that no such limitations were intended by the parties. In addition, VIL argues that because our order of December 30, 1993, ruled that Article 16 did not survive the termination of the licensing agreement, preventing VIL from assigning its rights post-termination would mean that it had greater leeway to assign before the termination than after, which it asserts is an absurd result.
We are not persuaded that the presence of Article 16 overcomes the strong presumption against implying a right to assign licenses for intellectual property. Article 16 and a post-termination restriction on assignment are not, as VIL suggests, in hopeless conflict. It is reasonable for Verson to have allowed VIL greater leeway to assign its rights during the five-year period of the licensing agreement because VIL was prohibited by the agreement from competing with Verson in North America. After the termination of the agreement, however, VIL could compete directly with Verson in North America, which may have prompted Verson to restrict VIL's right to assign. In any event, we need not rule that this is what the parties intended. Rather, we conclude that the license agreement does not conclusively refute Verson's claim that the know-how cannot be assigned.
D. Restraint of Trade
VIL also argues that interpreting the agreement to require a perpetual ban on VIL's ability to assign its rights is an unreasonable restraint of trade that violates Illinois common law and Illinois and federal antitrust statutes. In doing so, it apparently seeks to advance the best argument it can in support of a concern expressed by this court and, probably, upon reflection, better left unexpressed.
VIL claims that since we have previously ruled that some of the agreement's territorial restrictions violated the antitrust laws, then, a fortiori, a perpetual ban on assignments does so as well.
VIL is incorrect in attempting to compare the anti-assignment issue here with the covenants not to compete that were at issue in the first lawsuit between these parties. The contract provision previously at issue divided up the worldwide market for Verson presses and prevented the contracting parties from entering various markets. Thus, by their very nature, the covenants not to compete restrained competition. We held that certain of the restrictions were overly broad and upheld the covenants only in part. Unlike the covenants not to compete, the limitation on assignments does not prevent VIL from competing in the market for Verson presses.
VIL argues, however, that by preventing the assignment of the know-how, Verson is preventing other companies from entering the market. VIL's argument proves too much. Under VIL's view, any company possessing trade secrets or know-how vital to entry into an industry must turn over that know-how or risk violating the antitrust laws. That simply cannot be true, for the very nature of a patent is a government-authorized monopoly in a certain market, and much of the law of intellectual property is designed to protect a company's innovations from competitors. VIL has failed to cite a single case finding an antitrust violation because of a patent license's restriction on the licensee's right to assign.
In fact, the case law indicates that restrictions in patent licenses are not per se violations of the antitrust laws. See Atari Games Corp. v. Nintendo of America, Inc., 897 F.2d 1572, 1577 (Fed. Cir. 1990); USM Corp. v. SPS Technologies, Inc., 694 F.2d 505, 513 (7th Cir. 1982), cert. denied, 462 U.S. 1107, 103 S. Ct. 2455, 77 L. Ed. 2d 1334 (1983) ("Patent licensing agreements between competitors are sometimes struck down under antitrust laws, of course, but only upon proof of anti-competitive effect beyond that implicit in the grant of the patent"); Moraine Products v. ICI America, Inc., 538 F.2d 134, 145 (7th Cir.), cert. denied, 429 U.S. 941, 50 L. Ed. 2d 310, 97 S. Ct. 357 (1976). Verson is simply not required by law to turn over the know-how, now or in the future, and it is not an unreasonable restraint of trade for it to prevent the know-how from falling into a competitor's hands through some other source.
E. Assignment or Sublicense
VIL's final argument is that its agreement with Enprotech is not an assignment at all, but rather is a sublicense, and since the license agreement granted VIL the authority to sublicense its rights, Verson's suit must fail.
Verson argues that intellectual property rights can be severed and assigned separately. That is, a patentee may assign the right to use a patent for sale of a product but retain the right to use the patent for other purposes. Support for this proposition can be found in tax cases, see Cory v. Commissioner, 230 F.2d 941, 944 (2d Cir.), cert. denied, 352 U.S. 828, 1 L. Ed. 2d 50, 77 S. Ct. 43 (1956), and in some of the cases dealing with who has standing to sue for patent infringement. See Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870, 875 (Fed. Cir. 1991) (recognizing patent rights as constituting a bundle of rights). Under this view the answer depends on whether the patentee has transferred all its rights in a particular market (an assignment) or has transferred only some of those rights, retaining others for itself (a license). During the course of this litigation VIL has retreated from its earlier opposition to this principle and now seems content to argue that, even if that were the law, the Enprotech agreement still cannot be considered an assignment.
Verson claims that the Enprotech agreement is an assignment rather than a sublicense because VIL transferred all the rights associated with the after-market for Verson presses. Specifically, the Enprotech agreement states:
[VIL] (i) grants and assigns to [Enprotech] (1) the exclusive (as between Licensor and Licensee), royalty free right and license to utilize the Proprietary Rights in the Territory for the manufacture and sale of Verson Parts and for the rebuilding and modernization of Verson Presses and subject to the reserved rights of [VIL], the maintenance and repair of Verson Presses, and (2) the right and license to use the Trademark in connection with the manufacture and sale of Verson Parts and, subject to the review and consent of [VIL], which consent will not be unreasonably withheld, the maintenance, repair, rebuilding and modernization of Verson Presses and (ii) sells to Enprotech the Technical Information and Other Information subject to the terms and conditions of this Agreement.
The "territory" is defined to include certain countries in North America and Central America. "Proprietary rights" and "technical information" basically entail the Verson technology that VIL received under the licensing agreement.
VIL counters that it has retained sufficient rights to the after-market to render the Enprotech agreement a sublicense rather than an assignment. It identifies five such rights: (1) the right to make replacement parts in connection with the sale of new presses; (2) the exclusive right to provide service for the enhancement retrofit of Verson presses; (3) the exclusive right to provide service work for the maintenance and repair of Verson presses; (4) a fifty-year period for the agreement; and (5) a parts supply agreement requiring Enprotech to purchase spare parts from a corporation affiliated with VIL.
We can quickly dispense with VIL's argument that rights two and three render the agreement a sublicense. Those rights do not limit the agreement's grant to Enprotech of an exclusive right to manufacture replacement parts; the issue of repair service does not limit Enprotech's ability to use the know-how in the replacement parts market.
Similarly, the fifty-year period does not, as a matter of law, render the agreement a sublicense. Verson has alleged that the fifty-year period far exceeds the useful life of any of the knowhow, given the normal rate of change in technology in the industry, and thus the fifty-year period does not serve as any practical restraint on Enprotech's rights under the agreement. Since VIL has not demonstrated that this well-pleaded allegation is incorrect as a matter of law, we must accept it as being true for the purposes of this motion to dismiss.
Nor does the parts supply agreement, as a matter of law, render the Enprotech agreement a sublicense. Although Enprotech is required to purchase certain products from a VIL-affiliated corporation, the agreement states that Enprotech's failure to abide by the parts supply agreement does not affect its exclusive rights granted elsewhere in the agreement. Therefore, the parts supply agreement need not be read to limit Enprotech's right to the use the know-how in the parts market.
That leaves the Enprotech agreement's provision granting VIL the right to manufacture replacement parts in connection with the sale of new presses. It is too early at this juncture to determine as a matter of law that VIL's retention of this right limits Enprotech's interest to a mere sublicense rather than an assignment. VIL may be able to demonstrate that its retained right to provide replacement parts as part of contracts for the sale of new presses represents a sufficiently large portion of the replacement part market to make the Enprotech agreement a sublicense, but we are not in a position to make that determination here.
Since VIL has failed to demonstrate that the Enprotech agreement is a license as a matter of law, we must deny its motion to dismiss. VIL is free to renew this argument at a later stage if it can present extrinsic evidence clarifying the ambiguity in the Enprotech agreement.
VIL may well prevail on one or more of its arguments when the record is fully developed. Given, however, the limitations of a motion to dismiss, it cannot now prevail. For the reasons outlined above, VIL's motion to dismiss the amended complaint is denied.
JAMES B. MORAN,
Senior Judge, U.S. District Court
July 17, 1995.