ExxonMobil Global Services Company et al v. Gensym Corporation et al

Filing 78

MEMORANDUM OPINION AND ORDER GRANTING 11 MOTION for Partial Summary Judgment. Signed by Judge John D. Rainey. (kkc)

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

§

EXXONMOBIL GLOBAL
§

SERVICES CO., EXXON MOBIL
§

CORP., and EXXONMOBIL
§

CO.,
RESEARCH &
§

Plaintiffs/Counter-Defendants,
§

§
v.
§
§

GENSYM CORP. & VERSATA

§

ENTERPRISES, INC.,

§
CASE NO. 1:12-CV-442-JDR
Defendants,
§
§

GENSYM CORP.,

§
Counter PlaintifflThird-Party Plaintiff
§
§
v.
§
§

INTELLIGENT LABORATORY

§

SOLUTIONS, INC.,

§
Third-Party Defendant
§
MEMORANDUM OPINION AND ORDER
Pending
Corporation,

"''''~Arn

and

Court is ExxonMobil Global

ExxonMobil

Research

and

"ExxonMobil") Motion for Partial

Company,

Engineering

Company's

J...d"LHJH

Mobil

(collectively

(Dke No. 11), to which Gensym

Corporation ("Gensym") and Versata Enterprises, Inc. ("Versata") (collectively "Gensym") have
responded CDke No. 20) and ExxonMobil has replied (Dkt. No.

).

I. Factual and Procedural Background
Gensym's G2 Software Platform is a technology tool on which computer software
applications can be designed. Over the course of
that is
Detection" and

-~'Jo-."-~

to run exclusively on the

years, ExxonMobil has built an alert
Software Platform called "Abnormal Event

Advisory" (AED/RTA). ExxonMobil currently uses the AED/RTA

1

at over thirty different refining and chemical plants that produce and store petroleum
products

alert system provides an

chemicals. According to ExxonMobil,

important line of defense to identify

advance advisories

deviations;

ExxonMobil personnel of potential process, equipment, and system failures; and recommend
corrective

before operational

can develop into more

In 2007, ExxonMobil and Gensym
agreement

Gensym's

problems.

into negotiations for a single license

Software Platform to replace previous ad hoc,

between

ExxonMobil

ExxonMobil and Gensym entered

Effective April 1, 2008,

a License

"define the terms and conditions for

the purpose of which was to

of products and

to future purchase orders. (The "License Agreement", Dkt. No. 11,
to

defines

t+t>Y'&>nt

for

I at

art. 1.) Exhibit C

as "[a]l1 products made commercially available by

Licensor to its customers including but not limited to:
sets forth two

by Gensym

licensing models under

XOM Development Bundle"
products may be acquired: (1) individual

ExxonMobil facility or (2) a single, corporate-wide, commercially-restricted

license. (License Agreement at 20, Ex. C.)
On or about April 11, 2008, ExxonMobil

l""......' .....'.u

and

Company (EMRE) I

submitted a purchase order under the second option for a "corporate wide perpetual license for
G2 XOM development bundle."
$960,000 for

Order," Dkt. No. 11,

G2 Software, which included

also known as "Customer Support Service" (CSS).

initial year of
Agreement at

ExxonMobil
Services,"
Ex. D.) After one

l. According to Gensym's response to ExxonMobil's motion, EMRE is the branch of ExxonMobil
responsible for distributing software, providing support, and performing development of new applications with
respect to the G2 Software Platform.

2

Maintenance Services were optional and could
(Jd. at 11 Ex.

purchased at ExxonMobil's discretion.

§ 6.6.)

Because the G2 Software Platform requires an access code in order to start, shortly after
the

Agreement was

Gensym and ExxonMobil discussed how to handle the

of access codes. At Gensym's request, the

decided that

provide ExxonMobii with temporary I8-month access
would distribute to ExxonMobil
access

12

Gensym would

("annual access codes") that

covered under

was to ensure that

The reason

Software Platform was not being used at

unauthorized locations.
From 2008 to

2011, things proceeded without incident.

the initial free

of

Maintenance Services, ExxonMobil twice agreed to optional annual Maintenance Services at
limitation provision in Exhibit D to the License Agreement. ExxonMobil

amounts set by a
paid $175,000

maintenance

in 2009 and slightly more than $175,000 in 2010.

in January 2011, just before ExxonMobil's annual maintenance subscription was set to expire,
scheduled a telephone call with ExxonMobil in order to gather feedback
Maintenance

At that time, ExxonMobil

Gensym

it was not satisfied with

the level of support it was receiving from Gensym and that it wanted to expand support to allow
employees to contact Gensym's help desk. This included adding
ExxonMobil's Baton

at

facility, which was covered under a separate $30,000/year

maintenance plan at that time. Gensym offered to provide that support, along with additional
upgrades under a new
for $258,500. Citing

maintenance program that Gensym was rolling out to its
$200,000

Exhibit D to

3

that it wanted to

ExxonMobil offered to pay $181,700, despite the
expand Maintenance Services beyond the
On March 3 1,

of the original License

11, as

U"'.HHA",

current contract for !V1aintenance
ExxonMobil

stalled, Exxon\1obil allowed its
On June 9, 2011, Gensym provided

to
that it was

30-days

Agreement pursuant to Article 2, Section 2.2

right to
the same.

ExxonMobil was no longer permitted to place new

the

the notice period expired,

under

License

ExxonMobil requested that Gensym reconsider its decision to terminate the

Agreement,

but Gensym refused.

Meanwhile,

of ExxonMobil's annual access

were set to

2011. Once that happened, ExxonMobil would no longer be
Platform. In anticipation

the annual access codes

made its first written demand for permanent access
contract for Maintenance
no longer
92:8-1

to use the

on

any access

As a result, on August 29,

Software

1, 2011, ExxonMobil

However, because ExxonMobil's

had expired, Gensym represented to ExxonMobil

providing ExxonMobil

Judicial

in October

(de Wit

Dkt. No. 21,

it would

7 at

11, ExxonMobil filed its Original Petition in 419th

County, Texas

breach

contract and declaratory relief

connection with the License Agreement, as well as injunctive relief requiring Gensym to provide
ExxonMobil with permanent access codes to use the G2
By letter dated September 8, 2011,

TTU'.,,..a

Platform.
it

with

[ExxonMobil's] stated position that it is entitled to use the G2 platform without payment of
maintenance

" (Dkt. No. 21,

injunction

on the

4 at 1.) At that time, and in order to avoid a temporary

Gensym provided ExxonMobil with a temporary 3-month access

4

that its "willinb'11ess to provide access codes under

However, Gensym made it
should not

(Id.)

at least a

months

code and stated that it would continue to do so

to use the

construed as

platform without payment

" (Id. at 2.)

maintenance

November

2011,

amended

fraudulent inducement and breach of

Petition,

both relating to the License Agreement.

amended its Petition on January 31, 201

ExxonMobil
Defendant

causes of action

making minor

and adding

parent company-under an alter ego theory.

On February

201

Gensym counterclaimed, seeking a declaration from the Texas

state court that ExxonMobil was in
breach,

the

material breach, or had failed to adequately cure a

Agreement. On May 17, 201

Counterclaim, alleging breach of contract, tortious

Gensym
with contract,

its Amended
copyright

against ExxonMobil. Gensym also brought claims against third party defendant
Intelligent Laboratory Solutions, Inc., alleging breach of contract and copyright infringement.
Based on

claims

Court on May 1

the federal

Act,

2. ExxonMobil now moves

contractual interpretation that it

removed the action to this

summary judgment concerning a number of

can

as a matter oflaw.

II. Legal Standards
A. Summary Judgment Standard
Summary
file, and

is proper

affidavits

movant is

Village, Ltd. v.

the discovery and disclosure materials on

the

that there is no genuine

to judgment as a matter
190

law." FED.

310,314 (5th Cir. 1999).

5

as to any material fact and that
CIV.

56( c); see also Christopher
matter on

the non­

movant would

the burden of

at trial ... , the movant may merely point to the absence

shift to
summary

non-movant

proof that there is an

Ins. Co. v. Avenell, 66 F.3d 715, 71
(1986). To

317,
setting forth

of material

a

fact. Rushing v. Kansas City

issue

1999).

When considering a motion for summary judgment,

iJu,rnut::t

F.3d 390, 392

Inc., 939 F.2d 1

bare

evidence, or

v'-'C"-1l1.UV.''''

at a verdict in that

judgment by

v. Holmes, 1

favor of the

to evaluate

inferences

favor, the court must deny the
1263 (5th

1

only
a complaint,

are met, a court

believes

course would

31

Nov. 22,

v.
of the

factual disputes; so long as the evidence in the record

jury drawing

asserted. Little v. Liquid Air Corp.,

85, *2

inferences
1998);

nonmoving
rnrH,,,.n "

). However,

Int 'I Shortstop,

must present

1069, 1
discretion to
to proceed to a
(quoting

(1986».

6

could arrive

v. Rally

non-movant cannot avoid summary

allegations" or "unsubstantiated

testimony in a aet)osltlcm or affidavit, to create a genuine

standards of

evidence in

173, 1

1995). "[T]he court may not

witnesses, weigh
is such that a

Court must view

to the non-movant and draw all

non-movant.

v. Catrett, 477

non-movant must "respond by

judgment,

nrpupn

496,505 (5th

the light most

"

warranting

19 (5th Cir. 1995); see also Celotex

that

S. Ry. Co., 1

of demonstrating by competent

evidence,
material

" such as
as sworn
as to the claim

Cir. 1994) (en banc). "Even if the
a motion for
trial.'" Freeman v.

v. Liberty Lobby,

judgment if it

u.s., 2005
u.s.

B. Contract Construction
Act, a party to a written contract may

Unifonn Declaratory

the

Dallas #1, LP v.

seek a judicial detennination of its contractual rights."

Underwriters

Co., 316 S.W.3d

837

App.-Dallas 2010) (citing

Crv. PRAC.

§ 37.004(a); Hartman v. Sirgo Operating, Inc., 863 S.W.2d 764, 767

&

Paso 1993, writ denied». "When a contract is unambiguous and
dispute, a court

summary

and

App.-Corpus

judgment

a

parties' rights under the contract." Id. (citing Barrand,
13

dispositive facts are not in

v. Whataburger,

the
, 214 S.W.3d

2006, pet. denied) (granting summary judgment and

rendering declaratory judgment

breach of unambiguous contract».

construction of an unambiguous contract is a question

Under Texas law,
court. MCI

Uti/so Elec.

v.

law for

S.W.2d 647, 650-51 (Tex. 1999).

The court's main focus in interpreting a contract is to detennine the mutual intentions of the
as expressed in

v. Coker, 650 S.W.2d 391,

written agreement.

The

intent must be taken from the contract

Wells

Bank, Minn.,

Dallas 2006,

denied).

consequences to

which must be enforced as
, 194 S.W.3d

(Tex.

court should provide a construction that affords some

part of the agreement, so that none of its provisions are rendered

Coker,

S.W.2d at 394. Unless

"in a technical or different
generally

v. N. Cent. Plaza 1,

(Tex. 1983).

meaning."

"
Dallas

contract shows that the parties

a tenn

court should give tenns their "plain, ordinary, and
316 S.W.3d at 837.

7

III. Analysis
that the

into

Here, there is no dispute that the

Purchase Order was submitted pursuant to the License Agreement. Both
that the

Court

IS

also agree

that it may

declaratory judgment regarding the Parties' rights and obligations under

a

License Agreement.

Dallas #1,316 S.W.3d at 837.
ExxonMobil's Motion for

Summary Judgment concerns

interpretation that can be decided as a matter

contractual

law. Specifically, ExxonMobil seeks a

declaration that, pursuant to the tenns of the License Agreement and the

(1) EMRE is the

Purchasing Order:

, (2) EMRE is a "User"; (3) Gensym is required to

pennanent access codes for EMRE; (4) Gensym is required to provide EMRE with
access codes; and (5) each of

distribute

ability to

four statements

true

of whether ExxonMobil and/or EMRE purchases Maintenance Services from
Gensym.

A. Whether EMRE is the "Licensee"

The first contract interpretation issue is

status as the Licensee.

tenn "Licensee" is defined in
venture that

an

to

as "any Affiliate or joint

as

" (License

III

5, Ex.

§ 17.) The relevant "Order" in this case is the G2 Purchase Order.

an

of

argues that

Purchase Order because the Order itself

as to who issued

on behalf of Purchaser" as the

"ExxonMobil Global Services Company
Procurement contact, and

at

",,.,,,tn,,,,,, more infonnation is

III

to detennine who

issued the Order. (See GS Purchase Order at 1.) However, as ExxonMobil points out, the G2

8

Purchase Order was printed on EMRE

was to be invoiced to

delivered to EMRE. (Id.) After receiving
the

to

and

a purchase order

the entities." (Dkt. No. 21, Ex. 2 at
The Court finds

Order to

failed to

G2

a genuine issue

Order.

CerlSe(~··

is the

purchase

on behalf of

18-23.)

Gensym

than EMRE

, Ex. 3 at

a temporary injunction hearing

... It issues

Option

that the product

(G2 Invoice, Dkt.

affirmed to the state court

lV>.n.......

entity

was billed to

would be

1.) Counsel
that . . .

Purchase Order, Gensym issued an invoice

Purchase Order,

to the

and was to be

material fact that any
issued the G2

as defined in the License

B. Whether EMRE is a "User"

second contract interpretation issue concerns EMRE's status as a "User."

"User" as

The

that

on a computer,

of
User."

Agreement at
or

the

nPT",,,n

is a stand-alone

or a network

"Use" means "to execute,

§

" (Id. §

person who is enabled to be in actual

employ,

further provides

The

are "[s Jubject to the qualifications contained on usage set forth in 3.3(d)" (Id. §

Users

which reads

as follows:
a User as
as
appropriate action to assure such
Use is in compliance with
terms and
conditions herein and such use is solely for the benefit of Licensee, Affiliates and
Joint ventures. Licensee shall report
advance and in
to Licensor any
proposed use by contractors at
Site
and
shall have the
to reject
use.

(Id. at

B, § 3.3(d).) Finally, the

"[ u Jnless otherwise

Grant contained

Section 3.1 provides that,

stated herein, upon acceptance of an Order and receipt of the

9

Licensor

a

to

as

worldwide, fee paid

set forth in Section 3.4(a»,

to

...." (Id. § 3.1.)
According to ExxonMobil, as the
Grant. Because

1""'''''''''. EMRE has a "license to Use the

L1V""-'-'

""11""'" to use the G2 Software Platform, EMRE

",,.,,-1"1'''-''' is a "User" under the License

In response, Gensym argues that

of "User"

greemem is "person."

means "an actual flesh

can only ever

critical

" not a corporate entity.
through its ,,,,.. ."''''..·<:lr'''

constructive use

~"'~H.U.

Agreement.

maintains that EMRE cannot be a
above, unless a contract

that the parties used a term

a

or

different sense," the Court should give terms their plain, ordinary, and generally accepted

Dallas #1,316 S.W.3d at

Dictionary defines

as well as "an entity (such as a

that is recognized by

and duties of a

most

LAW DICTIONARY (9th

original). The

Texas law

§ 12.1) and specifically

(Id. at 30,
other

as "an individual,

or commercial entity."

§ 1.201 (b)(27). Because

Agreement limits the definition

human beings but also

. _ . or any
In

to "an actual flesh and blood human

must construe
not

at

Uniform Commercial

F, § 3(b)). The TUCC

the

as

generally accepted legal
'V'~'1"\""<>

10

which

The

finds that, as

Licensee,

has a

Agreement. Because EMRE is licensed to use

not broaden

its use of the G2

beyond

limits

Platform must be

contained

G2 Software Platform,

In

compliance with

status

License

and

terms and conditions

B, § 3.3(d).)

Agreement at 8,

Whether
is required to provide
annual access codes
third and

is a

as Gensym correctly points out,

"User" under the License
as a "User"

under the

to Use the

with permanent and/or

contract

obligation to

concern

EMRE with permanent and/or annual access codes.
stated above, ExxonMobil,
Bundle,

is considered a "Product." The

include the media containing the
license

certainly includes a

XOM Development

Agreement provides that
WH,Uf<lrp

'-'IHTUf<lrp

dongles or other security

the software." (License

software."

EMRE, purchased the

(l""lll"~"

or

shall

components, including

that are leCI;)Ss:arv to

or access

at 6, Ex. A, § 24.) According to Gensym, "[t]his definition
working access code[,] as

No. 20 at 17.) The section

License

IS

all that is necessary to use the

OT"''''..... '''nt entitled

Generation"

with the ability to distribute annual license

further provides that "Gensym will provide

2. Specifically,
argues that EMRE is not allowed to use the G2 Software Platform outside of a
site-i.e., petroleum refinery or chemical
ExxonMobil
Maintenance
process
Services because ExxonMobil
a
restricted
wide
license for
deployment at L3 Process Control LAN." (License
at
Ex. D.) The L3 Process Control LAN is "a
local area network [that] supports applications which directly interact with process control DCS." (Jd. at 21.) Process
control applications in tum are part of the
control
" which automates refining and chemical
of the License
EMRE's rights were expanded to use the G2
plants. Under Gensym's
Software Platform outside of process operating sites "for the development and support of site
of
Ex. D.) Thus,
but only "as
as EMRE's CSS is current." (License Agreement at
from using the G2 Software Platform if it is not
for Maintenance
however,
EMRE is not
sites. Because ExxonMobil did not move for summary judgment on
EMRE must limit its use to process
this
the Court will not address it at this time.

11

for the

Development Bundle ....

codes will be generated by

,,",,n'''V1T1 "

Agreement at 20, Ex. C.)
Gensym appears to agree that it is

a

ExxonMobil

to

access code under

that its obligation to

access codes is moot.

of a

ExxonMobil has been

access code since before the

was even signed. Gensym

sent

new permanent access codes on May 7, 2012 and then again on June 13,
No. 20, Exs. 16 & 22.) Unless
nu,'<>r"_Tnr

2.

alters the way in which it is

example, by upgrading its

or changing the version of the
are necessary,

claims that no
a new, updated, or

it is
extent

generation of
argues that temporary,

to use, operate[,] or access

access

quoted above, since such

are not included in the definition

is

are not

if the user has a permanent code, which

claims ExxonMobil now has.
response to Gensym's claim that
access code since at
that his investigation
access

has been in possession of a

offers the testimony

2008,

had never provided a

r\plrpr1m

6 at 104:7-105:7.)

to ExxonMobil.
and Partnership Management also
ever provided a permanent access

to

that he was not aware that
(de Wit Dep., Id.,

7 at

:7.) ExxonMobil concedes that

ExxonMobil's Baton Rouge facility

with a permanent access code under a separate

agreement that predated the License

91: 1

12

Agreement at issue;

ExxonMobil states that

Baton

use the permanent code only at that facility. ExxonMobil

argues that

provided ExxonMobil pursuant to

this

not render

case moot

the decision to leave the

lawsuit was

111

access

Finally, ExxonMobil

sent it a new permanent

concedes that

permanent

Rouge facility is materially different from the

that was provided to the
codes

to

facility was

"nfU,.,·p'

Software

but argues

to Gensym's

ExxonMobil has

"due to GensymNersata's attempted

extortion and demonstrated unreliability." (Dkt. No. 21 at 10.) Because this will cost millions of
dollars

make some

its previous expenditures

it intends

states

to recover these costs.
finds

EMRE with whatever access codes

to

IS

to allow ExxonMobil to use the G2 Software Platform that it purchased pursuant to

are

Purchase
provide

with

arumal access codes

Agreement required
actually

To the extent Gensym
lieu of one

to do so on a yearly

lHU.ll"'Jl1'

in the

access code, the

indefinitely. Whether Gensym

ExxonMobil with a working permanent access code

filed remains an

fact for a

to

lawsuit was

to decide.

Gensym's Obligation

D. Whether EMRE's Status as a
and User,
are Conditioned on

to Provide Annual
Permanent Access
ExxonMobil Purchasing Maintenance Services from Gensym

fifth contract interpretation issue concerns whether EMRE's status as a
User, or whether Gensym's obligation to

EMRE

codes, are conditioned on ExxonMobil purchasing Maintenance

13

and

permanent and/or annual access

License Agreement
and repair

"Maintenance Services" as "the support, enhancement[,]

the Product as described

under a subscription for a
the

Exhibit C[,]

are

by Licensor to Ll(:en:see

Agreement at 5,

period."

Agreement provides that

§ 21.) Exhibit C to
to Maintenance

include:
• Providing corrections, patches, "bug fixes", troubleshooting[,] and
modifications to eliminate non-conformities
the Product to the
Specifications,
•
system support user and developer questions, [and]
• Providing Enhanced Product and
routine improvements, or new

of the
that
generally makes
to its

(Id. at 20,

C.) The . . . ,,-.''"''',''"' Agreement further provides that:

Scope. Licensor

to provide to Licensee all Maintenance
the
period
thereafter
that
submitted an Order for Maintenance
and paid the annual maintenance
Product
include one initial year
Maintenance Services, and annual
renewal
Maintenance Services I optional

***

Support Optional.
or discontinue Maintenance
at 11,

§§ 6.1,

Order

conditions

at its sole option and
from
at any

to

There is no provision in the License Agreement or
provision of

and/or

Purchase

's

access

paying for Maintenance Services. Likewise, there is no provision in the License Agreement or
Purchase

that nullifies EMRE's status as a

and/or

ExxonMobil is not

paying for Maintenance Services.
The

finds that EMRE's status as a Licensee and User
as well as Gensym's obligation to provide

to allow ExxonMobil to use the G2
License

greemem and

Purchase

L.<n . . "....,

ATr'IH'>,''''

with

the
access codes are

Platform it purchased pursuant to the

are not conditioned on ExxonMobil purchasing

14

optional Maintenance Services. However, Gensym is not required to provide EMRE with
upgraded codes, codes for new software versions, or replacement codes, unless ExxonMobil
purchases Maintenance Services from Gensym.

V. Conclusion
For the aforementioned reasons, ExxonMobil's Motion for Partial Summary Judgment
(Okt. No. 11) is GRANTED, and it is hereby DECLARED that, pursuant to the terms of the
License Agreement and the G2 Purchase Order:
(1) EMRE is the "Licensee";
(2) EMRE is a "User";
(3) Gensym is required to provide EMRE with whatever access codes are
necessary to allow ExxonMobil to use the G2 Software Platform; and

(4) Each of the previous three statements remains true regardless of whether
ExxonMobil purchases maintenance services from Gensym.
However, the above findings do not resolve the disputed issue of whether EMRE

IS

entitled to use the G2 Software Platform outside of a process operating site unless ExxonMobil
purchases Maintenance Services from Gensym. This issue was not the subject of ExxonMobil's
Motion for Partial Summary Judgment and therefore will not be decided at this time. Likewise,
the issue of whether Gensym actually provided ExxonMobil with a working permanent access
code before this lawsuit was filed remains an issue of fact for the jury.

It is so ORDERED.

SIGNED this 26th day of March, 2013.

15