Groen v. Children's Hosp. Med. Ctr.

[Cite as Groen v. Children's Hosp. Med. Ctr., 2012-Ohio-2815.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO

PAMELA GROEN, : APPEAL NO. C-100835
TRIAL NO. A-0907904
Plaintiff-Appellant, :
O P I N I O N.
vs. :

CHILDREN’S HOSPITAL :
MEDICAL CENTER,
:
Defendant-Appellee.

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: June 22, 2012

Schwartz Manes Ruby & Slovin, William S. Wyler and Hallie Borellis for Plaintiff-
Appellant,

Taft Stettinius & Hollister LLP, W. Stuart Dornette and Ryan M. Bednarczuk, for
Defendant-Appellee,

Please note: This case has been removed from the accelerated calendar.
 OHIO FIRST DISTRICT COURT OF APPEALS

J. H OWARD S UNDERMANN , Judge.

{¶1} Plaintiff-appellant Pamela Groen appeals from the trial court’s entry

granting summary judgment in favor of defendant-appellee Children’s Hospital

Medical Center (“CHMC”) on Groen’s claims that she was entitled to receive a

distribution of proceeds under a Policy on Inventions, Patents, and Intellectual

Property (“IP Policy”) with CHMC for one patented assay and five unpatented assays

she co-invented during her employment at CHMC. Because the IP Policy does not

provide for such compensation, we affirm the trial court’s decision granting

summary judgment to CHMC.

I. Groen’s Work at CHMC and the IP Policy

{¶2} Groen, an employee at CHMC since 1993, works in the molecular

pathology lab. While in CHMC’s employ, Groen collaborated with her supervisor

Dr. David Witte to develop an assay for tracking the progress of the Epstein Barr

Virus (“EBV”) in post-organ-transplant patients. In January 2001, Groen signed an

invention disclosure form covering the EBV assay and submitted it to CHMC’s Office

of Technology Transfer. The document confirmed CHMC’s ownership of the

invention. CHMC subsequently filed a patent application for the invention, and on

September 14, 2004, the Patent Office issued to CHMC a patent entitled

“Quantitative Epstein Barr Virus PCR Rapid Assay.”

{¶3} When it filed the patent application, CHMC was discussing with a

third party a potential licensing of the test. Those talks never resulted in a license

agreement, and CHMC did not license the test to any other party. CHMC continues,

however, to use the test in-house. In addition to the EBV assay, Groen has developed

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 OHIO FIRST DISTRICT COURT OF APPEALS

five other assays, none of which CHMC has patented or licensed to a third party. But

CHMC does use these assays in its treatment of patients.

{¶4} At the time Groen invented the assays, CHMC maintained an IP Policy.

Over the years, Groen has made numerous inquiries about whether she would be

paid for her inventions under the IP Policy. Ultimately, CHMC refused to make any

payments to Groen for its in-house use of the assays.

II. Groen’s Lawsuit Against CHMC

{¶5} Groen then sued CHMC, claiming, among other things, breach of

contract based on the IP Policy. Groen claimed that under the IP Policy, she was

entitled to compensation for CHMC’s use of the EBV assay. Following the trial

court’s dismissal of Groen’s claims for mutual mistake of fact and unjust enrichment,

Groen amended her complaint to include three additional claims: retaliation in

violation of public policy, tortious interference with a business relationship, and a

second contract claim. Groen claimed CHMC had also breached the IP Policy by

failing to pay her for its in-house use of the five unpatented assays she had co-

invented.

{¶6} CHMC moved to dismiss Groen’s claims for retaliation in violation of

public policy and tortious interference with a business relationship. Following a

hearing, the trial court dismissed her retaliation claim. Shortly thereafter, CHMC

moved for summary judgment on Groen’s contract claims. After briefing and oral

argument, the trial court determined that there was no ambiguity in the IP Policy,

and entered an order granting CHMC’s motion for summary judgment. Groen

voluntarily dismissed her remaining claims against CHMC without prejudice, and

filed a notice of appeal from the trial court’s entry granting summary judgment on

her contract claims.

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 OHIO FIRST DISTRICT COURT OF APPEALS

{¶7} CHMC filed a motion to dismiss Groen’s appeal, arguing that the Ohio

Supreme Court’s decision in Pattison v. W.W. Grainger, Inc., 120 Ohio St.3d 142,

2008-Ohio-5276, 897 N.E.2d 126, precluded Groen from dismissing her remaining

claims without prejudice so as to convert the trial court’s entry of partial summary

judgment on her contract claims into a final appealable order. Groen filed an

amended notice of dismissal, dismissing her remaining claims against CHMC with

prejudice, as well as a memorandum opposing CHMC’s motion to dismiss her

appeal. We overruled CHMC’s motion to dismiss Groen’s appeal.

III. Jurisdiction to Entertain Groen’s Appeal

{¶8} In its merit brief, CHMC persists in arguing that this court lacks

jurisdiction to entertain Groen’s appeal because (1) the trial court’s entry granting

summary judgment on Groen’s contract claims lacks Civ.R.54(B) certification; and

(2) the Ohio Supreme Court’s decision in Pattison precludes Groen from voluntarily

dismissing her remaining claims against CHMC to create a final appealable order.

We disagree.

{¶9} In Pattison, an employee brought two claims against his employer and

an another individual: an age discrimination claim and wrongful termination claim

based upon a violation of public policy. See Pattison v. W. W. Grainger, Inc. 8th

Dist. No. 88556, 2007-Ohio-3081, ¶ 2. The trial court granted summary judgment to

the employer on the age discrimination claim. The employee appealed. The Eighth

District Court of Appeals dismissed the employee’s “appeal for want of a final

appealable order under Civ.R. 54(B) because the public policy claim remained

extant.” Id. The employee subsequently filed a notice in the trial court, pursuant to

Civ.R.41(A)(1)(a), dismissing his public policy claim without prejudice, and filed a

second notice of appeal. Id.

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 OHIO FIRST DISTRICT COURT OF APPEALS

{¶10} The Eighth District concluded that it had jurisdiction to entertain the

employee’s second appeal, but it, nonetheless, dismissed the appeal as untimely. Id.

at ¶ 3. Acknowledging that its precedent, which permitted a party in cases where

the party had received a partial judgment to voluntarily dismiss its remaining

claim[s] in a single party suit in order to convert the partial judgment into a final

appealable order subject to appeal, “conflicted with the near unanimity” of other

appellate districts, the Eighth District certified the conflict to the Ohio Supreme

Court. Id. at ¶ 8 and ¶ 11, fn. 3.

{¶11} The Ohio Supreme Court rejected the Eighth District’s position,

holding that it not only contravened the plain text of Civ.R.41(A)(1), but also

promoted piecemeal appeals, which were burdensome and prejudicial to defendants.

The court stated that the text of Civ.R. 41(A) does not permit the voluntary dismissal

of less than “all claims asserted by that plaintiff against a defendant.” See Pattison,

120 Ohio St.3d 142, 2008-Ohio-5276, 897 N.E.2d 126 at ¶ 18. The court further

noted that the Eighth District’s

position regarding judicial economy and the need to streamline cases

suffers in that, were Civ.R.41(A) to be used to dismiss fewer than all of

the claims against a certain defendant, a plaintiff could create a final

and appealable order as to one issue under Civ.R.41(A) while still

saving the dismissed claim to be refiled later. To allow a partial

Civ.R.41(A) dismissal is potentially prejudicial to defendants. In cases

in which all claims against a party are dismissed without prejudice,

there still is the risk of the action being refiled, but the amount of

potential litigation that a defendant is subjected to is the same. When

an individual claim against a defendant is dismissed without prejudice,

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however, the defendant is forced to go through the appeal process and

may perhaps still be subjected to the dismissed claim upon refiling.

The defendant in that situation is vulnerable to an increased overall

burden due to the Civ.R.41 dismissal. Id. at ¶ 20.

{¶12} Consequently, the Supreme Court held that “[w]hen a plaintiff has

asserted multiple claims against one defendant, and some of those claims have been

ruled upon but not converted into a final order pursuant to Civ.R.54(B), the plaintiff

may not create a final appealable order by voluntarily dismissing pursuant to Civ.R.

41(A) the remaining claims against the same defendant.” See id. at ¶ 1; see also

Dohme v. Eurand Am. Inc., 121 Ohio St.3d 277, 2009-Ohio-506, 903 N.E.2d 1174.

{¶13} Groen argues that Pattison is factually distinguishable. We agree.

Because the plaintiff in Pattison dismissed his remaining claim without prejudice,

the Supreme Court did not discuss the appealability of an order, which disposes of

some, but not all of the plaintiff’s claims against a defendant, following the plaintiff’s

voluntarily dismissal with prejudice of her remaining claims against that same

defendant. CHMC has not cited, nor has our independent research discovered, any

Ohio cases extending Pattison beyond its facts. See, e.g., Mahoney v. HB Emp.

Serv., L.L.C., 8th Dist. No. 96603, 2011-Ohio-5186; GRA Water Mgt. Co. v. Univ. of

Toledo, 6th Dist. No. L-11-1014, 2011-Ohio-5034; P.N. Gilcrest Ltd. Partnership v.

Doylestown Family Practice, Inc., 9th Dist. No. 09CA0051, 2010-Ohio-1803, ¶ 12;

Myles v. Quail Woods Holdings, LLC, 8th Dist. No. 92413, 2009-Ohio-5561, ¶ 6.

{¶14} Here, Groen has dismissed her remaining claims against CHMC with

prejudice. The Ohio Supreme Court has held that a dismissal with prejudice

“operates as an adjudication on the merits and is an appealable order under R.C.

2305.03.” See Tower City Properties v. Cuyahoga Cty. Bd. of Revision, 49 Ohio

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St.3d 67, 69, 551 N.E.2d 122 (1990) (quoting the staff note to Civ.R. 41); see also

Chadwick v. Barbae Lou, Inc., 69 Ohio St.2d 222, 226, 431 N.E.2d 660 (1982);

compare Hensley v. Henry, 61 Ohio St.2d 277, 400 N.E.2d 1352, syllabus (1980)

(“Unless Plaintiff’s Civ.R.41(A)(1)(a) notice of dismissal operates as an adjudication

upon the merits under Civ.R.41(A)(1), it is not a final judgment, order, or

proceeding.”).

{¶15} As a direct consequence of the dismissal with prejudice, Groen has lost

forever the opportunity to prove the remaining claims in her amended complaint.

Additionally, Groen has not appealed from and is further precluded from contesting

the trial court’s judgment dismissing her claims against CHMC for unjust

enrichment, mutual mistake of fact, and retaliation in violation of public policy.

{¶16} By allowing Groen to appeal, following the voluntary dismissal of her

remaining claims with prejudice, this court is actually furthering the goal of judicial

economy by permitting Groen to forego litigation on the dismissed claims while

accepting the risk that if her appeal on the contract claims is unsuccessful the

litigation will end.

{¶17} Because the trial court’s entry granting CHMC partial summary

judgment on Groen’s two contract claims became a final appealable order when

Groen dismissed her remaining claims against CHMC with prejudice, we conclude

that we have jurisdiction to consider Groen’s appeal. We, therefore, proceed to the

merits of her arguments on appeal.

IV. Groen’s Breach of Contract Claims

{¶18} In her first assignment of error, Groen argues that the trial court erred

in granting CHMC summary judgment on her breach of contract claims.

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 OHIO FIRST DISTRICT COURT OF APPEALS

{¶19} We review the trial court’s entry of summary judgment de novo, using

the same standard that the trial court applied. Koos v. Central Ohio Cellular, Inc.,

94 Ohio App.3d 579, 588, 641 N.E.2d 265 (8th Dist. 1994). Summary judgment is

appropriate under Civ.R. 56(C) when “(1) no genuine issue as to any material fact

remains to be litigated; (2) the moving party is entitled to judgment as a matter of

law; and (3) it appears from the evidence that reasonable minds can come to but one

conclusion, and viewing such evidence most strongly in favor of the nonmoving

party, that conclusion is adverse to the party against whom the motion for summary

judgment is made.” State ex rel. Parsons v. Fleming, 68 Ohio St.3d 509, 511, 1994-

Ohio-172, 628 N.E.2d 1377. Contract interpretation, which is at the heart of the

judgment in this case, is reviewed de novo. See Nationwide Mut. Fire Ins. Co. v.

Guman Bros. Farm, 73 Ohio St.3d 107, 108, 652 N.E.2d 684 (1995).

{¶20} Groen argues that the trial court erred in granting summary

judgment to CHMC on the basis that the IP Policy unambiguously provides for

payment to an inventor only when the inventions are commercialized by a third

party. We disagree.

{¶21} Section VI(A)(2) of the IP Policy provides that “the inventor has the

right to * * * receive a share of any licensing fees or royalties received by CHMC from

the commercialization of the discovery or invention according to the distribution

schedule contained in Section VIII of this Policy.” Section VI(D)(5) of the IP Policy,

likewise, limits CHMC’s obligation to “distribute any licensing fees or royalties

received by CHMC for any discovery or invention according to the schedule

contained in Section VIII of this Policy.” Section VIII of the IP Policy further

provides that an inventor is entitled to receive a percentage of the “Cumulative Net

Lifetime Proceeds” (“CNLP”) for her invention. CNLP is defined as:

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 OHIO FIRST DISTRICT COURT OF APPEALS

Gross revenues or other payments received by CHMC from a

licensed technology minus applicable patent fees, other legal

fees associated with the technology, fees for patentability and

marketability searches, fees arising out of litigation, legal advice

or any other fees or costs directly attributable to the invention

being licensed. Indirect costs, overhead or other CHMC costs

usually associated with operation of CHMC and not directly

attributable to the invention shall not be deducted from gross

revenues.

{¶22} Groen argues that the definition of CNLP is subject to conflicting

interpretations and is thus, ambiguous. She reads the phrase “received by CHMC

from a licensed technology” as modifying only the phrase “other payments” and not

modifying the phrase “gross revenues.” Thus, she argues that gross revenues could

encompass those gross revenues received by CHMC when it uses an invention in-

house while “from a licensed technology” is limited to the “other payments.” CHMC

argues, on the other hand, that “received by CHMC from a licensed technology”

modifies both “gross revenues” and “other payments.”

{¶23} It is well established that “[a] contract or its terms will be viewed as

ambiguous only in the event that the rights and duties imposed on the parties are

reasonably subject to conflicting interpretations.” Kern v. Clear Creek Oil Co., 149

Ohio App.3d 560, 2002-Ohio-5438, 778 N.E.2d 115, ¶ 20 (5th Dist). Here, the

parties’ rights and duties are spelled out in Section VI of the IP Policy — the inventor

has the right to receive and Children’s has the duty to pay a portion of “licensing fees

or royalties.” In light of those rights and duties, both “gross revenues” and “other

payments” as defined in Section VIII of the IP Policy must come “from a licensed

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technology.” Any other reading is unreasonable in light of the IP Policy as a whole.

See German Fire Ins. Co. v. Roost, 55 Ohio St. 581, 45 N.E. 1097 (1897), paragraph

one of the syllabus.

{¶24} Furthermore, the definition of CNLP confirms that the CNLP are

proceeds from licensed inventions and nothing more. Groen, who is seeking to

recover a percentage of gross revenues received by CHMC, agrees that the adjective

“received” modifies both “gross revenues and “other payments.” But if “received”

modifies both “gross revenues and “other payments,” then the phrase that

immediately follows it, “from a licensed technology” must also modify “gross

revenues” as well as “other payments.” The principle of ejusdem generis confirms

this reading. It provides that “[w]here general words are used after specific terms,

the general words will be limited in their meaning to things of like kind and nature as

those specified.” See Dingledy Lumber Co. v. Erie Railroad, 102 Ohio St. 236, 131

N.E. 723 (1921), syllabus; see also Kay v. Pennsylvania Rd. Co., 156 Ohio St. 503,

103 N.E.2d 751 (1952). The phrase “other payments” refers to types of licensing

revenue received from a licensed technology other than gross revenues, such as up-

front payments or milestone payments. Thus, from the grammatical context of the

first sentence of the definition, read as a whole, CNLP are proceeds from licensed

inventions and nothing more.

{¶25} The definition of CNLP also ends with a deduction of costs “directly

attributable to the invention being licensed.” See IP Policy VIII(A). The costs to be

deducted are fees incurred when an invention is patented and licensed. They do not

include the costs incurred for a test used in-house at CHMC. IP Policy VIII(A). This

further confirms that CNLP are proceeds from licensed inventions.

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 OHIO FIRST DISTRICT COURT OF APPEALS

{¶26} Finally, there is no ambiguity with respect to any other term that

changes our conclusion that Groen is entitled to only a percentage of licensing

revenues. While Groen urges this court to attach significance to the fact that not

every word in the contract is defined, the absence of definitions does not

automatically make the meaning of a term ambiguous. See Guman Bros. Farm, 73

Ohio St.3d at 108, 652 N.E.2d 684. Because the IP Policy unambiguously provides

that an inventor is entitled to receive payment only from a licensed technology,

CHMC was entitled to judgment as a matter of law on Groen’s contract claims. We,

therefore, overrule her first assignment of error.

{¶27} In her second assignment of error, Groen argues that the trial court

erred as a matter of law in holding that Section I of the IP Policy is not part of the

contract. We disagree.

{¶28} Section I of the policy, entitled “Preamble,” merely lays out the

objectives of the policy. One of those objectives is the “equitable distribution of

income resulting from the commercialization of novel discoveries * * * between

CHMC, TCHRF [The Children’s Hospital Research Foundation] and the

investigator/inventor.” Groen argues that CHMC’s in-house use of the tests

amounts to “commercialization” for which she is entitled to receive an “equitable

distribution of income.”

{¶29} But because the preamble merely lays out the objectives of the policy,

it is not itself an operative part of the policy. See Cain Restaurant Co. v. Carrols

Corp., 273 Fed. Appx. 430, 434, (6th Cir.2008)( noting that “preambles in a contract

generally serve to introduce the contract’s subject matter rather than set forth the

specific rights and obligations of the parties.”); see also Berg v. Berg, 201 Minn. 179,

275 N.W. 836, 842 (Minn.1937) (“[I]n contracts where a preamble * * * is declaratory

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of the purposes and intentions of the parties, it will be looked to in construing the

contract * * * but in no sense will it be the basis of a legal and binding obligation of

the parties.”) The preamble, moreover, concludes with a transition into the actual

policy: “the following policy on inventions, patents, and intellectual property has

been formulated and adopted.” IP Policy, Preamble.

{¶30} Finally, as we read the contract there is nothing inconsistent between

the preamble’s objective of equitable distribution and the operative provisions of the

IP Policy that follow. The generalized phrase “income resulting from

commercialization of novel discoveries and inventions” merely echoes the section on

the employee-inventor’s rights in the body of the IP Policy: “The inventor has the

right * * * to receive a share of licensing fees or royalties received by CHMC from

the commercialization of the discovery or invention according to the distribution

schedule contained in Section VIII of this Policy * * *.” IP Policy VI(A)(2). This is

the equitable distribution of income referenced in the Preamble.

{¶31} Because the trial court correctly concluded that the Preamble in the IP

Policy merely lays out the objectives of the policy and is not an operative part of the

contract, we overrule Groen’s second assignment of error and affirm the judgment of

the trial court.
Judgment affirmed.
DINKELACKER, P.J., concurs.
CUNNINGHAM, J., dissents.

CUNNINGHAM, J., dissenting.

{¶32} I respectfully dissent. While I agree with the majority that we have

jurisdiction to entertain Groen’s appeal, I cannot agree that the IP Policy

unambiguously provides compensation to inventors only if there is a licensed

technology.

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{¶33} To explain why this case is not ripe for summary judgment, reluctantly

I must quote at length from the IP Policy. The policy, drafted by Dr. Joseph

Fondacaro, provides in pertinent part:

I. Preamble

As a leading institution for patient care and research,

Children’s Hospital Medical Center (CHMC) and The Children’s

Hospital Research Foundation (TCHRF) have dedicated their

efforts towards the discovery of knowledge that will benefit

child health now and in the future. Recognizing that

discoveries and inventions of commercial importance are a

natural outgrowth of research and without intent to focus the

pursuit of research solely on the attainment of patents, CHMC

and TCHRF have a responsibility to:

***

C. provide equitable distribution of income resulting

from the commercialization of novel discoveries and

inventions between CHMC, TCHRF, and the investigator,

inventor.”

In recognition and furtherance of these objectives, * * * the

following policy on inventions, patents, and intellectual

property has been formulated and adopted.

***

Section VI. Rights and Obligations of the Parties

A. Inventor Rights. The inventor has the right to:

***

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2. receive a share of any licensing fees or royalties

received by CHMC from the commercialization of the discovery

or invention according to the distribution schedule contained in

Section VIII of this Policy;

***

D. CHMC Obligations. CHMC is obligated to:

***

5. distribute any licensing fees or royalties received by

CHMC for any discovery or invention according to the schedule

in Section VIII of this Policy.

***

Section VIII Distribution of Proceeds:

A. For all discoveries or inventions for which CHMC

receives proceeds, CHMC shall deduct all costs (as defined

below) pertinent to the technology and not recovered

previously in a license agreement. The remaining net proceeds

shall be distributed as set forth below:

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DIVISIONAL
Cumulative Net Inventor(s)*
Lifetime Proceeds Inventor’s(΄) Division(s) ± Research
Laboratory(ies)** Foundation

0.$100K 50% 15% 10% 25%

$100K-$300K 40% 20% 15% 25%

>$300K 30% 25% 20% 25%

For purposes of this distribution schedule, the following

definitions shall apply:

***

Cumulative Net Lifetime Proceeds: Gross revenues or other

payments received by CHMC from a licensed technology

minus applicable patent filing fees, other legal fees associated

with the technology, fees for patentability and marketability

searches, fees arising out of litigation, legal advice or any other

fees or costs directly attributable to the invention being

licensed. Indirect costs, overhead or other CHMC costs usually

associated with operation of CHMC and not directly

attributable to the invention shall not be deducted from gross

revenues.

***

D. The above distribution schedule shall be adhered to

whenever the conditions of Section IV are satisfied and CHMC

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funds are used to pursue a patent application and/or license

agreement. The distribution schedule shall apply also to

revenues received from licensing and commercialization of

unpatented technologies.

(Emphasis added.)

{¶34} The majority holds that an inventor only has a right to compensation

under the IP Policy if there is a licensed technology. It relies on the following

sentence in the definition of Cumulative Net Lifetime Proceeds [CNLP]: “Gross

revenues or other payments received by CHMC from a licensed technology.” The

majority reasons that the term “licensed technology” must modify both the terms

“gross revenues” and “other payments.” Thus, it reasons that payment is limited to

third party commercialization of an invention.

{¶35} But the term “gross revenue” is not defined in the policy. In its

ordinary and usual sense, it would mean all revenues. See Alexander v. Buckeye

Pipeline Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph two of the syllabus

(holding that words in a contract must be given their plain and ordinary meaning).

“Other payments,” which is also not defined in the IP Policy, if read without the

limiting phrase “from a licensed technology” would make no sense, because all

payments would already be accounted for by “gross revenues.” Revenues and

payments would essentially mean the same thing.

{¶36} On the other hand, if “from a licensed technology” is applied only to

“other payments” and not “gross revenues” then the sentence, although awkward,

makes sense. “Gross revenues” would apply to fees other than those from a licensed

technology and “other payments” would apply to fees from a licensed technology.

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This is a reasonable interpretation of the provision, particularly in light of the other

language employed in Section VIII.

{¶37} In reaching its conclusion that the IP Policy is unambiguous, the

majority ignores the first portion of Section VIII of the IP Policy, which begins by

stating: “For all discoveries for which CHMC receives proceeds, CHMC shall deduct

all costs (as defined below) * * *. The remaining net proceeds shall be distributed as

set forth below.” It also omits from its discussion Section VIII(D) which further

states that the distribution schedule applies to “revenues received from licensing

and commercialization of unpatented technologies.”

{¶38} In interpreting a contract, “[a] court has an obligation to give plain

language its ordinary meaning and to refrain from rewriting the contractual

agreement of the parties.” Miller v. Marrocco, 28 Ohio St.3d 438, 439, 504 N.E.2d

67 (1986). It must give meaning to every word used in each provision, and cannot

choose to ignore certain words that the drafters had included in the document. See

Cleveland Elec. Illum. Co. v. Cleveland, 37 Ohio St.3d 50, 53-54, 524 N.E.2d 441

(1988); see also Blair v. McDonough, 177 Ohio App.3d 262, 2008-Ohio-3698, 894

N.E.2d 377, ¶ 49 (1st Dist.) (a court must read a contract as a whole).

{¶39} Like the terms “gross revenues,” and “other payments,” the terms

“income,” “commercialization,” and “proceeds,” are not defined in the IP Policy.

Because they are undefined, this court must give them their plain and ordinary

meaning. See Goering v. Choicecare Healthcare Plans, Inc., 136 Ohio App.3d 22,

24, 735 N.E.2d 936 (1st Dist.1999); see also Morton Internatl. v. Aetna Cas. & Sur.

Co., 106 Ohio App.3d 653, 663, 666 N.E.2d 1163 (1st Dist.1995); Terreri & Sons, Inc.

v. Mahoning Cty. Bd. of Commrs., 152 Ohio App.3d 95, 2003-Ohio-1277, 786 N.E.2d

921 (7th Dist.).

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{¶40} Commercialize is commonly defined as “[t]o apply methods of

business to for profit.” “To do, exploit, or make chiefly for financial gain.” American

Heritage Dictionary 371 (4th Ed.2000). “Proceeds” is defined as “[t]he amount of

money derived from a commercial or fundraising venture; the yield.” Id. at 1398.

“Income” is defined as “[t]he amount of money or its equivalent received during a

period of time in exchange for labor or services, from the sale of goods or property,

or as profit from financial investments.” Id. at 887.

{¶41} Although the majority makes a distinction between payments for “in-

house use” versus payment for third-party commercialization, the references in

Section VIII of the IP Policy to “commercialization” and “proceeds” do not

differentiate between income generated in house at CHMC or otherwise. Rather, the

IP Policy simply states that CHMC has an obligation to pay inventors revenues based

on licensing and commercialization of the assays. Such commercialization could

include CHMC’s own use of the assays.

{¶42} Because Section VIII of the contract is reasonably susceptible to

conflicting interpretations, it is ambiguous. See Matthews v. Morris Sons Co., 118

Ohio App.3d 345, 349, 692 N.E.2d 1055 (2nd Dist.1997) (holding that “[a] contract is

ambiguous if the rights and duties it imposes on the parties to it are reasonably

subject to conflicting interpretations”); see also United States Fid. & Guar. Co. v. St.

Elizabeth Med. Ctr., 129 Ohio App.3d 45, 55, 716 N.E.2d 1201 (2nd Dist.1988).

{¶43} Typically the resolution of an ambiguity is a question for the jury, but

if the extrinsic evidence is undisputed and reveals the contract to have but one

reasonable meaning, summary judgment may be entered. See Graham v. Drydock

Coal Co., 76 Ohio St.3d 311, 313, 667 N.E.2d 949 (1996); Cincinnati Ins. Co. v. ACE

INA Holdings, Inc. 175 Ohio App.3d 266, 2007-Ohio-5576, 886 N.E.2d 876 (1st

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Dist.); see also Lewis v. Mathes, 161 Ohio App.3d 1, 2005-Ohio-1975, 829 N.E.2d

318, ¶ 25 (7th Dist.).

{¶44} Here, CHMC attached an affidavit from Dr. Fondacaro to its motion

for summary judgment. Dr. Fondacaro asserts that the terms “proceeds” and

“commercialization” as used in the IP Policy have a “technical” meaning. But these

terms are not unique to medical or research institutions. If CHMC had intended for

proceeds and commercialization to mean something unique to CHMC’s industry,

then it should have carefully defined them in the IP Policy. Because CHMC did not

define these words in the policy, it cannot now use an affidavit from Dr. Fondacaro to

assert that the terms have a “technical” meaning. See Comtide Holdings, LLC. v.

Booth Creek Mgt. Corp., S.D. Ohio No. 07-CV-01190, 2011 Ohio U.S. Dist LEXIS

131028 (Nov. 14, 2011)(applying Ohio law); see also Inland Refuse Transfer Co. v.

Browning-Ferris Indus. of Ohio, Inc., 15 Ohio St.3d 321, 322, 474 N.E.2d 271 (1984).

{¶45} Furthermore, the record reveals that the IP Policy was not freely

negotiated between CHMC and its employees. Instead, it was drafted by Dr.

Fondacaro. Dr. Fondacaro testified that he “cobbled the provisions together” from

other intellectual-property policies that he had found on the internet. As a result,

any ambiguity in the contract should be strictly construed against CHMC. See

McKay Machine Co. v. Rodman, 11 Ohio St.2d 77, 80, 228 N.E.2d 304 (1967).

{¶46} I also disagree with the majority’s conclusion that Section I of the IP

Policy is a preamble rather than an operative portion of the IP Policy. Black’s Law

Dictionary defines a preamble as “an introductory statement in a * * * document

explaining the document’s basis and objective.” 1214 (8th Ed.2004).

{¶47} While Section I of the IP Policy is titled “Preamble,” it is in effect an

operative portion of the parties’ agreement. See Jordan v. Marion Technical

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College, 3rd Dist. No. 9-90-36, 1991 Ohio App. LEXIS 3866, *2 (Aug. 15, 1991)

(holding that section headings are not binding provisions of a contract). Instead of

setting the background of the parties’ agreement, Section I sets forth the parties’

rights and obligations.

{¶48} The section expressly states that it is the “responsibility” of CHMC and

the Foundation to “provide [Groen] with an equitable distribution of income

resulting from the commercialization of * * * inventions.” Notably, Section I does

not limit equitable distribution to revenue derived from “license fees” or “royalties.”

Nor is payment to the inventor limited to revenues from “licensed technologies.”

{¶49} In Orwell Natural Gas Co., Inc. v. PCC Airfoils, LLC, the plaintiff

argued that the first part of the agreement was a preamble, serving as “a perfunctory

statement that simply introduces the parties and subject matter.” 189 Ohio App.3d

90, 2010-Ohio-3093, 937 N.E.2d 609, ¶ 14 (8th Dist.). The Eighth District Court of

Appeals disagreed, holding that “these pages are more than that. They set forth a few

material terms, such as location of delivery, and provide the only section that binds

[the defendant] to the later terms and conditions * * *.” Id. Similarly, Section I of

the IP Policy sets out the “responsibility” of CHMC to “provide equitable distribution

of income resulting from commercialization.” It is mandatory language binding

CHMC to the later terms and conditions.

{¶50} When CHMC’s obligation in Section I to provide inventors with an

“equitable distribution of income” is read in conjunction with Section VIII(A) of the

IP Policy, delineating the inventor’s right to a distribution of the remaining net

proceeds for all discoveries and inventions for which CHMC receives proceeds, the

terms of the agreement support Groen’s argument that “gross revenues” in the

definition of CNLP is not limited to proceeds from a licensed technology. Rather,

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CHMC has an obligation to equitably distribute income from commercialization from

an invention.

{¶51} There is an obvious conflict between the wording in Section VIII and

CHMC’s obligation in Section I to provide an “equitable distribution” for the

commercialization of inventions. Coupled with the contradictory language of Section

VIII itself, and the important but undefined terms in that section, I would hold that

the IP Policy is ambiguous as to whether an inventor can share in the revenues

received from CHMC’s internal use of an invention. Because reasonable minds could

differ as to whether an inventor could share in CHMC’s commercialization of an

invention, the use of summary judgment to terminate this litigation was

inappropriate. See Comtide Holdings, LLC., 2011 Ohio U.S. Dist LEXIS 131028, at

*25 (holding summary judgment inapposite when extrinsic evidence did not

conclusively resolve the meaning of an undefined contract term); Inland Refuse

Transfer, 15 Ohio St.3d at 322, 474 N.E.2d 271. As a result, I would reverse the trial

court’s decision granting summary judgment to CHMC, and remand this case for

further proceedings in the trial court.

Please note:
The court has recorded its own entry this date.

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