Court Opinion

ID: 2658166
Source: CourtListenerOpinion
Date Created: 2014-03-28 00:02:09.440995+00
Date Added: 2024-06-11T13:00:47.007237
License: Public Domain

Case: 12-13210      Date Filed: 03/27/2014      Page: 1 of 12

                                                                    [DO NOT PUBLISH]

                 IN THE UNITED STATES COURT OF APPEALS

                           FOR THE ELEVENTH CIRCUIT
                             ________________________

                                   No. 12-13210
                             ________________________

                          D.C. Docket No. 4:08-cv-00167-HL

AMERICAN FAMILY LIFE ASSURANCE
COMPANY OF COLUMBUS,

                                                                       Plaintiff-Appellant,

                                           versus

INTERVOICE, INC.,

                                                                      Defendant-Appellee.
                             ________________________

                     Appeal from the United States District Court
                         for the Middle District of Georgia
                           ________________________

                                    (March 27, 2014)

Before PRYOR and MARTIN, Circuit Judges, and Honeywell,* District Judge.

PER CURIAM:

*
 Honorable Charlene Edwards Honeywell, United States District Judge for the Middle District
of Florida, sitting by designation.
              Case: 12-13210     Date Filed: 03/27/2014   Page: 2 of 12

      American Family Life Assurance Company of Columbus (Aflac) entered

into an agreement with Intervoice, Inc., to purchase an interactive voice response

system. In this appeal, we must determine whether Intervoice has a duty under the

contract to defend and indemnify Aflac for certain patent infringement claims

brought by a third party. Because we agree with the district court that no such duty

exists here, we affirm.

                                          I.

      Like many companies in the 21st century that handle large volumes of phone

calls from customers, Aflac operates a customer call center that uses interactive

voice response (IVR) technology. Gone are the days when callers would dial 1-

800-99-AFLAC and wait for extended periods to be assisted by an Aflac customer

service representative. Today, Aflac’s calls are answered by computers that have

been programmed with IVR technology. This allows customers to report their

claims, pay their bills, or retrieve their policy information from Aflac’s corporate

mainframe—all without the hassle of dealing with a customer service

representative.

      In July 2000, Aflac decided to replace its obsolete IVR system with a new

and improved model. To that end, Aflac solicited proposals from companies that

could provide the functions and features that Aflac was looking for in a new IVR

system. Eventually, Aflac signed an agreement with Intervoice in February 2001

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to purchase and install Intervoice’s IVR system at Aflac’s customer call center in

Columbus, Georgia.

      Not long after Intervoice’s IVR system was up and running, a company

known as Ronald A. Katz Technology Licensing LP (RAKTL) alleged that Aflac

was infringing a number of its patents. Critically, RAKTL did not allege that

Intervoice’s IVR system alone infringed any of its patents. Instead, RAKTL’s

infringement claims involved the interaction between the IVR system and other

components of Aflac’s call center not furnished by Intervoice. These components

included, among other things, Aflac’s private branch exchange (which routes

phone calls to the IVR), its automatic call distributor (which answers calls and

keeps callers on the line), the computers which ran the IVR software, as well as

Aflac’s corporate mainframe which stores customer information.

      After receiving RAKTL’s demands, Aflac turned to Intervoice to provide a

defense or indemnification under the purchase agreement. Intervoice refused,

arguing that RAKTL’s claims were excluded from coverage. Aflac then sued in

Georgia state court, and Intervoice removed the case to federal court. Following

discovery, Intervoice filed a motion for summary judgment. The district court

granted the motion, finding that Aflac had no right to be indemnified under the

purchase agreement. Aflac now appeals.

                                         II.

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      We review de novo the district court’s grant of summary judgment, applying

the same legal standards as the district court. McCormick v. City of Fort

Lauderdale, 333 F.3d 1234, 1242–43 (11th Cir. 2003). Summary judgment is

appropriate if the evidence establishes “no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

The evidence, and all reasonable inferences, must be viewed in the light most

favorable to the non-moving party. McCormick, 333 F.3d at 1243.

                                         A.

      At issue in this case is a provision of the purchase agreement that was titled

“Patent, Copyright and Trade Secret Indemnity” (the Indemnity Provision). The

Indemnity Provision opens by stating:

      InterVoice[] will indemnify, hold harmless and defend Customer at its
      own expense against any claim that any System or Software as
      provided by InterVoice[] . . . infringes any United States copyright,
      patent or trade secret.

The Indemnity Provision also contains an exclusion (the Combination Exclusion),

which states:

      InterVoice[] shall have no obligation with respect to any such claim of
      infringement based upon Customer’s modification of any System or
      Software or their combination, operation or use with apparatus, data
      or computer programs not furnished by InterVoice[].

      Both parties agree that the purchase agreement is to be governed by and

interpreted in accordance with Texas law. When construing a written contract
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under Texas law, the primary concern of the court is to ascertain the true intent of

the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393

(Tex. 1983). “If a written contract is so worded that it can be given a definite or

certain legal meaning, then it is not ambiguous.” Nat’l Union Fire Ins. Co. of

Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). If, however,

the language of the contract is subject to two or more reasonable interpretations,

“the contract is ambiguous, which creates a fact issue on the parties’ intent.”

Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589

(Tex. 1996). An ambiguity does not arise simply because the parties advance

conflicting interpretations of the contract. Forbau v. Aetna Life Ins. Co., 876
S.W.2d 132, 134 (Tex. 1994). For an ambiguity to exist, both interpretations must

be reasonable. Id. “While parol evidence of the parties’ intent is not admissible to

create an ambiguity, the contract may be read in light of the surrounding

circumstances to determine whether an ambiguity exists.” Balandran v. Safeco

Ins. Co. of Am., 972 S.W.2d 738, 741 (Tex. 1998) (internal citation omitted).

      With these principles in mind, we agree with the district court that RAKTL’s

patent infringement claims fall unambiguously into the Combination Exclusion.

Both Aflac and Intervoice acknowledge that RAKTL’s claims arise only when

Intervoice’s IVR system is combined with one or more components not furnished

by Intervoice. These components included, among other things, Aflac’s private

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branch exchange, its automatic call distributor, the computers that ran the IVR

software, and Aflac’s corporate mainframe. In other words, RAKTL’s

infringement claims are not based on the theory that RAKTL is the rightful

inventor of Intervoice’s IVR system. Instead, RAKTL patented many of the

functions and features that were made possible once Intervoice’s IVR system was

hooked up with other components in Aflac’s integrated call center.

      The record in this case supports our conclusion that each of RAKTL’s

infringement claims was based upon a “combination, operation or use” of

Intervoice’s IVR system with other components not furnished by Intervoice. After

settling its infringement claims with Aflac, RAKTL made the following statement

about its patent portfolio:

      [A] single piece of computer equipment alone that is not programmed
      would not infringe. Instead, the claims of the RAKTL Patent
      Portfolio are generally directed to Inventions involving the interaction
      between telephone systems, computer systems and enabling software.

In the same way, Aflac’s expert also stated that the Intervoice IVR system does not

itself satisfy all of the elements of any of RAKTL’s patent infringement claims.

Instead, the Intervoice IVR system is only one (albeit an important one) of the

necessary elements of the claims. We therefore conclude that Aflac has no right to

indemnity under the purchase agreement because RAKTL’s claims are based upon

a “combination, operation or use” of Intervoice’s IVR system “with apparatus, data

or computer programs not furnished by InterVoice[].”
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                                         B.

      Aflac responds with a number of reasons why we should conclude that the

Combination Exemption and the Indemnity Provision as a whole are ambiguous.

We find none of these reasons persuasive.

      First, Aflac argues that the plain language of the Indemnity Provision is

ambiguous on its face. It observes that the terms “System” and “Software” are

undefined in the purchase agreement. Aflac therefore argues that the Indemnity

Provision is ambiguous about the scope of coverage because it states that

Intervoice will indemnify Aflac for claims that “any System or Software as

provided by InterVoice[] . . . infringes any United States copyright, patent or trade

secret.”

      We see no relevant ambiguity in these terms. To begin with, even if the

purchase agreement does not contain a definition of “System or Software,” neither

party disputes that the Intervoice IVR system is included in any definition of those

two words. More important, the purchase agreement opens with the following

statement:

      [AFLAC] agrees to purchase and INTERVOICE[], agrees to sell the
      System and license the Software listed in Schedule “A” subject to the
      terms and conditions that follow.

This language tells us that the term “System or Software” refers to the

individual hardware and software components that are listed in the

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Schedules A that were appended to the purchase agreement. As a result, the

Indemnity Provision is not ambiguous about the scope of coverage. Rather,

the Indemnity Provision clearly protects Aflac against any claim that a third

party has a copyright, patent, or trade secret over any of the items listed in

the Schedules A.

      Aflac next argues that the language of the Combination Exception is

ambiguous about the types of claims that are excluded from coverage. Aflac

admits that the Combination Exception excludes from coverage any claims relating

to a “modification of any System or Software.” But Aflac points out that the

Exception also excludes claims relating to “their combination, operation, or use

with apparatus, data or computer programs not furnished by Intervoice[].”

(emphasis added). Aflac argues that the meaning of the word “their” is unclear in

this context. For this reason, Aflac suggests that the purchase agreement is

ambiguous with respect to the types of combinations, operations, or uses that are

exempted from coverage.

      We cannot agree. While it may be true that the Combination Exception was

not artfully drafted, the only way to make sense of the word “their” is to say that it

refers to “System or Software.” As a result, we conclude that the Combination

Exception unambiguously excludes from coverage: (1) modifications of any

System or Software; and (2) combinations, operations, or uses of the System or

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Software with apparatus, data or computer programs not furnished by Intervoice.

And again, it is clear based on the record that each of RAKTL’s claims were based

on a “combination, operation or use” of Intervoice’s IVR system with other

components not furnished by Intervoice.

      Third, Aflac argues that the district court’s interpretation of the Combination

Exemption would render the Indemnity Provision meaningless. Aflac emphasizes

that the combination of Intervoice’s IVR system with other components in Aflac’s

call center was necessary for the system to function, enabled by Intervoice’s

products and services, and contemplated by the parties as part of their agreement.

In other words, Aflac argues that RAKTL’s patent infringement claims implicate

the primary purposes and functions of the IVR system. As a result, Aflac argues

that the parties intended the Combination Exception to exclude only combinations

that are (1) not intended as part of the purchase agreement and (2) not necessary

for the IVR system to function. Anything less, according to Aflac, would mean

that all indemnity protection “evaporated” once the IVR system was connected to

Aflac’s call center and used precisely as intended.

      Aflac’s argument on this front fails in at least two ways. As an initial

matter, we reject Aflac’s assertion that the district court’s reading of the Indemnity

Provision functionally deprives Aflac of any coverage at all. Under the plain

language of the Indemnity Provision, Intervoice still has the obligation to

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indemnify Aflac for any claims that Intervoice’s IVR system on its own infringes

the patents of a third party. Indeed, one could certainly imagine a situation where

one of Intervoice’s competitors sues Aflac, arguing that it is the inventor of

Intervoice’s IVR system. In this hypothetical, Intervoice admits that it would be

obliged to provide coverage.

      Beyond that, the Combination Exclusion exempts from coverage only those

combinations that involve components not “furnished by InterVoice[].” This

means that Intervoice would still have a duty to defend Aflac against claims

relating to combinations between products that were exclusively furnished by

Intervoice. As a result, Aflac is wrong to assert that any indemnity protection in

the contract “evaporated” once Intervoice’s IVR system was connected to the other

components of Aflac’s call center.

      Finally, Aflac argues that Intervoice’s knowledge and conduct during

negotiations of the purchase agreement demonstrate that the parties contemplated

indemnification in this situation. According to Aflac, Intervoice had received—

and ignored—dozens of complaints from its customers regarding RAKTL, but it

nevertheless led Aflac to believe that the Indemnity Provision would provide

protection against RAKTL’s infringement claims.

      Aflac’s last argument is a non-starter under Texas law. Because this is an

unambiguous contract with an integration clause, extrinsic evidence of contract

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negotiations are completely beside the point. See Nat’l Union Fire Ins. Co., 907
S.W.2d at 520 (“Parol evidence is not admissible for the purpose of creating an

ambiguity.”). In any event, it is significant that Intervoice never promised to Aflac

during contract negotiation that claims by RAKTL would be covered. Instead,

Intervoice pointed to the purchase agreement and stated that if the Indemnity

Provision “doesn’t meet your needs, then we can have our attorneys discuss it.”

Instead of bargaining for different language, however, Aflac entered into the

contract containing this provision. We are therefore not persuaded by Aflac’s

attempts to introduce ambiguity into this purchase agreement, where the plain

language of the contract clearly and definitively resolves this dispute.

                                         III.

      We cannot accept Aflac’s invitation to rewrite the purchase agreement to

reach a result we believe is more just. We simply have no power to rewrite the

contract or add to its language under the guise of interpretation. See Natural Gas

Clearinghouse v. Midgard Energy Co., 113 S.W.3d 400, 407 (Tex. App. 2003)

(“For a court to change the parties’ agreement merely because it did not like the

contract, or because one of the parties subsequently found it distasteful, would be

to undermine not only the sanctity afforded the instrument but also the

expectations of those who created and relied upon it.”).

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     For these reasons, the district court’s grant of summary judgment to

Intervoice is AFFIRMED.

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