Court Opinion

ID: 8597871
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:05:18.94737+00
Date Added: 2024-06-11T16:55:02.806024
License: Public Domain

NICHOLS, Judge,
dissenting:
Respectfully, I dissent.
The contract to be construed is free from ambiguity and plainly says the opposite to what the court urges. Its plain language is that defendant is to pay royalties of 6 percent of the first $30,000,000 of procurement of FATT systems from competitive sources if they embody the ideas of the TDP, in whole or in part. The court has been led astray, I fear, by its wholly unwarranted belief that defendant made an imprudent contract from which it must be rescued, and it *209conjures up an imaginary horror where defendant might be billed millions for a few nuts and bolts. Such a case can be dealt with when it arises, it is not this one. This contract was negotiated by experienced and able lawyers who wrote exactly what they meant. The parties were well aware that the ultimate procurement of FATT systems from "competitive” sources might involve utilization of plaintiffs TDP only in part. They spelled out exactly what they agreed upon in that contingency.
Things have really reached the point where the result-oriented jurist will attain the result he desires whatever the words say that are to be construed. It is out of date and an entire waste of time to draft a contract with the care that the parties devoted to this one. When they meant to measure the royalties on a base that would be simple and easily ascertained, the court has invented out of whole cloth a new base of its own, which will foster endless litigation and have to be ascertained over again every time defendant changes its specifications for new procurement of FATT systems, perhaps, indeed, every time plaintiff submits a new invoice.
In framing this dissent, (I) I point out th£ glaring defects and omissions in the court’s exegesis, and I go through the contract language and show that, grammatically, it can be given but one construction, (II) I consider the negotiation history, and (III) how the chaotic result achieved discredits the court’s pretense, that it is ascertaining the intent of the parties.
I
The object of contract interpretation indeed is to ascertain the parties’ intentions, and this should not be done for the purpose of frustrating them when ascertained. The court says that the interpretation must give reasonable meaning to all provisions and not render any of them meaningless. I could not agree more. But it proceeds to ignore large parts of the clauses to be interpreted and to render numerous words perfectly meaningless.
To begin with, there can be no doubt that by the definition in Article I-B, the systems procured from Honey*210well are, in their entirety, FATT systems. They are "improved versions” of "any one” of enumerated systems plaintiff had designed, and they are versions "which embodies any [emphasis supplied] background data with respect to ideas developed at private expense and submitted by contractor * * *,” and "which data has been accepted by the GOVERNMENT.” I do not understand the court now contests this, so I do not labor the point further. The use of the word "embodies” is to be noted, and I invite attention to the meaning it must have by its context here. The court assigns a dictionary meaning to the same word when used in Article VI-C2, but is not candid enough to note the dictionary cited gives alternative meanings, one of which is "incorporate.” The full definition giving this meaning in Webster’s Unabridged is: "3. to cause to become a body or part of a body: INCORPORATE, ORGANIZE embodied a revenue provision in the new law” The plain implication here is that the remainder of the new law consisted of other than revenue provisions. This is what the context requires "embody” to mean in our definition, I-B. To reach the result the court does, it ignores Article I-B as "just a basic definitional section.” By the trendy interpretation techniques, anything so mere as a "basic definitional section” is of course for ignoring.
Now, turning to Article Cl, I take it the court does not deny that by it the whole $1,000,000 became due on delivery and acceptance of the TDP for competitive procurement, but explains this by differentiating between the word "employing” in Cl and "embodying” in C2. I invite attention to the words "in whole or in part” in Cl, anticipating use of the same words in C2. The court never discusses the meaning of "in whole or in part,” obviously vital to expression of the meanings of the parties, nor does it explain why the same words mean something different in Cl and C2.
Turning now to C2, the court’s whole case seems to turn on its arbitrary selection of one of several dictionary meanings for the word "embody,” disregarding that the context requires selection of a different meaning when used elsewhere. It says that the words "embodying the background data” are mere redundancy if one of the dictionary *211meanings is not chosen in preference for another. If it is redundancy here, however, it is equally redundancy in I-B when it cannot be doubted it means "incorporate.”
The court’s eye does not rest on the words "in whole or in part” in C2, reflecting the same words in Cl. It reads these words entirely out of the contract. The obvious purpose of "in whole or in part”: are to make it clear that the royalty right accrues just the same whether the government utilizes the whole TDP in "competitive procurement” or just a part thereof. I perceive no other purpose it can serve.
The court utterly ignores the language that really does define the royalty base—
6% on the first thirty million dollars ($30,000,000) procurement.
What can the word "procurement” mean if not the entire procurement from the "competitive” supplier, here Honeywell? How does the court have the face, arbitrarily, to narrow the scope of the perfectly plain word "procurement.”
However, if there should be any doubt, Article VI-E, which the court never mentions or quotes, makes it perfectly clear—
E. The computation of royalties payable and of the total royalties applicable toward the ceiling specified in SUB-ARTICLE D above, shall include all procurements of FATT Systems from sources other than CONTRACTOR, as specified in SUBARTICLE VI-C2. [Emphasis supplied to all.]
The author of this article obviously supposed that Article VI-C2 provided for royalties not just on procurement, but all procurement. He says "as specified,” not "to the extent specified” which I am sure we will learn from the majority he really meant. The court takes the word all out of the contract and renders it nugatory.
The court mishandles Article VII which says that the government is to report to SCM twice annually the number of competitive FATT systems it has procured. The obvious purpose is so that SCM can bill for its royalties. Of what possible use for that purpose is the mere number if the court’s interpretation is correct?
*212The court makes out the careful negotiators of this contract as mere bunglers who wrote a contract saying the opposite of what they meant from beginning to end.
There is nothing anomalous in making a license contract for use of intellectual property that includes components not the invention of the licensor in the royalty base. We have often done this with a pioneer invention, as SCM’s was, under 28 U.S.C. § 1498; Marconi Wireless Telegraph Co. v. United States, 99 Ct.Cl. 46, 49 (1942), modified on other grounds, 320 U.S. 1 (1943); Tektronix, Inc. v. United States, 213 Ct.Cl. 257, 552 F.2d 343 (1977).
II
I turn now to the negotiation history. The court ignores the most telling point in this for plaintiff.
Gordon W. Kerr, Esquire, a patent attorney of the Army Electronics Command, wrote of a conference with SCM people, that his side proposed a ceiling on the royalties "after which the use of the data and patent package would be free, and also a descending scale of royalties.” Mr. Kerr himself then pointed out that "as the program progressed the percentage of the FATT developed by Kleinschmidt would decrease, since from here on out most of the changes or modifications would be Government funded, and this is a good reason for adopting a royalty rate with a descending scale.”
But no such descending scale would have been necessary to allow for new government development on the original FATT designs of SCM if the percentage reduction were in that case effected automatically by limiting the royalty to component items disclosed in SCM’s TDP alone. Defendant says Mr. Kerr had only a "peripheral involvement in the negotiations.” Maybe so, but he spoke for the government in making representations to the other side. Whoever was in charge of the negotiation, if Mr. Kerr was not, heard him and would have spoken up and said so if Mr. Kerr was misrepresenting the government position. Defendant tries to show that some later versions of the contract drafts incorporated both the declining royalty rate and the express limitation of royalties to hardware in the SCM *213package, but I cannot find any of them did the latter expressly and without ambiguity. If any had done so, the difference in the final signed version would have spoken for itself. I find no clear evidence that such a reading was adverted to by the negotiators, and intended by them, at any stage.
The court quotes from a draft it says was submitted by plaintiff. I suppose it refers to the draft language which was an enclosure to a letter by Jerry Oppenheimer, Esquire, SCM counsel, to Kendall Barnes, Esquire, Army counsel, dated May 6, 1971. If one assumes the court is right in selecting a meaning of the word "embodying” that is one thing, but the choice among alternative dictionary meanings is the very matter to be decided. The same draft includes a clause reading as follows:
D. The computation of the royalty payments and ceiling shall include all procurements by the GOVERNMENT of the equipment specified in the APE contract or any part thereof (or which utilize the data or patent rights licensed hereunder) from sources other than CONTRACTOR.
This would apparently include all procurements which utilized data or patent rights supplied in the TDP however much data from other sources may also be used. The court is wholly disingenuous in referring to part of this letter and not mentioning the above significant language I have quoted, which clearly indicates the intention of the writer of that letter to be exactly the contrary of what the court asserts.
Ill
The parties did not foresee the weird interpretation this court would put on this contract. Lacking such foresight, they of course failed, in an otherwise elaborately thought out contract, to provide any machinery for ascertainment of the amount of royalties due for billing, for audit, etc., whereas under the contract as they meant it to be, these matters were readily and simply provided for. Even the very first installment of royalty is thrown into endless litigation before the amount due can be ascertained, and *214when it is, it will be by the arbitrary fiat of the court and not by the agreement of the parties. A vista of chaos stretches before the mind’s eye, as other royalties in future accrue to SCM on the Honeywell procurement, and as other procurements are made on other specifications the chaos is multiplied. If the court could face up for even a moment to the idea that these counsel were competent and knew what they were doing, it would appreciate that they would have shot themselves before perpetrating the mess that the court now makes out of their labors. Should the contract be a lot more ambiguous than it is, I would construe it according to plaintiffs contentions for that reason. Surely anyone who expected some day to face the questions put in Part IV of the court’s opinion would have negotiated out some kind of agreement how such questions would be answered. Today there seems to be some kind of strange and antic judicial preference for the most complicated solution to every problem.
I would enter summary judgment for plaintiff and refer to the trial division under Rule 131(c) only the limited question of the dollar value of "competitive” procurement of FATT systems up to the date of judgment. There seems to be some question whether plaintiffs first invoice may have included in the base some procurement of articles or services from Honeywell that were not "FATT Systems.” The only remaining task is to determine the dollar value of no more than all FATT systems procured and apply the contract percentages to the totals thus determined.