Babcock & Wilcox v. AREVA

PRESENT: Lemons, C.J., Goodwyn, Mims, McClanahan, Powell, and Kelsey, JJ., and Lacy, S.J.
THE BABCOCK & WILCOX COMPANY, ET AL.
OPINION BY
v. Record No. 150830 JUSTICE D. ARTHUR KELSEY
June 30, 2016
AREVA NP, INC., F/K/A FRAMATOME ANP, INC.
FROM THE CIRCUIT COURT OF THE CITY OF LYNCHBURG
Mosby G. Perrow, III, Judge
This appeal concerns a royalty dispute over the use of nuclear technology, which resulted
in a jury verdict in favor of Areva NP, Inc. (“Areva”) against Babcock & Wilcox Company
(“B&W”) and affiliated companies (collectively, the “B&W defendants”) for breach of contract
and violation of the Virginia Uniform Trade Secrets Act, Code §§ 59.1-336 to -343.
The B&W defendants appeal on various grounds, claiming that the trial court
misconstrued the governing agreements and that the alleged use of the nuclear technology did
not violate these agreements, properly construed, as a matter of law. The B&W defendants also
contend that Areva failed to prove a prima facie violation of the Trade Secrets Act. In one of its
two assignments of cross-error, Areva contends that, in the event that we reverse and remand for
a new trial, we should correct an alleged error in the finding instruction. 1
I. BACKGROUND
In the trial court, Areva filed a two-count complaint against B&W and three affiliated
companies, Babcock & Wilcox Power Generation Group, Inc.; Babcock & Wilcox Nuclear
Energy, Inc. (“B&W Nuclear”); and Babcock & Wilcox Canada, Ltd. (“B&W Canada”). This
1
Areva’s second assignment of cross-error contends that the trial court erred in granting
partial summary judgment for the B&W defendants and holding that “the royalty does not apply
to gross contract amounts for off site design, manufacture, and sale of ROTSG.” Appellee’s Br.
at 47 (altering capitalization). This issue is subsumed within our discussion of the B&W
defendants’ assignments of error.
suit was filed on the heels of earlier litigation between the parties in federal court, which the
parties settled after the issuance of a preliminary injunction against Areva’s parent company in
favor of B&W Canada and BWX Technologies, Inc. See Babcock & Wilcox Canada Ltd. v.
Framatome ANP, Inc., No. 6:02CV00049 (W.D. Va. Feb. 13, 2003) (Moon, J.) (unpublished
opinion granting the B&W affiliates’ motion for a preliminary injunction); 9 J.A. at 3465 (2003
Settlement Agreement’s recital referencing the federal suit). The present dispute arose primarily
out of one of several agreements related to the settlement of the litigation in federal court.
A. COUNT I – BREACH OF SUB-LICENSE
Count I of Areva’s complaint alleged that B&W and B&W Canada (“B&W
sublicensees”) breached a 2004 agreement titled “Sub-License of Nuclear Technology” (“Sub-
License”). 19 J.A. at 8507. 2 According to Areva, the B&W defendants had breached the Sub-
License by failing to notify Areva of qualifying contracts under Section II.A and “to pay Areva a
[corresponding] royalty of four percent (4.0%) of the gross amount paid under any such
contracts.” 1 J.A. at 7.
The parties agreed on the relevant terms of the Sub-License. It included several prefatory
clauses acknowledging prior agreements between the parties and defining various terms of the
Sub-License by reference to these agreements. The first “WHEREAS” clause stated that, in an
agreement titled “Technology Transfer Agreement” entered into in 1989 and restated in 1991
(“1991 License Agreement”), B&W had transferred to B&W Nuclear Service Company, Areva’s
predecessor in interest, “an exclusive license to apply the Once Through Steam Generator
2
The Sub-License specifies New York in its choice-of-law provision. The parties have
not asserted that New York law differs from Virginia law, and thus, we presume it “to be
identical with the law of this state upon the same subject.” Norfolk & W. Ry. v. Denny, 106 Va.
383, 400, 56 S.E. 321, 327 (1907); see also Mountain Lake Land Co. v. Blair, 109 Va. 147, 151,
63 S.E. 751, 752 (1909); Restatement (Second) of Conflicts of Laws § 136, cmt. h (1971).
2
(‘OTSG’) nuclear technology in the field of commercial nuclear services.” 19 J.A. at 8507. 3
The second through fourth recitals stated that Areva could sublicense back to the B&W
sublicensees “all Nuclear Technology” as that term was understood in the 1991 License
Agreement and various other prior contracts between the parties. Id.
Section I of the Sub-License, titled “LICENSE GRANT,” provided that Areva’s
predecessor granted to the B&W sublicensees “a perpetual, worldwide, sub-license to practice
and use the Nuclear Technology which is exclusive to [Areva] . . . for all purposes, without
restriction, in the field of or relating to the supply of commercial nuclear services to OTSG
plants.” Id. at 8508. Section II, designated “ROYALTY OF 4% ON GROSS REVENUES,”
stated:
For the use as defined in this Sub-License at OTSG plant sites
described in Exhibit “A” by a Grantee of the Nuclear Technology,
but excluding the first contract, which is covered under paragraph
D, below, the Grantee agrees to pay to [Areva] a royalty of four
percent (4.0%) of the Grantee’s gross contract amounts to the
extent such amounts are actually paid to the Grantee by the
Grantee’s customer(s) . . . as calculated and on the terms and
conditions as set out below . . . .
Id. The “below” terms and conditions included paragraph A, a notice provision, and paragraph
B, which clarified that the actual “receipt” of any portion of contract revenue would trigger the
obligation to pay “the royalty applicable to such payment.” Id.
In addition, paragraph D recognized a one-time royalty waiver for the “first contract,”
which Section II specifically excluded:
[The B&W sublicensees] shall pay [Areva] a one-time only lump
sum payment of U.S. $250,000 within thirty days of the first
contract to be entered into by either [B&W sublicensee] greater
than U.S. $100,000 for commercial nuclear service projects
3
Areva was a party to the Sub-License and all other relevant contracts involved in this
litigation under its former name, Framatome ANP, Inc. For ease of reading, we substitute Areva
for Framatome ANP, Inc. when quoting from these agreements.
3
performed using the Nuclear Technology as licensed herein at an
OTSG site described in Exhibit “A”, or by December 31, 2004,
whichever occurs first. If payment is not received by [Areva] by
December 31, 2004, this Sub-License Agreement will be
considered null and void.
Id.
In their counterclaim for declaratory judgment, the B&W defendants agreed that the Sub-
License governed B&W and B&W Canada, see 1 J.A. at 65, 67, but they denied that they had
entered into any customer contracts that triggered the royalty obligation. Their customer
contracts, they contended, did not require the use of Areva’s exclusive technology or constitute
the specific type of use specified in the royalty provision.
B. COUNT II – TRADE SECRETS
Count II of Areva’s complaint alleged that the B&W defendants had misappropriated
Areva’s trade secrets by using its exclusive technology, which was “subject to” the Sub-License,
without obtaining Areva’s authorization to do so and “without compensating Areva” for the
unauthorized use. 1 J.A. at 9-10. In a bill of particulars, Areva added that B&W Nuclear was
“neither a signatory to nor a Grantee under” the Sub-License. Id. at 14; see also id. at 27.
In their answer, the B&W defendants denied Areva’s allegation that B&W Nuclear was
not a party to the Sub-License. Instead, they claimed, all B&W subsidiaries, including B&W
Nuclear, were “authorized under the License and Sub-License Agreements.” Id. at 52; see also
id. (“[T]he [Sub-License] allows use of the intellectual property in issue by the referenced
parties”).
C. CROSS-MOTIONS FOR SUMMARY JUDGMENT
Both sides of the dispute filed cross-motions for summary judgment. Among the issues
in contest was the B&W defendants’ assertion that the royalty provisions of the Sub-License
were unambiguous and should be interpreted by the court as a matter of law according to their
4
plain meaning. The trial court agreed and found, based on the record available upon summary
judgment, that the plain meaning of those provisions precluded any royalty liability for customer
contracts involving the off-site design, manufacture, and sale of heavy components known as
ROTSGs, an acronym for replacement once-through steam generators installed at nuclear power
plants. The court held,
as a matter of law that the four percent (4%) royalty provisions in
Art. II of the [Sub-License Agreement] between the parties is
unambiguous; that the royalty applies to gross contract amounts
involving the use of nuclear technology exclusive to Areva in the
field of commercial nuclear services at OTSG plant sites identified
in Exhibit A of the Agreement, whether such use was substantial or
“insubstantial”; and that the royalty does not apply to gross
contract amounts for off site design, manufacture and sale of
ROTSG[s].
Id. at 234-35 (emphases added). On this ground, the court granted “Defendants’ Motion for
Summary [J]udgment That The Services Sublicense Does Not Apply To Contracts For The
Design, Manufacture And Sale Of ROTSGs.” Id. at 236.
D. TRIAL
The case proceeded to a jury trial. In Areva’s opening argument, counsel stated that this
was a “contract case and [that the B&W defendants] should be paying us 4 percent, and that’s it
in a nutshell.” 2 J.A. at 737 (emphasis added). Areva’s counsel later affirmed this position in
closing argument, suggesting to the jurors: “[A]s to every one of these contracts [listed on the
verdict form] the answer that you should give in your jury verdict form is yes . . . .” 8 J.A. at
3239 (emphasis added). 4 Significantly, Areva had taken this position even though two of these
4
See also 3 J.A. at 1088-89 (testimony of Areva’s senior vice president, who negotiated
the Sub-License, that B&W Nuclear was a “grantee” subject to the royalty obligation); 4 J.A. at
1451-52 (testimony of Areva’s expert that “each of the contracts” addressed in his expert report,
including both B&W Nuclear contracts, was “covered under the royalty of 4 percent of the gross
revenues”); 5 J.A. at 2104 (testimony of Areva’s manager of nuclear steam supply system
5
contracts — verdict form contract numbers 10 and 14 — involved only B&W Nuclear, which
was not specifically identified by name in the Sub-License as a grantee.
The B&W defendants responded by asserting that three of these contracts, which were for
the “off site design, manufacture and sale of ROTSG[s],” were excluded from the royalty
obligation as a matter of law pursuant to the court’s letter opinion on the cross-motions for
summary judgment. Id. at 235. All but one of the remaining contracts, they argued, did not
involve exclusive technology of Areva and, in any event, did not involve any “use” of such
technology “at OTSG plant sites described in Exhibit ‘A,’” as the Sub-License required. 19 J.A.
at 8508. In their view, the one contract that would trigger the royalty obligation qualified for the
“first contract” exclusion under Section II.D of the Sub-License. Id.
At the end of Areva’s case-in-chief and again at the close of the evidence, the B&W
defendants moved to strike, arguing that the evidence, when reviewed against the unambiguous
contractual terms, did not prove Areva’s claims as a matter of law. “This is the plain language
on the face of the contract, your Honor,” B&W counsel argued. 5 J.A. at 2145. “There’s no jury
issue here.” Id. The trial court took the first motion to strike “under advisement,” noting that it
wanted “a complete record” for review on appeal. Id. at 2223-24.
Following the B&W defendants’ renewal of their motion to strike at the conclusion of all
the evidence, the trial court again took the motion “under advisement” without restating its
purpose for doing so. 7 J.A. at 2970. The trial court later clarified its reasoning: “[W]hat I am
trying to do, and since we have gone this far for this long, is to get a verdict and then set portions
of it aside or not, depending on how I rule on the motions.” Id. at 3004. “I want to get it to the
(NSSS) engineering that the Duke Master Services Contract “was subject to the 4 percent royalty
obligation . . . even though [B&W Nuclear] isn’t named as a grantee” in the Sub-License).
6
jury, subject to all the objections. I know the defendants feel like it shouldn’t go to the jury at
all. And the reasons are well stated on the record.” Id. at 3006.
The jury returned a $16,075,000 general verdict for Areva against the B&W defendants.
The verdict form, which was offered by Areva over the B&W defendants’ objection, recorded
the jury’s finding that on each of the 15 contracts at least one of the B&W defendants owed the
contractual 4% royalty under the Sub-License. The jury accepted Areva’s argument that all 15
customer contracts triggered the contractual duty to pay royalties. See 1 J.A. at 360-62 (verdict
form indicating breach of contract for each of the 15 contracts). The verdict form also indicated
that the jury found that the B&W defendants had misappropriated Areva’s trade secrets.
The B&W defendants moved to set aside the verdict and filed a written motion for
judgment notwithstanding the verdict or, alternatively, a new trial on various grounds. Those
relevant to our resolution of this appeal include the contentions that:
 The court should have enforced its ruling on the cross-motions for
summary judgment, which, when applied to the facts at trial,
categorically excluded three ROTSG contracts from the royalty
obligation.
 On all contracts other than one (the Duke Master Services
Contract), the evidence failed to prove as a matter of law that the
B&W defendants used Areva’s exclusive technology “at OTSG
plant sites,” as the royalty provision expressly required. 19 J.A. at
8508.
 The court should enter judgment notwithstanding the verdict on
Areva’s royalty claim applicable to the Duke Master Services
Contract because the “first contract” exclusion applied as a matter
of law. Alternatively, the court should set aside the verdict on this
claim and order a retrial after giving a proper jury instruction.
 Finally, the court erred by submitting the trade secrets claim to the
jury because any use of Areva’s exclusive technology was
governed exclusively by contract (the Sub-License), and no
evidence demonstrated a prima facie claim for damages under the
Virginia Uniform Trade Secret Act.
7
See 8 J.A. at 3342-50 (oral motion to set aside the verdict); 18 J.A. 8361-405, 8474-505 (brief
and reply brief in support of motion for judgment notwithstanding the verdict). The trial court
denied all post-trial motions and entered final judgment on the jury verdict. 5
II. THE SUB-LICENSE AGREEMENT
To address the principal issues on appeal, we must first determine if the relevant contract
provisions have a meaning discernible from the words alone, and if so, whether the trial court
correctly interpreted these provisions. On these questions, we do not defer to either the trial
court or the jury. “The interpretation of a contract presents a question of law subject to de novo
review.” School Bd. of Newport News v. Commonwealth, 279 Va. 460, 467, 689 S.E.2d 731,
735 (2010) (citation omitted). 6
In this case, Areva and the B&W defendants both assert that the Sub-License’s
provisions, while highly technical, have a plain meaning and, thus, should be considered
unambiguous. 7 Even so, they offer very different interpretations favoring their respective views.
5
The B&W defendants also assign error regarding the trial court’s refusal to instruct the
jury that “B&W’s use of certain computer codes does not trigger a royalty under the Services
Sublicense.” Appellants’ Br. at 29. We do not address this issue, however, based on our finding.
See infra note 47 and accompanying text.
6
See also Joseph M. Perillo, Calamari and Perillo on Contracts § 3-15, at 141 (6th ed.
2009) (“[T]he general rule is that the interpretation of a writing is treated as a question of law for
the court.”); 11 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 30:6,
at 92-98 (4th ed. 2012) (“The interpretation and construction of a written contract present only
questions of law, within the province of the court, and not of the jury or other trier of fact as long
as the contract is unambiguous, and the intent of the parties can be determined from the face of
the agreement.”).
7
Throughout the lower court proceedings, Areva made numerous assertions along these
lines. See, e.g., 2 J.A. at 409 (“[W]e agree that this is a question for the Court to decide. . . .
[N]o one argues that [the license grant] is ambiguous.”); 8 J.A. at 3236 (“[E]verybody agrees
there’s no special language in here. ‘Use’ means ‘use.’”); id. at 3078-79 (“Both sides proposed”
the jury instruction that “words used by the parties should be given their ordinary, usual, and
popular meaning unless [they] find that the parties intended such words to have other
meanings.”); 13 J.A. at 5350 (“Defendants’ assertion . . . contradicts the unambiguous terms of
[the Sub-License].”); id. at 5354 (“[T]he Subject Contracts fall within the plain meaning of
8
Their opposing interpretations, however, do not necessarily render the contract ambiguous.
Bartolomucci v. Federal Ins., 289 Va. 361, 370-71, 770 S.E.2d 451, 456 (2015). As we have
often said, “[a] contract is not ambiguous simply because the parties to the contract disagree
about the meaning of its language.” Pocahontas Mining L.L.C. v. Jewell Ridge Coal Corp.,
263 Va. 169, 173, 556 S.E.2d 769, 771 (2002). We concede the possibility that the parties’
interpretative deadlock implies the possibility that the correct meaning may be somewhere
between the two. Even so, we neither presume this to be the case nor discount the possibility
that it might be so.
Turning to the Sub-License and the prior contracts it incorporated by reference, we must
first determine whether the plain meaning of the contractual terms can be discerned with
sufficient precision to render the Sub-License unambiguous, and, if so, whether that meaning
favors the B&W defendants or Areva. We organize our analysis around three contractual
benchmarks: (a) the nuclear technology “exclusive” to Areva, which defines the scope of the
Sub-License; (b) use of Areva’s exclusive technology “at OTSG plant sites,” which triggers the
obligation under the Sub-License to pay royalties; and (c) the “first contract” exclusion, which
the Sub-License exempts from any royalty obligation. 19 J.A. at 8508.
Section II.A.”); id. at 5360 (“On its face, the sublicense grant . . . is ‘for all purposes.’”); id. at
5362 (“Defendants have identified no ambiguity as would allow the Court to consider extrinsic
evidence.”); 18 J.A. at 8432 (“[T]he plain meaning of [the license grant] belies Defendants’
contention . . . .”). Areva maintained this position in its brief on appeal. See Appellee’s Br. at
15 (“The word ‘use’ is not defined in the [Sub-License], but its plain meaning includes ‘to put
into action or service.’” (citation omitted)). The B&W defendants similarly argued that the
royalty provisions “are not ambiguous and must be interpreted according to their plain and
ordinary meaning.” 17 J.A. at 7393; see also 7 J.A. at 2987; 8 J.A. at 3264, 3347, 3388-90; 12
J.A. at 4653, 4667; 17 J.A. at 7387, 7703-05; 18 J.A. at 8395, 8399. But see 7 J.A. at 3036-37
(“[T]he jury should take into account the parties’ intent” because “[t]hey have heard more than
one witness testify about what they intended to do when they . . . entered into the [Sub-
License].”).
9
To determine whether these provisions have a plain meaning, “words used are given their
usual, ordinary, and popular meaning.” Pocahontas Mining L.L.C., 263 Va. at 173, 556 S.E.2d
at 772; see also City of Chesapeake v. States Self-Insurers Risk Retention Grp., 271 Va. 574,
578, 628 S.E.2d 539, 541 (2006). In addition, “when considering the meaning of any part of a
contract, we will construe the contract as a whole,” Doctors Co. v. Women’s Healthcare
Assocs., 285 Va. 566, 572-73, 740 S.E.2d 523, 526 (2013) (citations omitted), striving not to
“place emphasis on isolated terms” wrenched from the larger contractual context, Quadros &
Assocs. v. City of Hampton, 268 Va. 50, 54, 597 S.E.2d 90, 93 (2004). 8
There is a temptation, regrettably natural to the adjudicative task, to allow complex
draftsmanship to discourage the search for the plain meaning of words used in technical
agreements. But complexity should not be confused with convolution, and agreements are not
ambiguous simply because they deal “with a technical subject that may be considered complex to
the uninformed lay person who is not familiar with the topic.” Westmoreland-LG&E Partners v.
Virginia Elec. & Power Co., 254 Va. 1, 11, 486 S.E.2d 289, 294 (1997) (quoting Doswell Ltd.
P’ship v. Virginia Elec. & Power Co., 251 Va. 215, 223, 468 S.E.2d 84, 89 (1996)). As
Professor Costello perceptively said:
As modern life becomes more complex, and commerce becomes
increasingly dependent on law, arcane business arrangements will
come before the courts in increasing numbers. It will not do that
judges be deprived of their control over contracts by the assertions
of a party that her technical agreement is ambiguous because she
8
See also Williston & Lord, supra note 6 § 32:11, at 765 (“A contract must be construed
as a whole and the intention of the parties is to be collected from the entire instrument and not
from detached portions. Individual clauses and particular words of the agreement, and all parts
of the writing and every word of it, will, if possible, be given effect.”); id. § 32:5, at 692-99 (“A
contract will be read as a whole and every part will be read with reference to the whole. If
possible, the contract will be so interpreted as to give effect to its general purpose as revealed
within its four corners or in its entirety.” (footnote omitted)); John E. Murray, Jr., Murray on
Contracts § 88(C), at 481 (4th ed. 2001) (“[A]ll of the different parts of an agreement must be
viewed together, i.e., as a whole, and each part interpreted in the light of all of the other parts.”).
10
says it is, or that her agreement cannot be understood by persons
not schooled in her obscure science.
John L. Costello, Virginia Remedies § 18.11[3] (4th ed. 2012).
A. NUCLEAR TECHNOLOGY “EXCLUSIVE TO AREVA”
The Sub-License expressly granted to B&W and B&W Canada, the B&W sublicensees,
the right to
use the Nuclear Technology which is exclusive to [Areva], for all
purposes, including without limitation the supply of Licensed
Products and Services as such term is defined in Article 1.13 of the
License Agreement and generally for all purposes, without
restriction, in the field of or relating to the supply of commercial
nuclear services to OTSG plants.
19 J.A. at 8508 (emphases added). For the definition of “Nuclear Technology,” a prefatory
recital incorporated relevant portions of the 1991 License Agreement, contemporaneous
agreements, and “all technology which was at issue in [the federal litigation].” Id. at 8507. 9
Another of the Sub-License’s recitals explained the source and meaning of this “exclusive”
technology by recognizing that the 1991 License Agreement granted to Areva “an exclusive
license to apply the Once Through Steam Generator (‘OTSG’) nuclear technology in the field of
commercial nuclear services.” Id.
These prefatory recitals “shed light on the circumstances the parties wished to have
considered in the interpretation of the contract.” 2 E. Allan Farnsworth, Farnsworth on Contracts
§ 7.10, at 289 (3d ed. 2004). So read, the recitals confirmed that the exclusivity of Areva’s
original license depended on the terms of the 1991 License Agreement and was limited to the
“field of commercial nuclear services.” 19 J.A. at 8507; see also id. at 8508. The 1991 License
Agreement separated the relevant nuclear technology into three categories: technology exclusive
9
The parties do not dispute the meaning of “Nuclear Technology,” as it was defined by
the third recital of the Sub-License by incorporating specific definitions from prior agreements.
19 J.A. at 8507.
11
to B&W, technology shared by B&W and Areva, and technology exclusive to Areva.
The first category, technology exclusive to B&W, included nuclear technology used to
“perform the manufacture or Manufacturing Detailed Design of Heavy Components.” 9 J.A. at
3562 (Art. 8.1.3(ii)). This included “the design activities to detail manufacturing drawings,
processes, procedures, sequencing, quality control procedures, tolerances, weld location and
technology, inspection requirements and any other details needed to manufacture the component
to meet the Component Design 10 requirements.” Id. at 3532. Article 8.6 expressly “reserved” to
B&W “[a]ll rights in” the nuclear technology that were “not granted” to Areva. Id. at 3566.
In this respect, the 1991 License Agreement maintained B&W’s exclusive right to use the
nuclear technology to manufacture and sell “Heavy Components,” which were defined as
“complete components for a Nuclear Reactor System,” including “reactor vessels; reactor vessel
heads; reactor vessel internals; steam generators or portions thereof which includes tube bundles;
primary system heat exchangers; pressurizers; accumulators (core floor tanks); control rod drive
mechanisms; and main reactor coolant piping [i.e., hot and cold legs].” Id. at 3531.
The second category, technology shared by B&W and Areva, included functional design
of heavy components 11 and component design, as well as other activities not at issue here. Id. at
3560-61, 3565; see id. at 3531-32 (defining “Licensed Products and Services”). Functional
design included “design activities which establish the design parameters of the component and
10
“Component Design” refers to “the design activities which translate the Functional
Design into general layout drawings, detailed bills of materials, design and stress reports, quality
control and quality assurance specifications and any other details needed to fully describe the
component for manufacturing.” 9 J.A. at 3528.
11
For B&W, this right was non-exclusive “only with respect to replacement steam
generators for which such Functional Design is requested by the customer.” Id. at 3565 (Article
8.2(c)). Areva conceded this point at trial. See, e.g., 3 J.A. at 973 (affirmation by Areva’s
negotiator for the Sub-License that “if the customer asked for functional design, it was
nonexclusive” because “B&W had a right to do a functional design” of Heavy Components with
respect to ROTSGs for which functional design is requested by customers).
12
the specific applicable design requirements such as design codes, safety and quality levels,
physical interfaces, working fluids, electrical requirements and any other parameters needed to
define the form, fit and function of an acceptable component.” Id. at 3529 (emphasis added).
“[C]hange-out of steam generators or other heavy components” was also nonexclusive.
Compare id. at 3565 (Art. 8.2(d) of 1991 License Agreement) with 28 J.A. at 13394 (Section
5.05(f) of BWNS Coordination Agreement). 12
The third category, technology exclusive to Areva, included the right to “design and sell:
(i) Nuclear Reactor Engineering Services; and (ii) Specialized Nuclear Maintenance, Inspection
and Field Services” and to “design, manufacture, sell and use: (i) Specialized Service Tools and
Inspection Equipment and (ii) Specialized Equipment and Spare Parts.” 9 J.A. at 3559. The two
categories relevant to this case are nuclear reactor engineering services and specialized nuclear
maintenance, inspection, and field services.
12
“[C]hange-out” of steam generators involved “taking one out and putting another one
in [i.e., installing a replacement]” and, according to Areva’s senior vice president and negotiator
of the Sub-License, was a “nonexclusive activity,” hence non-royalty bearing. Id. at 997-98,
1031-32. But see id. at 1159 (contention by same witness for Areva that “designing engineering
activities” relating to installation of ROTSGs are Areva’s exclusive technology).
We note that at oral argument on appeal, Areva argued that, to understand § 5.05(f) in the
BWNS Coordination Agreement, we should also examine § 5.05(b). That would be true if we
were trying to interpret and apply the BWNS Coordination Agreement’s non-compete
provisions. But that is not our task. We look to the Coordination Agreement only because the
1991 License Agreement stated that B&W’s license grant to Areva was “nonexclusive with
respect to any activity B&W undertakes in exercising its rights to compete pursuant to Section
5.05(f).” 9 J.A. at 3565. Under § 5.05(f), B&W may “engage” in various “activities,” including
“change-out of steam generators or other heavy components.” 28 J.A. at 13394. The only
reference to § 5.05(b) that subsection (f) makes is to define “the relevant non-competition
period,” which is immaterial here because § 5.05(f) expressly permitted these rights (including
change-outs) both “during and after the relevant non-competition period.” Id. (emphasis added).
Moreover, although § 5.05(f) notes that these rights are “subject to whatever restrictions on their
use of technology” exist per the 1991 Licensing Agreement, Section 8.2(d) of the 1991 License
Agreement makes clear that, whatever those other restrictions may be, B&W’s license of
change-outs to Areva “will be nonexclusive.” 9 J.A. at 3565.
13
Nuclear reactor engineering services were defined as “services for Nuclear Reactor
Systems or parts thereof which require a specialized knowledge of the functional design,
operation, or safety and regulatory requirements of or related to Nuclear Reactor Systems.” Id.
at 3533 (emphasis added). Such services consist “of designing, providing requirements for,
specifying and procuring equipment for, performing engineering studies . . . relating to, or
implementing modifications . . . to, Nuclear Reactor Systems or parts thereof” but expressly
exclude the same activities when they “do not require a specialized knowledge of Nuclear
Reactor System functional design, operation, safety or regulatory requirements.” Id. at 3533-34.
Specialized nuclear maintenance, inspection, and field services were broadly defined as “services
for Nuclear Reactor Systems or parts thereof,” when performance of such services requires:
“a) specialized knowledge of the functional design, operation or safety of Nuclear Reactor
Systems, or b) nuclear related analyses and/or regulatory licensing support, or c) the use of
Specialized Service Tools and Inspection Equipment.” Id. at 3538-39.
The 1991 License Agreement appended two exhibits of “illustrative” activities, one
describing nuclear reactor engineering services and the other describing specialized nuclear
maintenance, inspection, and field services. The illustrations of nuclear reactor engineering
services included, among other things, “[c]onduct[ing] safety, reliability and probabilistic risk
analyses” and “[d]esign[ing], specify[ing], procur[ing], and provid[ing] regulatory licensing
support, for new” — but not replacement — “equipment or components (including Heavy
Components), and perform[ing] design/engineering activities for their installation.” Id. at 3605-
07. Illustrative specialized maintenance, inspection, and field services included various services
for complete nuclear reactor systems, hot and cold legs, and other components. See id. at 3609-
12. Some of these services were characterized as “on-site,” others as “off-site,” and others were
not designated either way, though it was often implicit in the nature of the work to be done. Id.
14
The three categories of nuclear technology described in the 1991 License Agreement
confirm the B&W defendants’ view that Areva’s exclusive license was limited, as the Sub-
License states, to nuclear technology “in the field of or relating to the supply of commercial
nuclear services,” 19 J.A. at 8508 (emphasis added), and not in the field of manufacture and sale
of complete heavy components. Equally clear is that the shared-use category of nuclear
technology, when applicable, protected the B&W defendants from any royalty liability under the
Sub-License.
A separate category of nuclear technology pertains solely to the TVA Bellefonte plant.
Exhibit B to the TVA Agreement, executed one day after the 1991 License Agreement, amended
the 1991 License Agreement to include Article 8.1.6, in which B&W granted to Areva an
exclusive, “non-assignable license . . . to make, use, sell, design or take any other action (but not
including manufacture of Heavy Components) necessary or desirable to perform Bellefonte NSS
Completion.” 26 J.A. at 12106. By inserting the phrase “but not including manufacture of
Heavy Components,” id., B&W expressly reserved for itself the exclusive right to manufacture
ROTSGs and any other heavy components for the TVA Bellefonte plant.
In sum, read separately and together, these interlocking contractual provisions provided a
clear contractual meaning to the Sub-License’s grant of “Nuclear Technology which is exclusive
to [Areva] . . . in the field of or relating to the supply of commercial nuclear services to OTSG
plants.” 19 J.A. at 8508 (emphases added). On the issue of technology exclusive to Areva,
therefore, the Sub-License has a plain, albeit intricate and technical, meaning.
B. USE OF AREVA’S EXCLUSIVE TECHNOLOGY “AT OTSG PLANT SITES”
The Sub-License limited royalty liability to use of Areva’s exclusive technology “at
OTSG plant sites” by the B&W sublicensees. Id. The governing paragraph stated:
15
For the use as defined in this Sub-License at OTSG plant sites
described in Exhibit “A” by a Grantee of the Nuclear Technology,
but excluding the first contract, which is covered under paragraph
D, below, the Grantee agrees to pay to [Areva] a royalty of four
percent (4.0%) of the Grantee’s gross contract amounts to the
extent such amounts are actually paid to the Grantee by the
Grantee’s customer(s) . . . as calculated and on the terms and
conditions as set out below . . . .
Id. (emphases added). The “below” terms and conditions included paragraph A, a notice
provision that repeated that the royalty must be paid only for “use” of the technology “at an
OTSG site described in Exhibit A.” Id. (emphasis added). Also included was paragraph D,
which recognized the “first contract” exclusion for “commercial nuclear service projects
performed using the Nuclear Technology as licensed herein at an OTSG site.” Id. (emphases
added).
These provisions break down to a simple statement with three essential predicates: No
matter the scope of Areva’s exclusive technology, the B&W sublicensees were obligated to pay a
4% royalty only when (i) they, not their customers or anyone else, (ii) used Areva’s exclusive
technology, not shared technology, (iii) at a covered OTSG site, not at some off-site location.
Thus, under the plain meaning of the royalty provision, no royalty was owed if only the
customers of the B&W sublicensees used Areva’s exclusive technology at their own OTSG sites.
Nor was the royalty owed if the B&W sublicensees used this technology at some non-OTSG, off-
site location.
We reject Areva’s contrary interpretation, which would impose the royalty obligation
whenever the B&W sublicensees used the technology at their own facilities in Canada or, for that
matter, when they used the technology for any other reason anywhere in the world — so long as
the technology was ultimately put into operational use at an OTSG site by one of their OTSG
16
customers. 13 This expansive interpretation not only contradicts, but also renders textually
superfluous, the at-OTSG-sites qualification repeated three times in the royalty provision. 14
Areva’s dismissal of the on-site/off-site distinction strips the royalty of its plain meaning
and dislodges it from the larger contractual context. As noted earlier, the Sub-License expressly
incorporated the license grants, reservations, definitions, and illustrative exhibits of the 1991
License Agreement. See id. at 8507. That agreement described technology that, by its very
nature, could be performed off-site. See 9 J.A. at 3533 (definition of nuclear reactor engineering
services); id. at 3605-08 (illustrative list of nuclear reactor engineering services non-exhaustively
including “process[ing] data”; planning and managing “research, development and engineering
tests”; performing “safety, reliability and probabilistic risk analyses”; performing various
“analyses” and “calculations”; “develop[ing]” and “design[ing]” various programs, services, and
studies; and designing, specifying, procuring, and providing “regulatory licensing support” and
related engineering activities); id. at 3610 (illustrative list of specialized nuclear maintenance,
inspection, and field services including “off-site refurbishment of contaminated Nuclear Reactor
System components and parts thereof”). 15
13
At trial, Areva’s expert asserted that in the industry of commercial nuclear services
what “at the site” normally means is where the nuclear reactor engineering services are
“applied,” irrespective of where performed, because work that is done in an office is “applied at
the site” and is “inspected by the NRC at the site.” 4 J.A. at 1540; see also id. at 1521-22, 1589,
1666.
14
During oral arguments, counsel for Areva argued that a former Areva executive who
testified for the B&W defendants had conceded that “if you are using Areva-exclusive
technology, you owe a [royalty].” Oral Argument Audio at 28:38 to 28:55. The record does not
support counsel’s characterization of the witness’s testimony, which Areva’s counsel elicited on
cross-examination while asking him about the meaning of the word use under Section I of the
Sub-License. Section I is the “License Grant” provision. That provision, which gave B&W a
“perpetual, worldwide, sub-license” to use the technology “for all purposes” was broader than
Section II, which established the conditions for the applicability of the royalty. 19 J.A. at 8508.
15
B&W Canada’s manager of component engineering testified at trial that all “nuclear-
safety-related” work “must be perform[ed]” off site, at B&W Canada’s own facility, because the
17
It also identified technology that would generally be used to perform tasks “on-site,” i.e.,
at OTSG customers’ sites. See id. at 3538-39 (definition of specialized nuclear maintenance,
inspection, and field services); id. at 3609-12 (illustrative list of specialized nuclear maintenance,
inspection, and field services including the provision of “management and/or operation personnel
for site management,” performance of “service work” for tube plugs and other components
already installed, provision of “steam generator cleaning services,” and performance of “on-site
decontamination” of various tools and components).
This latter category included field services, which, as their name suggests, must
necessarily be performed at OTSG customers’ sites in the “field.” See, e.g., 5 J.A. at 2105
(testimony of Areva’s NSSS manager that “[w]hen we speak of field [services], that means away
from your office and typically that means at the site, where the plant and the physical equipment
is located”); 6 J.A. at 2240 (testimony of B&W defendants’ witness and former Areva executive
that field services describes “all of the services that are provided at the site of the utility after the
plant is running”). This on-site/off-site dichotomy, used to describe the technology at issue,
belies Areva’s effort to read the distinction out of the royalty provision. 16
Areva seeks to displace this reasoning with the assertion that the meaning of the royalty
provision was a question of fact that was properly decided by the jury. See Appellee’s Br. at 19-
engineering personnel and all of the “quality assurance certifications for doing that work” are
there, not at customer sites. 6 J.A. at 2531-32; see also 4 J.A. at 1707 (testimony by Areva’s
NSSS engineering manager that “safety analysis” is “typically not done at customer sites”).
Licensing work is similarly not physically tied to a customer site because it also requires “quality
assurance” work. 6 J.A. at 2553-54; see also 4 J.A. at 1707 (testimony by same witness that
“regulatory licensing support” is “not done exclusively at customer sites”).
16
We similarly reject Areva’s reliance on Section II.A of the Sub-License. It was neither
a license grant provision nor a royalty provision. Section II.A was simply a notice provision. It
neither expanded the scope of the license grant nor broadened the contractual duty to pay
royalties. The text of Section II.A, moreover, confirmed that notice was required only when “use
of the Nuclear Technology as licensed herein [was] at an OTSG site described in Exhibit A.”
19 J.A. at 8508 (emphasis added).
18
20. Areva made this argument at trial during a dialogue with the trial court over a proposed jury
instruction. 17 Areva acknowledged the B&W defendants’ “theory of the case” which, on this
issue, was “that none of these contracts are royalty-bearing because [they] did [their] work in the
[Canada] office. But that is a fundamental disputed factual issue in this case.” 8 J.A. at 3119
(emphasis added). Our answer to this assertion is “yes” in part and “no” in part.
The trial court’s summary judgment order correctly held that the Sub-License’s royalty
provision was unambiguous. Its plain meaning was thus a question of law for the court, not a
question of fact for the jury. See School Bd. of Newport News, 279 Va. at 467, 689 S.E.2d at
735; Williston & Lord, supra note 6, § 30:6, at 92-98 (4th ed. 2012). Therefore, the court’s
interpretation of the on-site/off-site distinction in the royalty provision was not a question of fact
for the jury. What was a question of fact was whether the B&W defendants actually used
Areva’s exclusive technology on site — that is, “at OTSG plant sites,” 19 J.A. at 8508 — while
performing any of the disputed 15 customer contracts. 18
We acknowledge Areva’s contention that it never intended the at-an-OTSG-site
qualification to carry a literal meaning. See, e.g., 8 J.A. at 3321 (closing argument by Areva that
the scope of “[t]he royalty and the license are the same” because “no honest person could say
that [the B&W sublicensees] got a license that was this big but the royalty obligation is only this
17
This assertion was most directly stated in Areva’s objection to Jury Instruction E,
proffered by the B&W defendants. 8 J.A. at 3119. Areva assigns cross-error to the giving of this
instruction. Appellee’s Br. at 47. However, given our ultimate conclusion, this assignment of
cross-error is moot.
18
Analogous principles of contract interpretation clarify that extrinsic evidence cannot be
“offered first to create an ambiguity and then to remove it.” Stewart-Warner Corp. v. Smithey,
163 Va. 476, 487, 175 S.E. 882, 886 (1934) (quoting Coal River Collieries v. Eureka Coal &
Wood Co., 144 Va. 263, 280, 132 S.E. 337, 343 (1926)); accord W.W.W. Assocs., Inc. v.
Giancontieri, 566 N.E.2d 639, 643 (N.Y. 1990) (“An analysis that begins with consideration of
extrinsic evidence of what the parties meant, instead of looking first to what they said and
reaching extrinsic evidence only when required to do so because of some identified ambiguity,
unnecessarily denigrates the contract and unsettles the law.”).
19
big”). That may or may not be so. “[E]ach party to a contract,” however, “has notice that the
other will understand his words according to the usage of the normal speaker of English under
the circumstances, and therefore cannot complain if his words are taken in that sense.” Oliver
Wendell Holmes, Theory of Legal Interpretation, 12 Harv. L. Rev. 417, 419 (1899). When
courts search for the parties’ intent in an unambiguous contract provision, the search ends where
it begins — with the plain, usual, and ordinary meaning of the words themselves.
We have neither the duty nor the inclination to creatively construe an unambiguous
contractual phrase “so as to conform it to the court’s notion of the contract [the parties] should
have made” under the circumstances. Bentley Funding Grp. v. SK&R Grp., 269 Va. 315, 330,
609 S.E.2d 49, 56 (2005) (quoting Ames v. American Nat’l Bank, 163 Va. 1, 38, 176 S.E. 204,
216 (1934)). We are “aware of the temptation” of courts to “indulge in artificial interpretations
or abnormal implications in order to save a party from a bad bargain.” Williston & Lord, supra
note 6, § 32:11, at 771-72 (footnotes omitted).
We resist this temptation with the observation that our interpretative task is far simpler:
“It is the court’s duty to declare what the instrument itself says it says.” Bentley Funding Grp.,
269 Va. at 330, 609 S.E.2d at 56 (citation omitted). 19 “[W]hat the parties claim they might have
said, or should have said, cannot alter what they actually said.” Wilson v. Holyfield, 227 Va.
184, 188, 313 S.E.2d 396, 398 (1984).
19
Along these lines, it should not go unnoticed that the parties in this case have been
litigating their disputes for over a decade. See Babcock & Wilcox Canada Ltd. v. Framatome
ANP, Inc., No. 6:02CV00049 (W.D. Va. Feb. 13, 2003) (Moon, J.). The Sub-License was itself
a product of the litigation settlement that the parties reached to end the federal court proceedings
that preceded this suit. See 9 J.A. at 3468 (Section I.C.4 of the 2003 Settlement Agreement
providing that “[Areva] agrees to begin negotiation” for the “immediate[] grant on a royalty-
bearing basis, such negotiated rights in the licenses in the Technology Agreements which are
exclusive to [Areva]”).
20
C. THE “FIRST CONTRACT” EXCLUSION
Section II.D of the Sub-License recognized a special one-time payment that would serve
in lieu of the 4% royalty obligation for a qualifying first contract:
[B&W defendants] shall pay [Areva] a one-time only lump sum
payment of U.S. $250,000 within thirty days of the first contract to
be entered into by either Grantee greater than U.S. $100,000 for
commercial nuclear service projects performed using the Nuclear
Technology as licensed herein at an OTSG site described in
Exhibit “A”, or by December 31, 2004, whichever occurs first. If
payment is not received by [Areva] by December 31, 2004, this
Sub-License Agreement will be considered null and void. . . .
19 J.A. at 8508 (emphasis added). The trial court declined to offer any interpretation of this
provision and rejected a request by the B&W defendants to instruct the jury on this issue. See 1
J.A. at 330.
We find no ambiguity in either the text of paragraph D or the role it plays in Section II of
the Sub-License. Paragraph D governed the “first contract,” in excess of $100,000, covered by
Section II. 19 J.A. at 8508. Thus, it applied to the first contract between a B&W sublicensee
and its customer that required performance using Areva’s exclusive technology at an OTSG
plant site. By its plain terms, paragraph D required a one-time payment of $250,000 within the
earlier of two deadlines: within 30 days of any such “first contract” or by December 31, 2004.
Id. It was a critical deadline. If missed, the Sub-License would be “considered null and void.”
Id. In exchange for that $250,000 payment, Areva agreed to “exclud[e] the first contract,” no
matter its date of execution, from any further royalty obligation. Id.Areva argues that the $250,000 lump sum was not in lieu of, but “in addition to,”
Appellee’s Br. at 40 (emphasis in original), the payment of a 4% royalty for the first contract.
We reject this argument as an awkward revision of the plain language of the Sub-License.
Section II, which established the 4% royalty, stated that a royalty applied to qualifying contracts
21
“excluding the first contract, which is covered under [Section II.D].” 19 J.A. at 8508. Section
II.D required that the B&W defendants pay Areva “a one-time only lump sum payment of U.S.
$250,000.” Id. Read together, as these provisions necessarily must be, see Berry v. Klinger, 225
Va. 201, 208, 300 S.E.2d 792, 796 (1983), “excluding the first contract” means to exclude the
first contract, and what the first contract is excluded from is payment of the 4% royalty, 19 J.A.
at 8508. The $250,000 lump sum payment was thus in lieu of, not in addition to, a royalty
payment for the first contract.
III. THE 15 CUSTOMER CONTRACTS ON THE VERDICT FORM
Applying our interpretation of the governing contractual provisions, we now turn to the
B&W defendants’ arguments on appeal contesting the trial court’s failure to enforce its summary
judgment ruling regarding ROTSG contracts, its decision to deny the B&W defendants’ motions
to strike the evidence as a matter of law, and its refusal to enter judgment notwithstanding the
verdict. The jury found the B&W defendants contractually liable for the 4% royalty on each of
the 15 contracts listed on the verdict form. See 1 J.A. at 360-62. We address these contracts in
three categories: the ROTSG contracts, the commercial nuclear services contracts, and the first
contract excluded under Section II.D of the Sub-License.
A. THE ROTSG CONTRACTS 20
The undisputed evidence at trial was that the first three contracts on the verdict form
involved the manufacture of replacement once-through steam generators (ROTSGs). These
included the FirstEnergy Davis-Besse Contract 205S (“Davis-Besse”), the Progress Crystal River
20
This section of our analysis corresponds to the B&W defendants’ Assignments of Error
1 and 5, which contend that the trial court erred by “not granting judgment for B&W on the
[ROTSG contracts] as B&W’s use of the OTSG Technology was in its retained field of use,
which does not constitute commercial nuclear services, was not performed by B&W at OTSG
plant sites, and does not trigger the royalty obligation,” and by “refusing to instruct on its
summary judgment ruling that the [Sub-License] did not provide for royalties for off-site design,
manufacture and sale of ROTSGs.” Appellants’ Br. at 27-29.
22
3 Contract 150F (“Crystal River”), and the TVA Bellefonte Contract 230T (“TVA
Bellefonte”). 21
The trial court entered a pretrial summary judgment order holding that the Sub-License
was “unambiguous” as a matter of law and that, under its plain meaning, “the royalty does not
apply to gross contract amounts for off site design, manufacture and sale of ROTSG[s].” 1 J.A.
at 234-35. As discussed earlier, we agree with the trial court on this issue. See supra Part II(B).
We do not understand why the trial court allowed these claims to proceed to trial, but at any rate,
the B&W defendants made the appropriate motions to preserve the issue for appeal.
In our opinion, the three ROTSG contracts did not trigger the royalty specified in the
Sub-License as a matter of law. Given the plain meaning of the license grant and royalty
provisions of the Sub-License, (i) no B&W defendant used any nuclear technology exclusive to
Areva in performance of the Davis-Besse and Crystal River contracts, (ii) no B&W defendant
used the disputed technology at any of the OTSG plant sites identified in the Davis-Besse,
Crystal River, or TVA Bellefonte contracts, and (iii) the TVA Bellefonte plant site was never
completed, a precondition to any royalty liability for this contact. We thus conclude that the trial
court erred in denying the B&W defendants’ motions for judgment as a matter of law on the
royalty claims arising out of the three ROTSG contracts. 22
21
See, e.g., 19 J.A. at 8523 (contract pertaining to “supply of two Once-Through Steam
Generators for Bellefonte Unit 1 Plant”); 21 J.A. at 9594 (contract for the “manufacture and
delivery of two (2) steam generators to be delivered to the Crystal River Nuclear Plant” (altering
capitalization)); 24 J.A. at 11223 (contract for “once-through steam generator replacement” for
Davis-Besse Power Station, Unit 1 (altering capitalization)).
22
The First Energy Hot Legs Contract, although for the manufacture of replacement
heavy components, is not considered one of these contracts because hot legs are not steam
generators, and thus the B&W defendants did not have the same broad design rights as they did
for the ROTSGs, which included functional design when requested by customers. See 6 J.A. at
2480-84 (concession by former B&W Canada president that functional design is only
nonexclusive to B&W when it pertains to ROTSGs, but this contract required functional design
23
1. Areva’s Exclusive Technology
In performance of the ROTSG contracts, the B&W defendants used only technology that
they either owned exclusively or that they shared nonexclusively with Areva. Technology that
they owned exclusively related to the manufacture of heavy components, defined as “complete
components for a Nuclear Reactor System,” 9 J.A. at 3531, and encompassed related engineering
and design work, see id. at 3532 (defining “manufacturing detailed design” as “the design
activities to detail manufacturing drawings, processes, procedures, sequencing, quality control
procedures, tolerances, weld location and technology, inspection requirements and any other
details needed to manufacture the component to meet the Component Design requirements”
(emphases added)).
Technology that they shared with Areva included component design, inclusive of “design
activities which translate the Functional Design into general layout drawings, . . . design and
stress reports, quality control and quality assurance specifications.” Id. at 3528. Functional
design, along with its corresponding engineering activities, was also agreed to be shared
technology when requested by a customer. 23 According to the 1991 License Agreement,
functional design included broad subsets of design activities, including all those necessary to
establish “the specific applicable design requirements such as design codes, safety and quality
levels, physical interfaces, working fluids, electrical requirements and any other parameters
needed to define the form, fit and function of an acceptable component.” Id. at 3529 (emphases
added).
Within the ambit of functional design existed various engineering tasks, including those
which required “specialized knowledge” of the operations “or safety and regulatory requirements
of hot legs, which was exclusive to Areva).
23
Compare 9 J.A. at 3560 with id. at 3565; see also supra note 11.
24
of or related to Nuclear Reactor Systems.” Id. at 3533. Because these activities required such
“specialized knowledge,” they consequently qualified as “Nuclear Reactor Engineering
Services” as defined by the 1991 License Agreement. Id. Thus, such engineering tasks would
have been Areva-exclusive technology but for the fact that B&W had expressly reserved the
royalty-free right to perform these tasks when their ROTSG customers asked for it. See id. at
3565 (Article 8.2(c)).
Uncontroverted evidence at trial established that for each of these ROTSG contracts the
B&W defendants’ customers had requested functional design. See 6 J.A. at 2389. On appeal,
Areva does not dispute this fact. Accordingly, the manufacture of “complete” components,
9 J.A. at 3531, in the context of replacement components, necessarily included before-and-after
comparative analyses, even those that would otherwise qualify as nuclear reactor engineering
services, to ensure the “acceptab[ility]” of the component for the particular nuclear plant at
which it would be installed, id. at 3529.
At trial, Areva produced evidence that the contractual scope of the Davis-Besse contract
called for B&W Canada to perform various nuclear reactor engineering services. The contract’s
scope included the performance of “[a] Loop Nuclear Steam Supply System (NSSS) structural
analysis”; “[e]valuations and reanalyses, where required, of plant events and accidents”; and “a
Licensing Report for input to Buyer’s 10CFR50.59 Safety Evaluation.” 24 J.A. at 11286; see
also id. at 11321 (“Contractor shall provide analyses or evaluations to demonstrate the
acceptability of the NSSS structural design basis considering the differences between the
ROTSGs and the original OTSGs.” (emphasis added)). Areva’s witnesses at trial contended that
“several” tasks in the contractual scope of work “are nuclear reactor engineering services as
defined in the [1991 License Agreement].” 4 J.A. at 1729-30; see also id. at 1651-53.
25
Areva fails to acknowledge, however, the uncontested evidence that all of these activities
were performed as part of the manufacturing detailed design, component design, and functional
design of complete, acceptable replacement steam generators. 6 J.A. at 2418-19; id. at 2552-54;
7 J.A. at 2748-49. They were not “stand-alone service[s]” but were tasks “required to produce a
nuclear steam generator.” 6 J.A. at 2470. Indeed, Areva’s manager of NSSS engineering
affirmed the contemporaneousness of these design activities with the manufacture of the
ROTSGs, noting that the contract “schedule implies the manufacturing and the licensing report
[were] prepared in parallel.” 5 J.A. at 2045; see also 3 J.A. at 973 (testimony of Areva’s senior
vice president that there was no “reason to think that the customer didn’t ask B&W for functional
design” regarding any of the manufacturing contracts because “functional design would be part
of the scope”).
The Crystal River contract similarly required B&W Canada to perform “NSSS RCS Loop
Structural Analysis,” 21 J.A. at 9655, and to “provide the support, to the [plant], necessary to
ensure licensability,” including “all engineering . . . and plant modifications required as a result
of functional differences between [the old and replacement steam generators]” installed, id. at
9755. Areva contended that these analyses constituted nuclear reactor engineering services
exclusive to Areva. See, e.g., 4 J.A. at 1411-14; 5 J.A. at 2100-01. Here again, however, the
undisputed evidence proved that these tasks were performed as “part of the steam generator
design process” for manufacturing the replacement heavy component. 7 J.A. at 2749.
Thus, with respect to the Davis-Besse and Crystal River contracts, we agree with the
B&W defendants that “B&W’s royalty-free right to perform Functional Design, Component
Design, Manufacturing Detail Design, manufacture, and change out of the Heavy Components
subsumed all of the uses that AREVA claimed triggered a royalty” regarding the ROTSG
26
contracts. Appellants’ Br. at 14-15. 24 The governing contractual provisions did not obligate the
B&W defendants to pay a royalty on contracts for the manufacture or manufacturing detailed
design of ROTSGs — exclusive rights B&W had reserved for itself since 1989 and had agreed
for the first time to share with Areva in the 2003 Settlement Agreement, for which Areva paid
additional consideration and executed a parallel royalty agreement one year later. 25
2. Use of Areva-Exclusive Technology “at” OTSG Plant Sites
None of the ROTSG contracts involved actual use of Areva’s exclusive technology at
any of the OTSG plant sites listed in Exhibit “A” of the Sub-License, an essential predicate for
the royalty obligation to apply. See supra Part II(B). Areva produced no evidence at trial that
any of the B&W defendants’ personnel had ever gone to any of the TVA Bellefonte, Davis-
Besse, or Crystal River plant sites to render on-site services of any kind. See, e.g., 4 J.A. at
1627, 1648, 1658.
The royalty provision required actual — not the mere possibility of — on-site use by the
B&W defendants of Areva’s exclusive technology. Any possibility of such use in any of the
24
See, e.g., 3 J.A. at 1032, 1038-39 (testimony of Areva’s negotiator of the Sub-License
that the parties did not intend the Sub-License to “appl[y] to manufacturing contracts”); 6 J.A. at
2276 (testimony of B&W defendants’ witness and former Areva executive, who had executed
the Sub-License for Areva, that he “never even considered th[e] possibility” that “B&W would
pay AREVA a royalty whenever B&W got what has been referred to as an all-in contract to
make a [ROTSG]”).
25
The TVA Bellefonte contract requires a different analysis than the other two ROTSG
contracts because B&W licensed to Areva exclusive authority to “make, use, sell, design or take
any other action (but not including manufacture of Heavy Components) necessary or desirable to
perform Bellefonte NSS Completion.” 26 J.A. at 12106. However, this license excluded the
right to manufacture ROTSGs and any other heavy components for the TVA plant, a right B&W
kept exclusively for itself. See id. Areva correctly points out that Article 8.1.6 of the TVA
amendment to the 1991 License Agreement did not expressly incorporate the provisions of the
1991 License Agreement granting B&W the right to use shared nuclear technology in support of
B&W’s manufacturing activities. Given our holding in Part III(A)(2) of this opinion, however,
we need not address this issue further.
27
ROTSG contracts, however, was limited to installation or change-out assistance, 26 which, as
noted earlier, were royalty-free activities contractually reserved by the B&W defendants. See
supra note 12 and accompanying text. Areva conceded this point at trial. Its senior vice
president and negotiator of the Sub-License, 2 J.A. at 795, acknowledged that the installation of
a steam generator would require “a little” on-site work, but he agreed that “[c]hange-out” of
heavy components was “nonexclusive” to Areva and thus “[n]o royalty” applied. 3 J.A. at 1031-
32. Another Areva corporate witness affirmed that any presence of the B&W defendants at an
OTSG site “to be available for questions during installation is not something that would trigger a
royalty.” 5 J.A. at 2002-03 (testimony of Areva’s NSSS engineering manager). 27
3. The Uncompleted TVA Bellefonte Plant 28
With respect to the TVA Bellefonte contract, Areva’s royalty claim runs into a unique,
additional contractual obstacle: The plant site was never completed. Exhibit “A” to the Sub-
License stated that TVA Bellefonte was an “OTSG plant site to which th[e] Sub-License
26
See 19 J.A. at 8577 (TVA Bellefonte contract provision limiting B&W’s on-site “Field
Service support” to “unloading, installation and startup” of the ROTSGs by TVA); 21 J.A. at
9655 (Crystal River contract provision for “[f]ield service support for unloading, installation and
start-up up to 240 (man hours of support)”); 24 J.A. at 11268 (Davis-Besse contract provision
providing that “[d]uring the steam generator replacement outage, [B&W] will provide up to 400
man-hours of engineering support to respond to field deviation requests” and “competent
technical personnel to provide advice, assistance and guidance in the unloading of the
[ROTSGs]” (emphasis added)).
27
Notably, none of these contracts included installation by the B&W defendants. See 19
J.A. at 8565 (TVA to provide its own “installation of equipment provided by [B&W Canada]”);
20 J.A. at 9063 (B&W Canada to provide “Final Delivery of the ROTSGs” to Davis-Besse for
subsequent installation); 21 J.A. at 9729 (“[Crystal River] to receive, store, [and] install” the
ROTSGs).
28
This section of our analysis corresponds to the B&W defendants’ Assignment of Error
2, which alleges that the trial court erred by “not granting judgment for B&W on the TVA
Bellefonte Contract” as a matter of law because “both the Sublicense and the court’s instructions
establishing the law of the case conditioned royalties on completion, and all evidence on the
point showed that the Bellefonte facility was not, and may never be, completed.” Appellants’
Br. at 28.
28
Agreement applies” only “[i]f completed.” 19 J.A. at 8514. All parties agreed at trial that work
at this plant had been suspended with no definite plans to resume at any time in the future.
Indeed, Areva’s own NSSS engineering manager stated that “completing the plant is an option
for [TVA Bellefonte] in the future,” 5 J.A. at 2042 (emphasis added), necessarily conceding that
the plant was not yet completed. Because the royalty obligation for work at this OTSG plant
arose only if the plant were completed, Areva’s claim for royalties associated with this
incomplete plant necessarily fails. See, e.g., 4 J.A. at 1626-27; 5 J.A. at 2042-43; 6 J.A. at 2567-
68. 29
Areva urges a non-literal reading of the qualifying clause “[i]f completed,” 19 J.A. at
8514, contending that the clause denotes work of any kind in furtherance of completion of the
plant site, even though the plant may never in fact be completed. The Sub-License simply
cannot bear this counter-intuitive interpretation. Something cannot be both completed and in the
process of completion at the same time. As Judge Learned Hand remarked, “there is a critical
breaking point beyond which no language can be forced.” Farnsworth, supra, § 7.10, at 290
(alteration and citation omitted)). In our opinion, Areva’s interpretation of the “if completed”
qualification goes beyond that point.
We are also unpersuaded by Areva’s reliance upon the definition of “Bellefonte NSS
Completion” in the 1991 License Agreement. That provision included “any agreement
(including an agreement for management of construction, but not for management of the
construction workforce) by which TVA . . . contracts with any party for work pertaining to the
completion of Bellefonte Units 1 and/or 2.” 9 J.A. at 3542. This definition, however, plainly
29
This indefinite suspension even led to the projected “long-term storage” of B&W
Canada’s newly manufactured ROTSGs, which, as of trial, had not been installed at the
incomplete plant. 6 J.A. at 2568.
29
described contracts during TVA Bellefonte’s completion phase — not the culmination of that
phase in a completed, operational plant site. 30
It is chronologically nonsensical for the if-completed qualification to be interpreted as
Areva suggests. The qualification appears in the 2004 Sub-License Agreement, not the 1991
License Agreement. By 2004, the construction phase of the TVA Bellefonte plant had already
progressed to about 90% completion. See 6 J.A. at 2340. The original steam generators had
already been installed. Id. Thus, in 2004, the if-completed qualification could not possibly
mean, as Areva claims, any and all aspects of the completion phase because that phase was
already about nine-tenths done at the time the parties agreed to the qualification. 31
Instead, the “if completed” qualification could logically mean only what it literally says:
Any royalty associated with this plant would be owed only if the plant is completed — which can
only refer to the future date. Otherwise, there would be no reason to have even used that caveat,
for it would have added nothing to the words already in the royalty provision. 32
B. THE COMMERCIAL NUCLEAR SERVICE CONTRACTS
The remaining twelve customer contracts did not involve the manufacture of ROTSGs. 33
30
Moreover, the only time that the 1991 License Agreement mentions Bellefonte NSS
Completion is in Article 9, which imposes limitations on Areva’s ability to sub-license
intellectual property relevant to completion of the site. See 9 J.A. at 3569-70.
31
We do not decide whether the B&W defendants trespassed upon any of Areva’s
Bellefonte NSS Completion rights because Areva has not alleged at any point in this litigation a
breach of the 2003 Settlement Agreement, nor would the issue be properly before us on appeal.
See Appellee’s Br. at 47 (assignments of cross-error limiting appellate review to the trial court’s
summary judgment ruling and the finding instruction given to the jury).
32
In interpreting contracts, “[e]ffect should be given to every part of the instrument, if
possible, and no part thereof should be discarded as superfluous or meaningless.” CNX Gas Co.
v. Rasnake, 287 Va. 163, 168, 752 S.E.2d 865, 867 (2014) (citations omitted); see also
Commonwealth v. Squire, 278 Va. 746, 752, 685 S.E.2d 631, 634 (2009); Cook v.
Commonwealth, 268 Va. 111, 114, 597 S.E.2d 84, 86 (2004).
33
This section of our analysis corresponds to the B&W defendants’ Assignment of Error
30
They did involve, however, use by the B&W defendants of Areva’s exclusive technology in the
field of commercial nuclear services. These contracts can be divided into two categories based
on the type of nuclear technology they used. 34 The first involved the off-site “design and [sale]”
of “Nuclear Reactor Engineering Services.” 9 J.A. at 3559. The second related to the on-site
“design, manufacture, [sale,] and use” of “Specialized Nuclear Maintenance, Inspection and
Field Services.” Id.
1. Off-Site Services
The evidence at trial was sufficient to establish that the B&W defendants used the first
category of nuclear technology in the performance of the contracts listed on the verdict form as
contract numbers:
 4 (Duke Contract #00111924)
 5 (Duke Contract #00119518)
 6 (Duke Contract #00121611)
 7 (Duke Contract #00124687)
 8 (Duke Contract #00127176)
 9 (Progress Master Services Contract #407670)
 10 (Duke Contract #00144904)
 11 (First Energy Hot Legs Contract)
 12 (First Energy Contract #55111846)
 13 (Duke Contract #66364)
 15 (Progress Contract #187562)
3, which asserts that the trial court erred by not granting judgment for B&W as a matter of law
on all of the contracts because “royalties are triggered only by B&W’s use of the OTSG
Technology ‘at an OTSG site’ and no B&W agent performed any work at any of the OTSG sites
involved except on the Duke Master Services Agreement.” Appellants’ Br. at 28.
34
See, e.g., 4 J.A. at 1841-46 (testimony of Areva’s NSSS engineering manager
regarding “multiple types of services” and activities that were granted to Areva in the 1991
License Agreement and distinguishing between “inspection, maintenance and field services” and
“nuclear reactor engineering services,” noting that all but one of these contracts involved the
latter technology).
31
The scope of work for these contracts included engineering studies of main steam line
breaks, 35 evaluation of foreign materials in steam generators, 36 determination of the impact of
replacement generators on tube-wear rates, 37 thermal-hydraulic analyses, 38 “calculation[s]
documenting the finite element single beam model of the [ROTSG],”39 all engineering studies
necessary for qualification of ROTSGs for extended power uprate (EPU) conditions, 40
engineering services required for a License Amendment Request (LAR) write-up for a
Measurement Uncertainty Recovery (MUR) power uprate, 41 engineering services related to
35
26 J.A. at 12263 (Duke Contract #00111924); id. at 12283 (Duke Contract
#00127176); id. at 12289 (Duke Contract #00124687); see also 4 J.A. at 1427-28 (testimony of
Areva’s expert that in his expert opinion, “AREVA-exclusive nuclear technology was used”); id.
at 1778-79 (testimony of Areva’s NSSS engineering manager that “a re-performance and a re-
evaluation” of a main steam line break analysis “embodies and incorporates the original [pre-
1989] analysis”); 5 J.A. at 2065-66 (testimony of same witness that “this scope of work is not
able to be performed without reliance on pre-1989 technology” because a main steam line break
“is an accident scenario” designed when the plant was originally constructed).
36
26 J.A. at 12366 (Duke Contract #00119518); see also 4 J.A. at 1429-30 (testimony of
Areva’s expert that in his expert opinion “nuclear reactor engineering services would be required
to perform this contract”); 5 J.A. at 2056 (testimony by Areva’s NSSS engineering manager that
the evaluation involved reliance on “inputs which are based on the original design basis and
AREVA-exclusive technology which is also from before 1989”).
37
26 J.A. at 12303 (Duke Contract #00121611); see also 4 J.A. at 1430-31 (testimony of
Areva’s expert that the contract “require[d] the use of AREVA-exclusive nuclear technology”
because the evaluation affected the “licensed level” of the plant, which was licensed before
1989).
38
25 J.A. at 11897 (Progress Master Services Contract #407670, work authorization
number 1).
39
Id. at 11905 (Progress Master Services Contract #407670, work authorization number
2).
40
Id. at 11909 (Progress Master Services Contract #407670, work authorization no. 3);
see also 4 J.A. at 1823 (testimony by Areva’s NSSS engineering manager that “doing work
associated with the base support for the steam generator and/or the upper lateral support for the
steam generator is not part of component design for a heavy component and . . . meets the
definition of a nuclear reactor engineering service” requiring Areva-exclusive technology
because “the analysis that you do in 2010 has to be measured against the analysis of what was
done previously”).
41
26 J.A. at 12336 (Duke Contract #00144904); see also 4 J.A. at 1435-36 (testimony of
32
licensing support for replacement hot legs, 42 engineering analyses of hot legs harvested from an
abandoned nuclear plant to determine feasibility of installation elsewhere, 43 structural
qualification of “tube-to-tubesheet seal welds,” 44 and services for the procurement of
equipment. 45 The First Energy Hot Legs contract, even though for the manufacture of heavy
components (hot legs), involved B&W Canada’s performance of nuclear reactor engineering
services that were exclusive to Areva. 46
Each of these activities fell within the definition of “nuclear reactor engineering services”
set forth in the 1991 License Agreement, and many of them were even listed as specific
illustrations of such services in an exhibit attached to the 1991 License Agreement. See 9 J.A. at
3605-08. Thus, evidence of the B&W defendants’ performance of the various engineering
Areva’s expert that “this contract required use of AREVA’s exclusive nuclear technology”
because “the licensed level of this particular reactor is part of the [original] licensing basis”); id.
at 1829 (testimony of Areva’s NSSS engineering manager that the contract specifically called for
licensing support, “one of the AREVA-exclusive activities,” specifically, “nuclear reactor
engineering services”).
42
27 J.A. at 12982 (First Energy Hot Legs Contract); 24 J.A. at 11039-40 (same); see
also 4 J.A. at 1542, 1546-47 (expert’s opinion that the scope of services went beyond
manufacture and sale into “engineering”).
43
26 J.A. at 12028 (First Energy Contract #55111846); see also 5 J.A. at 2068 (testimony
of Areva’s NSSS engineering manager that the contract scope was for “an engineering study to
evaluate the potential refurbishment of some equipment”).
44
26 J.A. at 12378 (Duke Contract #66364); see also 4 J.A. at 1837-38 (testimony of
Areva’s NSSS engineering manager that “the scope of work includes re-evaluating that particular
weld for a different load,” which was “performed on an existing component in the plant which
then meets the definition of a nuclear reactor engineering service”); 7 J.A. at 2736 (concession
by B&W Canada manager that the “tube-to-tubesheet welds were in a steam generator whose
design was based very substantially on the pre- or 1989 original once-through steam generator”).
45
27 J.A. at 12867 (Progress Contract #187562); see also 4 J.A. at 1447 (testimony of
Areva’s expert that Areva-exclusive technology was required “because it involves the utilization
of . . . 10 CFR Part 15, Appendix B, Quality Assurance”).
46
Unlike the broad design and manufacture rights that the B&W defendants possessed
for ROTSG contracts, B&W defendants were not permitted to perform functional design or
corresponding engineering services for heavy components that were not replacement steam
generators. See supra note 22.
33
studies described in the contract scopes was sufficient to establish that the B&W defendants used
Areva’s exclusive technology in the performance of these contracts.
However, the systemic error in Areva’s claim for royalty payments related to these
contracts is that none of the B&W defendants used this technology at any of the OTSG sites
listed in Exhibit “A” of the Sub-License. As noted earlier, the royalty provision stated — in
three separate places — that the royalty obligation was triggered only when the B&W
sublicensees used the exclusive technology “at OTSG plant sites” listed in Exhibit “A.” 19 J.A.
at 8508. At trial and on appeal, Areva contends that the at-OTSG-plant-sites qualification should
not be read literally. It was enough, Areva contends, that customers of the B&W sublicensees
ultimately benefited from the technology and employed it, however they chose to do so, in their
plant operations.
As we stated earlier, the plain meaning of the provision refutes Areva’s position. See
supra Part II(B). Under the royalty provision of the Sub-License, the B&W sublicensees were
obligated to pay a 4% royalty only when (i) they, not their customers or anyone else, (ii) used
Areva’s exclusive technology (iii) at an OTSG site, not at some off-site location. No royalty was
owed, therefore, if only the customers of the B&W sublicensees used Areva’s exclusive
technology at their own OTSG sites. Nor was the royalty owed if the B&W sublicensees used
this technology at some non-OTSG, off-site location. The royalty provision, by its unambiguous
terms, applied only to on-site services.
Thus, pursuant to the plain language of the royalty provision, verdict form contract
numbers 4 (Duke Contract #00111924), 5 (Duke Contract #00119518), 6 (Duke Contract
#00121611), 7 (Duke Contract #00124687), 8 (Duke Contract #00127176), 9 (Progress Master
Services Contract #407670), 10 (Duke Contract #00144904), 11 (First Energy Hot Legs
34
Contract), 12 (First Energy Contract #55111846), 13 (Duke Contract #66364), and 15 (Progress
Contract #187562) did not trigger the royalty provisions. 47
2. On-Site Services
The evidence was sufficient for reasonable jurors to have found that B&W Nuclear used
the second category of nuclear technology, which required work performed “at OTSG plant
sites,” 19 J.A. at 8508, for the Duke Nuclear Steam Generator Inspection & Maintenance
Services Agreement (“Duke Master Services Contract”), contract number 14 on the verdict form.
The scope of this contract included “eddy current inspection,” “[t]ube plugging and
stabilization,” and qualification of “[a]ll plugs and stabilizers . . . for full power operation and
transient conditions including design basis accident conditions,” among other things. 26 J.A. at
12120, 12151.
Some of these tasks were specifically listed in the exhibit of illustrative “specialized
nuclear maintenance, inspection and field services” attached to the 1991 License Agreement.
See 9 J.A. at 3610. Trial testimony further characterized these activities as Areva-exclusive
maintenance, inspection, and field services, which also required use of the “technology from the
original licensing basis and design basis of the plant.” 4 J.A. at 1849-50; see also 4 J.A. at 1448-
49 (testimony of Areva’s expert that, in his expert opinion, “this contract involve[d] the use of
AREVA’s exclusive nuclear technology”).
The evidence fully supports the jury’s conclusion that B&W Nuclear’s use of this second
category of Areva’s nuclear technology occurred at an OTSG plant site. Field services, by their
very definition, involved on-site work. 5 J.A. at 2105; 6 J.A. at 2240; see also 4 J.A. at 1845,
47
Based on this finding, there is no need for us to address the B&W defendants’
Assignment of Error 6 regarding the trial court’s refusal to instruct the jury that “B&W’s use of
certain computer codes does not trigger a royalty under the [Sub-License].” Appellants’ Br. at
29.
35
1848-49. Moreover, the B&W defendants concede that the Duke Master Services Contract
satisfied the threshold royalty conditions. See, e.g., Appellants’ Br. at 18-19; 4 J.A. at 1598.
C. THE “FIRST CONTRACT” EXCLUSION 48
Under the Sub-License, any royalty due for the first qualifying contract with a gross
contract amount exceeding $100,000 was covered by the $250,000 lump-sum payment described
in the “first contract” exclusion of Section II.D. 19 J.A. at 8508; see also supra Part II(C). On
appeal, the B&W defendants contend that the Duke Master Services Contract was the first
contract to qualify for the exclusion as a matter of law.
In response, Areva argues the “first contract” exclusion does not apply as a matter of law
because the $250,000 lump sum was not in lieu of, but “in addition to,” the payment of a 4%
royalty for the first contract to trigger the royalty provisions. See Appellee’s Br. at 40. As stated
earlier, we reject this position as irreconcilable with the plain meaning of the exclusion. Supra
Part II(C). Section II imposed the 4% royalty but conspicuously excluded any royalty liability
on the “first contract” covered by paragraph D. 19 J.A. at 8508. Nothing in either provision’s
text or context supports Areva’s contention that the $250,000 payment was meant to be in
addition to, rather than in lieu of, a royalty payment on the first contract to trigger the royalty
provisions. 49
48
This argument corresponds to the B&W defendants’ Assignment of Error 4: “The trial
court erred in not granting judgment to B&W on the Duke Master Services Agreement, as the
first services contract for greater than $100,000, or, if it was not the first as a matter of law, in
refusing to instruct the jury on the first contract exclusion.” Id. at 28.
49
We note that at the end of the trial, the trial court remarked from the bench that the
first-contract exclusion was “ambiguous.” 8 J.A. at 3131. In its earlier written order on the
cross-motions, however, the court had expressly held that the “royalty provisions in Art. II” —
which would include Section II.D’s “first contract” provisions — are “unambiguous.” 1 J.A. at
234. We need not look for a reconciliation of these views, however, because we hold as a matter
of law that the provision has a plain meaning that we interpret de novo.
36
One additional aspect of this issue deserves mention. The Sub-License did not expressly
identify B&W Nuclear as a grantee. In its initial pleadings, Areva asserted that B&W Nuclear
was “neither a signatory to nor a Grantee” under the Sub-License. See, e.g., 1 J.A. at 14.
However, in support of its claim for contractual royalties, Areva reversed its position at trial and
presented evidence that B&W Nuclear was a grantee under the Sub-License.
The first witness Areva put on the stand was the company’s senior vice president who
had also negotiated the Sub-License on Areva’s behalf. He was asked on cross-examination:
“And it’s your position that [B&W Nuclear] is a grantee under the sublicense, right?” 3 J.A. at
1088. He answered: “Right.” Id. To confirm that there was no misunderstanding, the B&W
defendants’ counsel again asked: “And, so B&W, as it is set forth in [the Sub-License] you
negotiated, includes [B&W Nuclear], right?” Id. at 1089. Areva’s witness again confirmed:
“Yes, Sir.” Id.
Areva’s expert witness made the same assertion, claiming that “each of the contracts” in
dispute, including the two in which B&W Nuclear was the only B&W defendant on the contract,
were “covered under the royalty of 4 percent of the gross revenues” and, thus, subject to its
license grant and royalty provisions. 4 J.A. at 1451-52; see also 5 J.A. at 2104 (testimony of
Areva’s manager of its NSSS engineering division that the Duke Master Services Contract “was
subject to the 4 percent royalty obligation . . . even though [B&W Nuclear] isn’t named as a
grantee” in the Sub-License). 50
50
We do not mean to imply that this concession was unwarranted. The 2003 Settlement
Agreement, which imposed on Areva the contractual obligation to “grant on a royalty-bearing
basis[] . . . negotiated rights in [Areva-exclusive technology],” acknowledged that the entire
context for the cross-licenses was resolution of the federal litigation between B&W, Areva, and
their various affiliates. See 9 J.A. at 3464-65. Consequently, the Settlement Agreement
expressly stated that its terms were to govern “all subsidiaries of [B&W] in which [B&W] has at
any time owned . . . or in the future owns . . . a majority interest.” Id. at 3464 (emphasis added).
37
Areva’s counsel argued this position to the jury, see supra Part I(D), and succeeded in
obtaining a jury verdict — on a form that Areva drafted and which proceeded “contract by
contract” through each of the 15 contracts. 8 J.A. at 3166; 1 J.A. at 360-62. It was undisputed
that B&W Nuclear was the only B&W defendant that was party to two of the disputed contracts,
the Duke Master Services Contract and Duke Contract #00144904, and the jury’s finding in the
verdict form that a B&W defendant had “breached the Sub-License” in relation to each of these
contracts necessarily indicates that the jury found B&W Nuclear bound by the Sub-License. See
1 J.A. at 360-61; see also Appellee’s Br. at 41 (arguing that the Duke Master Services Contract
was “subject to notice and royalty provisions” of the Sub-License).
To permit Areva to disavow on appeal the very argument it made at trial would allow
Areva to approbate and reprobate. See Wooten v. Bank of Am., N.A., 290 Va. 306, 310 n.1,
777 S.E.2d 848, 850 n.1 (2015). Under settled principles, however, a litigant may not take
“successive positions in the course of litigation that are either inconsistent with each other or
mutually contradictory.” Lewis v. City of Alexandria, 287 Va. 474, 480, 756 S.E.2d 465, 469
(2014) (citation omitted); Berry, 225 Va. at 207, 300 S.E.2d at 795.
The “doctrine against approbation and reprobation” applies both to assertions of fact and
law, Wooten, 290 Va. at 310 n.1, 777 S.E.2d at 850 n.1, and precludes litigants from “playing
fast and loose” with the courts, Wilroy v. Halbleib, 214 Va. 442, 445, 201 S.E.2d 598, 601
(1974) (citation omitted), or “blowing hot and cold” depending on their perceived self-
interests, United Va. Bank v. B.F. Saul Real Estate Inv. Tr., 641 F.2d 185, 190 (4th Cir. 1981).
We thus see no reason to examine further whether B&W Nuclear should receive the benefit, as
well as the hoped-for burden, of the Sub-License.
IV. THE TRADE SECRETS CLAIM
Finally, we address the B&W defendants’ challenge to the trial court’s rulings and the
38
jury’s verdict finding that the B&W defendants misappropriated Areva’s trade secrets. See
Appellants’ Br. at 29 (Assignment of Error 7).
Under Virginia’s Uniform Trade Secrets Act (VUTSA), an owner of “trade secrets” may
be entitled to damages when it can prove “misappropriation” by another. Code §§ 59.1-336, -
338; see also Collelo v. Geographic Servs., Inc., 283 Va. 56, 68, 727 S.E.2d 55, 60 (2012). A
“trade secret” is information that “[d]erives independent economic value . . . from not being
generally known to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use” and “[i]s the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.” Code § 59.1-336. 51 Under the
VUTSA, “[m]isappropriation” requires:
1. Acquisition of a trade secret of another by a person who knows
or has reason to know that the trade secret was acquired by
improper means; or
2. Disclosure or use of a trade secret of another without express
or implied consent by a person who
a. Used improper means to acquire knowledge of the trade
secret; or
b. At the time of disclosure or use, knew or had reason to
know that his knowledge of the trade secret was
(1) Derived from or through a person who had utilized
improper means to acquire it;
(2) Acquired under circumstances giving rise to a duty to
maintain its secrecy or limit its use;
51
The Uniform Trade Secrets Act “codifie[d] the basic principles of common law trade
secret protection,” substituted “unitary definitions of trade secret and trade misappropriation,”
and provided “a single statute of limitations for the various . . . theories of noncontractual
liability utilized at common law.” Uniform Trade Secrets Act § 1 prefatory note (Nat’l Conf. of
Comm’rs on Unif. State Laws 1985). However, the VUTSA expressly states that it “displaces
conflicting tort, restitutionary, and other law of this Commonwealth providing civil remedies for
misappropriation of a trade secret.” Code § 59.1-341(A).
39
(3) Derived from or through a person who owed a duty to
the person seeking relief to maintain its secrecy or limit
its use; or
(4) Acquired by accident or mistake.
Id. (emphases added).
The B&W defendants dispute that they misappropriated the technology at issue,
contending that “B&W owns all of the OTSG Technology, was entitled to access what it did not
physically possess, obtained access by lawful means, and is entitled to use all of it for any
purpose subject only to royalty for certain uses at certain sites.” Appellants’ Br. at 45 (emphasis
added). Thus, they assert, “there was no acquisition or use of the trade secrets ‘of another’ by
improper means or without consent or ‘unauthorized disclosure or use.’” Id. (citations omitted).
Given our interpretation of the Sub-License, we agree with the B&W defendants that they cannot
be liable for misappropriating trade secrets as a matter of law.
Section I of the Sub-License gave the B&W sublicensees “a perpetual, worldwide, sub-
license to practice and use” Areva’s exclusive technology “for all purposes, without restriction,
in the field of or relating to the supply of commercial nuclear services to OTSG plants.” 19 J.A.
at 8508. The scope of this license sweeps very broadly, employing such descriptions as
“perpetual,” “worldwide,” “for all purposes,” and “without restriction.” Id. Exhibit B to the
Sub-License further granted the B&W sublicensees the right to “disclose without prior approval
to a third party as subcontractor or in other relationship to the extent necessary to qualify a
repair product or service” various Areva-exclusive technologies, including reports detailing
“[a]ny interfaces required for the rendering of the OTSG commercial nuclear services.” Id. at
8515 (emphasis added).
There can be no misappropriation where acquisition, disclosure, and use of a trade secret
have been expressly authorized by contract. See Navar, Inc. v. Fed. Bus. Council, ___ Va. ___,
40
___, 784 S.E.2d 296, ___ (2016) (finding that the defendant “did not disclose or use the trade
secrets in violation of the Trade Secrets Act” because at the time of the contract award, he “was
[contractually] authorized to use the information”). 52 A valid contractual acquisition can hardly
be characterized as “improper means,” which the VUTSA defines as “theft, bribery,
misrepresentation, use of a computer or computer network without authority, breach of a duty or
inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other
means.” Code § 59.1-336. 53 A comment to the Uniform Trade Secrets Act specifically lists
acquisition “under a license from the owner of the trade secret” as an example of “proper
means,” Uniform Trade Secrets Act § 1 cmt. (Nat’l Conf. of Comm’rs on Unif. State Laws
1985), assuming that the contractual relationship is not procured through fraud. 54
52
The District of Columbia and at least 46 states, including Virginia, have adopted the
Uniform Trade Secrets Act (“UTSA”). 1 Roger M. Milgrim & Eric E. Bensen, Milgrim on
Trade Secrets § 1.01 (2016). Under the UTSA, “misappropriation” is a defined term “and
includes unauthorized acquisition, use and disclosure.” Id.; see also Uniform Trade Secrets Act
§ 1 (Nat’l Conf. of Comm’rs on Unif. State Laws 1985) (“‘Misappropriation’ means: (i)
acquisition of a trade secret of another by a person who knows or has reason to know that the
trade secret was acquired by improper means; or (ii) disclosure or use of a trade secret of another
without express or implied consent.”).
Thus, by definition, “misappropriation” of a trade secret can only occur when acquisition,
disclosure, or use is not authorized. See, e.g., IAC, Ltd. v. Bell Helicopter Textron, Inc., 160
S.W.3d 191, 199 (Tex. App. 2005) (affirming the trial court’s decision to grant a temporary
injunction on the trade secret owner’s misappropriation claim because the owner had produced
“evidence that appellants used the [confidential information] without [owner]’s authorization”
based on the fact that “the confidentiality agreement expressly prohibited [appellant] from using
the [confidential information]”).
53
As we have already observed, Areva asserted at trial that B&W Nuclear was a party to
the Sub-License and, indeed, sought and obtained a royalty award associated with the Duke
Master Services Contract. See supra Part III(C). Under approbate-reprobate principles, Areva’s
contentions on this issue at trial close the door on appeal to any argument that the Sub-License
was inapplicable to B&W Nuclear. Supra Part III(C).
54
See Restatement (First) of Torts §§ 757 cmt. f, 759 cmt. c (1939) (noting that the term
“improper means” generally includes “means which fall below the generally accepted standards
of commercial morality and reasonable conduct” and specifically includes obtaining a trade
secret through “fraudulent misrepresentations to induce disclosure,” such as entering into a
41
The royalty provision in the Sub-License was not a limitation on the scope of the right to
use Areva’s exclusive technology. It was a provision requiring compensation for use of Areva’s
exclusive technology at specifically identified OTSG plant sites. If the B&W sublicensees had
breached their contractual duty to pay royalties for the 15 customer contracts in this case, that
fact would not convert Areva’s breach-of-contract claim into a statutory right of action for
misappropriation of trade secrets. 55 Areva offers us no persuasive authority to the contrary, and
we are aware of none. For this reason, the trial court erred in failing to set aside the verdict on
Areva’s trade secrets claims. 56
license agreement that the licensee has no intent to fulfill at the time of execution); Uniform
Trade Secrets Act § 1 cmt. (Nat’l Conf. of Comm’rs on Unif. State Laws 1985) (noting that
“[i]mproper means could include otherwise lawful conduct which is improper under the
circumstances”); id. (noting that “[o]ne of the broadly stated policies behind trade secret law is
‘the maintenance of standards of commercial ethics’” (quoting Kewanee Oil Co. v. Bicron Corp.,
416 U.S. 470, 481 (1974))); see also Systems 4, Inc. v. Landis & Gyr, Inc., 8 Fed. App’x 196,
200 (4th Cir. 2001) (recognizing the indeterminate nature of “improper means” but noting that
from various jurisdictions’ statutory definitions, “one can derive some common characteristics”
centering on “intentional conduct involving some sort of stealth, deception or trickery”).
55
1 Milgrim & Bensen, supra note 52, § 4.02 (“Use of an express contract [to govern
trade secrets] may cast an eventual trade secret action as one for breach of contract rather than as
one sounding in tort. This could have impact on . . . the available remedy. . . . Similarly, an
express contract might impose narrower duties and competitive strictures than the relationship
between the parties would create in the absence of an express agreement.” (footnotes omitted));
see also Aktiebolaget Bofors v. United States, 194 F.2d 145, 148 (D.C. Cir. 1951) (“[O]ne who
has lawfully acquired a trade secret may use it in any manner without liability unless he acquired
it subject to a contractual limitation or restriction as to its use. In that event a licensee who uses
the secret for purposes beyond the scope of the license granted by the owner is liable for breach
of contract, but he commits no tort, because the only right of the owner which he thereby invades
is one created by the agreement of disclosure. The owner could not maintain a suit against him
for damages arising from unlicensed use without pleading and proving the contract. This being
true, the gist of the owner’s action is the breach of the licensing agreement.” (emphasis added)
(footnote omitted)).
56
The B&W defendants also challenge Areva’s method of calculating statutory damages
under Code § 59.1-338(A). See generally Cacique, Inc. v. Robert Reiser & Co., 169 F.3d 619,
623-24 (9th Cir. 1999) (interpreting a similar adaptation of the Uniform Trade Secrets Act);
American Sales Corp. v. Adventure Travel, 862 F. Supp. 1476, 1479-80 (E.D. Va. 1994)
(applying the Virginia Uniform Trade Secrets Act and calculating damages); 4 Milgrim &
Bensen, supra note 52, § 15.02. Given our holding, we need not address this issue.
42
V. CONCLUSION
In sum, we hold that the trial court erred in failing to set aside the verdict and enter
judgment for the B&W defendants on Areva’s royalty and trade secret claims on each of the 15
contracts on the verdict form. Our holding moots Areva’s assignments of cross-error. For these
reasons, we reverse and enter final judgment dismissing Areva’s claims.
Reversed and final judgment.
43