Contract Term "Publish" Is Given Its Plain Meaning

Posted on March 22, 2011 by Michael Rigney

INTEGRATED GENOMICS v. GERNGROSS (February 24, 2011)

Integrated Genomics is in the business of mapping organisms' genomes and selling the data for commercial and noncommercial uses. In 2000, Tillman Gerngross, a Dartmouth College bioengineering professor, formed a private company to develop commercial uses for the genetic modification of yeast. In 2002, Gerngross sought to obtain a license to use data IG had developed regarding a species of yeast organism. The parties dispute whether Gerngross disclosed that he was seeking a license for commercial, rather than academic, purposes (the district court concluded that he had not). In any event, IG treated him as an academic customer. IG usually charges more to its commercial customers. Gerngross refused to sign IG's standard academic agreement, but did agree to some data publication restrictions. Merck acquired Gerngross’ company in 2006 for $400 million. IG accused Merck of using its data for commercial purposes. When Merck refused to compensate IG more generously, IG filed suit against Gerngross. It alleged that Gerngross fraudulently misrepresented his status when he acquired the license, breached an oral agreement to use the data for academic purposes only, and breach the written agreement that restricted publication. Judge Kennelly (N.D. Ill.) granted summary judgment to Gerngross on the oral contract claim (finding insufficient evidence of a contract), granted summary judgment to Gerngross on the written contract claim (concluding that internal data sharing was not publication), and entered judgment for Gerngross on the fraudulent misrepresentation claim after a bench trial (finding that Gerngross did not misrepresent the purpose of the data and that he had no duty to affirmatively volunteer its purpose, and concluding that IG failed to carry its burden that it would have made a difference). IG appeals the rulings with respect to the written agreement and fraudulent misrepresentation.

In their opinion, Judges Bauer, Rovner, and Hamilton affirmed. With respect to the written contract claim, the Court had to interpret Gerngross’ promise not to "publish" more than a certain amount of data per year. Applying state law, and particularly Illinois' rule to give contracts their plain meaning, the Court concluded that "publish" means disclosure to the public. Therefore, Gerngross’ sharing with Merck did not constitute a publication and was not a breach. With respect to the fraudulent misrepresentation claim, the Court concluded that there was sufficient evidence to support the district court's finding – and also sufficient evidence to support the finding urged by IG. The district court did not commit error in resolving the dispute as it did.

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Claims For Fraudulent And Negligent Misrepresentation Do Not Trigger A Duty To Indemnify And Defend Under An Insurance Policy Covering An "Occurrence"

Posted on September 24, 2009 by Michael Rigney

EBERTS v. GODERSTAD (June 29, 2009)

The Goderstads sold their large, vintage Wisconsin home to the Ebertses for $1.85 million. Within months of their occupancy, they began to notice significant defects. The Ebertses brought a seven count complaint in the district court. American Family Mutual Insurance Company, the Goderstad’s insurer, reserved its rights, appointed counsel, and moved to intervene to protect its interests. The district court concluded that none of the claims were covered under any of the Goderstad’s policies. It granted summary judgment to American Family and certified its judgment under Rule 54 (b). The Goderstads appeal.

In their opinion, Judges Ripple, Williams and Sykes affirmed. The Court noted that American Family has a duty to defend if the allegations of the complaint raise the possibility of coverage. The Goderstads have four policies, each of which insures against “property damage” caused by an “occurrence,” an “occurrence” being defined as an “accident.” On appeal, the Goderstads argue that two of the allegations of the Ebertses’ complaint trigger coverage – fraudulent misrepresentation and negligent misrepresentation. The Court looked to the Stuart case in Wisconsin, which had been decided by the court of appeals shortly after the district court ruled and decided by The Wisconsin Supreme Court shortly after oral argument in the Seventh Circuit. The unanimous decision in Stuart effectively disposed of the Goderstad’s argument with respect to fraudulent misrepresentation. The court reversed the court of appeals and held that a fraudulent misrepresentation claim by definition has a degree of volition inconsistent with “accident.” With respect to negligent misrepresentation, the Court blocked both avenues attempted by the Goderstads. First, the Court held that Wisconsin law predating and unaffected by Stuart held that negligent misrepresentation was not covered by a policy insuring against an “accident.” Next, the Court held that the Goderstad’s attempts to get around that principle by arguing that theirs was a non-disclosure claim failed because Wisconsin does not recognize such a tort. Finally, the Court noted that the Goderstads suffered no “property damage” as defined in the policy and was not entitled to a defense for that reason as well.

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