United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge.
Motorola Mobility LLC has sued Myriad France SAS and Myriad Group AG (collectively Myriad), alleging breach of contract, third party beneficiary breach of contract, and breach of implied contract. Defendants have moved for summary judgment. For the reasons stated below, the Court denies Motorola's motion.
In 1999, Motorola Mobility's predecessor, Motorola, Inc. (collectively Motorola) entered into a contract with Phone.com, a predecessor-in-interest to Myriad France. This contract, called the Master License and Services Agreement (MLSA), gave Motorola a license to use Phone.com's client software, which included incorporating the software "into Motorola Enabled Devices." Pl.'s Ex. 24-a § 3.2.1(c). Among many other provisions, the MLSA contained a section on indemnification, in which Phone.com agreed to indemnify Motorola against claims resulting from Phone.com's gross negligence in performing the tasks set out in the contract. Id. § 14.1. These tasks included delivering client software to Motorola (later defined as browser software), as well as providing maintenance and support help to Motorola related to the software. The MLSA also contained a limitation of liability section that, in its original form, provided that:
[e]xcept for a breach of section 13 ("Confidentiality"), in no event will either party... be liable for any indirect, special or consequential damages of any kind or nature whatsoever, suffered by the other party, any end user, customer, sublicensee, var, enabled device manufacturer, vendor or any distributor, including, without limitation, lost profits, business interruptions, or other economic loss arising out of the performance or non-performance hereunder or any use of or failure to be able to use the technology licensed herein or any new products developed pursuant to this agreement....
Id. § 15.
The parties to the MLSA made various amendments in the ensuing years, such as extending the term of the contract and substituting party names when the party making the software at issue changed names or was acquired. (The parties do not dispute that the MLSA is still in force, or that Myriad is the predecessor-in-interest to the various parties that came before it, including Phone.com and Openwave.) In 2008, the parties agreed to an amendment in which Myriad's predecessor granted Motorola a license for its mobile browser client software in exchange for "a per-unit royalty fee for each OPENWAVE Enabled Device, manufactured and shipped, sublicensed and/or otherwise distributed by Motorola that incorporates the OPENWAVE Mobile Browser Client Software...." Pl.'s Ex. 24-e ¶ 6. The royalties included a minimum payment of $4 million for the period of April 1, 2008 to March 31, 2010; Motorola also agreed to pay an annual $495, 000 maintenance and support fee for 3500 hours of support per year. Id. ¶¶ 6-7. In this amendment, the parties also agreed to modify the liability limitation, removing language applying the limitation to losses arising from performance or non-performance under the MLSA or the "failure to be able to use" the technology. The new version of this provision stated:
Except for a breach of section 13 ("Confidentiality"), in no event will either party or its respective suppliers or licensors be liable for any indirect, special or consequential damages of any kind or nature whatsoever, suffered by the other party, any end user, customer, sublicensee, var. [sic] enabled device manufacturer, vendor or any distributor, including without limitation, lost profits, business interruptions, or other economic loss arising out of the use the [sic] technology licensed herein or any new products developed pursuant to this agreement.
Id. ¶ 13.
In 2000, Phone.com entered into a contract with Compal Communications, Inc., a Taiwanese company, called the Master Browser License Agreement (MBLA). In this contract, Phone.com granted Compal a license to "bundle the Phone.com Client Software with [Compal's] wireless handsets ('Enabled Devices')." Defs.' Holm Decl. Ex. 2 at MYR012194. An "Enabled Device" was defined as "any wireless device manufactured by, or on behalf of, [Compal] and which has the ability to execute the Phone.com Client Software...." Id. at MYR012193. The MBLA contained a provision requiring Phone.com to provide maintenance and support services; an attached maintenance and support agreement required Phone.com to "provide Maintenance Support Services to [Compal] to ensure a consistent and high level of operation of the Phone.com Client Software." Id. at MYR012207.
In 2007, Myriad's predecessor Openwave and Compal agreed to amend the MBLA. In relevant part, the amendment stated that "Article I ('Definitions') is hereby amended by adding the following sentence to the end of the Enabled Device' definition: The parties hereby agree that an Enabled Device' shall not include any device manufactured or otherwise designed, developed, or distributed by Motorola, Inc.'" Id. at MYR012267.
In 2004, Motorola and Compal entered into their own contract. It stated that Compal would develop products and supply them to Motorola, with each product subject to its own development and supply agreement. In an appendix to the contract, Compal agreed to "supply to Motorola... all software in the Product, and all test and equipment software needed to manufacture, test, and program the Product (the "Software")." Defs.' Holm Decl. Ex. 4b at MOT0004742. The agreement defined "Software" as "all software in the Product created by CCI, supplied in object code form, and all software in the manufacturing and test equipment, supplied in object and source code form." Id. It also stated that "CCI shall supply Motorola with fixes, enhancements and updates to all Software at no charge." Id.
In 2007 and 2009, Motorola and Compal entered into development and supply agreements for two separate phone products, one code-named "Grant" and another code-named "Harvey." Each agreement incorporated the parties' prior agreement by reference and included specifications for each phone and a schedule for completion of various tasks associated with building the phone. Each development and supply agreement also contained a listing of third-party software. The Harvey agreement stated that the software was "currently incorporated into the Product." Defs.' Holm Decl. Ex. 6 at MOT0004660. The Grant agreement stated that the software was "authorized for incorporation into the Product." Defs.' Holm Decl. Ex. 7 at MOT0004639. Each agreement contained a table of the third-party software and stated that the table contained a notation indicating the party "responsible for making the royalty payment for such software" or "responsible for the royalties for such software." Defs.' Holm Decl. Ex. 7 at MOT0004639; Defs.' Holm Decl. Ex. 6 at MOT0004660. Each table contained a "Paid by" column. The Grant agreement had an entry for "Browser-WAP 2.0, " listing Myriad's predecessor Openwave as the vendor, and Motorola in the "Paid by" column. Defs.' Holm Decl. Ex. 7 at MOT0004639. The Harvey agreement had an entry for "WAP, " with the version stated as "2 (R220.127.116.11), " with Openwave as the vendor, and Motorola in the "Paid by" column. Defs.' Holm Decl. Ex. 6 at MOT0004660.
The parties agree that some version of Myriad's browser software was included in the Harvey phone, the Grant phone, and a phone that Motorola made for Verizon Communications. When installed in the Verizon phone, the browser software did not function properly; the discovery of this defect after the phone's release to market prompted a class action lawsuit against Verizon. Verizon sought indemnification from Motorola in the form of plaintiffs' attorneys' fees, class administrator's fees, and defense attorney's fees. Motorola made the ...