occurred, we must first define the            terms "licensing" and "sublicensing" as they are used  in the            Agreement.  We consider the terms "in light of all the  other            phraseology  in  the  instrument,"   and  "in  light  of  the            circumstances of the transaction."  McDonald's Corp. v. Lebow                                                ________________    _____            Realty Trust, 888 F.2d 912, 913-14 (1st Cir. 1989) (citations            ____________            omitted).                                              ____________________            Cognetics name or software.   PH's use of the  Cognetics name            in  this  situation might  support a  claim that  PH breached            section 11(e) of the Agreement, which states that  neither PH            nor  its affiliates  may market  products which  compete with            Cognetics products. However, this  evidence does not  support            Cognetics'  claim that PH  improperly sublicensed  its rights            under the Agreement.            10.  Section 2(b) provides:                 Sublicense  Right.   Cognetics  grants to  [PH] the                 right to sublicense its  rights under Section  2(a)                 to  an entity or entities which are wholly owned by                 [PH],  provided however,  that  (i)  [PH]  notifies                 Cognetics in advance and in writing with respect to                 such  sub-license, (ii)  the foregoing  right shall                 not  relieve [PH]  from its  obligations hereunder,                 and (iii)  such sub-licensee  is subject to  all of                 the   terms  and  conditions   of  this  Agreement.                 Cognetics  may, in  advance  of  such  sub-license,                 require  any reasonable  documentation of  [PH] and                 its sub-licensee in order to  assure sub-licensee's                 agreement to the foregoing.                                         -12-                                          12                      As  we  read  section  2(a)11   of  the  Agreement,            licensing  consists of three elements:  (1) an agreement; (2)            which  permits the  licensee  to use  the  Cognetics name  in            tandem  with  the  Cognetics  software;  (3)  in  an  ongoing            commercial manner.  These  three characteristics ensure  that            PH, the licensee, can  establish a viable consulting business            in Europe through the use of the Cognetics name and software.                      Section  2(b),  in turn,  grants  PH  the right  to            "sublicense" its  rights under the Agreement  to wholly owned            third  parties.    Sublicensing  under  2(b)  is  similar  to            licensing under 2(a).  It consists of:  (1) an agreement; (2)            whereby  PH  grants  a  third  party  permission  to  use the            Cognetics name in tandem with the Cognetics software; (3) for            ongoing commercial purposes.                                              ____________________            11.  Section 2(a) provides:                 Software and Name License.  Cognetics hereby grants                 _________________________                 to Licensee the  exclusive, non-transferable  right                 and license without right  of sublicense, except as                 specifically  provided  in  subsection (b)  hereof,                 (the "License"), to (i) use the Object Code version                 of  the   [Cognetics]  Software  and   any  Related                 Software,   including  but   not  limited   to  any                 Improvements, and all Software  Documentation, (ii)                 use and  to commercialize the  Name, including  but                 not limited  to  as part  of the  Name under  which                 Licensee  does business  in  the  European  Market,                 provided, however,  that use  of the Name  shall be                 solely in respect of [Cognetics] Products and (iii)                 use,  market, sell  and otherwise  to commercialize                 the  Products,  provided   however,  that  all  the                 foregoing  is granted throughout  but solely within                 the European Market.                                          -13-                                          13                      In  order  to  prove  a  breach  of  section  2(b),            Cognetics  would first have  to establish the  existence of a            sublicensing agreement between PH and Maven.  Cognetics would            then have to  show that the  sublicensing was improper  under            section  2(b)  or  some  other provision  of  the  Agreement.            Cognetics  has failed to allege or  demonstrate that any such            sublicensing occurred.                      Both  at trial  and on  appeal, Cognetics  seems to            rely  on  the  mistaken assumption  that  any  misuse  of the            Cognetics  name  by  Maven  or  PH,  whether  intentional  or            inadvertent, conclusively  demonstrates improper sublicensing            in breach  of section 2(b) on  the part of PH.   However, not            all misuses  of the  Cognetics name by  non-sublicensed third            parties amount to breaches of  section 2(b).  General misuses            of  the Cognetics name may be actionable under several of the            Agreement's  provisions.12   However, in  order to  give rise            to a claim under section 2(b), the  misuse must take place in            the context of an improper sublicensing agreement.                       At  trial, PH's  principals testified  that Maven's            misuse  was  essentially  inadvertent.    For  example,  Rolf                                            ____________________            12.  For  example, section  6(c) states  that PH  acquires no            proprietary interest in the Cognetics name; section 11 states            that both  parties agree  to preserve the  confidentiality of            proprietary material;  section 14 states that  PH will notify            Cognetics  of any  infringements  of the  Agreement by  third            parties; and section  16 states  that PH may  not assign  its            rights or  obligations under the  contract without Cognetics'            consent.                                            -14-                                          14            Hickmann, a principal  of both PH  and Maven, testified  that            the use of  the Cognetics name in Maven's  slide presentation            was "careless," and  that, between them, PH  and Maven "could            only  afford  one  set  of stationery  for  slide  material."            Cognetics  offered no  contrary  evidence  showing  that  the            misuses of the Cognetics name were in fact due to an improper            sublicensing agreement.                      At best, Cognetics has demonstrated  that PH and/or            Maven misused  the Cognetics name on two occasions.  Standing            alone,  this evidence  of misuse  does not  conclusively show            that PH improperly  sublicensed its rights to Maven,  or that            PH breached section 2(b) of the Agreement.  Thus, contrary to            Cognetics' claim in its  post-trial motion, the evidence does            not  lead inexorably  to  the conclusion  that PH  improperly            sublicensed  its rights to Maven in breach of section 2(b) of            the  Agreement.  A reasonable  jury could have concluded that            Maven's  misuse of the  Cognetics name  was inadvertent.   In            fact, we find  no evidence in the record  which would allow a            jury to conclude otherwise.   Accordingly, the district court            properly denied Cognetics' motion for judgment n.o.v.                        By  the  same token,  the  verdict  is not  clearly            against the  weight of the evidence and  presents no manifest                                         -15-                                          15            miscarriage of  justice.  Thus, the  district court committed            no error in denying Cognetics' motion for new trial.13                      For  the foregoing  reasons,  the judgment  of  the            district court is affirmed.                              ________                                            ____________________            13.  Cognetics   also   challenges   the   district   court's            instructions to the jury on section 2(b).  The district court            instructed the jury that  only "material" breaches of section            2(b)  give  rise  to  a right  to  terminate  the  Agreement.            Cognetics  argues  that  under  the  Agreement,  non-material            breaches  of  section  2(b) also  give  rise  to  a right  to            terminate,  and  that  the  district court's  failure  to  so            instruct entitles it to judgment n.o.v. or a new trial.                 We assume without deciding that non-material breaches of            section 2(b) give rise to a right to terminate.  Nonetheless,            as we  have  noted  above,  Cognetics  failed  to  allege  or            demonstrate a breach of  section 2(b), material or otherwise.            Thus,  even if  the district  court's instruction  on section            2(b) was incorrect, the evidence does not necessarily lead to            the conclusion  that a non-material breach  of 2(b) occurred.            Nor can we say  that the verdict was  so clearly against  the            weight of the evidence as to amount to a manifest miscarriage            of justice.  Accordingly, Cognetics' argument  regarding jury            instructions  does  not  alter  our  determination  that  the            district court properly denied Cognetics' motion for judgment            n.o.v. or new trial.                                         -16-                                          16