from the United States District Court for the Northern
District of Illinois in No. 1:16-cv-03545, Judge Edmond E.
Raymond P. Niro, Jr., Niro McAndrews LLC, Chicago, IL, argued
for plaintiff-appellant. Also represented by Kyle Wallenberg.
Rudolph A. Telscher, Jr., Husch Blackwell LLP, St. Louis, MO,
argued for defendant-appellee. Also represented by Kara Renee
Fussner, Steven E. Holtshouser, Brendan G. McDermott.
Lourie, Reyna, and Hughes, Circuit Judges.
Motor and Coil Corporation ("Molon") appeals from
the judgment of the U.S. District Court for the Northern
District of Illinois in favor of Nidec Motor Corporation
("Nidec") on Molon's claim for infringement of
U.S. Patent 6, 465, 915 ("the '915 patent").
The district court granted summary judgment that Molon is
barred from enforcing the '915 patent against Nidec
pursuant to a covenant not to sue that Molon granted in 2006
("the 2006 Covenant"). Molon argues that the 2006
Covenant was extinguished by a clause in a Settlement,
License and Release Agreement that the parties entered into
in 2007 ("the 2007 Settlement"). The clause at
issue in the 2007 Settlement states that all prior covenants
"concerning the subject matter hereof" are
"merged" and "of no further force or
effect." Because we agree with the district court that
the two agreements concern different subject matter and
therefore do not merge, we affirm.
and Nidec are competitors in the electric motor market. In
2004, Molon filed suit in the Northern District of Illinois
against Nidec's predecessor, Merkle-Korff Industries,
Inc. ("Merkle-Korff"), for infringement of U.S.
Patent 6, 054, 785 ("the '785 patent"). J.A.
76-78 ("the '5134 litigation"). Merkle-Korff
filed counterclaims, including for declaratory judgment of
noninfringement, invalidity, and unenforceability with
respect to two other patents owned by Molon-the '915
patent and U.S. Patent 6, 617, 726 ("the '726
patent"). J.A. 90-100. Molon moved to dismiss
Merkle-Korff's counterclaims involving the '915 and
'716 patents, and Merkle-Korff opposed the motion. On
February 2, 2006, Molon unilaterally provided Merkle-Korff
with the 2006 Covenant, which states:
Molon hereby forever covenants not to sue Merkle-Korff for
patent infringement (whether direct, contributory, or by
inducement thereof) under either the '915 patent or the
'726 patent with respect to any and all products
previously or presently made, used or sold by Merkle-Korff in
the United States. This covenant extends directly to
Merkle-Korff as well as any individual or entity to which
Merkle-Korff previously or presently supplies products by way
of the manufacture and/or sale thereof in the United States.
J.A. 27. Molon then represented to the court that
"[t]his covenant divests the Court of subject matter
jurisdiction over Merkle-Korff's declaratory judgment
counterclaims involving the '915 and the '726
patents, and such claims must accordingly be dismissed."
J.A. 28. After dismissal of those counterclaims, the
'5134 litigation continued with respect to only the
early 2007, Molon and Merkle-Korff entered into the 2007
Settlement, after which the parties jointly filed a
stipulation of dismissal in the '5134 litigation. J.A.
30-37. In the 2007 Settlement, Merkle-Korff agreed to pay
Molon a lump sum payment in exchange for an exclusive license
to more than a dozen of Molon's United States and foreign
patents and patent applications-including the '785,
'915, and '726 patents-within a narrowly defined
Grant. Molon hereby grants each of the Merkle-Korff
Affiliates an exclusive, fully paid-up, royalty free,
worldwide, perpetual, irrevocable, retroactive, current and
future right and license of all Patent Rights to make, have
made, use, sell, offer to sell, lease, import, export, or
otherwise commercialize products and/or systems for resale or
other transfer: (i) to any of the other Merkle-Korff
Affiliates; and/or (ii) to [a third-party company and its
affiliates] (such persons and entities in (i) and (ii) above,
collectively the "Kinetek Exclusive
Market"). Under said license, the sale, offer to
sell, lease, importation, exportation, commercialization
and/or other transfer of products and/or systems between two
Merkle-Korff Affiliates (as expressly set forth in (i)
above), shall in no way permit the transferee Merkle-Korff
Affiliate (i.e., the receiving Merkle-Korff Affiliate) to
make, have made, use, sell, offer to sell, lease, import,
export, or otherwise commercialize such products and/or
systems for resale or other transfer to any person or entity
outside of the Kinetek Exclusive Market.
J.A. 31. In addition to the exclusive license rights within
the Kinetek Exclusive Market, the 2007 Settlement granted
Merkle-Korff in certain instances "the right, but not
the duty, to pursue an infringement claim"-i.e., the
right to exclude others from using the patents within the
Kinetek Exclusive Market. J.A. 32.
2007 Settlement contains a "merger" or
Entire Agreement. This Agreement is an integrated
Agreement and constitutes the entire agreement and
understanding between and among the Parties with regard to
the matters set forth herein and shall be binding upon and
inure to the benefit of the administrators, agents, personal
representatives, successors, and assigns of each. There are
no representations, promises, or agreements pertaining to the
terms or subject matter of this Agreement, whether express or
implied, that are not set forth in this Agreement. All prior
and contemporaneous conversations, negotiations, possible and
alleged agreements, representations and covenants concerning
the subject matter hereof, are merged herein and shall be of
no further force or effect.
J.A. 35. The 2007 Settlement also expresses the parties'
agreement that they cooperated in drafting the agreement, it
is not to be interpreted for or against either of them, and
it is to be governed by the laws of the State of Illinois.
later merged with Nidec. Whether that merger immunizes Nidec
from liability that it might have otherwise had prior to the
merger raises the issue that is at the heart of this appeal.
In the present suit Molon alleges that Nidec is practicing
and/or inducing others to practice the '915 patent
outside the licensed Kinetek Exclusive Market. See
moved for partial summary judgment on Molon's
infringement claim, arguing that Molon is barred from
enforcing the '915 patent against Nidec under the 2006
Covenant. Molon responded that the 2006 Covenant was
extinguished by the merger clause in the 2007 Settlement.
Applying Illinois contract law, the district court granted
partial summary judgment in favor of Nidec on Molon's
claim for infringement of the '915 patent. J.A. 1-12.
Because the merger clause in the 2007 Settlement pertains
only to covenants "concerning the subject matter
hereof," the court compared the subject matter of the
2006 Covenant to the subject matter of the 2007 Settlement.
The court found that the 2006 Covenant gives Nidec a right to
avoid suit for patent infringement on two patents, one of
which is the '915 patent. J.A 9. In contrast, the 2007
Settlement is in some ways broader-it is an exclusive
license, it includes more than a dozen patents and
applications, and it provides Nidec with some enforcement
rights-and in other ways narrower-it is limited to a defined
market of customers-than the 2006 Covenant. J.A. 9. Thus, the
court concluded, the 2006 Covenant remains in effect because
it does not concern the same subject matter as the 2007
granting Nidec's motion for partial summary judgment, the
Court entered final judgment on Molon's patent
infringement claim pursuant to Federal Rule of Civil
Procedure 54(b). Molon appealed the court's judgment. We
have jurisdiction under 28 U.S.C. § 1295(a)(1).
review a district court's grant of summary judgment
according to the law of the regional circuit. Kaneka
Corp. v. Xiamen Kingdomway Grp. Co., 790 F.3d 1298, 1303
(Fed. Cir. 2015) (citing Halo Elecs., Inc. v. Pulse
Elecs., Inc., 769 F.3d 1371, 1377 (Fed. Cir. 2014)). In
the Seventh Circuit, a grant of summary judgment is reviewed
de novo. Edwards v. Briggs & Stratton Ret.
Plan, 639 F.3d 355, 359 (7th Cir. 2011). Summary
judgment is appropriate when "there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law." Fed.R.Civ.P. 56.
case, the question before us is whether the 2007 Settlement
should be interpreted to have revoked or extinguished the
2006 Covenant. Contract interpretation is a question of state
law. See Volt Info. Sci., Inc. v. Bd. Of Tr. Of
Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989).
The 2007 Settlement contains a choice-of-law provision
requiring that it "be governed and construed in
accordance with the laws of the State of Illinois as to all
matters of interpretation and remedy." J.A. 35.
Therefore, we apply Illinois state law to interpret the 2007
Settlement de novo. Erlenbush v. Largent,
819 N.E.2d 1186, 1189 (Ill.App.Ct. 2012) ("[W]e
interpret the contract independently, without deference to
the trial court.").
contract interpretation principles in Illinois require
application of the "four corners" rule. Air
Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882,
884 (Ill. 1999). In applying this rule, "[a] court must
initially look to the language of a contract alone, as the
language, given its plain and ordinary meaning, is the best
indication of the parties' intent." Gallagher v.
Lenart, 874 N.E.2d 43, 58 (Ill. 2007); Rakowski v.
Lucente, 472 N.E.2d 791, 794 (Ill. 1984) ("Where a
written agreement is clear and explicit, a court must enforce
the agreement as written. Both the meaning of the instrument,
and the intention of the parties must be gathered from the
face of the document without the assistance of parol evidence
or any other extrinsic aids.").
therefore look to the language of the 2007 Settlement. The