ExxonMobil Global Services Company et al v. Gensym Corporation et al, No. 1:2012cv00442 - Document 78 (W.D. Tex. 2013)
Court Description: MEMORANDUM OPINION AND ORDER GRANTING 11 MOTION for Partial Summary Judgment. Signed by Judge John D. Rainey. (kkc)
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UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION § EXXONMOBIL GLOBAL § SERVICES CO., EXXON MOBIL § CORP., and EXXONMOBIL § CO., RESEARCH & § Plaintiffs/Counter-Defendants, § § v. § § GENSYM CORP. & VERSATA § ENTERPRISES, INC., § CASE NO. 1:12-CV-442-JDR Defendants, § § GENSYM CORP., § Counter PlaintifflThird-Party Plaintiff § § v. § § INTELLIGENT LABORATORY § SOLUTIONS, INC., § Third-Party Defendant § MEMORANDUM OPINION AND ORDER Pending Corporation, "''''~Arn and Court is ExxonMobil Global ExxonMobil Research and "ExxonMobil") Motion for Partial Company, Engineering Company's J...d"LHJH Mobil (collectively (Dke No. 11), to which Gensym Corporation ("Gensym") and Versata Enterprises, Inc. ("Versata") (collectively "Gensym") have responded CDke No. 20) and ExxonMobil has replied (Dkt. No. ). I. Factual and Procedural Background Gensym's G2 Software Platform is a technology tool on which computer software applications can be designed. Over the course of that is Detection" and -~'Jo-."-~ to run exclusively on the years, ExxonMobil has built an alert Software Platform called "Abnormal Event Advisory" (AED/RTA). ExxonMobil currently uses the AED/RTA 1 at over thirty different refining and chemical plants that produce and store petroleum products alert system provides an chemicals. According to ExxonMobil, important line of defense to identify advance advisories deviations; ExxonMobil personnel of potential process, equipment, and system failures; and recommend corrective before operational can develop into more In 2007, ExxonMobil and Gensym agreement Gensym's problems. into negotiations for a single license Software Platform to replace previous ad hoc, between ExxonMobil ExxonMobil and Gensym entered Effective April 1, 2008, a License "define the terms and conditions for the purpose of which was to of products and to future purchase orders. (The "License Agreement", Dkt. No. 11, to defines t+t>Y'&>nt for I at art. 1.) Exhibit C as "[a]l1 products made commercially available by Licensor to its customers including but not limited to: sets forth two by Gensym licensing models under XOM Development Bundle" products may be acquired: (1) individual ExxonMobil facility or (2) a single, corporate-wide, commercially-restricted license. (License Agreement at 20, Ex. C.) On or about April 11, 2008, ExxonMobil l""......' .....'.u and Company (EMRE) I submitted a purchase order under the second option for a "corporate wide perpetual license for G2 XOM development bundle." $960,000 for Order," Dkt. No. 11, G2 Software, which included also known as "Customer Support Service" (CSS). initial year of Agreement at ExxonMobil Services," Ex. D.) After one l. According to Gensym's response to ExxonMobil's motion, EMRE is the branch of ExxonMobil responsible for distributing software, providing support, and performing development of new applications with respect to the G2 Software Platform. 2 Maintenance Services were optional and could (Jd. at 11 Ex. purchased at ExxonMobil's discretion. § 6.6.) Because the G2 Software Platform requires an access code in order to start, shortly after the Agreement was Gensym and ExxonMobil discussed how to handle the of access codes. At Gensym's request, the decided that provide ExxonMobii with temporary I8-month access would distribute to ExxonMobil access 12 Gensym would ("annual access codes") that covered under was to ensure that The reason Software Platform was not being used at unauthorized locations. From 2008 to 2011, things proceeded without incident. the initial free of Maintenance Services, ExxonMobil twice agreed to optional annual Maintenance Services at limitation provision in Exhibit D to the License Agreement. ExxonMobil amounts set by a paid $175,000 maintenance in 2009 and slightly more than $175,000 in 2010. in January 2011, just before ExxonMobil's annual maintenance subscription was set to expire, scheduled a telephone call with ExxonMobil in order to gather feedback Maintenance At that time, ExxonMobil Gensym it was not satisfied with the level of support it was receiving from Gensym and that it wanted to expand support to allow employees to contact Gensym's help desk. This included adding ExxonMobil's Baton at facility, which was covered under a separate $30,000/year maintenance plan at that time. Gensym offered to provide that support, along with additional upgrades under a new for $258,500. Citing maintenance program that Gensym was rolling out to its $200,000 Exhibit D to 3 that it wanted to ExxonMobil offered to pay $181,700, despite the expand Maintenance Services beyond the On March 3 1, of the original License 11, as U"'.HHA", current contract for !V1aintenance ExxonMobil stalled, Exxon\1obil allowed its On June 9, 2011, Gensym provided to that it was 30-days Agreement pursuant to Article 2, Section 2.2 right to the same. ExxonMobil was no longer permitted to place new the the notice period expired, under License ExxonMobil requested that Gensym reconsider its decision to terminate the Agreement, but Gensym refused. Meanwhile, of ExxonMobil's annual access were set to 2011. Once that happened, ExxonMobil would no longer be Platform. In anticipation the annual access codes made its first written demand for permanent access contract for Maintenance no longer 92:8-1 to use the on any access As a result, on August 29, Software 1, 2011, ExxonMobil However, because ExxonMobil's had expired, Gensym represented to ExxonMobil providing ExxonMobil Judicial in October (de Wit Dkt. No. 21, it would 7 at 11, ExxonMobil filed its Original Petition in 419th County, Texas breach contract and declaratory relief connection with the License Agreement, as well as injunctive relief requiring Gensym to provide ExxonMobil with permanent access codes to use the G2 By letter dated September 8, 2011, TTU'.,,..a Platform. it with [ExxonMobil's] stated position that it is entitled to use the G2 platform without payment of maintenance " (Dkt. No. 21, injunction on the 4 at 1.) At that time, and in order to avoid a temporary Gensym provided ExxonMobil with a temporary 3-month access 4 that its "willinb'11ess to provide access codes under However, Gensym made it should not (Id.) at least a months code and stated that it would continue to do so to use the construed as platform without payment " (Id. at 2.) maintenance November 2011, amended fraudulent inducement and breach of Petition, both relating to the License Agreement. amended its Petition on January 31, 201 ExxonMobil Defendant causes of action making minor and adding parent company-under an alter ego theory. On February 201 Gensym counterclaimed, seeking a declaration from the Texas state court that ExxonMobil was in breach, the material breach, or had failed to adequately cure a Agreement. On May 17, 201 Counterclaim, alleging breach of contract, tortious Gensym with contract, its Amended copyright against ExxonMobil. Gensym also brought claims against third party defendant Intelligent Laboratory Solutions, Inc., alleging breach of contract and copyright infringement. Based on claims Court on May 1 the federal Act, 2. ExxonMobil now moves contractual interpretation that it removed the action to this summary judgment concerning a number of can as a matter oflaw. II. Legal Standards A. Summary Judgment Standard Summary file, and is proper affidavits movant is Village, Ltd. v. the discovery and disclosure materials on the that there is no genuine to judgment as a matter 190 law." FED. 310,314 (5th Cir. 1999). 5 as to any material fact and that CIV. 56( c); see also Christopher matter on the non movant would the burden of at trial ... , the movant may merely point to the absence shift to summary non-movant proof that there is an Ins. Co. v. Avenell, 66 F.3d 715, 71 (1986). To 317, setting forth of material a fact. Rushing v. Kansas City issue 1999). When considering a motion for summary judgment, iJu,rnut::t F.3d 390, 392 Inc., 939 F.2d 1 bare evidence, or v'-'C"-1l1.UV.'''' at a verdict in that judgment by v. Holmes, 1 favor of the to evaluate inferences favor, the court must deny the 1263 (5th 1 only a complaint, are met, a court believes course would 31 Nov. 22, v. of the factual disputes; so long as the evidence in the record jury drawing asserted. Little v. Liquid Air Corp., 85, *2 inferences 1998); nonmoving rnrH,,,.n " ). However, Int 'I Shortstop, must present 1069, 1 discretion to to proceed to a (quoting (1986». 6 could arrive v. Rally non-movant cannot avoid summary allegations" or "unsubstantiated testimony in a aet)osltlcm or affidavit, to create a genuine standards of evidence in 173, 1 1995). "[T]he court may not witnesses, weigh is such that a Court must view to the non-movant and draw all non-movant. v. Catrett, 477 non-movant must "respond by judgment, nrpupn 496,505 (5th the light most " warranting 19 (5th Cir. 1995); see also Celotex that S. Ry. Co., 1 of demonstrating by competent evidence, material " such as as sworn as to the claim Cir. 1994) (en banc). "Even if the a motion for trial.'" Freeman v. v. Liberty Lobby, judgment if it u.s., 2005 u.s. B. Contract Construction Act, a party to a written contract may Unifonn Declaratory the Dallas #1, LP v. seek a judicial detennination of its contractual rights." Underwriters Co., 316 S.W.3d 837 App.-Dallas 2010) (citing Crv. PRAC. § 37.004(a); Hartman v. Sirgo Operating, Inc., 863 S.W.2d 764, 767 & Paso 1993, writ denied». "When a contract is unambiguous and dispute, a court summary and App.-Corpus judgment a parties' rights under the contract." Id. (citing Barrand, 13 dispositive facts are not in v. Whataburger, the , 214 S.W.3d 2006, pet. denied) (granting summary judgment and rendering declaratory judgment breach of unambiguous contract». construction of an unambiguous contract is a question Under Texas law, court. MCI Uti/so Elec. v. law for S.W.2d 647, 650-51 (Tex. 1999). The court's main focus in interpreting a contract is to detennine the mutual intentions of the as expressed in v. Coker, 650 S.W.2d 391, written agreement. The intent must be taken from the contract Wells Bank, Minn., Dallas 2006, denied). consequences to which must be enforced as , 194 S.W.3d (Tex. court should provide a construction that affords some part of the agreement, so that none of its provisions are rendered Coker, S.W.2d at 394. Unless "in a technical or different generally v. N. Cent. Plaza 1, (Tex. 1983). meaning." " Dallas contract shows that the parties a tenn court should give tenns their "plain, ordinary, and 316 S.W.3d at 837. 7 III. Analysis that the into Here, there is no dispute that the Purchase Order was submitted pursuant to the License Agreement. Both that the Court IS also agree that it may declaratory judgment regarding the Parties' rights and obligations under a License Agreement. Dallas #1,316 S.W.3d at 837. ExxonMobil's Motion for Summary Judgment concerns interpretation that can be decided as a matter contractual law. Specifically, ExxonMobil seeks a declaration that, pursuant to the tenns of the License Agreement and the (1) EMRE is the Purchasing Order: , (2) EMRE is a "User"; (3) Gensym is required to pennanent access codes for EMRE; (4) Gensym is required to provide EMRE with access codes; and (5) each of distribute ability to four statements true of whether ExxonMobil and/or EMRE purchases Maintenance Services from Gensym. A. Whether EMRE is the "Licensee" The first contract interpretation issue is status as the Licensee. tenn "Licensee" is defined in venture that an to as "any Affiliate or joint as " (License III 5, Ex. § 17.) The relevant "Order" in this case is the G2 Purchase Order. an of argues that Purchase Order because the Order itself as to who issued on behalf of Purchaser" as the "ExxonMobil Global Services Company Procurement contact, and at ",,.,,,tn,,,,,, more infonnation is III to detennine who issued the Order. (See GS Purchase Order at 1.) However, as ExxonMobil points out, the G2 8 Purchase Order was printed on EMRE was to be invoiced to delivered to EMRE. (Id.) After receiving the to and a purchase order the entities." (Dkt. No. 21, Ex. 2 at The Court finds Order to failed to G2 a genuine issue Order. CerlSe(~·· is the purchase on behalf of 18-23.) Gensym than EMRE , Ex. 3 at a temporary injunction hearing ... It issues Option that the product (G2 Invoice, Dkt. affirmed to the state court lV>.n....... entity was billed to would be 1.) Counsel that . . . Purchase Order, Gensym issued an invoice Purchase Order, to the and was to be material fact that any issued the G2 as defined in the License B. Whether EMRE is a "User" second contract interpretation issue concerns EMRE's status as a "User." "User" as The that on a computer, of User." Agreement at or the nPT",,,n is a stand-alone or a network "Use" means "to execute, § " (Id. § person who is enabled to be in actual employ, further provides The are "[s Jubject to the qualifications contained on usage set forth in 3.3(d)" (Id. § Users which reads as follows: a User as as appropriate action to assure such Use is in compliance with terms and conditions herein and such use is solely for the benefit of Licensee, Affiliates and Joint ventures. Licensee shall report advance and in to Licensor any proposed use by contractors at Site and shall have the to reject use. (Id. at B, § 3.3(d).) Finally, the "[ u Jnless otherwise Grant contained Section 3.1 provides that, stated herein, upon acceptance of an Order and receipt of the 9 Licensor a to as worldwide, fee paid set forth in Section 3.4(a», to ...." (Id. § 3.1.) According to ExxonMobil, as the Grant. Because 1""'''''''''. EMRE has a "license to Use the L1V""-'-' ""11""'" to use the G2 Software Platform, EMRE ",,.,,-1"1'''-''' is a "User" under the License In response, Gensym argues that of "User" greemem is "person." means "an actual flesh can only ever critical " not a corporate entity. through its ,,,,.. ."''''..·<:lr''' constructive use ~"'~H.U. Agreement. maintains that EMRE cannot be a above, unless a contract that the parties used a term a or different sense," the Court should give terms their plain, ordinary, and generally accepted Dallas #1,316 S.W.3d at Dictionary defines as well as "an entity (such as a that is recognized by and duties of a most LAW DICTIONARY (9th original). The Texas law § 12.1) and specifically (Id. at 30, other as "an individual, or commercial entity." § 1.201 (b)(27). Because Agreement limits the definition human beings but also . _ . or any In to "an actual flesh and blood human must construe not at Uniform Commercial F, § 3(b)). The TUCC the as generally accepted legal 'V'~'1"\""<> 10 which The finds that, as Licensee, has a Agreement. Because EMRE is licensed to use not broaden its use of the G2 beyond limits Platform must be contained G2 Software Platform, In compliance with status License and terms and conditions B, § 3.3(d).) Agreement at 8, Whether is required to provide annual access codes third and is a as Gensym correctly points out, "User" under the License as a "User" under the to Use the with permanent and/or contract obligation to concern EMRE with permanent and/or annual access codes. stated above, ExxonMobil, Bundle, is considered a "Product." The include the media containing the license certainly includes a XOM Development Agreement provides that WH,Uf<lrp '-'IHTUf<lrp dongles or other security the software." (License software." EMRE, purchased the (l""lll"~" or shall components, including that are leCI;)Ss:arv to or access at 6, Ex. A, § 24.) According to Gensym, "[t]his definition working access code[,] as No. 20 at 17.) The section License IS all that is necessary to use the OT"''''..... '''nt entitled Generation" with the ability to distribute annual license further provides that "Gensym will provide 2. Specifically, argues that EMRE is not allowed to use the G2 Software Platform outside of a site-i.e., petroleum refinery or chemical ExxonMobil Maintenance process Services because ExxonMobil a restricted wide license for deployment at L3 Process Control LAN." (License at Ex. D.) The L3 Process Control LAN is "a local area network [that] supports applications which directly interact with process control DCS." (Jd. at 21.) Process control applications in tum are part of the control " which automates refining and chemical of the License EMRE's rights were expanded to use the G2 plants. Under Gensym's Software Platform outside of process operating sites "for the development and support of site of Ex. D.) Thus, but only "as as EMRE's CSS is current." (License Agreement at from using the G2 Software Platform if it is not for Maintenance however, EMRE is not sites. Because ExxonMobil did not move for summary judgment on EMRE must limit its use to process this the Court will not address it at this time. 11 for the Development Bundle .... codes will be generated by ,,",,n'''V1T1 " Agreement at 20, Ex. C.) Gensym appears to agree that it is a ExxonMobil to access code under that its obligation to access codes is moot. of a ExxonMobil has been access code since before the was even signed. Gensym sent new permanent access codes on May 7, 2012 and then again on June 13, No. 20, Exs. 16 & 22.) Unless nu,'<>r"_Tnr 2. alters the way in which it is example, by upgrading its or changing the version of the are necessary, claims that no a new, updated, or it is extent generation of argues that temporary, to use, operate[,] or access access quoted above, since such are not included in the definition is are not if the user has a permanent code, which claims ExxonMobil now has. response to Gensym's claim that access code since at that his investigation access has been in possession of a offers the testimony 2008, had never provided a r\plrpr1m 6 at 104:7-105:7.) to ExxonMobil. and Partnership Management also ever provided a permanent access to that he was not aware that (de Wit Dep., Id., 7 at :7.) ExxonMobil concedes that ExxonMobil's Baton Rouge facility with a permanent access code under a separate agreement that predated the License 91: 1 12 Agreement at issue; ExxonMobil states that Baton use the permanent code only at that facility. ExxonMobil argues that provided ExxonMobil pursuant to this not render case moot the decision to leave the lawsuit was 111 access Finally, ExxonMobil sent it a new permanent concedes that permanent Rouge facility is materially different from the that was provided to the codes to facility was "nfU,.,·p' Software but argues to Gensym's ExxonMobil has "due to GensymNersata's attempted extortion and demonstrated unreliability." (Dkt. No. 21 at 10.) Because this will cost millions of dollars make some its previous expenditures it intends states to recover these costs. finds EMRE with whatever access codes to IS to allow ExxonMobil to use the G2 Software Platform that it purchased pursuant to are Purchase provide with arumal access codes Agreement required actually To the extent Gensym lieu of one to do so on a yearly lHU.ll"'Jl1' in the access code, the indefinitely. Whether Gensym ExxonMobil with a working permanent access code filed remains an fact for a to lawsuit was to decide. Gensym's Obligation D. Whether EMRE's Status as a and User, are Conditioned on to Provide Annual Permanent Access ExxonMobil Purchasing Maintenance Services from Gensym fifth contract interpretation issue concerns whether EMRE's status as a User, or whether Gensym's obligation to EMRE codes, are conditioned on ExxonMobil purchasing Maintenance 13 and permanent and/or annual access License Agreement and repair "Maintenance Services" as "the support, enhancement[,] the Product as described under a subscription for a the Exhibit C[,] are by Licensor to Ll(:en:see Agreement at 5, period." Agreement provides that § 21.) Exhibit C to to Maintenance include: ¢ Providing corrections, patches, "bug fixes", troubleshooting[,] and modifications to eliminate non-conformities the Product to the Specifications, ¢ system support user and developer questions, [and] ¢ Providing Enhanced Product and routine improvements, or new of the that generally makes to its (Id. at 20, C.) The . . . ,,-.''"''',''"' Agreement further provides that: Scope. Licensor to provide to Licensee all Maintenance the period thereafter that submitted an Order for Maintenance and paid the annual maintenance Product include one initial year Maintenance Services, and annual renewal Maintenance Services I optional *** Support Optional. or discontinue Maintenance at 11, §§ 6.1, Order conditions at its sole option and from at any to There is no provision in the License Agreement or provision of and/or Purchase 's access paying for Maintenance Services. Likewise, there is no provision in the License Agreement or Purchase that nullifies EMRE's status as a and/or ExxonMobil is not paying for Maintenance Services. The finds that EMRE's status as a Licensee and User as well as Gensym's obligation to provide to allow ExxonMobil to use the G2 License greemem and Purchase L.<n . . "...., ATr'IH'>,'''' with the access codes are Platform it purchased pursuant to the are not conditioned on ExxonMobil purchasing 14 optional Maintenance Services. However, Gensym is not required to provide EMRE with upgraded codes, codes for new software versions, or replacement codes, unless ExxonMobil purchases Maintenance Services from Gensym. V. Conclusion For the aforementioned reasons, ExxonMobil's Motion for Partial Summary Judgment (Okt. No. 11) is GRANTED, and it is hereby DECLARED that, pursuant to the terms of the License Agreement and the G2 Purchase Order: (1) EMRE is the "Licensee"; (2) EMRE is a "User"; (3) Gensym is required to provide EMRE with whatever access codes are necessary to allow ExxonMobil to use the G2 Software Platform; and (4) Each of the previous three statements remains true regardless of whether ExxonMobil purchases maintenance services from Gensym. However, the above findings do not resolve the disputed issue of whether EMRE IS entitled to use the G2 Software Platform outside of a process operating site unless ExxonMobil purchases Maintenance Services from Gensym. This issue was not the subject of ExxonMobil's Motion for Partial Summary Judgment and therefore will not be decided at this time. Likewise, the issue of whether Gensym actually provided ExxonMobil with a working permanent access code before this lawsuit was filed remains an issue of fact for the jury. It is so ORDERED. SIGNED this 26th day of March, 2013. 15
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