Mid-West Conveyor Co. v. Jervis B. Webb Co.

PUBLISH

UNITED STATES COURT OF APPEALS
Filed 8/6/96
TENTH CIRCUIT

MID-WEST CONVEYOR CO., INC., )
)
Plaintiff-Appellee, )
) No. 95-3073
v. )
)
JERVIS B. WEBB COMPANY, )
)
Defendant-Appellant. )

Appeal from the United States District Court
for the District of Kansas
(D.C. No. 93-2539-EEO)

Carter H. Kokjer of Kokjer, Kircher, Bowman & Johnson, P.C., Kansas City, MO
(Devon A. Rolf and Joseph B. Bowman, of Kokjer, Kircher, Bowman & Johnson,
P.C., with him on the brief) for Defendant-Appellant.

Charles B. Lyon, of Calfee, Halter & Griswold, Cleveland, OH (Mitchell G. Blair
and Maura L. Hughes, of Calfee, Halter & Griswold, with him on the brief) for
Plaintiff-Appellee.

Before TACHA, BRORBY, and EBEL, Circuit Judges.
EBEL, Circuit Judge.

Appellant Jervis B. Webb Company and Appellee Mid-West Conveyor

Company, Inc., are competitors in the business of manufacturing unit handling

conveyor systems for various industries, including the automotive industry. Webb

holds a patent in the United States, as well as in numerous foreign countries, on

an apparently popular conveyor systems technology known as the "wide dog"

transfer. Seeking to use its competitor's technology on certain projects, Mid-West

licensed from Webb the right to produce and construct conveyor systems in-

corporating the wide dog technology. The parties now dispute the geographic

scope of the license granted. Mid-West argues that Webb granted it a license to

use the technology worldwide. Webb argues that the License Agreement is only a

grant of a license in its United States patent and, as a result, the license does not

grant Mid-West a license under Webb’s corresponding wide dog technology

patents in other countries.

The district court found the language of the License Agreement to be

ambiguous. Considering extrinsic evidence of the negotiation conduct of the

parties, as well as their conduct under the Agreement before a dispute arose, the

court agreed with Mid-West that the License Agreement granted a worldwide

license. Webb now appeals, arguing: (1) The License Agreement unambiguously

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grants Mid-West a license limited to use of the wide dog technology only in the

United States; and (2) Even if the geographic scope of the Agreement is

ambiguous, the extrinsic evidence of the parties' conduct prior to and after

entering into the License Agreement indicates that the parties intended to grant

Mid-West a license limited in scope to the reach of its United States patent

covering the wide dog technology. Because we agree with the district court that

the Agreement is ambiguous, and because we conclude that the district court's de-

termination of the parties' intent was not clearly erroneous, we AFFIRM.

BACKGROUND

Mid-West and Webb are competitors who both manufacture and sell unit-

handling conveyor systems. Webb owns United States Patent No. 4,616,570 (the

"'570 Patent"), which patents a power and free conveyor system known as the

"wide dog" transfer. 1 In addition to the '570 Patent, Webb owns numerous

corresponding foreign patents for the wide dog technology disclosed and claimed

in the '570 Patent, including patents in Canada and France.

In 1988, Mid-West and Webb competed for a contract to supply conveyor

systems to a General Motors plant in Ste. Therese, Canada. GM awarded the

contract to Mid-West. Mid-West wanted to use Webb's wide dog transfer

1
The wide dog transfer mechanism is used to transfer objects, such as automobile
bodies, from one conveyor to another in conveyor systems.

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technology on the job, and negotiated for a license from Webb that would enable

it to utilize the technology on the Ste. Therese project. Mid-West argues that at

the same time, it also sought a license that would enable it to use the wide dog

technology on all future projects, including projects outside the U.S. and Canada.

In February 1989, Webb and Mid-West signed a License Agreement, which

was drafted by Webb. The second recital clause of the Agreement states that

“MID-WEST desires a non-exclusive license to practice the inventions disclosed

and claimed in the Licensed Patent and WEBB is willing to grant such a license to

MID-WEST.” Paragraph 2 of the Agreement provides:

License grant. Webb hereby grants to MID-WEST, and MID-WEST hereby
accepts, a non-exclusive, non-transferrable license to manufacture, use and
sell, or have manufactured for use and sale by MID-WEST, power and free
conveyor systems incorporating any invention disclosed and claimed in the
Licensed Patent, and such conveyor system being hereinafter referred to as
a Licensed System.

Furthermore, the Agreement defines the "Licensed Patent" as "United States

Patent No. 4,616,570…." The Agreement does not include any recitation that the

license right granted is limited geographically to the scope of the United States

patent, nor does the License Agreement include a definition of any territory

limiting the geographic scope of the license.

Since signing the License Agreement, Mid-West has paid Webb $286,800

in royalties for foreign jobs which used the licensed technology, including the

original Ste. Therese project in Canada, a subsequent project at Ste. Therese, and

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an installation in China. Webb unconditionally accepted these royalties, and

never threatened to sue Mid-West for its use of the wide dog technology in

foreign countries.

Mid-West's and Webb's differing interpretations of the scope of the License

Agreement became apparent in early 1992, when Mid-West considered bidding on

a General Motors project in Australia. In preparing Mid-West's bid, Michael

McClellan, president of Mid-West, concluded that he needed to ascertain whether

Webb owned a patent in Australia, which Mid-West thought might affect whether

the company had to pay a license fee under the License Agreement. In response

to McClellan's telephone inquiry in early 1992, David Webb Clark, Webb's vice-

president, stated that Webb had patent coverage in Australia that would prohibit

Mid-West's use of the wide dog technology in that country. Clark also wrote a

January 28, 1992 letter to McClellan stating that Mid-West's license was limited

to the United States only. Mid-West decided not to include the wide dog

technology in Mid-West's bid for the Australian project, purportedly in order to

avoid confrontation between Mid-West and Webb and because the small project

did not require the wide dog technology.

Webb and Mid-West again competed for an installation in 1992 and 1993,

this time for Peugeot in France. Prior to the submission of the bid, Peugeot

insisted that the wide dog technology be used. Webb wrote to Mid-West, restat-

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ing its position that the License Agreement covered only the '570 Patent in the

United States, and did not give Mid-West the right to use that technology in

foreign countries where that technology was protected by foreign patent. Mid-

West responded that it disagreed with Webb's position and interpreted the License

Agreement as granting a worldwide license.

Mid-West then brought this action in United States District Court to resolve

whether it could apply the wide dog technology to the Peugeot project under the

License Agreement. Mid-West later persuaded Peugeot to use a different

technology and amended its complaint to seek only a declaration of the parties'

rights under the License Agreement. At trial, the district court found the License

Agreement to be ambiguous, and therefore considered extrinsic evidence regard-

ing the Agreement's territorial limitations. Both parties offered testimony by

McClellan and Clark, as well as correspondence between Webb and Mid-West

and intraoffice memoranda. The district court concluded that, based on the ex-

trinsic evidence, the License Agreement granted Mid-West license rights

worldwide.

I. The Ambiguity of the License Agreement

Both parties initially argue that the License Agreement is unambiguous, and

that the clear language of the Agreement supports their respective interpretations.

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In considering the Agreement, we keep in mind that patent license agreements are

to be construed according to the general principles of contract interpretation and

construction. Cardinal of Adrian, Inc. v. Amerock Corp., No. 76-70868, 209

U.S.P.Q. (BNA) 724, 729, 1980 WL 30270 (E.D. Mich. Sept. 8, 1980) (citing 4

Anthony Will Deller, Deller's Walker on Patents, § 421 (1965)), aff’d, 698 F.2d

1218 (6th Cir. 1982). 2 However, inasmuch as the License Agreement involves an

invention described in a United States patent, the court also will look to federal

decisions interpreting similar license agreements for guidance. See MGA, Inc. v.

LaSalle Machine Tool, Inc., 384 N.W.2d 159, 161 (Mich. Ct. App. 1986). Be-

cause the determination of whether a contract provision is ambiguous is a

question of law, Teton Exploration Drilling, Inc. v. Bokum Resources Corp., 818

F.2d 1521, 1526 (10th Cir. 1987), we review the district court's determination the

contract was ambiguous de novo.

Under Michigan law, an agreement is considered ambiguous when its

language is susceptible to more than one reasonable interpretation. See SSC

Assocs. Ltd. Partnership v. General Retirements Sys. of Detroit, 480 N.W.2d 275,

277 (Mich. Ct. App. 1991); Auto Owners Ins. Co. v. Zimmerman, 412 N.W.2d

2
The License Agreement has a choice of law provision designating Michigan law as
controlling over the Agreement. Kansas law recognizes the enforceability of choice-of-
law provisions like the one contained in paragraph nine of the License Agreement. See
Equifax Services, Inc. v. Hitz, 905 F.2d 1355, 1360 (10th Cir. 1990).

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925, 927 (Mich. Ct. App. 1987). If an agreement is ambiguous, extrinsic

evidence to aid in interpretation or construction of the agreement is admissible.

In re Woodcock, 45 F.3d 363, 366 (10th Cir.), cert. denied, 116 S. Ct. 97 (1995).

Webb argues that the License Agreement unambiguously grants Mid-West

only a license for the United States '570 patent--not a license to use the invention

in countries covered by any of Webb's foreign patents. Webb relies on language

in the first recital clause of the License Agreement stating that "WEBB is the

owner of United States Patent No. 4,616,570 … hereinafter referred to as the

Licensed Patent." Furthermore, the Agreement neither refers to nor identifies any

foreign rights or patents. Finally, the License Agreement refers to the Licensed

Patent eleven times throughout its text. 3 Therefore, under Webb's interpretation,

because the parties did not explicitly contract for a worldwide license, any

corresponding patents Webb holds in foreign countries prohibit Mid-West from

using the wide dog technology there.

Mid-West similarly seizes particular language in the License Agreement to

support its argument that the Agreement unambiguously grants it a worldwide

3
For example, Paragraph 4 provides:

In the event that WEBB should subsequently grant to another licensee not
affiliated with WEBB a license under the Licensed Patent at a more favorable
royalty rate than that provided herein, MID-WEST shall be entitled to obtain such
more favorable royalty rate….

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license to make, use or sell the technology patented under the '570 patent. First,

Mid-West argues that the Agreement contains no express territorial restrictions

limiting where Mid-West can make, use or sell the wide dog technology. Second,

Mid-West argues that the Agreement's reference to the U.S. patent is only to

describe the technology being licensed--not the particular patent being licensed.

Specifically, the Agreement's grant clause provides that Webb is licensing to Mid-

West a "license to manufacture, use and sell, or have manufactured for use and

sale by MID-WEST, power and free conveyor systems incorporating any in-

vention disclosed and claimed in the Licensed Patent, any such conveyor system

being hereinafter referred to as a Licensed System." License Agreement ¶ 2

(emphasis added). Consistent with this clause, the second recital clause provides

that "MID-WEST desires a nonexclusive license to practice the inventions dis-

closed and claimed in the Licensed Patent and WEBB is willing to grant such a

license to MID-WEST." (emphasis added.)

Federal case law interpreting similar language in other license agreements

is sparse, and provides minimal guidance to us in resolving any ambiguity. Webb

relies on Cold Metal Process Co. v. United Engineer & Foundry Co., 235 F.2d

224 (3d Cir. 1956). There, a 1927 contract granted United the right to make, use

and sell rolling mills "under" Cold Metal's U.S. Patent. Id. at 229. The court

held that:

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 in the absence of any express provision to the contrary, the right thus
granted by the contract must be construed to have had the same territorial
limitation in its scope as in the case of a patent, that is, the right did not
extend beyond the territorial limits of the United States.

Id. In reaching this holding, the court cited no authority other than a reference to

a United States statute, 35 U.S.C. § 154, which provides:

Every patent shall … grant [the patent owner] … for the term of seventeen
years … the right to exclude others from making, using, or selling the
invention throughout the United States.…

Mid-West relies on Kabushiki Kaisha Hattori Seiko v. Refac Tech. Dev.

Corp., 690 F. Supp. 1339 (S.D. N.Y. 1988). There, the license agreement granted

Hattori a license "to make, have made, use, have used, sell and have sold products

coming within the scope of U.S. Patent Nos. 3,855,783…." Id. at 1341 (emphasis

added). 4 The court first noted that the language of the granting paragraph

"include[d] no terms of geographical restriction limiting to the United States

Hattori's right to sell." Id. at 1342. The court then decided that the agreement

unambiguously granted Hattori a right to sell the patented inventions that was

geographically unrestricted, rejecting Refac's argument that United States patents

4
The license agreement also granted Hattori a license for "all non-U.S. counterparts
of any said patents." 690 F. Supp. at 1341. However, Hattori did not argue that its right
to sell certain products abroad arose under any foreign patent covered by the agreement.
Id. at 1343 n.3. The court, therefore, did not consider the effect of this clause. See id.
(stating that "this disputed fact is not material to resolving the issues presented by these
motions").

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protect the right only to make, use or sell products within the United States. Id. at

1343. The court rested its decision on the definition of "scope of a patent":

A patent's "scope," as is well established in patent law, refers not to the
geographical area within which the patent provides protection, but to the
nature of the products covered by the patent's claims. The term "scope of a
patent" has been defined as follows:

The boundaries or limits of the invention protected by the patent,
which are not matters of metes and bounds and can never be defined
in the definite sense employed in thinking of physical things, but
must be determined by methods based upon established principles of
patent law.

Id. (citing Black’s Law Dictionary (5th ed. 1979) (emphasis added in opinion)).

The court concluded that "Refac has pointed to nothing within the confines of the

Agreement to warrant hesitation in concluding that the phrase `within the scope of

U.S. Patent…,' as used in the Agreement, carries its usual meaning. Therefore,

that phrase does not geographically limit the license granted." Id. (omission in

original). 5

5
There is a split in patent treatises regarding this issue. One treatise, citing Cold
Metal, supports Webb's argument:

In the absence of an express provision to the contrary, the right granted under the
license will be assumed to be geographically coextensive with the territorial
limitations of the patent. If the license agreement grants the licensee the right to
make, use, and sell the patented article, the grant will not be construed to extend
beyond the territorial limits of the United States, absent provisions to the contrary.

1 Harold Einhorn, Patent Licensing Transactions § 2.01[2] (1996). See also 6 Ernest B.
Lipscomb III, Lipscomb's Walker on Patents § 20:5 (stating that "[i]n the absence of an
express provision to the contrary a license must be construed as having the same
(continued...)

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 Considering the language of the License Agreement, we believe that the

Agreement is ambiguous as it could be interpreted to support either party's

interpretation. Its references to a specific U.S. patent supports Webb's argument

that it only grants a license to use the patent's technology in the United States. 6

However, the lack of any territorial restriction and the Agreement's granting

language that the license covers the "inventions disclosed and claimed in the

Licensed Patent" supports Mid-West's argument that the Agreement grants Mid-

West a license to use the wide dog technology anywhere in the world with the

reference to the United States patent only to describe the technology being

licensed. Furthermore, we do not believe that the two decisions cited by the

5
(...continued)
territorial limit as the patent and does not extend beyond the territorial limits of the United
States").

Arguably one treatise may support Mid-West's argument:

If the intent of the parties is to limit the patent rights to be transferred to a specific
territory defined in the license agreement, express language and a schedule of
licensed patents should be used to negate implications that otherwise arise.

Harry R. Mayers and Brian G. Brunsvold, Drafting Patent License Agreements § 22.08
(1991).
6
For example, paragraph 4 of the Agreement, quoted supra note 3, apparently grants
Mid-West a more favorable royalty rate only when a U.S. Patent licensee obtains such a
more favorable rate; the provision does not appear to be triggered if a licensee of a for-
eign patent obtains a more favorable rate. It seems logical, however, that if Mid-West
had bargained for a worldwide patent, it would have bargained for a clause applicable on
an international basis as well.

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parties clear up the ambiguity. Cold Metal involved a license agreement granted

expressly under a United States patent; there, the subject matter of the license

agreement clearly was the United States patent itself, not the technology

described in the patent. And although the language of the agreement in

Kabushiki--which licensed products "coming within the scope of" a United States

patent--seems similar to the language in the present Agreement licensing the

"inventions disclosed and claimed" in a United States Patent, the License

Agreement's numerous references to the Licensed Patent adds ambiguity to the

present License Agreement and distinguishes this case from Kabushiki.

Therefore, because we believe the License Agreement fairly could support both

Webb's and Mid-West's interpretations, we will look to the evidence in the record

and determine whether the district court's determination of the parties' intentions

regarding the license's geographic scope at the time the Agreement was drafted

was clearly erroneous.

II. Evidence of the parties' intent

Once a contract provision is found to be ambiguous, the resolution of its

proper meaning is a question of fact, subject to review on a clearly erroneous

standard. Teton Exploration, 818 F.2d at 1526. "Findings of fact, whether based

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on oral or documentary evidence, shall not be set aside unless clearly erroneous,

and due regard shall be given to the opportunity of the trial court to judge the

credibility of the witnesses." Fed. R. Civ. Pro. 52(a). See Salve Regina College

v. Russell, 499 U.S. 225, 233 (1991). "A finding of fact is not clearly erroneous

unless it is without factual support in the record, or if the appellate court, after

reviewing all the evidence, is left with the definite and firm conviction that a

mistake has been made." Las Vegas Ice & Cold Storage Co. v. Far West Bank,

893 F.2d 1182, 1185 (10th Cir. 1990) (quotation omitted).

Here, the district court concluded that: (1) the negotiations preceding the

License Agreement indicate that the parties intended to grant a worldwide license

of the wide dog technology; (2) the post-Agreement conduct of Webb further

confirms that it considered the License Agreement to grant a worldwide license;

and (3) Webb's explicit definition of territorial applications in its foreign licenses

indicates that it did not intend to limit Mid-West's license geographically.

Considering the evidence in the record, we do not believe that the court clearly

erred in deciding that Webb and Mid-West intended a worldwide license.

A. The conduct of the parties during negotiations

The court determined that Clark, the Webb officer authorized to negotiate

and contract with Mid-West, was aware that Mid-West intended that the License

Agreement apply to all future projects, including projects outside the United

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States. During the negotiations between McClellan and Clark, McClellan

expressed interest to Clark in obtaining a license agreement that would apply not

only to the Ste. Therese, Canada, project, but to all future projects as well. In a

December 19, 1988 letter to Clark, McClellan stated:

Our thought is that the license would initially cover 89 transfers at the
General Motors facility in St. Therese and that it could be extended to other
projects on the same basis.

(R.O.A. A98) (emphasis added). In a January 25, 1989 letter to Clark, McClellan

repeated Mid-West's position that the license would encompass the Ste. Therese

project, and all future projects:

We have reviewed your letter and would like to offer this counter proposal
of $1,200 for each transfer and $100 per carrier or 2 1/2% of the total sell
price, whichever is lower. This would provide a fee of $194,400 for the St.
Therese project and would be applicable to all future projects.

(R.O.A. A102) (emphasis added).

In response to the January 25 letter, Clark sent McClellan draft copies of a

license agreement accompanied by a cover letter dated January 27, 1989. The

cover letter stated:

Enclosed are two copies of a license agreement incorporating terms as
outlined in your letter to me dated January 25, 1989 with the exception that
we have deleted the royalty payment based on a percentage of sell price.

(R.O.A. A115) (emphasis added). McClellan testified that he interpreted the

January 27 letter's incorporation of terms of his January 25 letter--that the

agreement would apply to the Ste. Therese project and "would be applicable to all

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future projects"--to mean that the License Agreement was for all future Mid-West

projects without territorial limitation. Furthermore, at no time during the nego-

tiation process did Clark, or any other representative of Webb, tell McClellan that

Webb construed the scope of the License Agreement as limited to the United

States or the Ste. Therese project only.

Furthermore, Clark testified that he understood during negotiations that

Mid-West was seeking a license that would permit Mid-West to use the wide dog

technology outside the United States and the Ste. Therese project, that the License

Agreement accommodated Mid-West's intentions, and that Clark did not discuss

any geographic limits on the license with Mid-West:

Q. And you knew, did you not, sir, that Mid-West Conveyor was looking
to use the wide dog everywhere, were you not, sir?

A. I can't say everywhere. I certainly knew they were looking to use it
outside of Ste. Therese in Canada and projects in the United States.

(R.O.A. B188.) Later, Clark testified:

Q. It's true, isn't it, Mr. Clark, that you believed that the language in
Paragraph 2 [of the License Agreement] accommodated Mr.
McClellan's desire for a license with respect to any future project by
Mid-West Conveyor; isn't that correct?

A. That is correct.

(R.O.A. B224.)

Therefore, Mid-West provided a factual basis from which the court could

conclude that the parties intended a license applicable to all future Mid-West

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projects. Webb responds to the correspondence and Clark's testimony by arguing

that the fact the parties never explicitly discussed the territorial application of the

License Agreement indicates that only a United States patent license was

intended. However, we consider this argument insufficient to rebut the evidence

in the record that Clark was aware that Mid-West sought a license that would

apply to "all future projects," including projects outside the United States and the

Ste. Therese project. 7

Webb's argument also ignores the fact that the parties entered into the

License Agreement in the context of a Canadian project. We find it difficult to

understand how the License Agreement can be restricted to the United States

when Webb drafted it in the context of knowingly granting Mid-West the ability

to use the technology on a project outside the United States. Webb argues that it

needed to grant only a United States license for the Canadian project because the

components for the Ste. Therese project were made in the United States, thereby

7
Webb states that Clark's January 27 letter incorporating the terms of McClellan's
January 25 letter does not necessarily indicate that Clark understood the license to apply
to all future projects. Instead, Webb states that the letter merely acknowledges that the
royalty offered in the January 25 letter would apply to "all future projects." Although this
interpretation is a plausible one, it does not necessarily suggest that the court's
determination that Webb was aware of Mid-West's intentions in seeking a license
applicable to all future projects was clearly erroneous. We consider it unlikely that Mid-
West would enter a contract that would bind it to a royalty payment schedule on all future
projects, without at the same time obtaining the right to engage in such future projects.

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triggering the '570 patent. 8 However, we note that Webb maintains a patent on

the wide dog technology in Canada. Because Webb agreed that this License

Agreement allowed Mid-West to use this technology in Canada, it is not obvious

why the License Agreement would not allow Mid-West to use the same

technology in other foreign countries where Webb held similar patents.

Furthermore, a "local content" clause in the contract with GM required that Mid-

West manufacture as many of the components for the Ste. Therese project as

possible in Canada and, according to Mid-West, parts were made both in Canada

and the United States for the conveyor system on the Ste. Therese project.

Considering the correspondence among the parties, Clark's testimony, and

Webb's failure to require Mid-West obtain a license under Webb's Canadian

patent, we do not believe that the district court clearly erred in concluding that the

negotiations prior to entering the License Agreement indicates that the parties

intended for the License Agreement to apply to future Mid-West projects without

territorial restriction.

8
35 U.S.C. § 271(f)(1) provides:

Whoever without authority supplies or causes to be supplied in or from the United
States all or a substantial portion of the components of a patented invention, where
such components are uncombined in whole or in part, in such manner as to actively
induce the combination of such components outside of the United States in a
manner that would infringe the patent if such combination occurred within the
United States, shall be liable as an infringer.

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 B. The post-Agreement conduct of the parties

The court also found that the post-Agreement conduct of the parties

supports Mid-West's interpretation of the License Agreement as Webb

unconditionally accepted royalties for all of Mid-West's domestic and foreign

projects, including royalties for jobs in Canada and China. Webb offers two

explanations for how accepting payments for these projects is consistent with its

belief that the Mid-West held only a United States patent license. First, regarding

the Canadian projects, Webb argues that there was no evidence that the materials

for the conveyor systems were not produced in the United States. Therefore,

according to Webb, no Canadian license was necessary. However, as discussed

above, this argument is inconsistent with the argument Webb advanced when

Mid-West asserted the right to use the wide dog technology in France, Australia

and other countries where Webb similarly held foreign patents on the same

technology. In those later instances, Webb argued that patents held in each nation

affirmatively limit a U.S. patent licensee's ability to use the technology in that

particular country. 9 Second, regarding the China project, Webb argues that Mid-

West did not need to obtain a China-specific license because Webb does not hold

a patent in China. The flaw in this argument is that Webb should not have

9
Apparently components can be manufactured in the United States even if final
assembly is in a foreign country, regardless of whether that foreign country is Canada,
China or France.

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accepted Mid-West's royalty payments if it did not believe that it was necessary

for Mid-West to license the technology for a China setup. 10

Webb does point out that Mid-West intra-office correspondence suggests

that Mid-West did not consider the License Agreement applicable to projects

outside the United States. For example, after inquiring whether Webb had a

patent on the wide dog technology in Australia and learning of Webb's

interpretation of the License Agreement, McClellan sent a memo on January 27,

1992, to two Mid-West employees stating that, "It will be necessary for us to use

another method of transfer for the" conveyor than the wide dog technology. Terry

Cauley, a Mid-West employee, later prepared a memorandum on February 10,

1992, to Mid-West's officer in charge of international marketing, stating, "With

what we now know about our agreement w/Webb for Wide Dog transfers, we do

not have the right to sell except in Canada & U.S.A."

However, this evidence does not conclusively establishes that Mid-West did

not believe it had bargained originally for a worldwide license. The intraoffice

correspondence reflects that Mid-West appears first to have questioned what it

thought was the worldwide scope of its license only after Webb informed Mid-

10
Webb argues that because the components for the China project "were presumably
made in the United States," Mid-West was required to pay the royalty on the China sale.
However, Mid-West states that Webb never inquired of Mid-West where the components
were being produced before accepting the royalty payments. Furthermore, Webb
presented no evidence that the components were produced in the United States.

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West that the license applied only to the United States and Canada. Clark

testified that at the time the bidding for the Australian project was occurring,

Clark had discussed competitive reasons with Webb officers concerning why the

License Agreement should be restricted in scope:

Q. Now, when this dispute arose, you will agree with me, won't you, Mr.
Clark, that you did discuss competitive reasons with your people at
Webb why the License Agreement should be restricted in scope; isn't
that true?

A. In terms of where it could be utilized on international projects, yes,
that is true, we talked about that.

Q. And specifically that if Mr. [sic] Mid-West couldn't use the wide
dog, it might add to the price if they had to use an alternative method
on jobs that both Webb and Mid-West were bidding; isn't that true?

A. That is true.

(R.O.A. B198.) Clark then told Mid-West that it considered the License

Agreement applicable only to the United States and Canada. Mid-West's actions

in response appear to suggest that they were proceeding cautiously because they

were uncertain whether their interpretation or Mid-West's interpretation was

correct. However, we do not interpret these actions as necessarily suggesting, as

Webb argues, that Mid-West believed at the time the Agreement was entered into

that the License Agreement did not apply outside the United States and Canada.

In fact, Mid-West states that it decided not to include the wide dog technology in

Mid-West's bid for the Australian project only in order to avoid confrontation

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between Mid-West and Webb and because the small project did not require the

wide dog technology.

In all, we believe that Webb's acceptance of royalty payments for foreign

projects supports the court's conclusion that post-negotiation conduct by the

parties indicates they considered the License Agreement applicable worldwide.

Although Webb presented some evidence which might suggest that Mid-West

believed the license applied only to the United States and Canada, Clark's tes-

timony that he discussed the competitive advantage in limiting the scope of the

License Agreement with Webb officials, and the fact that Mid-West's conduct

appears to be a reaction to Webb's efforts to limit the Agreement, prevents us

from having a "definite and firm conviction that a mistake has been made." See

Las Vegas Ice & Cold Storage Co. v. Far West Bank, 893 F.2d 1182, 1185 (10th

Cir. 1990).

C. Webb's other international licenses

The district court also relied on the fact that Webb's foreign licenses define

the territorial limitations of each particular license. For example, a license

between Webb and an Italian corporation provides that Webb grants a license to

sell Webb products "in the Territory." The agreement further defines the

"territory" to mean "Italy, Ethiopia, Somalia, Spain, Portugal," and several other

listed nations. Based on evidence of numerous licenses with similar language and

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territorial definitions, the court concluded that "Webb knew how to define the

geographical territory and limit the license grant to the geographical scope of the

defined territory. Webb had done so explicitly in each of the license agreements

it had entered into with companies in foreign countries as part of its global

licensing program." Mid-West Conveyor Co., Inc. v. Jervis Webb Co., 877 F.

Supp. 552, 560 (D. Kan. 1995). Webb responds that its territorial definitions in

those licenses were not intended to limit the scope of the particular license agree-

ment to certain nations, but rather to expand it by defining the various nations

where the licenses could be used. Webb argues that the lack of any reference to

foreign countries in the License Agreement further shows that Webb did not

intend to expand the license to any countries outside the United States and

Canada.

Although once again this evidence is not conclusive, it does provide some

support for the district court’s factual conclusion that the parties intended an

unlimited geographical scope when they entered into the Agreement in question. 11

Conclusion

11
We also reject two other issues that Webb raises in its briefs, although we have
already implicitly rejected these arguments in the above analysis: (1) The district court
did not err in denying Webb's motion for summary judgment because the Agreement is
ambiguous and the court accordingly needed to decide the parties' intent, which is a
question of fact; and (2) We do not consider the Cold Metal opinion controlling in this
decision for the reasons stated above.

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 The License Agreement is ambiguous because different clauses contained

therein could be interpreted to support both Webb's and Mid-West's interpretation

of the license's geographic scope. Considering the extrinsic evidence in the

record, the district court did not clearly err in concluding that the parties intended

to grant Mid-West a worldwide license. We therefore AFFIRM the decision

below.

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