Soarus L.C.C. v. Bolson Materials International , 905 F.3d 1009 ( 2018 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 18-1144
SOARUS L.L.C.,
Plaintiff-Appellant,
v.
BOLSON MATERIALS
INTERNATIONAL CORP. and
TIMOTHY J. HEENAN,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:15-cv-10652 — Charles R. Norgle, Judge.
____________________
ARGUED SEPTEMBER 14, 2018 — DECIDED OCTOBER 1, 2018
____________________
Before BAUER, HAMILTON, and SCUDDER, Circuit Judges.
SCUDDER, Circuit Judge. This appeal turns on the construc-
tion under Illinois law of provisions in a nondisclosure agree-
ment. 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 dis-
2 No. 18-1144
closure by the parties’ agreement. The district court, exercis-
ing 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 ex-
changed 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 process it developed
using G-Polymer. The filing resulted in Bolson receiving U.S.
Patent No. 8,404,171, which the parties call the ‘171 Patent, on
March 26, 2013. Soarus later claimed that Bolson’s application
for the ‘171 Patent revealed confidential information about
No. 18-1144 3
G-Polymer, in violation of the NDA. Litigation ultimately
ensued in the Northern District of Illinois.
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., 159 F.3d 1032, 1036 (7th Cir.
1998). Because the case comes to us following the district
court’s exercise of diversity jurisdiction, we undertake that re-
view by applying Illinois law. See ECHO, Inc. v. Whitson Co.,
52 F.3d 702, 705 (7th Cir. 1995).
If the “words in the contract are clear and unambiguous,
they must be given their plain, ordinary and popular mean-
ing.” Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011). Indeed,
it is only if the NDA is ambiguous that Illinois law would turn
us to extrinsic evidence to determine the parties’ intent. See
id. Of course, “a contract is not rendered ambiguous merely
because the parties disagree on its meaning.” C. Illinois Light
Co. v. Home Ins. Co., 821 N.E.2d 206, 214 (Ill. 2004).
4 No. 18-1144
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 confi-
dence 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 para-
graphs 6 and 10 of the NDA:
6. Bolson shall not file any application for a pa-
tent or other intellectual property using any
piece of Confidential Information or the re-
sults of the Evaluation without prior written
consent of Nippon.
10. Notwithstanding Article 6 hereof, Bolson is
free to patent and protect any new applica-
tions using G-Polymer® in the specific area
of Fused Deposition Method Rapid Prototyp-
ing 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
6, but then broadly excepting them with the language
No. 18-1144 5
“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., 799 N.E.2d 817, 824 (Ill. App.
Ct. 2003) (explaining that “notwithstanding is defined as
without prevention or obstruction from or by; in spite of,
despite, and it implies the presence of an obstacle …
notwithstanding, in essence wipes out anything to the
contrary”) (internal citations omitted); see also Central Illinois
Public Service Co. v. Allianz Underwriters Ins. Co., 608 N.E.2d
155, 157 (Ill. App. Ct. 1992) (articulating same meaning of
“notwithstanding” in a contract setting); accord N.L.R.B. v.
SW General, Inc., 137 S. Ct. 929, 939 (2017) (stating, albeit in the
context of interpreting a statute, that “[t]he ordinary meaning
of notwithstanding is in spite of, or without obstruction from
or by”).
Soarus disagrees and asks us to read paragraph 10 as
simply making plain that paragraph 6 in no way limits
6 No. 18-1144
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, 948 N.E.2d at 47 (“A court will not interpret a
contract in a manner that would nullify or render provisions
meaningless, or in a way that is contrary to the plain and
obvious meaning of the language used.”). The existence of the
“Notwithstanding Article 6 hereof” language signals a
different intent—to create an exception to the limitation
paragraph 6 imposed on Bolson’s use of confidential
information in any patent application. See William Blair and
Co., LLC v. FI Liquidation Corp., 830 N.E.2d 760, 770 (Ill. App.
Ct. 2005) (explaining that “in the absence of ambiguity, a court
must construe a contract according to its own language, not
according to the parties’ subjective constructions”).
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)
No. 18-1144 7
have stated in clear and precise terms, as Soarus would now
have 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., 733
N.E.2d 718, 725 (Ill. 2000) (emphasizing that sophisticated
businesses are capable of protecting their own interests and
allocating risks in a negotiation process); Wachta v. First
Federal Sav. & Loan Ass’n of Waukegan, 430 N.E.2d 708, 714
(Ill. App. Ct. 1981) (“It is assumed the author wanted the
words it chose to be used and it cannot complain when a
construction favorable to the opposing party is adopted.”)
(internal citations omitted).
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 be-
lieves undergird the NDA. Nor are we permitted in the ab-
sence of ambiguity to consider extraneous evidence. Rakowski
v. Lucente, 472 N.E.2d 791, 794 (Ill. 1984) (“Where a written
agreement is clear and explicit, a court must enforce the agree-
ment as written. Both the meaning of the instrument, and the
intention of the parties must be gathered from the face of the
document without the assistance of parol evidence or any
other extrinsic aids.”).
For these reasons, the district court correctly concluded
that Bolson did not breach the NDA. We AFFIRM.