Phytelligence, Inc. v. Washington State University

• Court: Court of Appeals for the Federal Circuit
• Decided: August 27, 2020
• Docket: 19-2216
• Status: Published

Opinion

Case: 19-2216 Document: 65-2 Page: 1 Filed: 08/25/2020

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. Case: 19-2216 Document: 65-2 Page: 2 Filed: 08/25/2020

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 Case: 19-2216 Document: 65-2 Page: 3 Filed: 08/25/2020

PHYTELLIGENCE, INC. v. WASH. STATE UNIV. 3

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 Case: 19-2216 Document: 65-2 Page: 4 Filed: 08/25/2020

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 Case: 19-2216 Document: 65-2 Page: 5 Filed: 08/25/2020

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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. Case: 19-2216 Document: 65-2 Page: 6 Filed: 08/25/2020

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. Case: 19-2216 Document: 65-2 Page: 7 Filed: 08/25/2020

PHYTELLIGENCE, INC. v. WASH. STATE UNIV. 7

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). Case: 19-2216 Document: 65-2 Page: 8 Filed: 08/25/2020

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 Case: 19-2216 Document: 65-2 Page: 9 Filed: 08/25/2020

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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 Case: 19-2216 Document: 65-2 Page: 10 Filed: 08/25/2020

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 Case: 19-2216 Document: 65-2 Page: 11 Filed: 08/25/2020

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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. Case: 19-2216 Document: 65-2 Page: 12 Filed: 08/25/2020

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 Case: 19-2216 Document: 65-2 Page: 13 Filed: 08/25/2020

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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 Case: 19-2216 Document: 65-2 Page: 14 Filed: 08/25/2020

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 Case: 19-2216 Document: 65-2 Page: 15 Filed: 08/25/2020

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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”). Case: 19-2216 Document: 65-2 Page: 16 Filed: 08/25/2020

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 Case: 19-2216 Document: 65-2 Page: 17 Filed: 08/25/2020

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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.