Case: 19-2216 Document: 65-2 Page: 1 Filed: 08/25/2020
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`
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`PHYTELLIGENCE, INC.,
`Plaintiff-Appellant
`
`v.
`
`WASHINGTON STATE UNIVERSITY,
`Defendant-Appellee
`______________________
`2019-2216
`______________________
`
`Appeal from the United States District Court for the
`Western District of Washington in No. 2:18-cv-00405-RSM,
`Judge Ricardo S. Martinez.
`______________________
`SEALED OPINION ISSUED: August 25, 2020
`PUBLIC OPINION ISSUED: August 27, 2020∗
`______________________
`JOHN PAUL FLYNN, Wilson, Sonsini, Goodrich & Rosati,
`PC, San Francisco, CA, argued for plaintiff-appellant. Also
`represented by COLLEEN BAL, JOSHUA ALEC BASKIN.
`
` STUART RUSSELL DUNWOODY, Davis Wright Tremaine
`LLP, Seattle, WA, argued for defendant-appellee.
`______________________
`
`
`
`
`
`
`
`
`
`
`
`
`∗ This opinion was originally filed under seal and has
`been unsealed in full.
`
`

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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
`
`Before PROST, Chief Judge, REYNA and STOLL, Circuit
`Judges.
`
`REYNA, Circuit Judge.
`
`Phytelligence, Inc., appeals from the United States
`District Court for the Western District of Washington’s
`grant of summary judgment in favor of Washington State
`University. Because we agree with the district court’s
`decision, we affirm.
`
`BACKGROUND
`I
`Appellant Phytelligence, Inc., (“Phytelligence”) was an
`agricultural biotechnology company that used tissue cul-
`ture to grow trees for sale to nurseries and growers.
`Phytelligence has since ceased operations and is in receiv-
`ership.
`In November 2012, Phytelligence and appellee Wash-
`ington State University (“WSU”) began discussing the
`propagation, i.e., growing, of “WA 38” apple trees—a new
`apple cultivar that WSU developed and patented. On No-
`vember 9, 2012, WSU sent Phytelligence a draft propaga-
`tion agreement, which provided that Phytelligence could
`propagate WA 38 trees. The draft agreement forbid
`Phytelligence from selling WA 38 trees “unless [Phytelli-
`gence] ha[d] authorization to do so under a separate con-
`tract with [WSU], or an agent of [WSU], in accordance with
`Section 4 of this Agreement.” J.A. 119.
`Key to this appeal is Section 4 of the draft propagation
`agreement, entitled “option to participate as a provider
`and/or seller in [WSU] licensing programs,” which provided
`that:
`If [Phytelligence] is an authorized provider in good
`standing . . . by signing this Agreement, [Phytelli-
`gence] is hereby granted an option to participate as
`a provider and/or seller of Plant Materials listed in
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`Exhibit A, if the Cultivar is officially released by
`WSU and becomes available for licensing by [WSU]
`. . . . [Phytelligence] will need to sign a separate
`contract with [WSU], or an agent of [WSU], to ex-
`ercise this option.
`J.A. 51.
`On November 18, 2012, days before Phytelligence exe-
`cuted the agreement, Phytelligence reached out to WSU “to
`clarify” that to exercise its option under Section 4, WSU
`would need to “grant [it] a separate license for the purpose
`of selling.” J.A. 631. On November 19, 2012, WSU re-
`sponded “[y]es,” but also noted that there was uncertainty
`as to the terms of that future license. Specifically, WSU
`noted that “there exists the possibility that if we license
`WA 38 to an exclusive licensee, that company/person/group
`may want to do his/her own plant propagation without out-
`side assistance or may want to do that under contract with
`its own contractors.” Id. WSU also noted that:
`We have no idea how WA 38 will be licensed at this
`time. It would take any form: under an open re-
`lease through a nursery group, for example, to an
`exclusive license with a company, group of individ-
`uals, coop., etc. That decision has not yet been
`made, so there can be no guarantees made to any-
`one at this point.
`Id. During this exchange, Phytelligence noted that it un-
`derstood the Propagation Agreement to be a “strictly re-
`search undertaking,” in which it would propagate WA 38
`for WSU and be allowed to “experiment with propagation
`techniques.” J.A. 635. WSU indicated a similar under-
`standing of the Propagation Agreement, noting that “[t]he
`intent of the agreement is to give [Phytelligence] the ability
`to propagate WA 38.” Id.
`On November 19, 2012, Phytelligence reached out to
`WSU a second time, acknowledging the uncertainty
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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
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`surrounding WSU’s future licensing of WA 38. Phytelli-
`gence also noted that given the “wispy forward commit-
`ment” concerning the option in Section 4, it was hesitant to
`execute the Propagation Agreement. J.A. 247. Phytelli-
`gence noted that “[i]t may make more sense” for it to con-
`duct its research with a separate lab or to proceed forward
`with a “fee-for-service contract.” Id. WSU responded that
`same day, noting that the “fact of the matter is that what
`happens from a commercialization/licensing point of view
`in regard to WA 38 and future apple releases is completely
`out of [our] hands at the moment.” J.A. 640.
`On November 23, 2012, Phytelligence reached out to
`WSU again. Phytelligence acknowledged that WSU is
`“moving somewhat cautiously here,” but noted that “every-
`one thinks that . . . Phytelligence and others would have a
`shot at securing commercial licenses.” J.A. 249. Phytelli-
`gence also noted that
`since this [Propagation] agreement is a precursor
`to any other, [we] suppose there’s no harm in going
`ahead and executing it. Then at least we will have
`the pieces in place when we are all ready to go be-
`yond R&D mode. With that context, the agreement
`is fine as it is.
`Id. (emphasis added). On November 27, 2012, Phytelli-
`gence executed the “Propagation Agreement” with WSU,
`without making or even suggesting any changes to Section
`4.
`
`II
`In March 2013, WSU issued an “Announcement of Op-
`portunity,” i.e., a request for proposals, to companies inter-
`ested in commercializing WA 38. WSU sought “an
`exclusive licensee to manage” commercialization of WA 38,
`“including the contracting of tree propagation to nurseries
`and others.” J.A. 649, 652. WSU sent this announcement
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`of opportunity to Phytelligence. Phytelligence did not sub-
`mit a proposal.
`In June 2014, WSU accepted the proposal of Proprie-
`tary Variety Management (“PVM”) and entered into a
`“Management Contract” with PVM. The Management
`Contract granted PVM an exclusive license. The Manage-
`ment Contract also required PVM to subcontract exclu-
`sively with the Northwest Nursery Improvement Institute
`(“NNII”), a fruit tree nursery association, to propagate and
`sell WA 38 trees. Pursuant to the Management Contract,
`PVM provided NNII with an exclusive sublicense. In turn,
`NNII provided nonexclusive sublicenses with NNII mem-
`ber nurseries to propagate and sell WA 38 trees. As a re-
`sult, no industry participant could obtain a license to sell
`WA 38 without becoming a member of NNII.
`On May 18, 2017, Phytelligence formally notified WSU
`that it wanted to exercise its option under the Propagation
`Agreement. J.A. 126. WSU responded that under the op-
`tion clause, Phytelligence had to “sign a separate contract
`with [WSU], or an agent of [WSU], to exercise this option,”
`and that PVM was WSU’s “agent.” J.A. 157 (emphasis in
`original). WSU thus directed Phytelligence to “approach
`PVM for an agreement.” Id. Phytelligence reached out to
`PVM, which required Phytelligence to become a NNII
`member as a condition to obtaining a license to commer-
`cialize WA 38. Phytelligence subsequently notified WSU
`that it rejected PVM’s requirement to become a NNII mem-
`ber. Phytelligence explained that it did “not wish” to join
`NNII, nor did it believe that NNII membership was a con-
`dition contained in Section 4 of the Propagation Agree-
`ment. J.A. 165–166.
`On September 15, 2017, WSU then presented Phytelli-
`gence with three options for propagating and selling WA 38
`“on equal footing with other propagators that have com-
`mercial rights to WA 38.” J.A. 169. One of the options re-
`quired NNII membership while the other two did not.
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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
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`Phytelligence rejected WSU’s three options. Phytelligence
`never applied for membership in NNII.
`On January 16, 2018, WSU terminated the Propaga-
`tion Agreement. According to WSU, Phytelligence materi-
`ally breached section 1.b of the Propagation Agreement
`when it sold and delivered WA 38 to a third-party without
`a license to do so. WSU also alleged that such actions in-
`fringed its plant patent for WA 38 and its COSMIC CRISP
`trademark. Also on January 16, 2018, WSU revoked its
`September 15, 2017, offer to Phytelligence to commercial-
`ize the propagation of WA 38.
`III
`On February 26, 2018, Phytelligence sued WSU in
`Washington state court alleging breach of the Propagation
`Agreement. Specifically, Phytelligence argued that WSU
`breached the Propagation Agreement “[b]y entering into its
`arrangements with PVM and refusing to honor the obliga-
`tions in the Propagation Agreement.” J.A. 47. Phytelli-
`gence sought damages and specific performance of “the
`Propagation Agreement resulting in issuance of a license .
`. . to propagate WA 38 plant materials for commercial sale.”
`J.A. 48. On March 16, 2018, WSU asserted patent and
`trademark infringement counterclaims and removed the
`action to federal district court.1
`WSU then moved for summary judgment, arguing that
`Section 4 was an unenforceable “agreement to agree” pur-
`suant to Washington state law. J.A. 101. Phytelligence
`opposed the motion, arguing that Section 4 was not an
`agreement to agree but rather an enforceable “agreement
`with open terms.” See J.A. 294–95.
`
`
`1 WSU’s counterclaims are not at issue in this ap-
`peal.
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`The district court granted WSU’s motion. Phytelli-
`gence moved for reconsideration, and in that motion,
`Phytelligence specified its theory of breach. Phytelligence
`argued that WSU breached Section 4 by conditioning a li-
`cense to commercialize WA 38 on Phytelligence becoming a
`NNII member. The district court denied Phytelligence’s
`motion for reconsideration. WSU then waived any dam-
`ages related to its counterclaims, and the parties entered a
`stipulated injunction in order to permit this appeal to pro-
`ceed. Phytelligence timely appealed. We have jurisdiction
`under 28 U.S.C. § 1295(a)(1).
`DISCUSSION
`Phytelligence challenges the district court’s determina-
`tion concerning Section 4 on two general grounds. First,
`Phytelligence argues that, on its face, Section 4 of the Prop-
`agation Agreement is an enforceable agreement with open
`terms and not an unenforceable agreement to agree. Sec-
`ond, Phytelligence argues that evidence extrinsic to the
`Propagation Agreement indicates that Section 4 is an en-
`forceable agreement with open terms, or, at a minimum,
`creates a material factual dispute precluding summary
`judgment. We address each challenge in turn.
`We review a grant of summary judgment under the law
`of the regional circuit, which in this case is the Ninth Cir-
`cuit. See, e.g., Cheetah Omni LLC v. AT&T Servs., Inc.,
`949 F.3d 691, 693 (Fed. Cir. 2020). The Ninth Circuit re-
`views a district court’s grant of summary judgment de
`novo. See, e.g., L.F. v. Lake Washington School District
`#414, 947 F.3d 621, 625 (9th Cir. 2020). Summary judg-
`ment is appropriate when the moving party demonstrates
`that “there is no genuine dispute as to any material fact
`and the movant is entitled to judgment as a matter of law.”
`Fed. R. Civ. P. 56(a). In other words, summary judgment
`may only be granted when no “reasonable jury could return
`a verdict for the nonmoving party.” Anderson v. Liberty
`Lobby, Inc., 477 U.S. 242, 248 (1986).
`
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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
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`I
`Phytelligence argues that, on its face, Section 4 is not
`an unenforceable agreement to agree but rather an enforce-
`able agreement with open terms. For the reasons set forth
`below, we disagree.
`The parties agree that the Propagation Agreement is
`governed by Washington state law. Washington courts fol-
`low the “objective manifestation theory” of contract inter-
`pretation, which requires a court to look to the reasonable
`meaning of the contract language to determine the parties’
`intent. Hearst Commc’ns, Inc. v. Seattle Times Co., 115
`P.3d 262, 267 (Wash. 2005). “We generally give words in a
`contract their ordinary, usual, and popular meaning unless
`the entirety of the agreement clearly demonstrates a con-
`trary intent.” Id. The interpretation of a contract is a mat-
`ter of law when it does not rely on extrinsic evidence.
`Wash. State Major League Baseball Stadium Pub. Facili-
`ties Dist. v. Huber, Hunt & Nichols-Kiewit Constr. Co., 296
`P.3d 821, 825 (Wash. 2019); Wash. Pub. Util Dists.’ Utils.
`Sys. v. Pub. Util. Dist. No. 1 of Clallam Cnty., 771 P.2d 701,
`706 (Wash. 1989).
` “An agreement to agree is an agreement to do some-
`thing which requires a further meeting of the minds of the
`parties and without which it would not be complete. Agree-
`ments to agree are unenforceable in Washington.” P.E.
`Sys., LLC v. CPI Corp., 289 P.3d 638, 644 (Wash. 2012) (in-
`ternal quotation marks omitted). Underlying this rule is
`the fundamental principle that Washington courts are un-
`able to fix the liability of parties based on agreements that
`are “too indefinite and uncertain.” Sandeman v. Sayres,
`314 P.2d 428, 430 (Wash. 1957) (internal quotation marks
`omitted); see also Keystone Land & Dev. Co. v. Xerox Corp.,
`94 P.3d 945, 949 (Wash. 2004); Setterlund v. Firestone, 700
`P.2d 745, 746 (Wash. 1985) (“[A]greements must be defi-
`nite enough on material terms to allow enforcement with-
`out the court supplying those terms.”). A court will not
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`enforce an indefinite agreement in order “to avoid trapping
`parties in surprise contractual obligations.” Keystone, 94
`P.3d at 949 (internal quotation marks omitted).
`For example, in Sandeman, the Washington Supreme
`Court determined that a provision for a bonus within an
`employment contract was an unenforceable agreement to
`agree. 314 P.2d at 428–29. The provision provided that
`“[a] suitable incentive . . . will be paid [to] you and will be
`decided upon, after the first three (3) months of our mar-
`keting operations . . . . This period of time is specified to
`enable us to properly evaluate the market and acceptabil-
`ity of our products.” Id. at 428. The court found this pro-
`vision to be an agreement to agree because it required “a
`further meeting of the minds of the parties before a com-
`plete and enforceable agreement to pay a commission.” Id.
`at 430. Specifically, the court recognized that although the
`employer “offered to pay the respondent a commission
`and/or bonus,” the bonus was to be “decided upon by the
`company and the respondent three months later, in order
`to enable the company to properly evaluate the market and
`acceptability of its products.” Id.
`By contrast, “[u]nder an agreement with open terms,
`the parties intend to be bound by the key points agreed
`upon with the remaining terms supplied by a court or an-
`other authoritative source, such as the Uniform Commer-
`cial Code.” P.E. Sys., 289 P.3d at 644 (quotation marks
`omitted). Any missing or open term can therefore be “eas-
`ily” discerned by the court. Id.
`For example, in P.E. Systems, a case relied on by both
`parties in this appeal, the parties entered into an agree-
`ment in which P.E. Systems offered to analyze and reduce
`the credit card processing costs of CPI Corporation (“CPI”),
`and CPI provided that it would pay P.E. Systems a portion
`of the savings realized. Id. at 640. The agreement provided
`that the amount of savings would be determined by a cli-
`ent’s “Historic Cost,” which would be agreed to by the
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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
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`parties and included in the addendum to the contract. Id.
`The Historic Cost was left blank. Id. at 641. The appeals
`court found that in light of the missing Historic Cost, this
`was an agreement to agree. Id. The Washington Supreme
`Court disagreed, explaining that this was an enforceable
`agreement with an open term because the contract in-
`cluded an agreed to formula for calculating the Historic
`Cost. Id. at 644. Thus, the Historic Cost was “an open term
`that can easily be calculated.” Id.
`Here, Section 4 of the Propagation Agreement provides
`that Phytelligence is “hereby granted an option,” but that
`Phytelligence “will need to sign a separate contract with
`[WSU], or an agent of [WSU], to exercise this option.”
`J.A. 51. Thus, the plain terms of the agreement provide
`that Phytelligence’s option turns on a future contract be-
`tween the parties, and thus “a further meeting of the minds
`of the parties” is required before Phytelligence can com-
`mercialize WA 38. P.E. Sys., 289 P.3d at 644. This renders
`Section 4 an unenforceable agreement to agree.
`Additionally, contrary to Phytelligence’s position, Sec-
`tion 4 is not like the agreement with open terms in P.E.
`Systems. As noted earlier, in P.E. Systems, the court sup-
`plied the missing term from an objective formula that was
`agreed to by the parties and contained within the contract.
`See id. In contrast, here, the Propagation Agreement pro-
`vides the court with no objective method for determining
`the terms of the “separate contract” between Phytelligence
`and WSU (or its agent). Phytelligence even admits in its
`briefing that the terms of the separate contract had not yet
`been determined at the time it entered into the Propaga-
`tion Agreement. Phytelligence notes that “to exercise the
`option, [it] had to sign a separate contract with WSU or its
`agent; the terms of that contract had not yet been deter-
`mined.” Appellant’s Br. at 24 (emphasis added). Thus,
`given that Phytelligence’s licensing rights turned on a fu-
`ture “separate contract,” the terms of which were not yet
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`determined by the parties, Section 4 is an unenforceable
`agreement to agree.
`
`II
`A
`Phytelligence further argues that extrinsic evidence es-
`tablishes that Section 4 is an enforceable contract with
`open terms. Specifically, Phytelligence argues that the
`parties “reached a clear and unequivocal agreement on the
`method” for determining Section’s 4 open licensing terms.
`Appellant’s Br. at 33. For the reasons set forth below, we
`disagree.
`According to Phytelligence, the purportedly agreed
`upon method required WSU to offer Phytelligence the same
`“standardized licensing terms” it planned to offer other in-
`dustry participants. Phytelligence cites to a form license
`included in the record on appeal as the “WSU-approved
`standard licensing terms,” which “WSU promised Phytelli-
`gence.” Appellant’s Br. at 35 (citing form agreement at J.A.
`504–23) (“Form License”).2 Thus, Phytelligence argues,
`“[n]othing was left for future negotiation; no further meet-
`ing of the minds was required” for Phytelligence to exercise
`its option to a license under Section 4. Appellant’s Br. at
`33.
`To assist in determining the meaning of contract lan-
`guage, Washington courts, in addition to the objective man-
`ifestation theory, apply the “context rule.” See Berg v.
`Hudesman, 801 P.2d 222, 229–30 (Wash. 1990). This rule
`allows examination of the context surrounding a contract’s
`execution, including the consideration of extrinsic evidence
`to help understand the parties’ intent. Hearst, 115 P.3d
`
`
`2 The Form License is the nonexclusive sublicense
`that NNII offered to industry participants to commercialize
`WA 38 trees.
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`at 266–67. However, extrinsic evidence is to be used “to
`determine the meaning of specific words and terms used
`and not to show an intention independent of the instru-
`ment or to vary, contradict or modify the written word.” Id.
`at 267 (internal quotation marks omitted; emphasis in orig-
`inal). Notably, a court “must distinguish the parties’ intent
`at the time of formation from the interpretations the par-
`ties are advocating at the time of the litigation.” Int’l Ma-
`rine Underwriters v. ABCD Marine, LLC, 313 P.3d 395, 400
`(Wash. 2013); see also Viking Bank v. Firgrove Commons 3,
`LLC, 334 P.3d 116, 120 (Wash. Ct. App. 2014) (noting that
`“[t]he primary objective in contract interpretation is to as-
`certain the mutual intent of the parties at the time they
`executed the contract”).
`When the meaning of a contract turns on the inferences
`drawn from extrinsic evidence, contract interpretation is a
`question of fact. Berg, 801 P.2d at 229. “A question of fact
`may be determined as a matter of law where reasonable
`minds could reach but one conclusion.” Keystone, 94 P.3d
`at 949 n.10.
`As an initial matter, we reject Phytelligence’s theory of
`the case, which is self-contradictory. According to Phytelli-
`gence, the parties agreed that Phytelligence would receive
`the terms contained in the Form License. See J.A. 504–23;
`Appellant’s Br. at 16, 35, 38, 48–50. The Form License,
`however, requires the “Licensee” to “be a NNII member
`nursery in good standing” in order to license WA 38.
`J.A. 506. It is also undisputed that no propagator was of-
`fered a license to WA 38 unless it was a member of NNII.
`Membership in NNII is the very requirement that Phytelli-
`gence alleges was not required by Section 4 and triggered
`WSU’s breach. Thus, Phytelligence’s claim of breach of
`contract fails under either premise. On the one hand, if the
`parties agreed that the “separate contract” in Section 4
`would contain the standard terms of the Form License,
`then WSU did not breach Section 4 by requiring Phytelli-
`gence to become a NNII member. On the other hand, if the
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`parties did not agree to such standard terms, Section 4 is
`unenforceable as an agreement to agree.
`Even if we set aside this fundamental flaw in Phytelli-
`gence’s argument, we would disagree that a reasonable fact
`finder could conclude that Phytelligence and WSU agreed
`that the “separate contract” in Section 4 would contain the
`terms of the “Form License.” As noted earlier, WSU and
`Phytelligence communicated via email before the execution
`of the Propagation Agreement. WSU notified Phytelli-
`gence that it had “no idea how WA 38 would be licensed at
`this time,” and that “there can be no guarantees made to
`anyone at this point.” J.A. 631 (emphasis added). WSU
`also warned Phytelligence that WA 38 could be licensed to
`an exclusive licensee who may not want “outside assis-
`tance.” J.A. 247. In response, Phytelligence recognized
`that Section 4 contained a “wispy forward commitment.”
`Id. Phytelligence also recognized that there was “no harm”
`in signing the Propagation Agreement, despite this wispy
`forward commitment, because the Propagation Agreement
`“is a precursor to any other.” J.A. 249. Thus, according to
`Phytelligence, “[w]ith that context, the [Propagation] agree-
`ment is fine as it is.” Id. (emphasis added).
`On these undisputed material facts, no reasonable fact
`finder could conclude that at the time of execution, Phytelli-
`gence and WSU had agreed that the “separate contract”
`under Section 4 would contain the terms of the Form Li-
`cense. Rather, the email communications between the par-
`ties indisputably indicate that at the time the parties
`executed the Propagation Agreement, WSU did not commit
`to any definite terms of a future license with Phytelligence.
`Thus, Section 4 is an unenforceable agreement to agree,
`even considering the extrinsic evidence in a light most fa-
`vorable to Phytelligence. See Keystone, 94 P.3d at 948.
`B
`Phytelligence argues that, regardless of the above ref-
`erenced email communications, other sources of extrinsic
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`evidence create a material factual dispute concerning
`Phytelligence’s option under Section 4. We disagree.
`Phytelligence first argues that the declaration of Chris
`Leyerle, Phytelligence’s CEO, creates a material factual
`dispute. Mr. Leyerle’s declaration provides that:
`My understanding from [WSU personnel] was that
`there would be an internal process at WSU to de-
`cide whether and how to commercialize WA 38. If
`WSU decided to commercialize WA 38, the process
`would result in a set of standard terms and condi-
`tions pursuant to which industry participants
`could sell and distribute WA 38. [WSU] assured
`me that by entering into the Propagation Agree-
`ment, Phytelligence would have the option to ac-
`quire a license on the standard terms if and when
`such a license became available.
`J.A. 612 (emphasis added).
`Mr. Leyerle’s declaration, however, is insufficient to
`create a material factual dispute. Mr. Leyerle’s declaration
`speaks to his subjective “understanding” of his communi-
`cations with WSU, not to the parties’ mutual agreement
`that Section 4 provided Phytelligence with a “separate con-
`tract” based on the terms in the Form License. “It is well
`settled that a conclusory statement on the ultimate issue
`does not create a genuine issue of fact.” Applied Cos. v.
`United States, 144 F.3d 1470, 1475 (Fed. Cir. 1998) (inter-
`nal quotation marks omitted; emphasis in original) (hold-
`ing that an “affidavit alone” was insufficient to create a
`genuine issue of material fact in light of the documentary
`evidence showing otherwise); Nelson v. Pima Cmty. Col-
`lege, 83 F.3d 1075, 1081–82 (9th Cir. 1996) (“[M]ere allega-
`tion and speculation do not create a factual dispute for
`purposes of summary judgment.”).
`Mr. Leyerle’s deposition testimony, submitted to the
`district court below, confirms that the parties did not agree
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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
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`15
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`to any standard terms or method for determining the terms
`of the “separate contract” under Section 4. Mr. Leyerle tes-
`tified at his deposition that when he executed the Propaga-
`tion Agreement, he did so “with a lack of complete
`understanding of how the university intended to proceed or
`how they might actually proceed.” J.A. 231–32. He also
`testified that he was “hamstrung by not understanding or
`having insight into how the university was proceeding.”
`J.A. 231. Based on this evidence, no reasonable fact finder
`could conclude that parties understood that the “separate
`contract” in Section 4 would include the terms of the Form
`License.
`Phytelligence also argues that WSU’s “standard prac-
`tice” creates a genuine factual dispute. According to
`Phytelligence, WSU had previously undertaken a commer-
`cialization process with the WA 2 apple cultivar, which re-
`sulted in a set of standardized licensing terms. Thus,
`Phytelligence argues, WSU had a “customary practice” in
`place to establish standard license terms for industry par-
`ticipants and that the “licensing program WSU imple-
`mented with respect to WA 38 was consistent with its
`customary practice [of] licensing other plant cultivars.”
`Appellant’s Br. at 54–55. We reject this argument. Even
`assuming that WSU commercialized WA 38 based on this
`customary practice, Phytelligence fails to point to any evi-
`dence that the parties mutually agreed that Phytelligence
`would be entitled to any particular terms developed
`through this standardized process. Thus, no reasonable
`fact finder could conclude that, based on WSU’s alleged
`“standard practice,” the parties understood that the “sepa-
`rate contract” under Section 4 would contain terms con-
`sistent with the Form License. See Plumbing Shop, Inc. v.
`Pitts, 408 P.2d 382, 386 (Wash. 1965) (noting that by sup-
`plying all essential terms of an incomplete contract
`through “[b]usiness practice and custom,” a court “would
`violate the elementary principle that [it] will not make a
`contract for the parties”).
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`Case: 19-2216 Document: 65-2 Page: 16 Filed: 08/25/2020
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`16
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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
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`Lastly, Phytelligence argues that the parties’ conduct
`following the execution of the Propagation Agreement cre-
`ates a genuine factual dispute. We reject this argument.
`Post-execution, the evidence shows that the parties en-
`gaged in negotiations regarding Phytelligence’s future li-
`cense. Specifically, Phytelligence first discussed a future
`license with PVM, which required Phytelligence to become
`a member of NNII. Phytelligence rejected this offer.
`Phytelligence then communicated with WSU, noting it “be-
`lieve[d] that § 4 . . . requires WSU . . . to negotiate with
`Phytelligence, in good faith, and work out the terms and
`conditions of our option to propagate and sell WA-38.” J.A.
`165. (emphasis added). WSU subsequently offered to
`Phytelligence three different licensing options, two of
`which did not require Phytelligence to join NNII. However,
`Phytelligence rejected these options as well. Based on this
`evidence, no reasonable fact finder could conclude that, at
`the time of execution of the Propagation Agreement, the
`parties understood that there was “[n]othing . . . left for
`future negotiation” regarding the terms of Phytelligence’s
`“separate contract” under Section 4.
`To conclude, we recognize Phytelligence’s desire to ob-
`tain a license to commercialize WA 38. But an enforceable
`right to that license does not reside within Section 4 of the
`Propagation Agreement. Courts are not in the business of
`making contracts. Plumbing Shop, 408 P.2d at 385. Here,
`Section 4 did not provide Phytelligence with a “separate
`contract” that contained sufficiently definite terms to be
`enforceable. Additionally, based on the extrinsic evidence,
`no reasonable fact finder could conclude that Section 4’s
`“separate contract” would contain the terms in the Form
`License.
`To hold otherwise would unfairly trap WSU with a sur-
`prise contractual obligation to grant Phytelligence a Form
`License that excludes the requirement of joining NNII—a
`requirement applicable to all other propagators. See Key-
`stone, 94 P.2d at 949. Based on the face of Section 4, as
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`PHYTELLIGENCE, INC. v. WASH. STATE UNIV.
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`17
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`well as the extrinsic evidence, it is clear that Section 4 con-
`tained no such obligation.3
`CONCLUSION
`We have considered Phytelligence’s remaining argu-
`ments but find them unpersuasive. We affirm the district
`court’s grant of summary judgment in favor of WSU.
`AFFIRMED
`
`
`3 Phytelligence also argues that the district court vi-
`olated Federal Rule of Civil Procedure 56(f) to the extent
`that it stated that Phytelligence failed to show WSU’s
`breach. Because we agree that the contract is unenforcea-
`ble, we do not reach this question.
`
`