[00:00:45] Speaker 04: Okay, our next case this morning is number 18-1511, Board of Trustees of University of Illinois versus Micron Technology. [00:00:54] Speaker 04: Mr. Summerfield. [00:00:56] Speaker 04: Thank you, Your Honor. [00:01:02] Speaker 03: Good morning, Your Honor. [00:01:02] Speaker 03: It's George Summerfield on behalf of the University of Illinois. [00:01:05] Speaker 03: May it please the Court? [00:01:08] Speaker 03: This is an action for breach of contract. [00:01:09] Speaker 03: It's a license agreement that was at issue below. [00:01:12] Speaker 03: So I'd like to turn right off the bat to the provision in question. [00:01:17] Speaker 03: This is found in edX 93. [00:01:20] Speaker 03: And it is paragraph 2C from the agreement. [00:01:23] Speaker 03: And it says, if company wishes to license for commercial use by company such intellectual property owned by university, then the requisite licenses for such intellectual property from university would be granted to company [00:01:37] Speaker 03: pursuant to a separate written license agreement to be negotiated in good faith between the parties, containing such reasonable terms and conditions as mutually agreed to between the parties. [00:01:47] Speaker 02: So why isn't the natural meaning of that language that if you want a license, then any licenses that you need from any law that might oblige you to get one, we, the university, will negotiate in good faith about? [00:02:08] Speaker 02: So the requisite doesn't itself impose on you an obligation to get the licenses. [00:02:16] Speaker 02: That obligation comes from any source of law like patent law. [00:02:21] Speaker 02: And this is a sentence that commits the university to something, not you to something. [00:02:26] Speaker 02: I mean, not them to something. [00:02:27] Speaker 03: So a couple of points, Your Honor. [00:02:28] Speaker 03: First of all, the language of that provision, the word requisite isn't the thing that obliges the university. [00:02:37] Speaker 03: There is language in there. [00:02:38] Speaker 02: No, that's right. [00:02:39] Speaker 02: But what the university is obliged to do is to negotiate in good faith with Micron for any licenses Micron under law requires from the university. [00:02:53] Speaker 03: But again, the agreement characterizes the licenses as requisite. [00:02:58] Speaker 04: Yeah, but it also says if you want a license, you've got to get the requisite licenses. [00:03:02] Speaker 04: That doesn't seem to me to say, [00:03:04] Speaker 04: if you want to commercialize it, you've got to get licenses. [00:03:08] Speaker 04: Because if you want a license, you've got to get the licenses. [00:03:11] Speaker 03: I mean, that really doesn't help you very much. [00:03:13] Speaker 03: There are two responses. [00:03:14] Speaker 03: First of all, if that's all that this provision means, it's effectively superfluous. [00:03:18] Speaker 03: Because that would be true whether there was a contract or not. [00:03:21] Speaker 02: Obviously, a company is going to be- Why would the university be obliged to negotiate in good faith with you at a reasonable rate or whatever? [00:03:29] Speaker 02: Yes, at reasonable terms. [00:03:32] Speaker 02: You could just say, go away. [00:03:35] Speaker 02: It's our patent. [00:03:38] Speaker 03: That's true, Your Honor. [00:03:40] Speaker 02: So this provision does do some work. [00:03:42] Speaker 03: Except that if the parties couldn't agree on those reasonable provisions, there wouldn't be a license that would ensue. [00:03:47] Speaker 01: Did Micron ever seek to enter these negotiations at all? [00:03:52] Speaker 03: No, Your Honor, it did not. [00:03:53] Speaker 03: It simply commercialized the technology. [00:03:55] Speaker 01: So even if it was your obligation, you never were put in a situation where you had to exercise it. [00:04:00] Speaker 03: That's true. [00:04:03] Speaker 03: Micron never came to the university to say we would like a license because we were going to commercialize your technology. [00:04:10] Speaker 03: So the university never had the opportunity to negotiate those terms. [00:04:14] Speaker 03: But that's on Micron, not on the university. [00:04:17] Speaker 04: Isn't it true that you didn't make this requisite argument below? [00:04:23] Speaker 04: What we argued below was the terms. [00:04:25] Speaker 04: Please answer my question. [00:04:27] Speaker 04: Is it true that you didn't make the requisite argument below? [00:04:30] Speaker 03: We didn't call it requisite specifically. [00:04:31] Speaker 03: That's correct, Your Honor. [00:04:32] Speaker 03: But what we did say was that the agreement on its face, and this, by the way, is in the face of a decision that the district court had already issued that said that our construction was the most reasonable, that Micron had the onus to seek a commercial license if it sought to commercialize the technology. [00:04:49] Speaker 03: So it was that context that we were arguing on summary judgment. [00:04:53] Speaker 03: The court basically did [00:04:55] Speaker 03: a reversal of its position. [00:04:57] Speaker 01: So this is an interesting point to me. [00:05:00] Speaker 01: So the district court said that that provision was a reasonable reading. [00:05:06] Speaker 01: The position that you were advocating was a reasonable interpretation of the contract. [00:05:11] Speaker 01: Then later it said, ah, there's another reasonable interpretation of the contract. [00:05:18] Speaker 01: And that was Micron's position. [00:05:20] Speaker 01: Is that right? [00:05:21] Speaker 03: That is correct. [00:05:22] Speaker 03: But the only thing that changed between the time that the court issued its original determination that said that ours was the most reasonable and the time that it said, well, Micron has a reasonable position, too, was that Micron had filed for summary judgment and had provided evidence extrinsic to the work agreement. [00:05:40] Speaker 01: So under Illinois' law, what happens when a court finds two reasonable interpretations to a contract clause? [00:05:46] Speaker 01: Does that create a genuine issue interior fact? [00:05:50] Speaker 03: Yes, if there's a question about what the extrinsic evidence means, then it creates an issue of fact for the jury. [00:05:57] Speaker 03: And here our position is that if the court was correct in resorting to the extrinsic evidence, which we don't believe is right, [00:06:05] Speaker 03: then there is an issue of fact as to what that extrinsic evidence meant. [00:06:10] Speaker 02: What's wrong with thinking about it this way? [00:06:12] Speaker 02: There's a threshold question about whether, as a matter of law, there's ambiguity. [00:06:17] Speaker 02: Let's assume, for purposes of this question, that there's a conclusion, there's ambiguity. [00:06:23] Speaker 02: So now you have to look outside the four corners of the document, and various things may be relevant. [00:06:28] Speaker 02: In general, that's a fact question. [00:06:30] Speaker 02: But why isn't it true that, like any fact question, [00:06:33] Speaker 02: the record may be such that summary judgment is appropriate in the resolution of that fact question. [00:06:40] Speaker 03: Clearly, if the facts were such that no reasonable jury could find for us, then that is something that's appropriate for resolution on summary judgment. [00:06:50] Speaker 02: But that is not the case here. [00:06:51] Speaker 02: But why isn't that case the case from the history of the departure from U of I's template? [00:07:02] Speaker 02: The template [00:07:03] Speaker 02: said something quite different from what Micron got U of I to agree to here. [00:07:11] Speaker 02: And this language no longer imposes an obligation on U of I. We disagree. [00:07:17] Speaker 03: We disagree. [00:07:19] Speaker 03: We think that that language does impose an obligation on Micron. [00:07:23] Speaker 03: And could the language have been clearer? [00:07:25] Speaker 03: Sure, as is the case with pretty much any contract out there. [00:07:29] Speaker 04: I mean, I really don't understand. [00:07:32] Speaker 04: How you can possibly read this is to say that Micron had an obligation to get a license to commercialize this. [00:07:42] Speaker 04: We talked about that one sentence. [00:07:46] Speaker 04: Is there any other argument? [00:07:48] Speaker 04: Is it just the use of the word requisite in there? [00:07:54] Speaker ?: Answer. [00:07:55] Speaker 03: Is it just the use of the word requisite? [00:07:58] Speaker 03: No, it's the fact that there is a provision that addresses what happens in the event of commercialization at all. [00:08:03] Speaker 03: There would be no need for that. [00:08:05] Speaker 03: In effect, the contract in other places says what Micron can and can't do with these annealed wafers. [00:08:12] Speaker 03: So it's very clear that Micron was able, under the license that was granted in the work agreement, to analyze the wafers for non-commercial purposes only. [00:08:24] Speaker 03: So that limitation is already there. [00:08:27] Speaker 03: So the question is, why is there a mention of a commercial license at all in the work agreement? [00:08:33] Speaker 04: Are you arguing that they misused the wafer analysis? [00:08:37] Speaker 03: No, Your Honor. [00:08:38] Speaker 03: They used the wafers for internal purposes. [00:08:41] Speaker 03: But then they went ahead and commercialized the intellectual property. [00:08:44] Speaker 03: Because again, the work agreement is- But not based on their wafer analysis. [00:08:49] Speaker 03: It's a little unclear, Your Honor. [00:08:51] Speaker 03: But we're not relying on that as the reason for our breach of contract. [00:08:55] Speaker 03: There's nothing in the agreement that says you need a commercial license unless you independently develop the products that practice the intellectual property. [00:09:05] Speaker 04: Perhaps that's because there isn't anything in the agreement that says you need a license if you commercialize it. [00:09:11] Speaker 03: Your Honor, we think paragraph 2C is clear. [00:09:14] Speaker 03: And as a matter of fact, the district court agreed with us. [00:09:17] Speaker 03: That was the district court's original conclusion. [00:09:20] Speaker 03: It read this provision and said, this is the most reasonable interpretation of the contract. [00:09:26] Speaker 02: I guess, let me just ask again, you've said a couple of times that even putting aside the word requisite, you've asked rhetorically what else would the existence of a provision about commercial licensing do? [00:09:40] Speaker 02: And I guess I'm having trouble [00:09:44] Speaker 02: understanding why the answer isn't fairly simple. [00:09:46] Speaker 02: This says the university thinks we have some IP rights and therefore Micron is getting from the university in this provision a promise that the university will negotiate in good faith, reasonable terms, if Micron [00:10:02] Speaker 02: seeks such a license. [00:10:04] Speaker 02: But then the question, Your Honor... So it does work, but it does work by imposing, by giving Micron something, not by giving the U of I something. [00:10:12] Speaker 03: Then the question, Your Honor, is what consideration did the university get? [00:10:15] Speaker 03: And the answer is nothing. [00:10:16] Speaker 04: Effectively... Well, that's not the case, because Micron agreed to analyze the wafers, right? [00:10:24] Speaker 03: That doesn't adhere to the benefit of the university, Your Honor. [00:10:27] Speaker 03: Basically, [00:10:28] Speaker 03: Micron was interested in knowing what would happen to its wafers. [00:10:31] Speaker 04: Sure, it benefits the university. [00:10:35] Speaker 04: They agreed to take a look at the wafers and to decide and to consider whether they wanted to take a license. [00:10:43] Speaker 04: So they started down the path of doing the research that was necessary to help them make that determination. [00:10:51] Speaker 04: They agreed to do that, no? [00:10:52] Speaker 03: No, Your Honor. [00:10:53] Speaker 03: That's not what this agreement is about at all. [00:10:54] Speaker 03: Did they agree to analyze the wafers? [00:10:56] Speaker 03: No, they agreed to anneal them. [00:10:58] Speaker 03: under a process that was proprietary to the university, and then give the waivers back to Micron. [00:11:02] Speaker 04: So they agreed to do something, right? [00:11:05] Speaker 03: They agreed to take on work for Micron's benefit. [00:11:08] Speaker 03: The question is, what did the university get in return? [00:11:11] Speaker 02: Well, if it turned out that the annealing process made for better chips than Micron, and if it turned out that U of I had a valid patent covering it, then Micron might come back and say, we want to make 500 million of these chips using your process. [00:11:27] Speaker 02: So we'd like to pay you money. [00:11:29] Speaker 03: But that would be true whether or not this license existed. [00:11:33] Speaker 03: The point is, the university, if Micron is right on its construction, the university was obliged to perform this annealing process for Micron at Micron's specifications, give the wafers back to Micron in a timely fashion, and let Micron do with them internally what it would. [00:11:50] Speaker 03: And the university got nothing. [00:11:53] Speaker 03: It didn't get paid. [00:11:54] Speaker 03: That's Article 2A of the work agreement. [00:11:57] Speaker 03: So the only reason the university entered into this and any other agreement was to ensure that if it was performing these kinds of processes for commercial entities, that it wouldn't have to fight infringement battles down the road if the company decided to commercialize the very intellectual property that the university used to perform this work. [00:12:17] Speaker 04: And yes, the language of this agreement is to suppose somebody agrees to with a patentee to [00:12:27] Speaker 04: use their technology to do an analysis of a sample with the idea that such an analysis might lead the company doing the analysis to seek a broader agreement. [00:12:45] Speaker 04: Is that, that's not consideration? [00:12:50] Speaker 03: I would think in that circumstance, no, there is no consideration because that's a mere agreement to agree [00:12:56] Speaker 03: Again, that would be an agreement to agree, and the license agreement wouldn't have to provide for that. [00:13:00] Speaker 04: It's not an agreement to agree. [00:13:01] Speaker 04: It's just an agreement that we're going to spend some resources to do an analysis that will inform a possible license agreement later on. [00:13:12] Speaker 03: Your Honor, at least in our view, that means that effectively the university is doing work that it's obliged to do, and Micron then has [00:13:20] Speaker 03: the ability to do whatever it wants down the road. [00:13:23] Speaker 03: Take a license, not take a license, infringe patents. [00:13:25] Speaker 03: Not infringe patents, that's not the nature of consideration. [00:13:29] Speaker 03: It's just not tangible. [00:13:31] Speaker 01: And so while the university... Your consideration was that you got to see a real-world application of the process, of your patent process. [00:13:38] Speaker 03: But the university didn't need Micron for that, Your Honor. [00:13:42] Speaker 03: There are wafers available that the university could have purchased and performed [00:13:46] Speaker 03: all of these tests. [00:13:48] Speaker 03: And the university wasn't able to analyze them once these tests were performed. [00:13:51] Speaker 03: It was only Micron. [00:13:53] Speaker 03: The university gave them back. [00:13:55] Speaker 03: So effectively Micron annealed these wafers and sent them back to Micron. [00:13:59] Speaker 03: So the knowledge base that the university gained from this is effectively zero. [00:14:03] Speaker 03: The only party that benefited from this is Micron. [00:14:06] Speaker 01: Well, the result was that the annealing process did not help. [00:14:10] Speaker 01: That experiment under this agreement was a failure. [00:14:13] Speaker 03: That's according to Micron. [00:14:15] Speaker 01: Yeah. [00:14:15] Speaker 01: Let's go back to the purpose. [00:14:17] Speaker 01: The real purpose of the agreement, or the stated purpose, is that this is a work agreement. [00:14:21] Speaker 01: Seems to me to be a pre-credo agreement. [00:14:25] Speaker 01: It's a cooperation agreement between the university and the private sector in order to help train your PhD students. [00:14:35] Speaker 03: No, Your Honor. [00:14:36] Speaker 03: Again, Micron wasn't necessary for that. [00:14:38] Speaker 03: Dr. Lighting had his own materials that he could work with, and in fact did. [00:14:43] Speaker 03: So we didn't need Micron to have Dr. Lighting train his PhD students. [00:14:49] Speaker 03: There were materials out there independent of Micron that the university could have used. [00:14:53] Speaker 03: So it wasn't as if Micron was saying, look, we know you don't have wafers. [00:14:57] Speaker 03: We'll provide them to you so that you can run these experiments to your benefit. [00:15:01] Speaker 03: That's not what this was about. [00:15:02] Speaker 03: And that's not what the agreement provides. [00:15:05] Speaker 03: This is material that's proprietary to Micron. [00:15:08] Speaker 03: The university wasn't able to analyze it. [00:15:10] Speaker 03: It wasn't able to do anything with it except perform the annealing and send it back so that Micron could then figure out what the benefit was. [00:15:18] Speaker 03: And the university, according to Micron, was entitled to zero in return. [00:15:25] Speaker 03: There was no compensation for the work itself. [00:15:28] Speaker 03: And, according to Micron, it had the right, if it felt like it, not to take a license [00:15:34] Speaker 03: to infringe patents and then force the university to come after Micron for patent infringement. [00:16:04] Speaker 00: Good morning, Your Honors. [00:16:05] Speaker 00: Adam Schartzer on behalf of Micron Technology. [00:16:08] Speaker 00: May it please the Court. [00:16:09] Speaker 00: Your Honors, I want to go straight to the issue regarding the seven-year pending litigation, seven years as of two days from now. [00:16:18] Speaker 01: What made the district court change its mind? [00:16:21] Speaker 01: It said first, at the very beginning, it said that the university's interpretation was the most reasonable interpretation. [00:16:28] Speaker 01: What happened after that that caused the change? [00:16:31] Speaker 01: And I understand the court made that decision at the motion to dismiss stage, correct? [00:16:38] Speaker 00: That's correct. [00:16:39] Speaker 01: So they survived the motion to dismiss on the basis that their interpretation was the most reasonable interpretation. [00:16:46] Speaker 00: That's correct. [00:16:47] Speaker 00: But I want to make sure the record is clear. [00:16:49] Speaker 00: It's the full scope of the district court's determinations. [00:16:52] Speaker 00: So at page 136 of the appendix, this is the court's decision [00:16:59] Speaker 00: With respect to the motion to submit, I'll wait for the panel to get to that page. [00:17:07] Speaker 00: I'm sorry, page what? [00:17:08] Speaker 02: Page 136 of the appendix. [00:17:11] Speaker 02: There is no such page in the appendix. [00:17:13] Speaker 02: 136. [00:17:15] Speaker 02: Are you looking at the other appendix? [00:17:18] Speaker 02: I'm looking at the wrong appendix, excuse me. [00:17:20] Speaker 02: Sorry about that. [00:17:25] Speaker 02: Too many cases with the same name. [00:17:27] Speaker 02: Why don't you go ahead, I'll get there. [00:17:29] Speaker 02: There are many cases here, Judge Charlton. [00:17:31] Speaker 00: Apologies. [00:17:36] Speaker 00: All right. [00:17:36] Speaker 00: So page 136 in that first paragraph, about halfway through that first paragraph, the district court states, the university's amended complaint plausibly pleads that it has suffered contract damages in the form of lost potential royalties. [00:17:49] Speaker 00: Colon. [00:17:50] Speaker 00: And it's almost as if the district court's stating what the university has pledged. [00:17:55] Speaker 01: and she restates that. [00:17:57] Speaker 01: I'm not on the same page. [00:17:59] Speaker 00: You said 137. [00:18:00] Speaker 00: 136, your honor. [00:18:01] Speaker 01: 136. [00:18:06] Speaker 00: So the district court ends with a colon in that clause there and then sort of restates what the court interprets to be the universities pleading there, that it's their position that the most reasonable reading of the contract called for Micron to seek a license. [00:18:21] Speaker 00: If you turn then to page [00:18:24] Speaker 00: 139 of the appendix, where the court restates essentially the issue that the university raised with respect to its understanding of the work agreement. [00:18:37] Speaker 00: And there, the district court states that A, rather than the most, but A, reasonable interpretation of the work agreement, however, conditioned the transfer on Micron's promise to seek a license from the university if it ultimately sought to put the university's processes to commercial use. [00:18:52] Speaker 00: So it's clear, even with the same motion to dismiss opinion, that the district court didn't view the university's position as a judgment, ultimately, on the proper interpretation. [00:19:05] Speaker 04: It's a legal question, right? [00:19:07] Speaker 04: The question of whether the agreement's unambiguous. [00:19:10] Speaker 00: You say it's unambiguous. [00:19:12] Speaker 00: We do say it's unambiguous, and it's unambiguous in Micron's favor based upon the most natural reading of the language. [00:19:18] Speaker 00: If company wishes to license, [00:19:20] Speaker 00: That's the predicate to this new argument. [00:19:22] Speaker 01: Is that what you argued below? [00:19:23] Speaker 00: Yes, that is what we argued below. [00:19:26] Speaker 00: We argued below that the natural reading of the agreement, the unambiguous language of the agreement, was that if Micron wishes or desires to obtain a license, then Micron would then seek that license from the university. [00:19:42] Speaker 00: But we never limited our arguments, for example, to- Did you object to the court turning to extrinsic evidence? [00:19:50] Speaker 00: So in our summary judgment motion, we argued both, and we argued the... Okay, that's what I thought. [00:19:55] Speaker 00: Right, we argued both. [00:19:55] Speaker 00: We argued that there was an unambiguous interpretation of this agreement, but if the court determined that there was not an unambiguous interpretation of this agreement in my run's favor, then certainly if there was an ambiguity to resolve, it could be resolved based upon undisputed facts in the record. [00:20:12] Speaker 00: on summary judgment. [00:20:13] Speaker 02: And just to be clear, did you make the argument that you were unambiguously right not only in summary judgment, but at the 12b stage also? [00:20:26] Speaker 02: Was that a basis for your motion to dismiss? [00:20:30] Speaker 00: On our basis for the motion to dismiss, we were not arguing the unambiguous interpretation of clause 2c. [00:20:36] Speaker 00: We focused primarily on the liability limiting clause, section 6. [00:20:41] Speaker 00: And the district court actually went into- Which is why at page 136, that's what the judge is discussing. [00:20:47] Speaker 00: That's right. [00:20:48] Speaker 00: The judge is discussing. [00:20:49] Speaker 00: The judge goes on from the paragraph that I highlighted for the panel here and goes on to discuss Micron's argument with respect to the liability limiting clause. [00:20:59] Speaker 00: And the district court viewed that as necessary because if Micron were correct as to its interpretation of the liability limiting clause, then even under the university's interpretation of clause 2C, [00:21:11] Speaker 00: there was no breach of contract claim to move forward. [00:21:15] Speaker 00: And the district court ultimately determined that there was an ambiguity there as well, and determined to allow this case to move forward under the Rule 12 standard that it determined the university had met. [00:21:28] Speaker 00: And so the case proceeded from there. [00:21:33] Speaker 00: Now, the other thing that we've argued, Your Honor, is that it was not touched on before, is the fact that there are four alternative bases for affirmance here. [00:21:40] Speaker 00: those alternative bases for affirmance, any one of which would result in an affirmance by this panel, would resolve this appeal without the court actually reaching any of the particular contract interpretation issues. [00:21:56] Speaker 02: Can I get back to the issue actually decided here? [00:22:00] Speaker 02: Suppose we were, just for purposes of this question, to conclude that the language here is ambiguous. [00:22:10] Speaker 02: so that evidence outside the four corners of the document is legitimately considered. [00:22:16] Speaker 02: And indeed, summary judgment is one way of doing that. [00:22:22] Speaker 02: Why is this a case in which the evidence submitted, the extrinsic evidence submitted, the drafting history, some of the testimony from U of I's negotiator [00:22:35] Speaker 02: Why does that not create a triable issue of fact? [00:22:41] Speaker 00: Well, there's no material issue in dispute with respect to the extrinsic evidence. [00:22:48] Speaker 00: The district court analyzed the Micron's arguments with respect to the extrinsic evidence and also completely analyzed the university's arguments [00:22:58] Speaker 00: with respect to. [00:23:00] Speaker 02: But that's a point about the process. [00:23:02] Speaker 02: The process worked well. [00:23:04] Speaker 02: But in order for there to be summary judgment, again, on the assumption that there is ambiguity, there would have to be only one reasonable fact finding that could be drawn from this evidence. [00:23:20] Speaker 02: And why does the evidence, in your view, rise to that level? [00:23:25] Speaker 00: Well, below, Your Honor, the university only raised one particular portion of the testimony in the record with respect to Leslie Miller Nicholson's testimony below. [00:23:36] Speaker 00: Now, on appeal, they've raised six different citations to various testimony below, attempting to create that fact issue now here at the appellate level. [00:23:45] Speaker 00: But all of those five citations to testimony that was not presented to the district court are waived. [00:23:51] Speaker 00: And with respect to what the district court had to look at, [00:23:55] Speaker 00: The district court only looked at and analyzed what the university put in front of the district court as a basis for there being some type of fact issue. [00:24:04] Speaker 02: And very charitably... And what was that basis? [00:24:07] Speaker 00: The university had argued that there was language in the agreement with respect to requiring a separate license agreement to be negotiated in good faith. [00:24:18] Speaker 00: They cited Ms. [00:24:20] Speaker 00: Miller-Nicholson's testimony [00:24:22] Speaker 00: It's in your appendix at page 234. [00:24:26] Speaker 00: It's her testimony at page 175, lines 5 through 21 of the transcript. [00:24:32] Speaker 00: But that's the substantive testimony that the university cited. [00:24:36] Speaker 00: The red lines weren't in favor of the university. [00:24:39] Speaker 00: The other testimony in the record wasn't in favor of the university. [00:24:42] Speaker 04: What was their argument? [00:24:43] Speaker 04: That her testimony preserved the notion that there could be a contract action? [00:24:49] Speaker 04: That's right. [00:24:50] Speaker 00: That somehow her testimony [00:24:52] Speaker 00: was part and parcel with obligating Micron to take a commercial license upon commercialization. [00:24:59] Speaker 00: And then they also argued with respect to there being a separate requirement to negotiate a license in good faith. [00:25:06] Speaker 00: But when you look at that testimony, that testimony is really just about the fact that Micron had the option to choose whether or not it would seek a license. [00:25:15] Speaker 00: And then the university was obligated to negotiate in good faith to reach that license. [00:25:20] Speaker 00: And that's the obligation that's created by Section 2C upon the university with respect to the natural reading of the language. [00:25:28] Speaker 01: But what in the contract creates that option? [00:25:30] Speaker 01: I kind of know the answer, but I'm asking you, what in the contract creates the option that we're talking about? [00:25:36] Speaker 00: Well, it's the first four words of Section 2C. [00:25:41] Speaker 00: If company wishes to license, I guess that's five words, Your Honor. [00:25:50] Speaker 01: So if you wish, then something happens. [00:25:54] Speaker 01: And then we have the word then. [00:25:56] Speaker 00: Then, right. [00:25:57] Speaker 01: Something else happens. [00:25:58] Speaker 00: Right. [00:25:58] Speaker 00: It's like an if-then statement in C programming. [00:26:02] Speaker 00: If the condition occurs, then something else will occur. [00:26:05] Speaker 00: And the first condition. [00:26:06] Speaker 01: So we're looking at the word wishes, if you would like to, as opposed to if Micron wants to commercialize. [00:26:14] Speaker 01: That's correct. [00:26:16] Speaker 01: Or is it going to commercialize? [00:26:18] Speaker 00: I would say going to commercialize or has commercialized. [00:26:21] Speaker 01: Or wants to commercialize. [00:26:23] Speaker 01: What's the difference between wants and wishes? [00:26:28] Speaker 00: Wants and wishes, I think they're probably fairly similar. [00:26:32] Speaker 01: What about desires? [00:26:34] Speaker 00: Desires. [00:26:35] Speaker 00: Same. [00:26:36] Speaker 00: If Micron desires to license, that may have been a different way to say it, but this contract here very clearly puts the predicate of termination whether or not Micron [00:26:47] Speaker 00: has wished to license from the university. [00:26:49] Speaker 04: As opposed to if it desires to commercialize. [00:26:53] Speaker 00: As opposed to if it desires to commercialize. [00:26:57] Speaker 01: I see different meanings in the words if you stop after to license. [00:27:04] Speaker 01: But the contract goes on and says to license for commercial use. [00:27:08] Speaker 01: Why can't that be read if Micron desires to use commercially? [00:27:14] Speaker 01: or if Micron wants to commercialize, isn't that what this is also saying? [00:27:20] Speaker 00: No, that's not what this is also saying, because it says you have to read the clause together. [00:27:24] Speaker 00: If a company wishes to license for commercial use, and in context, the license that the university referred to is not a commercial license that requires royalties like we typically think about in these patent infringement cases. [00:27:37] Speaker 00: They're talking about some type of limited license that limits the use of the treated wafers to testing, inspecting, and use. [00:27:43] Speaker 00: So, for instance, there may be, more to your point, Judge Raina, there may be experimental uses, there may be commercial uses. [00:27:50] Speaker 01: The minute we get into commercial use, we're talking about third party involvement. [00:27:55] Speaker 01: I'm sorry? [00:27:56] Speaker 01: As soon as we use the word commercial use, we're talking about third party involvement. [00:28:04] Speaker 00: I'm not sure I understand third party involvement, but it's possible that third parties could be involved, but to license for commercial use, that would suggest there's a type of... Micron is a very highly sophisticated company that's involved in licenses and in all aspects of IP law. [00:28:22] Speaker 01: And I think to me, it really pushes the extreme to not look at the words for commercial use. [00:28:35] Speaker 01: Because that's the allegation of the breach, that you ultimately used the intellectual property of the university for commercial use. [00:28:48] Speaker 00: Micron's not excluding the words commercial use, but those words just describe the type of license that would be obtained if Micron wished to. [00:28:56] Speaker 01: No, no, it describes the type of use, not the license. [00:28:59] Speaker 01: It has nothing to forget about the licenses. [00:29:02] Speaker 01: It said if you're going to use the IP, [00:29:05] Speaker 01: for commercial use, commercially. [00:29:07] Speaker 01: If you're going to use it, forget about the licenses. [00:29:09] Speaker 01: That comes later. [00:29:12] Speaker 00: Perhaps it would be a type of field of use limitation that would be included in a license that Micron wished to obtain down the line. [00:29:19] Speaker 01: But to a sophisticated party like Micron, why doesn't commercial use mean involvement of a third party? [00:29:29] Speaker 00: Well, Micron can manufacture and sell its own products. [00:29:33] Speaker 00: I'm trying to understand your question there, your honor, but commercial use would suggest that there's a problem. [00:29:41] Speaker 02: Can you address Mr. Summerfield's point that under your interpretation of this provision, there's really no point for this provision to have been included in the working agreement? [00:29:52] Speaker 00: Well, your honor, this is just a simple work agreement between the parties. [00:29:58] Speaker 00: Micron was going to send his engineer over to the university [00:30:02] Speaker 00: because the university had a piece of equipment in a needle chamber where they could introduce deuterium gas. [00:30:08] Speaker 00: And in this work agreement, Micron went over, took eight to ten silicon wafers of half-manufactured DRAM and then processed it. [00:30:18] Speaker 00: And then if you look at Clause 5C of the work agreement, there at page 93 of the appendix, [00:30:27] Speaker 00: It gives publication rights to the university, and it states that university and its researchers will have the right to publish or otherwise disclose the results of work performed by the university. [00:30:36] Speaker 00: So the university was getting something under this agreement. [00:30:39] Speaker 00: And with respect to Section 2C, I think the university's argument is premised on a false premise that every single term in an agreement must somehow provide a benefit to the university. [00:30:52] Speaker 00: We see in agreements, license agreements, for example, all the time that there are leases [00:30:56] Speaker 00: releases go one way to one party, and then the next paragraph has a release that goes the other way to the other party. [00:31:02] Speaker 00: That's just how agreements are written. [00:31:05] Speaker 00: But there's no indication that the university wasn't going to benefit from this agreement in some way, shape, or form through Micron's know-how, Micron's investment in billions of dollars into its fabs in order to be able to create these commercially viable products that were then [00:31:23] Speaker 00: tested with the university's alleged processes. [00:31:28] Speaker 00: The thing is is that these tests were a complete failure and that Micron didn't pursue the work any longer with, you know, respect to those treated wafers and there's no allegation that Micron has breached the agreement with respect to those treated wafers. [00:31:42] Speaker 00: Thank you, Mr. Schwarz. [00:31:45] Speaker 04: Mr. Summerfield, you've got two minutes. [00:31:57] Speaker 03: Thank you, your honor. [00:31:59] Speaker 03: I don't think I could have said it better than Mr. Sharzer as to what benefit Micron derived from the university's work. [00:32:04] Speaker 03: It was seeing whether it was worth investing money in a process that it asked the university to perform. [00:32:11] Speaker 03: And the fact it was a failure, assuming that Mr. Sharzer is correct, told Micron that wasn't the thing to invest money in. [00:32:17] Speaker 03: They did, however, use a kneeling process that used the university's intellectual property later on. [00:32:23] Speaker 03: I'd like to turn to the extrinsic evidence that the court addressed with Mr. Schartzer. [00:32:27] Speaker 03: First of all, this is Appendix Pages 8 and 9. [00:32:30] Speaker 03: It's the decision below. [00:32:32] Speaker 03: The change in the language of the agreement. [00:32:35] Speaker 03: What the judge cited was Ms. [00:32:38] Speaker 03: Miller Nicholson's testimony that the changes to the licensing paragraph, quote, had meaning. [00:32:43] Speaker 03: Mr. Schartzer took the deposition of Ms. [00:32:45] Speaker 03: Miller Nicholson, but never asked what that meaning was. [00:32:48] Speaker 03: And in fact, there were more changes to [00:32:51] Speaker 03: this particular provision, provision 2C, than just the issue about the commercial license. [00:32:56] Speaker 03: For example, the acknowledgement by the company that the university had proprietary interest in intellectual property was changed to what the university represented. [00:33:05] Speaker 03: So the record is completely devoid of what that change actually meant. [00:33:09] Speaker 03: This is something for the jury to determine. [00:33:12] Speaker 03: It's not a clear fact issue that could be resolved on summary judgment. [00:33:15] Speaker 03: Next, Ms. [00:33:16] Speaker 03: Miller-Nicholson's testimony. [00:33:20] Speaker 03: This is on page 9 of the appendix. [00:33:21] Speaker 03: Her answer, if they were using anybody's patents without license and they could be pursued and sued, that is a true statement, which is why we are here. [00:33:29] Speaker 03: They were pursued and sued because they didn't enter into the requisite commercial license. [00:33:34] Speaker 03: So again, to determine that this testimony somehow means that Micron had the... But she didn't say they could be sued for breach of contract. [00:33:43] Speaker 04: She was talking about [00:33:44] Speaker 04: being sued for infringement. [00:33:46] Speaker 04: She didn't say, Your Honor, that's the point. [00:33:48] Speaker 03: She didn't say they could be sued for patent infringement. [00:33:50] Speaker 03: I think the context arguably is pretty clear that that's what she was talking about. [00:33:54] Speaker 03: It may be arguably clear, Your Honor, but that's not for the court to resolve on summary judgment. [00:33:59] Speaker 03: And then finally, Mr. Scharzer's point that what she was doing in saying the most reasonable interpretation was our was somehow just parroting back what we said. [00:34:07] Speaker 03: If you look at page 8 of the appendix, [00:34:10] Speaker 03: She said, in an earlier order denying one of Micron's motions to dismiss, the court determined that the university's interpretation was reasonable. [00:34:18] Speaker 03: She wasn't just adopting our position. [00:34:19] Speaker 03: She actually made that finding. [00:34:21] Speaker 04: OK. [00:34:21] Speaker 04: All right. [00:34:21] Speaker 04: Thank you. [00:34:22] Speaker 04: We're out of time. [00:34:23] Speaker 04: Thank both counsel. [00:34:24] Speaker 04: The case is submitted. [00:34:24] Speaker 04: Why don't you just stay at the same table for the next case?