United States District Court, W.D. Washington, Seattle
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendant Washington State
University's Motion for Summary Judgment. Dkt. #46.
Plaintiff Phytelligence, Inc. opposes. Dkt. #64. The Court
has determined it can rule on this Motion without oral
argument. For the reasons stated below, this Motion
is an agricultural biotechnology company. Dkt. #66
(“Leyerle Decl.”), ¶¶ 2-3; Dkt. #1-1
(“Complaint”), ¶¶ 4-5. Phytelligence
uses a trade secret propagation process to grow food crop
plants that are fully-rooted, have genetically confirmed
varieties, and are guaranteed virus and disease-free, for
eventual sale to food crop growers. Leyerle Decl. at ¶
3. Phytelligence sells itself as an innovator in the field
and a potentially disruptive competitor of traditional
Washington State University (“WSU”) owns the
patent to an apple cultivar known as WA 38, which is sold
under the trademark COSMIC CRISP. See Dkt. # 1-2 at
late fall of 2012, WSU had developed WA 38 but had not made a
firm decision whether to commercialize it. Leyerle Decl. at
¶ 5. WSU did not have the facilities to grow and
maintain a sufficient number of WA 38 plants to distribute
them to nurseries and others if commercialization were to
occur. Id. WSU and WSURF therefore asked
Phytelligence to propagate WA 38 plants for eventual sale and
November 28, 2012, Phytelligence and WSU's
predecessor-in-interest Washington State University Research
Foundation (“WSURF”) entered into a
“Propagation Agreement” with respect to WA 38.
See Dkt #1-1 at 10 (“Agreement to Propagate
Apple Cultivar Plant Materials for Washington State
University”). This contract forms the basis for this
legal action. The Propagation Agreement allowed Phytelligence
(the “Propagator”) to propagate WA 38 plants,
which was apparently of some research benefit to
Phytelligence. The Propagation Agreement forbids
Phytelligence from selling any WA 38 plants unless it
receives “authorization to do so under a separate
contract with WSURF, or an agent of WSURF, in accordance with
Section 4 of the Agreement.” Id. Unless and
until Phytelligence receives such authorization to sell under
a separate contract, any WA 38 plants that it propagates
“remain the sole and absolute property of WSU and/or
WSURF.” Id. at 12.
4 of the Propagation Agreement states, in full:
4. OPTION TO PARTICIPATE AS A PROVIDER AND/OR SELLER IN
WSURF LICENSING PROGRAMS: If Propagator is an authorized
provider in good standing under WSDA's Washington State
Fruit Tree Certification Program in accordance with Section
5, below, by signing this Agreement, Propagator is hereby
granted an option to participate as a provider and/or seller
of Plant Materials listed in Exhibit A, if the Cultivar is
officially released by WSU and becomes available for
licensing by WSURF, or an agent of WSURF. Propagator will
need to sign a separate contract with WSURF, or an agent of
WSURF, to exercise this option. If any of the WSU Cultivars
listed in Exhibit A are not released by WSU, Propagator
agrees to destroy all Plant Materials of such Cultivars upon
written notification by WSURF that it will not release a
specific cultivar. It is anticipated that this Agreement will
be amended from time-to-time to include additional Cultivars
under Exhibit A.
Id. The parties agreed that Washington law applied
to any subsequent interpretations of the Agreement.
Id. at 13.
to signing the Agreement, Chris Leyerle, Phytelligence's
CEO, sent an email to Tom Kelly, a licensing associate at
WSURF, asking several questions about the option in Section
4. Leyerle Decl. at ¶ 7; Dkt #66-3. The parties wrote
back and forth. Mr. Leyerle also reached out to Anson
Fatland, the Interim Executive Director of WSURF and Mr.
Kelly's boss. Id. at ¶ 10; Dkt #66-7.
Phytelligence argues in in briefing:
Mr. Leyerle clearly communicated to both Mr. Kelly and Mr.
Fatland that Phytelligence would not enter into an agreement
to propagate WA 38 without assurance that it would be offered
a license to sell and distribute WA 38 if and when WSU
decided to commercialize it. Leyerle Decl., ¶ 11. Mr.
Leyerle was told by Mr. Kelly, Mr. Fatland and others that
there would be an internal process at WSU to decide whether
and how to commercialize WA 38. Id. ¶ 12. If
WSU decided to commercialize WA 38, the process would result
in a set of standard terms and conditions pursuant to which
industry participants could sell and distribute WA 38.
Id. Both Mr. Kelly and Mr. Anson assured Mr. Leyerle
that by entering into the Propagation Agreement,
Phytelligence would have the option to acquire a
non-exclusive license on those standard terms if and when a
decision was made to commercialize WA 38. Id. Mr.
Kelly's and Mr. Fatland's assurances were consistent
with then-existing WSU and WSURF custom and practice with
respect to licensing. By November 2012, their general
practice in connection with the commercialization of any
cultivar was to engage in processes and procedures
culminating in uniform license terms. [Pappu Dep.] at 60:1-5,
69:9-19. By that time, among other things, WSURF had
commercialized another apple variety, WA 2, pursuant to
non-exclusive license agreements put in place uniformly.
Id. at 55:16-56:08, 59:3-9. Section 4 of the
Propagation Agreement, the option clause at issue, contains
form language that had been previously used by WSURF six to
eight times for various other crops, including WA 2.