U.S. Court of Appeals for the Federal Circuit, Nippon Shinyaku Co., LTD. v. Sarepta Therapeutics, Inc., Docket No. 2021-2369

Contract Drafting

Mutual Confidentiality Agreement

Purpose of the Agreement Was for the Parties to Enter into Discussions

Covenant not to Sue

Forum Selection Clause to Govern Patent and Other Intellectual Property Disputes

Contract Interpretation

Delaware Law

 

 

Appeal from the United States District Court for the District of Delaware in No. 1:21-cv-01015-LPS

 

On June 1, 2020, Nippon Shinyaku and Sarepta Therapeutics, Inc. (“Sarepta”) executed a Mutual Confidentiality Agreement (“MCA”). J.A. 508–16. As stated in the MCA, the purpose of the agreement was for the parties “to enter into discussions concerning the Proposed Transaction,” which the MCA defined as “a potential business relationship relating to therapies for the treatment of Duchenne Muscular Dystrophy.” J.A. 508–09.

 

The MCA established a “Covenant Term,” which was “the time period commencing on the Effective Date and ending upon twenty (20) days after the earlier of: (i) the expiration of the Term, or (ii) the effective date of termination.” J.A. 509. Section 6 of the MCA contained a mutual covenant not to sue, whereby each party agreed that during the Covenant Term it:

shall not directly or indirectly assert or file any legal or equitable cause of action, suit or claim or otherwise initiate any litigation or other form of legal or administrative proceeding against the other Party . . . in any jurisdiction in the United States or Japan of or concerning intellectual property in the field of Duchenne Muscular Dystrophy. J.A. 512 (MCA § 6.1). Section 6 further stated:

For clarity, this covenant not to sue includes, but is not limited to, patent infringement litigations, declaratory judgment actions, patent validity challenges before the U.S. Patent and Trademark Office or Japanese Patent Office, and reexamination proceedings before the U.S. Patent and Trademark Office . . . . Id. (emphasis added).

 

As noted, the covenant not to sue was time limited and applied only during the Covenant Term. Id. Importantly, the MCA also included a forum selection clause to govern patent and other intellectual property disputes between the parties after the expiration of the Covenant Term. The forum selection clause in Section 10 of the MCA states in relevant part:

 

The Parties agree that all Potential Actions arising under U.S. law relating to patent infringement or invalidity, and filed within two (2) years of the end of the Covenant Term, shall be filed in the United States District Court for the District of Delaware and that neither Party will contest personal jurisdiction or venue in the District of Delaware and that neither Party will seek to transfer the Potential Actions on the ground of forum non conveniens. J.A. 513–14 (MCA § 10) (emphases added). “Potential Actions” is defined in Section 1 of the MCA as “any patent or other intellectual property disputes between Nippon Shinyaku and Sarepta, or their Affiliates, other than the EP Oppositions or JP Actions, filed with a court or administrative agency prior to or after the Effective Date in the United States, Europe, Japan or other countries in connection with the Parties’ development and commercialization of therapies for Duchenne Muscular Dystrophy.” J.A. 509 (MCA § 1) (emphases added).

 

The Covenant Term ended on June 21, 2021, at which point the two-year forum selection clause in Section 10 of the MCA took effect. Yet, on June 21, 2021—the same day the Covenant Term ended—Sarepta filed seven petitions for inter partes review (“IPR”) at the Patent Trial and Appeal Board (“the Board”).

 

We generally review a denial of a preliminary injunction using the law of the regional circuit, here the Third Circuit. See Murata Mach. USA v. Daifuku Co., 830 F.3d 1357, 1363 (Fed. Cir. 2016) (citing Trebro Mfg., Inc. v. Firefly Equip., LLC, 748 F.3d 1159, 1165 (Fed. Cir. 2014)). “However, the Federal Circuit has itself built a body of precedent applying the general preliminary injunction considerations to a large number of factually variant patent cases, and gives dominant effect to Federal Circuit precedent insofar as it reflects considerations specific to patent issues.” Id. (quoting Trebro, 748 F.3d at 1165). Both the Federal Circuit and the Third Circuit review a denial of a preliminary injunction for abuse of discretion. See id.; see also Adams v. Freedom Forge Corp., 204 F.3d 475, 484 (3d Cir. 2000). Under that standard, we review underlying questions of law de novo. Antares Pharma, Inc. v. Medac Pharma Inc., 771 F.3d 1354, 1357 (Fed. Cir. 2014).

 

(…) Here, the district court’s finding that Nippon Shinyaku did not show it was likely to succeed on the merits turned entirely on the court’s interpretation of the MCA. The parties agreed that the MCA “shall be governed by and interpreted in accordance with the laws of the State of Delaware.” J.A. 513 (MCA § 10). Therefore, this appeal presents “a question of contract interpretation under Delaware law, which we review de novo.” Studiengesellschaft Kohle, m.b.H. v. Hercules, Inc., 105 F.3d 629, 632 (Fed. Cir. 1997) (citing Cyrix Corp. v. Intel Corp., 77 F.3d 1381, 1384 (Fed. Cir. 1996)); see also Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989) (“The interpretation of private contracts is ordinarily a question of state law . . . .”); Howmedica Osteonics Corp. v. Wright Med. Tech., Inc., 540 F.3d 1337, 1347 (Fed. Cir. 2008) (“Construction of a contract is an issue of law that we review without deference.” (citing Intel Corp. v. VIA Techs., Inc., 319 F.3d 1357, 1361 (Fed. Cir. 2003))).

 

In interpreting a contract, “Delaware adheres to the ‘objective’ theory of contracts, i.e. a contract’s construction should be that which would be understood by an objective, reasonable third party.” Estate of Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (quoting NBC Universal v. Paxson Commc’ns, No. 650-N, 2005 WL 1038997, at *5 (Del. Ch. Apr. 29, 2005)). Under Delaware law, we must “read a contract as a whole” and “give each provision and term effect, so as not to render any part of the contract mere surplusage.” Id. (quoting Kuhn Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396–97 (Del. 2010)). Importantly, “when the contract is clear and unambiguous, we will give effect to the plain-meaning of the contract’s terms and provisions.” Id. at 1159–60 (citing Rhone-Poulenc Basic Chem. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992)).

 

In this case, the plain language of the forum selection clause in Section 10 of the MCA resolves the dispute. Section 10 states clearly that “all Potential Actions arising under U.S. law relating to patent infringement or invalidity, and filed within two (2) years of the end of the Covenant Term, shall be filed in the United States District Court for the District of Delaware.” J.A. 513–14. The express definition of “Potential Actions” includes “patent or other intellectual property disputes . . . filed with a court or administrative agency,” J.A. 509 (emphasis added), and the district court acknowledged that the “definition of ‘Potential Actions’ in Section 1 literally encompasses IPRs.” Decision, 2021 WL 4989489, at *3. Sarepta does not contend otherwise. The MCA’s forum selection clause is thus unambiguous, and we must “give effect to the plain meaning of its terms.” Estate of Osborn, 991 A.2d at 1159–60.

 

Under the plain language of Section 10, Sarepta was required to bring all disputes regarding the invalidity of Nippon Shinyaku’s patents—including the allegations and contentions contained in Sarepta’s IPR petitions—in the District of Delaware. Sarepta instead brought those disputes in the form of IPR petitions at the Board, which contravened the plain language of the forum selection clause in Section 10 of the MCA.

 

We agree with Nippon Shinyaku that there is no conflict or tension between the two sections of the MCA. During the Covenant Term, Section 6 prohibited the parties from “directly or indirectly asserting or filing any legal or equitable cause of action, suit or claim or otherwise initiating any litigation or other form of legal or administrative proceeding . . . of or concerning intellectual property in the field of Duchenne Muscular Dystrophy.” J.A. 512 (MCA § 6.1). In essence, the covenant not to sue broadly prohibited the parties from litigating any issue relating to patents, regardless of the forum. See id. (expressly clarifying that the covenant not to sue includes “patent infringement litigations, declaratory judgment actions, and patent validity challenges before the U.S. Patent and Trademark Office”). Upon the expiration of the Covenant Term, however, Section 6’s covenant not to sue was no longer in effect, and the parties were thus no longer prohibited from asserting claims relating to patent infringement or invalidity. At that point, to the extent either party wished to assert or file any such claims, Section 10’s forum selection clause merely required that such claims “arising under U.S. law relating to patent infringement or invalidity” be filed in “the United States District Court for the District of Delaware.” J.A. 514 (MCA § 10). This framework— which reflects harmony, not tension, between Sections 6 and 10 of the MCA—is entirely consistent with our interpretation of the plain meaning of the forum selection clause, as set forth above.

 

Sarepta next defends the district court’s reasoning that other language in Section 10 indicates that the forum selection clause is best read as limited only to federal district court litigation. We disagree. To be sure, the district court was correct that issues of patent infringement, forum non conveniens, and jurisdiction challenges are inapplicable to IPR proceedings. See Decision, 2021 WL 4989489, at *3 (citing Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S. 422, 430 (2007); AVX Corp. v. Presidio Components, Inc., 923 F.3d 1357, 1361 (Fed. Cir. 2019)). But it does not follow that the parties’ inclusion of those issues in the forum selection clause means that they intended to categorically exclude IPRs. We think the better reading of Section 10 recognizes the parties’ agreement that, after one party files an action relating to patent infringement or invalidity in the District of Delaware—as a filing party is required to do—the other party will not “contest personal jurisdiction or venue in the District of Delaware” or “seek to transfer . . . on the ground of forum non conveniens.” J.A. 514.

 

Finally, Sarepta argues that the district court correctly determined that neither party intended to bargain away its right to file IPR petitions, which, due to the time bar in 35 U.S.C. § 315(b), would be the practical effect of our reading of the forum selection clause. Again, we disagree with Sarepta and the district court. As a general principle, this court has recognized that parties are entitled to bargain away their rights to file IPR petitions, including through the use of forum selection clauses. For example, in Dodo- case VR, Inc. v. MerchSource, LLC, 767 F. App’x 930, 935 (Fed. Cir. 2019) (non-precedential), we affirmed a district court’s grant of a preliminary injunction on the basis that a defendant had likely violated a forum selection clause by filing IPR petitions, even though the forum selection clause did not explicitly mention IPRs. Even in Kannuu Pty Ltd. v. Samsung Electronics Co., 15 F.4th 1101, 1106–10 (Fed. Cir. 2021), where we determined that the parties’ forum selection clause did not extend to IPRs, that determination was based on the specific language in the forum selection clause at issue in that case. Inherent in our holding in Kannuu was an understanding that a differently worded forum selection clause would preclude the filing of IPR petitions. See id. In the case before us now, we have such a forum selection clause, which uses a defined term that the district court acknowledged “literally encompasses IPRs.” Decision, 2021 WL 4989489, at *3. 

 

We conclude as a matter of law that the forum selection clause in Section 10 of the MCA precludes the filing of IPR petitions during the two-year period following the expiration of the Covenant Term on June 21, 2021. Because Sarepta filed IPR petitions during that time in violation of the forum selection clause in Section 10, Nippon Shinyaku is likely to succeed on the merits of its claim for breach of contract. 

 

 

 

(U.S. Court of Appeals for the Federal Circuit, Feb. 8, 2022, Nippon Shinyaku Co., LTD. v. Sarepta Therapeutics, Inc., Docket No. 2021-2369, Circuit Judge Lourie)

U.S. Court of Appeals for the Federal Circuit, Molon Motor and Coil Corp., v. Nidec Motor Corp., Docket No. 2019-1071

Patent Infringement

Licenses

Contract Law

Contract Drafting

Covenant Not to Sue

Settlement, License and Release Agreement

Merger Clause

Integration Clause

Merger of the Two Agreements?

Illinois State Law

Contract Interpretation

Four Corners Rule

Parol Evidence Rule

Comparing the Subject Matter of Contracts

Appeal from the United States District Court for the Northern District of Illinois in No. 1:16-cv-03545

Molon Motor and Coil Corporation (“Molon”) appeals from the judgment of the U.S. District Court for the Northern District of Illinois in favor of Nidec Motor Corporation (“Nidec”) on Molon’s claim for infringement of U.S. Patent 6,465,915 (“the ’915 patent”). The district court granted summary judgment that Molon is barred from enforcing the ’915 patent against Nidec pursuant to a covenant not to sue that Molon granted in 2006 (“the 2006 Covenant”). Molon argues that the 2006 Covenant was extinguished by a clause in a Settlement, License and Release Agreement that the parties entered into in 2007 (“the 2007 Settlement”). The clause at issue in the 2007 Settlement states that all prior covenants “concerning the subject matter hereof” are “merged” and “of no further force or effect.” Because we agree with the district court that the two agreements concern different subject matter and therefore do not merge, we affirm.

The 2006 Covenant states: Molon hereby forever covenants not to sue Merkle- Korff for patent infringement (whether direct, contributory, or by inducement thereof) under either the ’915 patent or the ’726 patent with respect to any and all products previously or presently made, used or sold by Merkle-Korff in the United States. This covenant extends directly to Merkle-Korff as well as any individual or entity to which Merkle- Korff previously or presently supplies products by way of the manufacture and/or sale thereof in the United States.

In early 2007, Molon and Merkle-Korff entered into the 2007 Settlement, after which the parties jointly filed a stipulation of dismissal in the ’5134 litigation. J.A. 30–37. In the 2007 Settlement, Merkle-Korff agreed to pay Molon a lump sum payment in exchange for an exclusive license to more than a dozen of Molon’s United States and foreign patents and patent applications—including the ’785, ’915, and ’726 patents—within a narrowly defined exclusive market:

The 2007 Settlement states: Grant. Molon hereby grants each of the Merkle- Korff Affiliates an exclusive, fully paid-up, royalty free, worldwide, perpetual, irrevocable, retroactive, current and future right and license of all Patent Rights to make, have made, use, sell, offer to sell, lease, import, export, or otherwise commercialize products and/or systems for resale or other transfer: (i) to any of the other Merkle-Korff Affiliates; and/or (ii) to [a third-party company and its affiliates] (such persons and entities in (i) and (ii) above, collectively the “Kinetek Exclusive Market”). Under said license, the sale, offer to sell, lease, importation, exportation, commercialization and/or other transfer of products and/or systems between two Merkle-Korff Affiliates (as expressly set forth in (i) above), shall in no way permit the transferee Merkle-Korff Affiliate (i.e., the receiving Merkle-Korff Affiliate) to make, have made, use, sell, offer to sell, lease, import, export, or otherwise commercialize such products and/or systems for resale or other transfer to any person or entity outside of the Kinetek Exclusive Market.

In addition to the exclusive license rights within the Kinetek Exclusive Market, the 2007 Settlement granted Merkle-Korff in certain instances “the right, but not the duty, to pursue an infringement claim”—i.e., the right to exclude others from using the patents within the Kinetek Exclusive Market.

The 2007 Settlement contains a “merger” or “integration” clause:

The integration clause states: Entire Agreement. This Agreement is an integrated Agreement and constitutes the entire agreement and understanding between and among the Parties with regard to the matters set forth herein and shall be binding upon and inure to the benefit of the administrators, agents, personal representatives, successors, and assigns of each. There are no representations, promises, or agreements pertaining to the terms or subject matter of this Agreement, whether express or implied, that are not set forth in this Agreement. All prior and contemporaneous conversations, negotiations, possible and alleged agreements, representations and covenants concerning the subject matter hereof, are merged herein and shall be of no further force or effect.

The 2007 Settlement also expresses the parties’ agreement that they cooperated in drafting the agreement, it is not to be interpreted for or against either of them, and it is to be governed by the laws of the State of Illinois. J.A. 34–35.

(The terms “merger clause” and “integration clause” may be used interchangeably to describe a clause in a written contract that states that there are no representations, promises, or agreements between the parties except those found in the written contract. See Restatement (Second) of Contracts § 216 cmt. e (1981).)

Merkle-Korff later merged with Nidec. Whether that merger immunizes Nidec from liability that it might have otherwise had prior to the merger raises the issue that is at the heart of this appeal. In the present suit Molon alleges that Nidec is practicing and/or inducing others to practice the ’915 patent outside the licensed Kinetek Exclusive Market. See J.A. 58–64.

Nidec moved for partial summary judgment on Molon’s infringement claim, arguing that Molon is barred from enforcing the ’915 patent against Nidec under the 2006 Covenant. Molon responded that the 2006 Covenant was extinguished by the merger clause in the 2007 Settlement. Applying Illinois contract law, the district court granted partial summary judgment in favor of Nidec on Molon’s claim for infringement of the ’915 patent. J.A. 1–12. Because the merger clause in the 2007 Settlement pertains only to covenants “concerning the subject matter hereof,” the court compared the subject matter of the 2006 Covenant to the subject matter of the 2007 Settlement. The court found that the 2006 Covenant gives Nidec a right to avoid suit for patent infringement on two patents, one of which is the ’915 patent. J.A 9. In contrast, the 2007 Settlement is in some ways broader—it is an exclusive license, it includes more than a dozen patents and applications, and it provides Nidec with some enforcement rights—and in other ways narrower—it is limited to a defined market of customers—than the 2006 Covenant. J.A. 9. Thus, the court concluded, the 2006 Covenant remains in effect because it does not concern the same subject matter as the 2007 Settlement.

In this case, the question before us is whether the 2007 Settlement should be interpreted to have revoked or extinguished the 2006 Covenant. Contract interpretation is a question of state law. See Volt Info. Sci., Inc. v. Bd. Of Tr. Of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989). The 2007 Settlement contains a choice-of-law provision requiring that it “be governed and construed in accordance with the laws of the State of Illinois as to all matters of interpretation and remedy.” J.A. 35. Therefore, we apply Illinois state law to interpret the 2007 Settlement de novo.

Traditional contract interpretation principles in Illinois require application of the “four corners” rule. Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999). In applying this rule, “a court must initially look to the language of a contract alone, as the language, given its plain and ordinary meaning, is the best indication of the parties’ intent.” Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007); Rakowski v. Lucente, 472 N.E.2d 791, 794 (Ill. 1984) (“Where a written agreement is clear and explicit, a court must enforce the agreement as written. Both the meaning of the instrument, and the intention of the parties must be gathered from the face of the document without the assistance of parol evidence or any other extrinsic aids.”).

We must therefore look to the language of the 2007 Settlement. The merger clause states in relevant part:

All prior and contemporaneous conversations, negotiations, possible and alleged agreements, representations and covenants concerning the subject matter hereof, are merged herein and shall be of no further force or effect.

The parties have not argued that the merger clause is ambiguous or that it requires extrinsic evidence to interpret what the parties intended. The clause, on its face, only pertains to covenants “concerning the subject matter” of the 2007 Settlement.

We first address the language of the merger clause in the 2007 Settlement, which limits its application to covenants “concerning the subject matter hereof.” We consider whether the subject matter of the 2006 Covenant and the 2007 Settlement is the same, such that the 2006 Covenant was expressly merged into the 2007 Settlement.

In comparing the subject matter of contracts, Illinois courts have cautioned against defining subject matter too broadly or too narrowly. For example, in Ill. Concrete- I.C.I., Inc. v. Storefitters, Inc., the court rejected the broad view that two contracts had the same subject matter simply because both involved “using trucks.” 922 N.E.2d 542, 546 (Ill. App. Ct. 2010). On the other hand, in Midwest Builder Distrib., Inc. v. Lord & Essex, Inc., the court rejected an “extremely narrow view” of two contracts as having subject matter limited to “the specifications of the products to be delivered.” 891 N.E.2d 1, 20 (Ill. App. Ct. 2007).

(…) To determine the subject matter of each agreement, we must examine the actual language of the agreements themselves. We must consider how the language of each agreement conveys the substantive rights and obligations exchanged between the parties.

First, we look at the subject matter of the 2006 Covenant, which is a one-paragraph unilateral covenant not to sue on two patents—the ’915 patent and the ’726 patent. J.A. 27. The 2006 Covenant covers “any and all products previously or presently made, used or sold by Merkle-Korff” and it extends geographically to “the United States.” It contains no restrictions on the market for sales of licensed products.

Next, we look at the subject matter of the 2007 Settlement, which is an eight-page bilateral contract, in which Merkle-Korff agreed to pay monetary consideration to Mo- lon in exchange for an exclusive license covering more than a dozen United States and foreign patents and patent applications. J.A. 30–37. The 2007 Settlement is not limited to any specific products or geographical area, but it is limited to the Kinetek Exclusive Market. J.A. 31. Additionally, the 2007 Settlement gives Merkle-Korff a right to sue third parties for infringement of the licensed patents within the Kinetek exclusive Market in the event that Molon declines to do so.

A covenant not to sue is equivalent to a nonexclusive or “bare” license, see Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1032 (Fed. Cir. 1995), which is a promise by the patent owner not to sue the licensee for practicing the patented invention, and under which the patent owner impliedly reserves the right to grant similar nonexclusive licenses to other entities. See Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1345 (Fed. Cir. 2001). In contrast, an exclusive license is a license to practice the patented invention “accompanied by the patent owner’s promise that others shall be excluded from practicing it within the field of use wherein the licensee is given leave.” Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481, 1484 (Fed. Cir. 1998) (quoting Western Elec. Co. v. Pacent Reproducer Corp., 42 F.2d 116, 118 (2d Cir. 1930)). We have characterized an exclusive licensee as “sharing the property rights represented by a patent.” Rite-Hite Corp. v. Kelly Co., 56 F.3d 1538, 1553 (Fed. Cir. 1995) (quoting Weiner v. Rollform, 744 F.2d 797, 807 (Fed. Cir. 1984)).

There are fundamental differences between an exclusive license and a nonexclusive license, particularly in the context of standing to assert a claim for patent infringement. See Rite-Hite, 56 F.3d at 1552 (citing Independent Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 468– 69 (1926)). In essence, an exclusive licensee has an interest in the patent sufficient to establish an injury when a third party infringes, akin to an ownership interest, while a non- exclusive licensee has no such interest in the patent and merely enjoys freedom from suit. See id. Under this framework, it cannot be said that an exclusive license and a non- exclusive license necessarily concern the same subject matter, even though both licenses include the same patent.

We thus find that there are important substantive differences between the subject matter of the 2006 Covenant and the 2007 Settlement. The 2006 Covenant is a unilateral promise by Molon not to sue Merkle-Korff (or its successor, Nidec) for infringement of two patents, one of which is the ’915 patent. The 2007 Settlement, in contrast, is a bilateral contract through which Molon transferred to Merkle-Korff a share in the existing and potential exclusionary rights under more than a dozen listed patents and applications, one of which is the ’915 patent. Moreover, the 2006 Covenant is limited to products existing at the time of its execution, while the 2007 Settlement includes both existing and future products. And the 2006 Covenant is not limited to any specific market, while the 2007 Settlement is limited to the Kinetek Exclusive Market.

We therefore conclude that the language of the merger clause in the 2007 Settlement did not expressly extinguish the 2006 Covenant.

(Merger doctrine in its traditional form as a doctrine of contract interpretation. See Schweickhardt v. Chessen, 161 N.E. 118, 122 (Ill. 1928) (“The rule is, that when parties reduce their agreement to writing, all prior negotiations leading up to the execution of the contract are merged therein, and parol evidence is not admissible to explain, contradict, enlarge, or modify the writing as it existed when executed.”). The effect of the merger doctrine is to “preclude evidence of understandings, not reflected in a writing, reached before or at the time of its execution which would vary or modify its terms.” J & B Steel Contractors, Inc. v. C. Iber & Sons, Inc., 642 N.E.2d 1215, 1217 (Ill. 1994); see also Fuchs & Lang Mfg. Co. v. R.J. Kittredge & Co., 146 Ill. App. 350, 364 (Ill. App. Ct. 1909) (“It follows legally that this written contract merged all prior negotiations, letters and telegrams in the written agreement thus formulated and signed; and all extrinsic evidence of oral or written negotiations became incompetent, immaterial and irrelevant for the purpose of contradicting or modifying the written agreement.”)).

Under Illinois law, the doctrine of merger only applies when a later contract “relates to the same subject matter and embraces the same terms” as an earlier contract. Kraft v. No. 2 Galesburg Crown Fin. Corp., 420 N.E.2d 865, 870 (Ill. App. Ct. 1981).

We agree with the district court that the absence of any reference to the 2006 Cove- nant in the 2007 Settlement, though not dispositive, is an indication that Nidec did not intend to assent to its revocation.

(We see nothing “strange” about a market-limited exclusive licensee being both empowered to sue for infringement within the licensed market and also subject to being sued by the licensor for infringement outside of that market.)

(…) For these reasons, we find that the merger clause in the 2007 Settlement does not indicate that the parties intended to revoke the 2006 Covenant. The 2006 Covenant remains operable, and it bars Molon’s suit against Nidec for infringement of the ’915 patent.

Accordingly, the judgment of the district court is affirmed.

(U.S. Court of Appeals for the Federal Circuit, January 10, 2020, Molon Motor and Coil Corp., v. Nidec Motor Corp., Docket No. 2019-1071)