[00:00:01] Speaker 06:
192216, Phytelegence versus Washington State University.

[00:00:07] Speaker 06:
Mr. Flynn, we're ready whenever you are.

[00:00:10] Speaker 02:
Thank you.

[00:00:10] Speaker 02:
Good morning, and may it please the court.

[00:00:13] Speaker 02:
The district court made two fundamental errors that require reversal.

[00:00:20] Speaker 02:
Number one, the court found that Phytelegence's option agreement was an unenforceable agreement to agree.

[00:00:28] Speaker 02:
because it, quote, required a future contract without detailing the terms of such a contract, close quote.

[00:00:36] Speaker 02:
That ruling is reconcilable with Washington state law, which recognizes that agreements with open terms are enforceable agreements.

[00:00:47] Speaker 02:
What distinguishes agreements with open terms is that there's a method for determining the open terms.

[00:00:53] Speaker 02:
Here, there was not only an agreed upon method for determining the open terms.

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That method was in fact followed by WSU to develop a uniform set of licensing terms for all industry participants.

[00:01:08] Speaker 02:
There was nothing left for negotiation.

[00:01:10] Speaker 02:
No further meeting in the mines was required.

[00:01:14] Speaker 02:
Phytelegence's option entitled it to those uniform licensing terms.

[00:01:22] Speaker 02:
Number two, the second fundamental error.

[00:01:25] Speaker 02:
The court ruled that there were no triable issues for the jury, because it refused to consider any of these strengths.

[00:01:33] Speaker 02:
Council, this is Judge Raina.

[00:01:35] Speaker 03:
I'd like to point your attention to section four of the propagation agreement.

[00:01:40] Speaker 03:
This is the option clause.

[00:01:43] Speaker 03:
And it says there, halfway through the provision, it says, propagator will need to sign a separate contract

[00:01:50] Speaker 03:
with WSURF.

[00:01:53] Speaker 03:
What are the terms of that separate contract?

[00:01:56] Speaker 02:
The terms of that separate contract are the uniform license terms Washington State developed and approved in connection with making the Apple available for licensing.

[00:02:11] Speaker 02:
That's exactly what the Washington State officials told Phytelligence during the negotiations of the contract.

[00:02:19] Speaker 02:
That's exactly what Washington State's existing custom and practice was at the time the contract was executed.

[00:02:28] Speaker 02:
That's exactly what Washington State did in the course of performing the contract.

[00:02:34] Speaker 02:
It's also, per Washington State University's 36th witness, it was Washington State.

[00:02:43] Speaker 03:
You seem to be describing

[00:02:46] Speaker 03:
perhaps aspirations of the party at some point in the future.

[00:02:50] Speaker 03:
But I don't see those as contractual terms.

[00:02:55] Speaker 03:
Show me where there's been an agreement on the contractual terms on this separate contract with USURF.

[00:03:06] Speaker 02:
In the Joint Appendix,

[00:03:11] Speaker 02:
at 610 through 659 is the declaration of Mr. Lairley, who negotiated the agreement on behalf of Phytelligence.

[00:03:21] Speaker 02:
At page 612, Mr. Lairley describes what Anton Fapp, WSU's senior-most official responsible for negotiating the agreement, told him after Mr. Lairley made clear

[00:03:39] Speaker 02:
that phytelligence would not enter the propagation agreement without assurance that it would be entitled to a license.

[00:03:48] Speaker 02:
Those statements are promises under Washington state law and under the restatement of contracts.

[00:03:59] Speaker 06:
Those promises... Yes, Your Honor.

[00:04:04] Speaker 06:
bothering me or unclear to me about how this case went down is this agreement was signed like in 2012, right?

[00:04:12] Speaker 06:
And in 2013, WSU says we want to go forward with commercialization.

[00:04:18] Speaker 06:
So they send out an announcement of opportunities and phyteligence gets it and everybody else gets it.

[00:04:24] Speaker 06:
There's nothing wrong with what they did.

[00:04:25] Speaker 06:
And others responded and phyteligence didn't.

[00:04:29] Speaker 06:
So they proceeded.

[00:04:31] Speaker 06:
is it seems to me they had every right to do to proceed and get this contract and get everything going.

[00:04:39] Speaker 06:
And then years later, phyteligence comes in and says, no, no, no.

[00:04:44] Speaker 06:
They want them to undo what they had done five years later.

[00:04:48] Speaker 06:
I mean, it was never clear to WSU that phyteligence would ever come back.

[00:04:54] Speaker 06:
I'm sure your position is that you were not required to come back.

[00:04:59] Speaker 06:
So how does it make sense in the world of contracts that four years pass, WSU is proceeding, as I think you would agree it has a right to do, and now it has to undo everything that's done because Vitelligence is coming in four years later?

[00:05:20] Speaker 02:
Your Honor, respectfully, I don't think that's quite what the factual record shows.

[00:05:27] Speaker 02:
And because this is a motion for summary judgment, these factual details are critical.

[00:05:35] Speaker 02:
When WSU issues its announcement of opportunity, the announcement of opportunity is seeking a manager of the commercialization process.

[00:05:46] Speaker 02:
And in that announcement, in the written announcement,

[00:05:50] Speaker 02:
At APPX?

[00:05:52] Speaker 06:
Well, let me just ask you about that.

[00:05:53] Speaker 06:
We can review the record, but isn't it true that the announcement comes out in 2013, they proceed, and that side diligence doesn't come in until four years later in 2017?

[00:06:06] Speaker 06:
No, that's not true.

[00:06:08] Speaker 06:
When did you first try to exercise your option that you alleged in the contract?

[00:06:16] Speaker 02:
We begin to try to exercise the option in 2014.

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And we do it continuously up until the point we file suit.

[00:06:25] Speaker 02:
When we first try to exercise the option, we are told by WSU that our technology, growing trees and tissue culture, is unproven and will have to go through four to five years of field trials.

[00:06:40] Speaker 02:
Now that's at odds with the contract.

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which hired us to propagate trees and tissue culture.

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It's also at odds with WSU's contractual arrangement with the people it favors, PVM and NNII.

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Both of those entities at all times have been permitted to grow trees and tissue culture.

[00:07:01] Speaker 02:
So it's a phytelligence-only position that's obviously inappropriate.

[00:07:07] Speaker 02:
And they maintain that position from about 2014 until 2017, where their position changes slightly.

[00:07:15] Speaker 02:
But if I may, may I return to your first question?

[00:07:19] Speaker 02:
The announcement of opportunity expressly contemplates that whoever responds and wins, that entity is going to have to offer license agreements

[00:07:31] Speaker 02:
to people WSU has already committed to offer the license agreements to, and that includes Phytelligence.

[00:07:38] Speaker 02:
And in fact, if we fast forward in the record, in 2017, when the winner of that announcement of opportunity, PDM, is communicating with Phytelligence.

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PDM writes and says, we have no knowledge of your contractual rights.

[00:07:55] Speaker 02:
And the WSU Vice President of Commercialization, Sita Papu, who's also their 36th witness, knows that that statement, that disavowal of knowledge, is a lie.

[00:08:07] Speaker 06:
Well, let me go back to what Judge Rainer was asking about, which is why is this sentence in the agreement, which is that you'll need to sign a separate contract to exercise this option?

[00:08:23] Speaker 06:
What meaning under your construction of this contract does that phrase have?

[00:08:29] Speaker 06:
It has to have some meaning, right?

[00:08:30] Speaker 02:
No, it absolutely has to have some meaning.

[00:08:33] Speaker 02:
And the meaning was explained to phytelligence and discussed in the negotiations of the contract and all of which were confirmed by WSU's 30B6 witness.

[00:08:44] Speaker 02:
What that language means is that if WSU made this apple available, and at the time, if it made any cultivar available,

[00:08:53] Speaker 02:
It engaged in a process in which it developed uniform license terms that it would make available to all the participants in its licensing program.

[00:09:06] Speaker 02:
It does not negotiate individual licenses on a bespoke or individual basis with licensees.

[00:09:12] Speaker 02:
It develops a uniform standard license, and that license is what's made available to participants.

[00:09:19] Speaker 02:
What this language says is in order to exercise the option, not to have the option, to exercise it, phytelligence is required to sign that agreement.

[00:09:34] Speaker 02:
Now, it's merely sign.

[00:09:35] Speaker 02:
It's not negotiate, discuss.

[00:09:38] Speaker 02:
Nothing's left for further negotiation because the party... Yeah, but the question is, well, you say that agreement and... The template, the form license developed and approved.

[00:09:50] Speaker 06:
Well, all the contract says about it, all the propagation clause in Section 4 says it will sign a separate contract.

[00:09:58] Speaker 06:
It doesn't have any specificity or details as to what needs to be in that separate contract, correct?

[00:10:04] Speaker 02:
That is correct.

[00:10:05] Speaker 02:
The text is correct.

[00:10:06] Speaker 02:
In Washington State, however, the construction of any written agreement, even under the most stringent circumstances, a fully integrated agreement that's deemed unambiguous,

[00:10:18] Speaker 02:
Even there, under Washington state law, extrinsic evidence is always admissible to determine what the parties meant by the terms they used.

[00:10:29] Speaker 02:
That's the Berg case.

[00:10:31] Speaker 02:
It was affirmed in the Hearst case and many other cases in Washington state.

[00:10:36] Speaker 02:
In this circumstance, that extrinsic evidence makes clear that the parties

[00:10:43] Speaker 02:
understood that separate contract would be the standard and uniform license developed by WSU and made available to all of the industry participants.

[00:10:53] Speaker 02:
And what's critical to remember is that's not simply what Washington State told phytelligence during the negotiations, although it very clearly is.

[00:11:04] Speaker 02:
That statement has also been confirmed.

[00:11:06] Speaker 02:
It's consistent with

[00:11:08] Speaker 02:
Washington State's existing custom and practice.

[00:11:11] Speaker 02:
What Mr. Fatlin told Mr. Learly was the truth.

[00:11:15] Speaker 02:
It is in fact how Washington State did business with respect to its licensing program.

[00:11:20] Speaker 02:
Secondly, it is also precisely what Washington State did going forward after the execution here.

[00:11:29] Speaker 02:
And this point in the factual record references the prior question.

[00:11:34] Speaker 02:
After the announcement of opportunity, after the responses to the opportunity came in, there's a Washington State University document that talks about its commercialization plan.

[00:11:46] Speaker 03:
It says... Why was that document then not referenced on the face of the contract?

[00:11:52] Speaker 03:
You're citing a lot of extrinsic evidence, but it seems to me you can't do that unless the terms of the contract are ambiguous.

[00:12:02] Speaker 03:
And in here, they're not.

[00:12:05] Speaker 03:
You seem to not see the difference between the case and PD systems than what we have here.

[00:12:13] Speaker 02:
Respectfully, Your Honor, what the Berg case holds, which is confirmed over and over again, including in the Hearst case, is that in Washington state, extrinsic evidence is admissible even if the language of the written contract is deemed unambiguous.

[00:12:30] Speaker 02:
It's always admissible.

[00:12:31] Speaker 02:
It must be considered.

[00:12:34] Speaker 02:
Once it must be considered, and that's if it relates at all to what the parties understood the terms to mean, then it creates a tribal issue for the jury.

[00:12:45] Speaker 02:
It is not true that in Washington state an unambiguous written contract is construed without extrinsic evidence.

[00:12:51] Speaker 02:
The opposite is true.

[00:12:52] Speaker 02:
Extrinsic evidence must be considered.

[00:13:01] Speaker 05:
Well, but the judge still has a gatekeeping rule, right?

[00:13:05] Speaker 02:
No, Your Honor.

[00:13:06] Speaker 05:
That gatekeeping rule on a summary judgment is cut in our favor.

[00:13:27] Speaker 02:
The evidence, the extrinsic evidence, which is all four things,

[00:13:31] Speaker 02:
the negotiations, the custom and practice, preceding execution, the course of performance after execution, and the admissions of WSU after execution.

[00:13:44] Speaker 02:
All of those must be accepted as true and construed in the light most favorable to phytologists.

[00:13:52] Speaker 02:
In Scott Galvanizing versus Northwest Environment Services, the Washington Supreme Court held

[00:14:00] Speaker 02:
Under Berg, interpretation of contract provisions is a question of law only when the interpretation does not depend on the use of extrinsic evidence, or only one reasonable inference can be drawn from the extrinsic evidence.

[00:14:15] Speaker 02:
No gatekeeping rule under Washington state law applies.

[00:14:19] Speaker 02:
It's a uniform mandatory you must consider.

[00:14:23] Speaker 02:
It's called the context rule, and it's very clear.

[00:14:29] Speaker 03:
But what about the statements from Washington State University?

[00:14:34] Speaker 03:
This is a J8247.

[00:14:36] Speaker 03:
It says that we have no idea how W838 would be licensed at this time.

[00:14:42] Speaker 03:
So that kind of, to me, goes to respond to historical licensing aspects.

[00:14:48] Speaker 03:
It goes on and says it could take any form under an open license release through a nursing group.

[00:14:54] Speaker 03:
It says, that decision has not yet been made, so there can be no guarantees made to anyone at this point.

[00:15:02] Speaker 03:
How can that statement support an open terms contract?

[00:15:08] Speaker 02:
Because the factual record makes clear that when that statement was made... You can finish answering the question.

[00:15:17] Speaker 02:
Thank you.

[00:15:17] Speaker 02:
When that statement was made, phyteligence responded by saying, we won't sign the agreement under those circumstances.

[00:15:24] Speaker 02:
that statement is inconsistent with and contrary to the text of the agreement, we won't enter.

[00:15:31] Speaker 02:
They then engaged in discussions with that person's boss, Anson Fatlin, the head of WSURF, who explained to Phytelegence that if WSU decided to commercialize the Apple, it would develop uniform terms made available to all participants.

[00:15:49] Speaker 02:
And at that point, Phytelegence would be entitled to a license based on those terms.

[00:15:53] Speaker 02:
And everything WSU did since that point, including the announcement of opportunity, was consistent with those statements.

[00:16:03] Speaker 02:
Phytologist is entitled to that license per the contract.

[00:16:07] Speaker 02:
And it was legal error, reversible error, to refuse to consider the evidence and to find the contract, an unenforceable agreement to agree.

[00:16:15] Speaker 06:
Can I just ask you a follow-up to that?

[00:16:17] Speaker 06:
Because if licensing is so standardized and so well understood, why was there a bid process

[00:16:23] Speaker 06:
soliciting proposals for plan to manage commercialization.

[00:16:31] Speaker 02:
That process goes to marketing, development, effort on a business level, efforts to maximize profits with respect to the lease of the license.

[00:16:41] Speaker 02:
The terms by which licensees sell the Apple are uniform, and they are developed and approved by WSU in advance

[00:16:51] Speaker 02:
and made available to all participants on a standard basis.

[00:16:55] Speaker 02:
And so WSU's form option, the use of those languages, the option to participate, hereby granted, those are all consistent with that existing custom and practice and were all confirmed by the subsequent course of conduct.

[00:17:11] Speaker 02:
As their 30B6 witness admitted repeatedly and drafted a letter instructing their agents to comply.

[00:17:20] Speaker 06:
Okay.

[00:17:21] Speaker 06:
Guarantee rebuttal, so why don't we hear from the other side and we'll reserve the remainder of your time.

[00:17:26] Speaker 06:
Thank you.

[00:17:31] Speaker 06:
Thank you.

[00:17:31] Speaker 06:
Mr. Dunwoody?

[00:17:32] Speaker 01:
Yes, thank you, Your Honor.

[00:17:34] Speaker 01:
May it please the Court, my name is Stuart Dunwoody.

[00:17:36] Speaker 01:
I represent Washington State University.

[00:17:39] Speaker 01:
I would like to make three points today.

[00:17:42] Speaker 01:
First, that the District Court properly excluded phyteligens as extrinsic evidence.

[00:17:48] Speaker 01:
Second, even if that extrinsic evidence had been admitted, it wouldn't have saved the propagation agreement from being an unenforceable agreement to agree.

[00:17:57] Speaker 01:
And third, this court... Well, let me ask you about that.

[00:18:00] Speaker 06:
Yes.

[00:18:01] Speaker 06:
Let me ask.

[00:18:02] Speaker 06:
Second, fourth, though, propagators hereby granted an option to participate with the provider and or seller.

[00:18:09] Speaker 06:
Why would Washington State grant an option that it thought was an unenforceable

[00:18:18] Speaker 01:
Your Honor, I don't have an explanation for that.

[00:18:27] Speaker 01:
It is quite true that Washington State University did make clear to Phytelligence when liarly asked, what does this agreement do?

[00:18:39] Speaker 01:
It sent back the email that Judge Raina read from saying there can be no guarantees.

[00:18:46] Speaker 01:
We don't know how this will be.

[00:18:48] Speaker 01:
commercialized.

[00:18:50] Speaker 06:
And of course... But I'm just looking at the language of the contract.

[00:18:55] Speaker 06:
The language of Section 4, which it says, propagator is hereby granted an option to participate as a provider and or seller.

[00:19:01] Speaker 01:
Yes, that's correct.

[00:19:01] Speaker 01:
And it also goes on to say that they have to sign a separate contract.

[00:19:05] Speaker 01:
And so it basically is an agreement to agree.

[00:19:10] Speaker 01:
It's a statement that an option agreement will need to be negotiated.

[00:19:18] Speaker 06:
So you think it's true as, yes, they granted the option.

[00:19:22] Speaker 06:
That's what they say.

[00:19:24] Speaker 06:
But that whatever the option that was granted is not an enforceable option.

[00:19:29] Speaker 01:
That is correct.

[00:19:30] Speaker 01:
That it's something that the parties would need to negotiate on and reach agreement on.

[00:19:36] Speaker 01:
And it's not something that can be enforced.

[00:19:40] Speaker 01:
And that it didn't create a guarantee, just as Mr. Lyerley was told by Kelly.

[00:19:48] Speaker 01:
So with respect to the extrinsic evidence, Mr. Flynn spoke repeatedly about the context rule in the Byrd case, but he is going far beyond the Byrd rule.

[00:20:05] Speaker 01:
The Washington Supreme Court clarified that more recently in Hearst versus Seattle Times to say that the context rule is narrow.

[00:20:13] Speaker 01:
the rule allows extrinsic evidence only to determine the meaning of specific words and terms used in an agreement.

[00:20:21] Speaker 01:
For example, in Berg, the issue was what did the term gross rentals mean in a lease agreement?

[00:20:27] Speaker 01:
And Berg Court allowed extrinsic evidence to interpret that term.

[00:20:32] Speaker 01:
Here, by contrast, phytelligence doesn't offer extrinsic evidence for that limited purpose.

[00:20:38] Speaker 01:
It doesn't offer that extrinsic evidence sheds light on the meaning of

[00:20:42] Speaker 01:
some specific word or term in the propagation agreement, such as that it shows that the word separate contract means, oh, a license agreement having all these different provisions.

[00:20:55] Speaker 01:
So the context rule doesn't help them.

[00:20:57] Speaker 01:
Now, the other way that reason why the court was correct to exclude extrinsic evidence is because it's inconsistent with the written terms.

[00:21:12] Speaker 01:
The written terms of the propagation agreement impose no requirements on WSU at all regarding the provisions of this required separate contract.

[00:21:21] Speaker 01:
The WSU has complete freedom to bargain for any provision it wants in the separate contract.

[00:21:28] Speaker 01:
And to come up with those provisions any way it wants to, the extrinsic evidence that phytelligence is offering is inconsistent because it would substantially limit that freedom.

[00:21:38] Speaker 01:
It would require WSU to follow a specific process to come up with provisions and then offer the provisions that result from that process to Phyteligence.

[00:21:48] Speaker 01:
And this inconsistency and conflict is clearly stated in Lyreley's declaration.

[00:21:55] Speaker 01:
He said that the draft written agreement didn't provide Phyteligence an enforceable right to a license.

[00:22:03] Speaker 01:
He recognized that.

[00:22:05] Speaker 01:
And he said that the oral assurances he received did give phytelligence the right to a license.

[00:22:10] Speaker 01:
So that's the inconsistency.

[00:22:13] Speaker 01:
Liarly said that before signing the propagation agreement, he asked Kelly about the option provision.

[00:22:19] Speaker 01:
He said Kelly's response told him that even if WSU decided to commercialize Law 38, the proposed agreement would not provide phytelligence with an enforceable right to a license.

[00:22:30] Speaker 01:
That's Appendix 611, paragraph 7.

[00:22:33] Speaker 01:
Liarly said that response was unacceptable.

[00:22:36] Speaker 01:
Phytelegence wasn't willing to invest in Law 38 without a contractual right to a license to sell and distribute adult Law 38 if the license became available.

[00:22:48] Speaker 01:
That's Appendix 612, paragraph 8.

[00:22:52] Speaker 01:
Liarly said he communicated to Kelly and Fatland that Phytelegence wouldn't enter into an agreement to propagate without assurance that it would be offered a license.

[00:23:02] Speaker 01:
and that Kelly and Fatland assured him that by entering into the propagation agreement, Phytelegence would have the option to acquire a license.

[00:23:13] Speaker 01:
And so the conclusion was that Liarly said with the assurance that Phytelegence would have the right to a license to commercialize WA38 if one became available, Phytelegence entered into the propagation agreement.

[00:23:26] Speaker 01:
So he's saying these oral assurances were inconsistent with

[00:23:30] Speaker 01:
what the written agreement had offered and what was not acceptable.

[00:23:37] Speaker 01:
And that conflict is also confirmed by Citelligence's reaction to how WSU ultimately commercialized WAA38.

[00:23:45] Speaker 01:
WSU commercialized it by giving an exclusive license to PVM and requiring PVM to exclusively sub-license propagation to NNII, whose member nurseries would do the propagation.

[00:23:57] Speaker 01:
That is the sort of licensing arrangement that Kelly told Liarly the draft agreement would allow.

[00:24:03] Speaker 01:
That is, quote, an exclusive license with a company, group of individuals, co-op, et cetera, close quote.

[00:24:10] Speaker 01:
That's Appendix 631.

[00:24:12] Speaker 01:
Now Phyteligent says that these alleged oral assurances Liarly received preclude WSU from proceeding with that commercialization structure, even though Kelly told Liarly the draft written agreement would allow it.

[00:24:27] Speaker 01:
So what the situation here is just like the one in Enrich versus Connell.

[00:24:33] Speaker 01:
That's the Washington Supreme Court case involving a lease that the court found was partially integrated.

[00:24:40] Speaker 01:
The written terms of that lease allowed cancellation on 120 days notice.

[00:24:45] Speaker 01:
The trial court found that there was an oral agreement that the lesser could not cancel until the property was ready to be developed.

[00:24:53] Speaker 01:
the Supreme Court held the oral agreement would substantially limit and therefore was inconsistent with the right of cancellation under the written terms of the lease and held the extrinsic evidence inadmissible.

[00:25:06] Speaker 01:
And that exact same analysis applies here.

[00:25:11] Speaker 01:
The other point I wanted to make is that even if the extrinsic evidence is admitted, it wouldn't save the propagation agreement from being an unenforceable

[00:25:19] Speaker 01:
agreement to agree, because it doesn't fill in the blanks of that separate contract.

[00:25:25] Speaker 01:
And the extrinsic evidence, again, you need to go back to Liarly's statement in his declaration, and he makes two points there.

[00:25:34] Speaker 01:
And I'd like to note that Mr. Flynn is incorrect when he says that Kelly says what Anson Fatlin told him.

[00:25:43] Speaker 01:
It's not true.

[00:25:44] Speaker 01:
He doesn't actually quote any statements by

[00:25:47] Speaker 01:
by Fatland, he just says that he got an understanding and he said he received assurances, but he doesn't say what exact words Fatland supposedly used.

[00:25:58] Speaker 01:
So the first part of that extrinsic evidence is Liarly's statement that he had an understanding from Kelly and Fatland and unspecified that there would be an internal process at WSU to decide how to commercialize and to develop the set of standard terms.

[00:26:14] Speaker 01:
But Liarly didn't explain, didn't describe any statements or conducts by Kelly, Fatland, or others that gave him that understanding.

[00:26:23] Speaker 01:
So all he's attesting to is a subjective understanding on his part, and that understanding doesn't show an agreement by WSU.

[00:26:33] Speaker 01:
And then another part of the extrinsic evidence is Liarly's statement that Kelly and Fatland assured him that phytelligence would have an option to acquire a license on standard terms.

[00:26:43] Speaker 01:
But again, Lirely didn't quote any alleged statements by Kelly or Fatland that provided that assurance.

[00:26:51] Speaker 01:
So there's no showing that whatever they said rose to the level of an enforceable promise and not just an unenforceable statement of future intent.

[00:27:03] Speaker 01:
The third point that I'd like to make is that phytelegens admissions

[00:27:09] Speaker 01:
shows that there's no breach of the alleged oral assurances to liarly.

[00:27:14] Speaker 01:
So even if this extrinsic evidence were allowed in, the judgment below can be affirmed on the alternate ground of no breach.

[00:27:25] Speaker 01:
Phyteligent says in its brief that WSU performed according to the alleged oral assurances and developed standard terms.

[00:27:33] Speaker 01:
It says that page three of its opening brief and

[00:27:37] Speaker 01:
pages 39 and 26 of its reply.

[00:27:41] Speaker 01:
Phytelegens also admits the standard licensing terms are in the record at appendix 504 through 523.

[00:27:47] Speaker 01:
Phytelegens doesn't dispute that WSU and PVM offered Phytelegens a license on those standard licensing terms in September 2017.

[00:27:59] Speaker 01:
That offer is at appendix 169 through 198

[00:28:04] Speaker 01:
the terms themselves are within that range and they're identical to appendix 504.523.

[00:28:12] Speaker 01:
So there's no factual dispute that WCU complied with the oral assurances that Phytelegence alleges.

[00:28:19] Speaker 01:
Now Phytelegence also doesn't dispute that it rejected those standard terms and presumably it did that because they expressly require that the licensee be an NNII member nursery in good standing.

[00:28:32] Speaker 01:
That's appendix 506.

[00:28:35] Speaker 01:
But the oral assurances that Lierly alleges wouldn't prohibit WSU and PVM from making membership in NNII a requirement for a commercial license.

[00:28:46] Speaker 01:
And Lierly didn't say that the alleged oral assurance was that WSU would develop standard license terms that were acceptable not only to WSU, but to phytelligence as well.

[00:28:57] Speaker 01:
If he had said that, that assurance itself would be an agreement to agree, an agreement that the parties would agree on terms

[00:29:05] Speaker 01:
acceptable to both of them in the future.

[00:29:08] Speaker 01:
And Phytelegence's claim that it couldn't have joined NNII is pure speculation because Phytelegence admits it never applied to join NNII.

[00:29:19] Speaker 01:
That's Appendix 82.

[00:29:21] Speaker 01:
And that's even though Phytelegence had been encouraged to contact NNII at least as early as June 2016.

[00:29:28] Speaker 01:
That's Appendix 158.

[00:29:31] Speaker 01:
So if the court does find a fact issue, it can affirm the summary judgment on the ground of no breach.

[00:29:38] Speaker 06:
All right.

[00:29:39] Speaker 06:
Any other further questions from the panel?

[00:29:42] Speaker 04:
No.

[00:29:43] Speaker 06:
Thank you.

[00:29:45] Speaker 06:
Thank you.

[00:29:47] Speaker 04:
Chief Judge, first apology.

[00:29:49] Speaker 04:
This is Michael Lichtenberg.

[00:29:50] Speaker 04:
Mr. Flynn exceeded his total time by over two minutes.

[00:29:54] Speaker 04:
Did you want me to restore any amount of that?

[00:29:58] Speaker 06:
Yes, why don't you give him the full five minutes if he needs it.

[00:30:02] Speaker 04:
Okay, thank you.

[00:30:03] Speaker 06:
Thank you.

[00:30:07] Speaker 02:
Please proceed, Mr. Flynn.

[00:30:10] Speaker 02:
First, even in the Hearst case, which Washington State University contends limited Berg, the court stated in Berg, quote, we adopted the context rule and recognized that intent of the contracting parties

[00:30:26] Speaker 02:
cannot be interpreted without examining the context surrounding the instrument's execution.

[00:30:33] Speaker 02:
The extrinsic evidence goes to specific provisions of the written agreement.

[00:30:40] Speaker 02:
Namely, the commitment to hereby grant an option to participate as a provider or seller of WA38.

[00:30:53] Speaker 02:
subject to WSU releasing it and it becoming, quote, available for licensing by WSU-RF.

[00:31:01] Speaker 02:
So what it means to grant in the moment, to hereby grant an option to participate in commercialization if the Apple becomes available for licensing is text the extrinsic evidence goes to prove.

[00:31:16] Speaker 02:
The second text, the propagator will need to sign a separate contract to exercise the option.

[00:31:22] Speaker 02:
What that separate contract is that text is subject to proof based on extrinsic evidence and was expressly discussed in the negotiation of the agreement.

[00:31:32] Speaker 02:
The argument that by intelligence position is inconsistent with the writing, because the writing supposedly gives WSU unfettered discretion or complete freedom to enter licensing arrangements.

[00:31:46] Speaker 02:
It's simply wrong, it doesn't.

[00:31:48] Speaker 02:
When I make a contractual commitment to give another party an option to participate in my licensing program, I have restrained my freedom.

[00:31:57] Speaker 02:
I am not free to disregard that language, treat it as if it doesn't exist, later assure everyone it meant nothing.

[00:32:06] Speaker 02:
and do something else.

[00:32:07] Speaker 02:
That argument is what's inconsistent with the writing.

[00:32:11] Speaker 02:
And to go to the email that we discussed where WSU officials, intermediate officials suggest the writing means nothing.

[00:32:22] Speaker 02:
Number one, again, that position contradicts the writing.

[00:32:25] Speaker 02:
And number two, the evidence is clear and must be accepted as true that phytelegence responded by saying,

[00:32:32] Speaker 02:
If that can't be true, we are not entering this agreement based on that understanding.

[00:32:37] Speaker 02:
And in response, at Paragraph 12, at Appendix 612, it is clear, Kelly and Anson assured me that by entering the propagation agreement, Phytelegence would have the option to acquire a license on the standard terms if and when such a license becomes available, close quote.

[00:32:57] Speaker 02:
That's not a subjective, undisclosed statement of intent.

[00:33:02] Speaker 02:
That's what was told by intelligence in the negotiations.

[00:33:06] Speaker 02:
And the critical point here is that that's not the end of the story.

[00:33:09] Speaker 02:
That representation, per their own 30B6 witness, was true.

[00:33:14] Speaker 02:
That did describe how they operated at the time.

[00:33:18] Speaker 02:
And it's how they operated subsequently.

[00:33:21] Speaker 02:
The 30B6 witness herself drafted a letter instructing PDM, WSU's agent, to offer us a license on the same terms the other licensees were operating under.

[00:33:35] Speaker 02:
Now, to get to breach very briefly with the limited time, breach wasn't a subject of their motion.

[00:33:40] Speaker 02:
It was not properly in the record.

[00:33:41] Speaker 02:
They raised it on the last two pages of their reply brief in support of their summary judgment motion.

[00:33:47] Speaker 02:
The idea of breach is antithetical to their argument.

[00:33:50] Speaker 02:
You can't say simultaneously, I don't know what this agreement means.

[00:33:55] Speaker 02:
It's too uncertain to be enforced, notwithstanding a clear intent to grant you an option.

[00:34:00] Speaker 02:
But on the other hand, we complied with it.

[00:34:04] Speaker 02:
If they complied with it, it would by definition be certain enough to be enforced, particularly given the principles that require the court to search for an enforceable agreement when the intent to grant an option is manifest.

[00:34:16] Speaker 02:
Lastly, the idea that we, the breach, we'll strike that, the idea that they've complied because the offer was conditioned on membership in NNII.

[00:34:28] Speaker 02:
Membership in NNII isn't the issue.

[00:34:31] Speaker 02:
At the time, NNII working in concert with WSU had imposed a moratorium on any new members.

[00:34:40] Speaker 02:
The offer required phytelegence to apply for and be accepted by NNII at a time when NNII simply wouldn't accept them.

[00:34:49] Speaker 02:
So it was a sham.

[00:34:50] Speaker 02:
Had it been in the record, had a motion been made, there are myriad tribal issues.

[00:34:56] Speaker 02:
Our option was obliterated by that requirement.

[00:34:59] Speaker 02:
There was a moratorium in place preventing us from joining.

[00:35:03] Speaker 02:
Now, the contract we're entitled to is that contract.

[00:35:07] Speaker 02:
It's in the record.

[00:35:08] Speaker 02:
It could not be clearer.

[00:35:10] Speaker 02:
that appendix 179 to 193, we would be happy to be members of NNII if NNII and WSU would permit it.

[00:35:22] Speaker 02:
And WSU knew, as they admitted in deposition, that they were obliged to facilitate our membership, and they simply didn't do it.

[00:35:29] Speaker 00:
All right.

[00:35:30] Speaker 06:
Your time is up, sir.

[00:35:32] Speaker 06:
We thank both parties, and the case is submitted.

[00:35:35] Speaker 06:
That concludes our proceedings for this morning.

[00:35:37] Speaker 06:
Thank you.

[00:35:40] Speaker 04:
The honorable court is adjourned until tomorrow morning at 10 a.m.