Soarus L.C.C. v. Bolson Materials International
Opinion
This appeal turns on the construction under Illinois law of provisions in a nondisclosure agreement. The dispute arises out of Bolson Materials International Corporation's inclusion in a patent application of particular information Soarus, L.L.C. believed was protected from disclosure by the parties' agreement. The district court, exercising diversity jurisdiction, determined that the agreement's plain language controlled and revealed no breach of contract by Bolson. We agree and affirm.
I
Bolson develops products and processes for use in the 3D printing industry, and Soarus, which operates out of British Columbia, is a distributor of specialty polymers, including a material known as G-Polymer developed by Nippon Synthetic Chemical Industry Co., Ltd. In 2009, Bolson and Soarus began discussing Bolson's acquisition and use of G-Polymer in connection with developing a new 3D printing process. For its part, Soarus sought to protect its rights and interest in G-Polymer while also allowing for its potential entry into the lucrative 3D printing market.
The parties executed a nondisclosure agreement, which they titled as a Secrecy Declaration and we refer to as the NDA to align with commercial custom. The parties exchanged several rounds of correspondence discussing the terms of the prospective agreement and, more specifically, the intellectual property rights expected to result from Bolson's use of G-Polymer. The discussions led to the execution of the NDA and Soarus, in turn, providing Bolson with confidential information regarding G-Polymer and samples.
Shortly after executing the NDA, Bolson filed a provisional patent for the 3D printing
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process it developed using G-Polymer. The filing resulted in Bolson receiving
The district court granted Bolson's motion for summary judgment, concluding that the plain meaning of the NDA, while conferring generally broad confidentiality protection on Bolson's use of information about G-Polymer, authorized Bolson to use such confidential information in pursuing a patent in the specific area of the fused deposition method of 3D printing. Accordingly, the district court determined that Bolson's inclusion of otherwise confidential information about G-Polymer in its patent application did not constitute a breach of the NDA.
Soarus appeals, renewing the position it advanced in the district court.
II
We review questions of contract interpretation
de novo.
See
Bourke v. Dun & Bradstreet Corp.
,
If the "words in the contract are clear and unambiguous, they must be given their plain, ordinary and popular meaning."
Thompson v. Gordon
,
The NDA is a short two pages and, as would be expected, imposes in its early paragraphs broad restrictions on Bolson's use of confidential information. Take, for instance, paragraph 2, which states that "Bolson shall hold in the strictest confidence the Samples, Confidential Information and the results of the Evaluation, taking all reasonable measures to ensure the confidentiality and limitations on use." From there the NDA proceeds to reinforce and then to limit these restrictions, and the precise language used to do so is at the heart of the dispute that landed the parties in the district court.
Our resolution turns largely on the interplay of paragraphs 6 and 10 of the NDA:
6. Bolson shall not file any application for a patent or other intellectual property using any piece of Confidential Information or the results of the Evaluation without prior written consent of Nippon.
10. Notwithstanding Article 6 hereof, Bolson is free to patent and protect any new applications using G-Polymer® in the specific area of Fused Deposition Method Rapid Prototyping Equipment and Methods.
By its terms, paragraph 6 imposes an obligation on Bolson to refrain from using confidential information in any patent application absent Nippon's written consent. In this way, paragraph 6 reinforces the protection other provisions in the NDA afford to confidential information. But paragraph 10 creates an exception to those protections. It does so by expressly referencing the limitations imposed by paragraph *1012 6, but then broadly excepting them with the language "Notwithstanding Article 6 hereof" before making plain that "Bolson is free to patent and protect any new applications using G-Polymer®" in the specified 3D printing process.
The district court construed these provisions of the NDA the same way, emphasizing that the language employed at the outset of paragraph 10-"Notwithstanding Article 6 hereof ..."-made clear that the authorization conferred on Bolson to freely patent and protect new applications of G-Polymer in the specified 3D printing process was not confined by the NDA's preceding confidentiality restrictions. As the district court observed, the ordinary meaning of notwithstanding is "in spite of" and thus paragraph 10 is best and most plainly read as creating an exception to paragraph 6.
This construction of the NDA finds sound support in Illinois law. See
Board of Educ. of Maine Tp. High School Dist. No. 207 v. International Ins. Co.
,
Soarus disagrees and asks us to read paragraph 10 as simply making plain that paragraph 6 in no way limits Bolson's ability to pursue a patent for the specified 3D printing process. Paragraph 10 does so, Soarus reasons, by leaving intact the broad protections the NDA otherwise confers on confidential information. As an overarching matter, Soarus urges us to avoid reading paragraph 10 in any way at odds with the NDA's commercial purposes. And on this score Soarus contends that no reasonable company would seek to protect the confidentiality around a new product by entering into an agreement that permitted a counterparty to disclose those confidences in a public filing with the U.S. Patent Office.
Contrary to Soarus's construction, paragraph 10 does more than acknowledge or preserve Bolson's patent rights. Indeed, if that was the sole purpose of paragraph 10, there was no reason for the parties to have opened that paragraph by carving out any limitation imposed by paragraph 6. See
Thompson,
Put differently, if Soarus was right about the meaning of paragraph 10, there was no reason to create an exception with respect to paragraph 6: the parties instead could (and should) have stated in clear and precise terms, as Soarus would now have
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it, that Bolson was free to patent and protect the new 3D printing method so long as doing so did not disclose confidential information without the consent of Soarus. Employing that language (or any number of similar formulations) in paragraph 10 would not have been difficult, especially for commercially-sophisticated parties. See
Intrastate Piping & Controls, Inc. v. Robert-James Sales, Inc.
,
With the meaning of paragraph 10 and other applicable provisions of the NDA clear and unambiguous, Illinois law requires us to decline Soarus's invitation to afford substantial, if not controlling, weight to the commercial purposes it believes undergird the NDA. Nor are we permitted in the absence of ambiguity to consider extraneous evidence.
Rakowski v. Lucente
,
For these reasons, the district court correctly concluded that Bolson did not breach the NDA. We AFFIRM.
Reference
- Full Case Name
- SOARUS L.L.C., Plaintiff-Appellant, v. BOLSON MATERIALS INTERNATIONAL CORP. and Timothy J. Heenan, Defendants-Appellees.
- Cited By
- 14 cases
- Status
- Published