Full opinion text
FINDINGS OF FACT AND CONCLUSIONS OF LAW FOLLOWING NON-JURY TRIAL ALAN S. GOLD, District Judge. THIS CAUSE is before the Court in the above-captioned matter, which came on for a ten-day, non jury trial beginning April 5, 2011 and concluding April 20, 2011. See [ECF Nos. 320-326, 328-330]. A total of twelve witnesses were sworn and testified, and the testimony of two witnesses was introduced by deposition. Counsel presented opening statements and closing arguments with respect to the first two phases of the trial, as described more fully infra. Pursuant to a Pretrial Conference held on March 10, 2011, this matter was intended to be tried in three phases: Phase I — Liability, Phase II — Technical/Patent, and Phase III — Damages. See [ECF No. 315]. Upon the conclusion of Phases I and II, I determined that Phase III was unnecessary because based on the evidence presented during Phases I and II, no party was entitled to any damages in this action. [ECF No. 330]. On April 20, 2011, upon the conclusion of the bench trial, I entered a Preliminary Order to provide definitive rulings on disputed matters as addressed by the parties’ operative pleadings. [ECF No. 330]. Entry of the Preliminary Order enabled the parties to proceed with the right of first negotiation pursuant to Article 3.8 of the License Agreement, with the instant detailed Findings of Fact and Conclusions of Law to follow. Id. On August 12, 2011, the mediator filed a report indicating that the parties reached an impasse. [ECF No. 347]. Based on the fact that the parties did not reach a resolution following the mediation — the purpose of which was for the parties to engage in the right of first negotiation — I now enter the instant Findings of Fact and Conclusions of Law pursuant to Fed.R.Civ.P. 52(a). I. FINDINGS OF FACT A. Introduction 1. This case is before the Court upon Plaintiffs’ Third Amended Complaint [ECF No. 286] and Rad Source’s counterclaim for declaratory judgment, or reformation of contract in the alternative [ECF No. 290]. This case centers upon a written agreement (the “License Agreement”) to license patents and technology for devices that irradiate blood. [ECF No. 286-1]. 2. Blood irradiation is the process of eliminating pathogens and other microbes in blood to, inter alia, reduce the risk of Graft Versus Host Disease (a common complication of bone marrow transplants) for the purposes of transfusion. 4/5/11 Tr. at 65:6-9. 3. In the License Agreement, Defendant Rad Source Technologies, Inc. (“Defendant” or “Rad Source”) licensed rights to MDS Nordion, a division of Plaintiff MDS (Canada) Inc. (“MDS” or “Nordion”) to, inter alia, manufacture and sell a blood irradiator system known as the RS 3000. 4. Essentially, what is at stake in this case is the parties’ rights to develop, market, and sell certain blood irradiation devices including the RS 3000 and RS 3400. 5. Since the crux of this case lies in the interpretation of the parties’ License Agreement entered into on August 20, 2003 [ECF No. 286-1], a significant portion of the instant Findings of Fact and Conclusions of Law analyzes various provisions of the License Agreement referred to as “Articles” or “Sections.” See generally infra §§ II.F-N. 6. In particular, interpretation of the following three Articles of the License Agreement — and their relation to each other — is at issue: (1) 3.1 — Grant of License (2) 5.3 — non-compete provision (3) 3.8 — right of first negotiation 7. To provide a useful overview of this case, I begin with key documents and relevant witnesses. The critical written agreements in this case are: (1) August 20, 2003 License Agreement (“License Agreement”) between Nordion and Rad Source (2) 2008 Sublicense Agreement (“Sublicense Agreement”) between Nordion and Best (3) May 2008 Asset Purchase Agreement (“Asset Purchase Agreement”) between Nordion and Best Relevant witnesses in this case are: (1) Neil Gotfrit — Nordion Associate General Counsel (2) Randol Kirk — Rad Source Chief Executive Officer (3) Carolin Vandenberg — Nordion Former Director of Marketing (4) Shawn Weingast — Best Medical General Counsel (5) Phil Larabie — Nordion Vice President and Business Development Officer (6) Paul Moses — Best Theratronics Director of Global Sales, Service and Marketing (7) Will Hartman — Rad Source Chief Financial Officer and Executive Vice President, (8) Gord Ashfield — Nordion Former Vice President The following expert witnesses testified on behalf of the parties: (1) Dr. Jon Roberts — Plaintiffs (patents) (2) Stephen Szeglin, MS — Plaintiffs (physicist) (3) David Mullís — Defendant (FDA 510(k) process) (4) Dr. Roberto Uribe — Defendant (patents) 8. In addition to the License Agreement, this case involves Rad Source’s development of an x-ray blood irradiator known as the RS 3400. Accordingly, a significant portion of the instant Findings of Fact and Conclusions of Law discusses whether the RS 3400 “embodies in whole or in part the Patents” in the License Agreement. Plaintiffs’ position is that because the RS 3400 embodies the Patents, Plaintiffs hold the exclusive right and license to, inter alia, manufacture and sell the RS 3400. Conversely, Rad Source argues that the RS 3400 does not embody the Patents and therefore Rad Source can continue to develop and market the RS 3400. 9. A third critical subject matter in this case is the effect of a Sublicense Agreement between Plaintiffs MDS (Canada), Inc., Best Theratronics, Ltd., and Best Medical International, Ine.’s (collectively “Plaintiffs”) on all parties’ rights and obligations under the License Agreement. 10. Finally, a technical/patent analysis of the RS 3400 and the Patents at issue in the License Agreement comprises the last aspect of this case. B. Procedural history 1. Preliminary injunction 11. On October 15, 2009, Plaintiffs brought this action and simultaneously filed an Emergency Motion seeking a temporary restraining order and preliminary injunction (“Emergency Motion”). [ECF No. 2]. The basis for Plaintiffs’ Emergency Motion was because Rad Source intended to promote and market the RS 3400 at the American Association of Blood Banks (“AABB”) Annual Meeting on October 24, 2009 which — according to Plaintiffs — violated the non-compete provision (Article 5.3) in the License Agreement. [ECF No. 2, p. 2]; see also id. at ¶ 7. 12. On October 21, 2009, I held an evidentiary hearing on Plaintiffs’ Emergency Motion where the parties had the opportunity to present arguments and examine witnesses. See [ECF No. 36]. On October 22, 2009, I issued an Interim Order, ordering Rad Source “to immediately refrain from exhibiting, distributing, promoting, marketing, selling, or leasing— whether directly or indirectly — the RS 3400 blood irradiation device or a substantial equivalent” until a subsequent evidentiary hearing and subject to the terms of a Final Order to be issued following the subsequent evidentiary hearing. [ECF No. 37]. 13. On October 24, 2009, I held a subsequent hearing on Plaintiffs’ Emergency Motion. See [ECF No. 39]. On October 27, 2009, I issued a Preliminary Order on Plaintiffs’ Emergency Motion for Preliminary Injunction Setting Forth Findings of Fact and Conclusions of Law (“October 27, 2009 Order”). [ECF No. 40]. By this order, I granted Plaintiffs’ Emergency Motion, concluding that entry of a preliminary injunction was appropriate upon making various findings of fact and conclusions of law for the limited purpose of deciding Plaintiffs’ Emergency Motion. [ECF No. 40]. This order also preliminarily enjoined Rad Source from “directly or indirectly exhibiting, promoting, marketing, selling or leasing the RS 3400 or any other blood or blood product irradiation device or technology” pending a further order following a hearing on the injunction’s scope and bond. [ECF No. 40, p. 18]. 14. On October 29, 2009, I held a hearing on the scope of the injunction and issuance of bond. See [ECF No. 44]. On November 4, 2009, I issued a Supplemental Order Setting Injunction Bond and Clarifying Scope of Preliminary Injunction (“November 4, 2009 Order”). [ECF No. 48]. By this order, I modified the scope of the preliminary injunction entered in my October 27, 2009 Order [ECF No. 40] as follows: Defendant Rad Source and its agents, directors, employees, officers, affiliates, attorneys, and all others in active concert or participation with any of them are hereby PRELIMINARILY ENJOINED from directly or indirectly designing, developing, promoting, manufacturing, distributing, marketing, selling, leasing, providing service for, or providing maintenance for the RS 3400 blood irradiation technology, device, or any substantial equivalent and shall not carry on any other activities which compete in any way with the blood irradiation business (including the irradiation of blood and blood products) carried on by Plaintiff MDS directly or through its sublicensees, Plaintiffs Best Theratronics and Best Medical. This injunction shall remain in full force and effect until further Order of this Court or until September 26, 2010, whichever comes first. [ECF No. 48]. 15. On December 21, 2010, through an omnibus order, I denied Rad Source’s Motion for Partial Summary Judgment; Rad Source’s Second Motion for Partial Summary Judgment; and Plaintiffs Motion for Summary Judgment. [ECF No. 265]. 2. Preliminary Order following trial 16. On April 20, 2011, upon the conclusion of the trial, I entered a Preliminary Order to provide definitive rulings on disputed matters as addressed by the parties’ current pleadings and therefore, to enable the parties to proceed with the right of first negotiation pursuant to Article 3.8 of the License Agreement, pending the completion of the instant detailed Findings of Fact and Conclusions of Law. [ECF No. 330]. 17. By entry of the Preliminary Order, I determined the following: (1) Defendant’s RS 3400 is not subject to Section 3.1 of the License Agreement and Defendant may market the RS 3400 which may compete as against the RS 3000, as modified by Plaintiffs, subject to the right of first negotiation set forth in Section 3.8; (2) the License Agreement remains in full force and effect through its termination date, and Plaintiffs have full rights and benefits as to the RS 3000 as modified (now known as the Raycell Mk2); (3) pursuant to Section 3.8, Defendant shall provide to Plaintiffs a right of first negotiation for the RS 3400 in accordance with the provisions of that section; (4) the parties shall participate in mediation with regard to Section 3.8, with Plaintiffs and Defendant to equally bear the costs of mediation; (5) the non-compete provision of the License Agreement in Section 5.3 is no longer in effect having expired by its own terms on September 26, 2010; (6) Plaintiffs shall bear the cost of preparing the transcripts in this matter, which payment shall be due ten days after the transcripts are filed of record; and (7) neither party shall recover damages from the other. [ECF No. 330]. 18. The Preliminary Order was not intended to constitute an appealable final order or judgment, as I reserved to enter the instant detailed Findings of Fact and Conclusions of Law. See [ECF No. 330]. 19. On August 12, 2011, the mediator filed a report indicating that the parties reached an impasse. [ECF No. 347]. On September 27, 2011, the parties filed a Joint Status Report indicating the same, as well as detailing: Rad Source’s production of documents to Plaintiffs; Plaintiffs’ visit to Rad Source’s manufacturing facility in Georgia on May 31, 2011; Best Medical’s written counter-proposal to Rad Source’s May 19, 2011 proposal; the parties’ exchange of correspondence; and the Mediator’s Report indicating that the parties reached an impasse. [ECF No. 349]. C. Parties 20. Plaintiff MDS (Canada) Inc., now known as Nordion (Canada), Inc. (“Nordion” or “MDS”) is a corporation organized under the laws of Canada, with its principal place of business located in the province of Ontario. Joint Pretrial Statement (“J.P.S.”) [ECF No. 310] ¶ 1; see also 4/5/11 Tr. at 65:12-21. Nordion is a niche health science company operating in the areas of detection, prevention, and diagnosis of disease. 4/5/11 Tr. at 65:23-24. 21. Plaintiff Best Theratronics, Ltd. (“Best Theratronics”) is a corporation organized under the laws of Canada, with its principal place of business located in the province of Ontario. J.P.S. ¶ 2. 22. Plaintiff Best Medical International, Inc. (“Best Medical”) is a corporation organized under the laws of the Commonwealth of Virginia and has its principal place of business located in the Commonwealth of Virginia. J.P.S. ¶ 3. 23. Defendant Rad Source Technologies, Inc. (“Rad Source”) is a corporation organized under the laws of Florida, with its principal place of business in the state of Georgia. J.P.S. ¶ 4. Rad Source specializes in research and development of irradiation technologies, and it participated in developing technology contained in the RS 3000 blood irradiation device and the device itself. J.P.S. ¶¶ 5-6. Rad Source’s President and CEO, Randol E. Kirk, has spent many years developing irradiation technology that utilizes x-rays as a replacement for radioactive isotope irradiation technology. J.P.S. ¶ 7; 4/6/11 Tr. at 6:21-5. D. RS3000 24. In the late 1990’s, Rad Source developed certain technology and its first product, a device for x-ray blood irradiation known as the RS 3000. J.P.S. ¶ 8; 4/6/11 Tr. at 8:19-24. The RS 3000 was unique in the United States blood irradiation market because it utilized an x-ray source of irradiation as opposed to traditional isotope-based irradiation. J.P.S. ¶ 9. In taking the RS 3000 to market, Mr. Kirk applied to the Food and Drug Administration (“FDA”) for marketing clearance through an FDA 510(k) application. Defense Exhibit (“D.E.”) DX. 25. In 1998, the FDA granted Rad Source’s 510(k) application for the RS 3000 and deemed it “substantially equivalent” to a gamma-source blood irradiation device. D.E. N. Rad Source manufactured and sold the RS 3000 for approximately one year in its initial form in 1999 as a one-blood bag device, then changed the volume of blood it could accommodate to two to three bags by 2001. 4/6/11 Tr. at 11:4-20; 4/11 /II Tr. at 169:5-16. 26. Rad Source sold the RS 3000 until August 2003 at an average sales price of approximately $110,000 to $120,000. 4/11/11 Tr. at 169:17-22; J.P.S. ¶ 10. Mr. Kirk described Rad Source’ success in its marketing and sale of the RS 3000 as “moderate[J” 4/6/11 Tr. at 12:7-9. Prior to licensing the RS 3000 to MDS who marketed and sold the RS 3000 on behalf of Rad Source, Rad Source conducted all marketing and sales of the RS 3000 itself through marketing materials and attending trade shows. 4/11 /II Tr. at 168:5-16. E. Patents 27. In connection with the RS 3000 device, Rad Source obtained three patents granted by the United States Patent and Trademark Office: U.S. Patent Nos. 6,212,255 (“255 Patent”); 6,489,099 (“'099 Patent”); and 6,614,876 (“'876 Patent”). Joint Exhibit (“J.E.”) 2, 36, 37; J.P.S. ¶ 46. These three patents are the patents subject to the License Agreement. J.P.S. ¶ 52; 4/6/11 Tr. at 9:17-20; 4/19/11 Tr. at 33:14-16. 28. Mr. Kirk was one of the inventors of the RS 3000 and the '255 Patent associated with the RS 3000 was issued in Mr. Kirk’s name. 4/6/11 Tr. at 8:25-9:5; 9:15— 16; 4/19/11 Tr. at 33:17-18; J.E. 3. 29. The file wrapper for the '255 Patent indicates that it is a utility patent application transmittal which describes an invention that performs a function; in this case, the function was to irradiate blood and provide a uniform dose of x-ray beam irradiation to a bag of blood. 4/19/11 Tr. at 34:24-25; 35:12-14; 36:6-8; 36:12-15; 36:23-25. F. Long tube technology 30. In the late 1990s, Mr. Kirk began working on a different type of technology to generate high doses of x-ray radiation for replacing isotope devices. J.E. 38, 39. This technology, known as the long tube, consists of a cylindrical anode with an electron emitter centered through its entire length to generate a field of x-rays in three dimensions. J.E. 38, 39. The technology was a long tube capable of creating a field of irradiation. 4/11/11 Tr. at 176:19-24. Two patents were issued related to the long tube technology: U.S. Patent No. 7,346,147 and U.S. Patent No. 7,515,686. J.E. 38, 39. G. Rad Source seeks larger platform for RS3000 31. Rad Source first became acquainted with MDS when Mr. Kirk contacted MDS in the late 1990s to discuss the RS 3000, but MDS was not interested at that time. 4/11/11 Tr. at 170:1-8. MDS was the largest company in the world for irradiation applications and products as far as Rad Source knew. 4/11/11 Tr. at 175:10-12. 32. In 2002, after sales of the RS 3000 increased, MDS approached Rad Source to see if a partnership would be possible. 4/11/11 Tr. at 170:9-171:3. At that time, Rad Source desired to launch the RS 3000 globally, but had limited funding to do so. 4/11/11 Tr. at 171:4-15. Moreover, Rad Source’s resources were tied up in pursuing further development of x-ray technologies, including the long tube technology. 4/11/11 Tr. at 171:16-172:4. 33. Rad Source knew of MDS’ global presence in the field of irradiation equipment because MDS sold gamma-source blood irradiators and a variety of other irradiation products to a worldwide market. 4/11/11 Tr. at 171:4-25. At the same time, MDS had no knowledge or focus on x-ray technology. 4/11/11 Tr. at 175:16-18. Hence, Rad Source believed that a partnership with MDS was a good fit and mutually beneficial at the time of signing the License Agreement. 4/11/11 Tr. at 175:1-4. Moreover, this partnership would provide Rad Source with necessary funding to further develop x-ray irradiation technologies, ie., long tube technology, that it could potentially license to MDS through separate license agreements. 4/11/11 Tr. at 175:19-25. H. Negotiations leading up to License Agreement 34. On or about August 20, 2003, Rad Source entered into the License Agreement with Nordion. J.P.S. f 11; see also 4/5/11 Tr. at 65:16-66:1; Joint Exhibit (“J.E.”) 1; [ECF No. 286-1]. Rad Source and Nordion negotiated the License Agreement for approximately one year to 16 months prior to execution. J.P.S. ¶ 14; 4/5/11 Tr. at 66:4-5; 4/6/11 Tr. at 16:2-4; 4/11 /II Tr. at 173:23-25. 35. Craig Hunter, vice president of business development and strategic growth at MDS, and Gordon Ashfield, Nordion’s associate general counsel, handled most of these negotiations on behalf of MDS. 4/5/11 Tr. at 63:17-64:2; 68:16-21; 4/11/11 Tr. at 173:8-13; see also D.E. A. Mr. Kirk and Will Hartman, Rad Source’s Chief Financial Officer and Executive Vice President, negotiated on behalf of Rad Source. 4/11/11 Tr. at 172:14-19. Mr. Hartman was the lead negotiator for Rad Source. 4/11/11 Tr. at 173:18-22. 36. The parties participated in telephone conference calls and exchanged correspondence during the negotiation of the License Agreement, including executing a non-binding letter of intent. 4/5/11 Tr. at 70:6-9; D.E. Z. 37. Mr. Gotfrit participated in drafting and negotiating the License Agreement. 4/5/11 Tr. at 64:4-7. Within the last two days of the negotiations before the License Agreement was actually signed and closed, Rad Source retained counsel, Tom Luken. 4/5/11 Tr. at 68:25-69:5; 4/11/11 Tr. at 172:20-173:7. Mr. Ashfield and Mr. Kirk signed the License Agreement on behalf of MDS and Rad Source, respectively. J.E. 1; J.P.S. ¶ 54. 1. Long tube technology not part of License Agreement 38. The License Agreement was not for purposes of MDS acquiring a license to Rad Source’s long tube technology. J.E. 1. During negotiations of the License Agreement, Rad Source advised MDS of the long tube technology and its potential. 4/11/11 Tr. at 177:13-16. MDS expressed interest in the long tube technology in the future. 4/11 /II Tr. at 177:25-178:2. 39. For these reasons, Article 3.8 regarding the right of first negotiation was included because the parties contemplated Rad Source developing the future long tube technology. 4/11/11 Tr. at 178:3-11. The purpose of Article 3.8 was to preclude Rad Source from selling the long tube technology without first offering it to MDS. 4/11/11 Tr. at 178:12-17. 40. While the parties were in negotiations for the License Agreement, Rad Source was developing the long tube technology which was a different approach that what was ultimately in the RS 3000. 4/6/11 Tr. at 53:13-19. In late 2002, Rad Source demonstrated a prototype of the long tube technology to Nordion representatives. 4/6/11 Tr. at 53:20-23. Rad Source had discussions with Nordion even before the License Agreement was signed relative to the long tube technology such that when it was adequately developed, Rad Source would be interested in selling it to Nordion, hence the purpose of the right of first refusal. 4/6/11 Tr. at 54:19-55-2. 41. Mr. Kirk’s goal was to have a global company such as MDS sell Rad Source’s product which would then be under MDS’ exclusive license. 4/6/11 Tr. at 55:12-16. Another goal was to eventually sell the long tube technology to MDS who would be in a position to use its global context to sell the long tube technology. 4/6/11 Tr. at 55:17-23. Accordingly, before the License Agreement was signed, Rad Source was already working on the long tube technology and had showed it to Nordion. 4/6/11 Tr. at 54:4-8. 2. Rad Source and Nordion enter into the License Agreement 42. MDS drafted the initial draft of the License Agreement. J.P.S. ¶ 12; 4/11/11 Tr. at 176-1-3. The closing date for the License Agreement, defined in Article 1.3 as the date Nordion received 510(k) clearance from the FDA to market and sell the System in the United States, was September 26, 2003. J.P.S. ¶ 13; J.E. 1. On or about September 26, 2003, Nordion began to market and sell the RS 3000, which became known as the Raycell. J.P.S. ¶ 16. 43. Mr. Hartman testified that after the parties entered into the License Agreement, the relationship between Rad Source and MDS was very good and the parties were “always very open with each other.” 4/11/11 Tr. at 177:3-10. 3. Compensation under the License Agreement 44. Under Article VI of the License Agreement, MDS paid Rad Source approximately $1.7 million as compensation and royalties over a period of approximately four years from the date the parties signed the agreement. J.P.S. ¶ 17; 4/6/11 Tr. at 30:14-16; 4/19/11 Tr. at 48:14-16. While the term of the license granted under the License Agreement extended from the Closing Date (September 26, 2003) until the last to expire of the patents (2022), Rad Source agreed to only receive compensation for the first four years of the agreement (with the potential for compensation in Year 5). J.E. 1. 45. Article 7 of the License Agreement, titled Compensation, provided for the following payments to Rad Source: (i) $500,000 within five (5) working days of the Closing Date; (ii) $400,000 during the first year following the Closing Date; (iii) $400,000 during the second year following the Closing Date; (iv) $11,250 per System sold, up to a maximum of $225,000 during the third year following the Closing Date; (v) $9,000 per System sold, up to a maximum of $225,000 during the fourth year following the Closing Date; (vi) During the first five years after the Closing Date, $5,000 for each System sold in excess of 40 Systems sold. J.E. 1. 46. Revenues derived from sales of Raycells were approximately two to three million dollars in gross revenues per year. 4/6/11 Tr. at 124:6-11. 47. Rad Source’s interest in the number of blood irradiator units sold by Nordion was as follows: Article 7.1 of the License Agreement regarding compensation required Nordion to pay $500,000 to Rad Source within five days of entering into the License Agreement and $400,000 within the first year regarding of the number of units sold. 4/5/11 Tr. at 82:8-16; J.E. 1. However, payments for years three and four were tied to the sale of blood irradiators and Rad Source had an interest for five years from the date of closing, ie., if Nordion sold an excess of 40 units in the United States in any given year, Rad Source would receive $5,000. 4/5/11 Tr. at 82:24-83:12. 48. After year five of the License Agreement, Rad Source had no interest in the number of units sold under the terms of the agreement. 4/5/11 Tr. at 83:25-84:3. The License Agreement provided for no payments to Rad Source from the end of Year 5 through the term of the license that expired in 2022. J.E. 1. In addition, after the license expired in 2022, Nordion was free to use the Licensed Technology without any further obligation or payment to Rad Source. J.E. 1. I. July 2007 visit to Rad Source 49. In June 2007, Rad Source employees saw MDS employees at a conference where Rad Source indicated that it would be a good time for MDS to begin reviewing the long tube technology because Rad Source had been developing, and had confidence in, the technology. 4/11/11 Tr. at 179:7-16. 50. In July 2007, at the invitation of Rad Source, former MDS employee Carolin Vandenberg visited Rad Source’s new facilities outside of Atlanta with two other MDS representatives. J.P.S. ¶ 19; 4/5/11 Tr. at 121:16-19; 121:21-22; 133:24-134:4; 4/11/11 Tr. at 180:2-4. Ms. Vandenberg repeatedly insisted that the purpose of this visit was not to examine Rad Source’s long tube technology or determine whether MDS sought to license it. 4/5/11 Tr. at 134:5-8; 134:21-135:4; 139:1-6; 143:12-13. 51. Ms. Vandenberg received an e-mail from an individual in MDS’ procurement department, which is responsible for purchasing different components used to build products, which stated the following: Good afternoon. Just a heads-up. If MDS is planning to enter into some discussions with Rad Source, given § 3.8, we should be very clear in writing of our intentions. There may be an assumption from the agreement that technical discussions are the initiation of future business from which we will have a short duration to make some important business decisions. 4/5/11 Tr. at 137:3-11; D.E. BA. Ms. Vandenberg responded to the email, stating in relevant part: “We are clear on our contractual obligation limitations and will enter into any discussions with Rad Source in that context.” 4/5/11 Tr. at 137:14-17; D.E. BA. 52. Prior to the visit, MDS/Nordion and Rad Source signed and executed a confidentiality agreement requested on behalf of and drafted by Nordion/MDS. 4/5/11 Tr. at 122:23-25; 139:7-10; 140:2-5; 141:3-7; 141:22-142:1; 144:4-6; 4/11 /II Tr. at 180:5-9; D.E. B (confidentiality agreement dated July 26, 2007, signed by Kevin Brooks, MDS Nordion Vice President of Global Marketing, and Mr. Kirk). 53. The confidentiality agreement contains a clause that states: “Whereas each of the parties, for their mutual benefit, desire that certain information be disclosed to the other in order for the parties to discuss companies x-ray technology for the purpose of potential joint ventures or in-license of technology, (the Arrangement).” 4/5/11 Tr. at 142:7-14; D.E. B. 54. In stark contrast to Ms. Vandenberg’s testimony, the testimony of other individuals demonstrates that Rad Source showed MDS the devices and spoke in-depth regarding the long tube technology and whether it had any application in blood irradiation. 4/11/11 Tr. at 181:8-10; 181:11-12; 181:16-18. 55. The day after Ms. Vandenberg visited Rad Source’s facility, Ms. Vandenberg sent Messrs. Kirk and Hartman a “thank you” e-mail dated August 1, 2007, carbon copying the MDS employees who accompanied Ms. Vandenberg on the visit. 4/5/11 Tr. at 146:1-4; 145:13-15; 146:10-13; 158:21-129:10; 4/6/11 Tr. at 70:14-19; 4/11/11 Tr. at 181:19-182-17; D.E. C. The e-mail states, in relevant part: “Thank you for the opportunity to meet at your facility in Alpharetta yesterday and for your generous hospitality. Our discussions helped us understand your long-tube strategy and vision of its marketability in SIT, biologies and blood applications. We share your opinion that x-ray technology has a future in the blood irradiation market and let’s continue our open and honest dialogue in this arena.” and “Please extend our thanks to Phil for the product demonstrations[.]” 4/5/11 Tr. at 145:16-146:4; 146:15-18; 159:11-18; 4/6/11 Tr. at 70:24-25; 70:6-8; D.E. C. 56. Rad Source had additional contact with MDS in September 2007 when Mr. Kirk e-mailed Ms. Vandenberg regarding news of the dangers of radioactive isotopes in the marketplace, which would be viewed as an opportunity for x-ray technology. 4/11/11 Tr. at 182:18-183:5. 57. On October 10, 2007, Ms. Vandenberg received an e-mail from Mr. Kirk referencing an article which highlighted the need for isotope replacements. 149:1-5; 149:9-16; J.E. 5. The e-mail from Mr. Kirk also stated, in relevant part: “we here at Rad Source feel it is time to prepare for the coming demand and for the potential competition that could gravitate to a market of that size. One question is what strategy maximizes company value process. It is time to begin some definitive discussions if you wish to work with us; otherwise, we need to prepare for the future in some other manner.” 4/5/11 Tr. at 149:24-150:5; J.E. 5. 58. Ms. Vandenberg’s response to Mr. Kirk’s e-mail states, in part, “Nordion recognizes the opportunity ahead of us and potential demand from the market. Your email is timely as it is our intent to continue our discussions and would now like to loop in our folks in business development. In preparation for the discussion, can you provide me with a company profile, with some level of financials, if possible, that I can forward to them and few key individuals on our senior management team? Can you provide your availability over the next few weeks?” 4/5/11 Tr. at 150:18-151:2; 4/11/11 Tr. at 183:13-184:8. 59. On October 25, 2007, Mr. Hartman responded by sending Ms. Vandenberg a summary profile of Rad Source, which he prepared specifically for her request. 4/5/11 Tr. at 154:3-24; 4/11/11 Tr. at 184:9-11; 185:1-9; D.E. D; J.E. 6. 60. Mr. Hartman never heard back from Ms. Vandenberg regarding the long tube technology following this correspondence and eventually discovered — upon Nordion’s request for consent to assignment — that MDS was negotiating to sell its business. 4/11/11 Tr. at 185:10-23. J. 2007-08 Asset Purchase Agreement 61. On November 29, 2007, MDS and Best Medical executed an “Asset Purchase Agreement” for the sale of MDS’ External Beam Therapy and Self Contained Irradiator business to Best Medical for approximately $15 million (“Asset Purchase Agreement”). J.P.S. ¶ 20; 4/5/11 Tr. at 189:8-10; see also D.E. BQ (Securities and Exchange Commission (“SEC”) filing). In May 2008, Nordion and Best Medical closed on the Asset Purchase Agreement. J.P.S. ¶ 26. In an SEC filing, MDS stated that on November 29, 2007, MDS had signed an agreement with Best Medical Inc. to divest MDS’ external beam therapy and self-contained irradiator product lines. J.P.S. ¶ 21. 62. As a condition to closing on the Asset Purchase Agreement, MDS executed a Non-Competition Agreement with Best Medical and agreed for “a period of 7 years” to not “directly or indirectly, develop, manufacture, market or sell ... Cesium-137 based blood irradiators, x-ray based blood irradiators, other technology based blood irradiators, and related products and services.” J.P.S. ¶ 30. When the Asset Purchase Agreement closed, 155 MDS employees transitioned to Best Theratronics, and the MDS “Theratronics building” and a parcel of land were turned over to Best Medical. D.E. E. 63. Section 2.1 of the Asset Purchase Agreement, titled “Purchase and Sale,” states that Best Medical is purchasing the “Assets” and “Business” from MDS. D.E. E. Section l.l(i) of that agreement defines “Business” to include the “Self-Contained Irradiator business currently carried on by [MDS] as more particularly described in Schedule F,” and, under Schedule F, includes the “[c]omplete ... Raycell line of products____” D.E. E. Section l.l(d)(xii) of that agreement defines “Assets” to include “the Intellectual Property;” Section l.l(gg) defines “Intellectual Property” to include “trade-marks, copyrights, patents, licenses and agreements described in Schedule D.” D.E. E. Schedule D to the Asset Purchase Agreement specifically includes the License Agreement. D.E. E. K. 2007 Nordion request for Rad Source’s consent to assignment 64. In correspondence dated December 14, 2007, Nordion requested that Rad Source consent to an assignment of the License Agreement from Nordion to Best Medical. 4/5/11 Tr. at 173:8-15; 4/6/11 Tr. at 79:20-25; 80:7-16; J.E. 7; J.P.S. ¶ 22. At this time, Nordion had made all the payments due to Rad Source under the License Agreement. 4/5/11 Tr. at 177:2-8. 65. MDS stated in its one-page letter that it had “recently entered into an agreement with Best Medical International, Inc. (“Best”) pursuant to which MDS Nordion will sell to Best its External Beam Therapy and Self Contained Irradiator business.” 4/5/11 Tr. at 173:16-23; 174:6-8; J.E. 7. This letter marked the first time that Rad Source learned that MDS intended to exit the blood irradiation market. 4/11/11 Tr. at 186:3-6; J.E. 7. Though the Asset Purchase Agreement had already been signed, it had not yet closed, and Nordion did not seek Rad Source’s consent prior to signing the Asset Purchase Agreement. 4/5/11 Tr. at 174:9-17. 66. Rad Source described the correspondence as “shocking” because MDS had recently visited Rad Source’s facility and Rad Source had just sent Ms. Vandenberg the requested profile of Rad Source. 4/11/11 Tr. at 186:12-15. Subsequent investigation by Rad Source also revealed that Best Medical may have an x-ray product division, which concerned Rad Source. 4/11/11 Tr. at 188:17-24. 1. January 22, 2008 correspondence from Rad Source to MDS 67. On January 22, 2008, Rad Source responded to the December 14, 2007 correspondence by stating that the assignment would not be in Rad Source’s best economic or business interest and requested all documents with respect to the Nordion/Best transaction. J.P.S. ¶ 23; 4/5/11 Tr. at 177:18-175:1; 175:12; 179:3-4; 4/6/11 Tr. at 81:5-21; 93:21; 4/11 /II Tr. at 187:7-10; J.E. 8. Rad Source stated that it does “not believe that such an assignment would be in the best economic or business interest of Rad Source, so [it] decline[s] to consent to or to agree to such an assignment,” but that Rad Source did “not want to foreclose further discussions, so [it] would appreciate receipt of copies of all documents pertaining to the [MDS]-Best transaction,” and that after it “had an opportunity to review those documents, [it would] respond promptly if Rad Source ha[d] a different view of the requested assignment.” J.E. 8. 68. Rad Source did not agree to assignment and requested documents because it had no idea of the nature of the Nordion/Best transaction, how Rad Source would be affected by it, what assets were being transferred, and the identity of Best because Best was not in the same industry as Rad Source. 4/11/11 Tr. at 187:14-23; 188:3-11. 69. Nordion did not provide the documents with respect to the Nordion/Best transaction, ie., the Asset Purchase Agreement, because the purchase and sale had not closed and to do so during the interim period would be a “significant detriment” because Nordion was a public company and the Asset Purchase Agreement contained matters broader than merely the License Agreement. 4/5/11 Tr. at 178:3-179:2. 2. January 28, 2008 conference call 70. On January 28, 2008, Phil Larabie (Nordion’s Vice President of Business Development), Mr. Gotfrit, Mr. Hartman of Rad Source, and Rad Source’s counsel, Tom Steele, participated in a telephone conference to discuss Nordion’s request for Rad Source’s consent to assignment of the License Agreement from Nordion to Best. J.P.S. ¶ 24; 4/5/11 Tr. at 180:4-22; 4/6/11 Tr. at 81:22-82:11; 4/11/11 Tr. at 189:19-190:9. Prior to this conference call, Rad Source did not know Mr. Larabie’s identity. 4/11/11 Tr. at 190:10-14. 71. During the conversation, MDS informed Rad Source that it would sublicense the License Agreement to Best if Rad Source would not consent to an assignment. 4/5/11 Tr. at 180:2-3; 4/11/11 Tr. at 192:21-193:3. Rad Source objected that MDS had a right to sublicense the License Agreement to Best. 4/11/11 Tr. at 193:4-5. Upon the conclusion of the call, Rad Source maintained its refusal to consent to an assignment of the License Agreement from Nordion to Best. J.P.S. ¶ 25. 3. Call front Best to Rad Source 72. Within a month of the January 28, 2008 conference call, the owner of Best, identified as Krish, called Mr. Kirk. 4/11/11 Tr. at 196:1-7. Mr. Suthanthiran indicated that he wanted to arrange a meeting with Messrs. Hartman and Kirk. 4/11/11 Tr. at 196:25-3. Mr. Suthanthiran also told Mr. Kirk that Best was closing on the Nordion deal that week. 4/6/11 Tr. at 90:18-22; 92:11-13. 73. However, Rad Source never heard from Mr. Suthanthiran again and no meeting was ever arranged. 4/11/11 Tr. at 197:4-7. During the call, Mr. Kirk never said anything to Mr. Suthanthiran about Rad Source refusing to consent to the assignment or any objection Rad Source had to the Nordion/Best transaction. 4/6/11 Tr. at 92:17-22. Mr. Kirk never voiced his concerns regarding Best, nor did he request documents, even in spite of Rad Source’s concern that it did not know anything about Best. 4/6/11 Tr. at 92:23-93:4; 93:10-12. L. April BO, 2008 Sublicense Agreement 74. On April 30, 2008, Nordion, Best Medical, and Best Theratronics entered into an agreement titled “Sublicense Agreement” (the “Sublicense Agreement”). 4/5/11 Tr. at 184:10-13; 184:19-23; J.E. 10; J.P.S. ¶ 27. Paragraph E of the Sublicense Agreement provides that “MDS, Best Medical and Best Theratronics have agreed that MDS will grant to Best Theratronics an exclusive right and sublicense to the licensed technology for the system and for the single power supply version of the system as opposed to assigning the license agreement to Best Theratronics in accordance with and subject to the Asset Purchase Agreement.” 4/5/11 Tr. at 190:7-16; J.E. 10. 75. Article 2.1 of the Sublicense Agreement, titled “Grant of Sublicense,” represents Nordion’s sublicense of the same rights it had under its license which were the exclusive right to use the Licensed Technology and the System. 4/5/11 Tr. at 192:8-18. In Section 2.1, MDS granted Best Theratronics a worldwide license to “Use the Licensed Technology for the [RS 3000] System ... and for the single power supply version of the System,” which is identical to the license grant that MDS received from Rad Source under the License Agreement. J.E. 10. In the Sublicense Agreement, Plaintiffs acknowledged that the “Licensed Technology,” which was licensed from Rad Source to MDS under the License Agreement, “comprises part of the Assets as defined in the Asset Purchase Agreement....” J.E. 10. 76. Under Section 2.3 of the Sublicense Agreement, Best Theratronics assumed all obligations that MDS had under the License Agreement. J.E. 10. Both Best Medical and Best Theratronics acknowledged in Section 2.3 that “the obligations of MDS under the License Agreement ... constitute Assumed Obligations within the meaning of the Asset Purchase Agreement and have been assumed by Best Medical and Best Theratronics.” J.E. 10. 77. Under Sections 2.3 and 2.6 of the Sublicense Agreement, Best Theratronics agreed to fully indemnify MDS in connection with a breach of the License Agreement by Rad Source or Best Theratronics. 4/6/11 Tr. at 111:11-17; J.E. 10. 78. Under Section 2.5 of the Sublicense Agreement, Plaintiffs agreed that MDS “shall not be required to make any payments to Rad Source” under the License Agreement unless and until MDS has received the required payment from Best Theratronics. 4/6/11 Tr. at 111:4-10; J.E. 10. M. MDS exits blood irradiation business through Asset Purchase Agreement 79. A press release dated November 29, 2007 noted that MDS “signed an agreement with [Best Medical] to divest its ... self-contained irradiator product lines.” D.E. F. MDS’ president, Steve West, was quoted in this press release as stating: “By divesting these product lines, we can direct all of our energy and resources on becoming a leading innovator in the exciting and growing field of molecular medicine.” D.E. F. 80. Best Theratronics ' and MDS cosigned notices stating that “on April 30, 2008, MDS Canada, Inc. conveyed and transferred to Best Theratronics, Limited, all of MDS’ right, title and interest in and to the ... Self-contained irradiator business.” 4/6/11 Tr. at 118:10-16; D.E. CF; CG. 81. Mr. Gotfrit signed a confirmation of transfer of the External Beam Therapy and self-contained irradiator business which stated: We hereby notify you and confirm to you that on April 30, 2008, MDS Canada, MDS conveyed and transfers to Best Theratronics all of MDS’s right, title and interest in and to the External Beam Therapy and self-contained irradiator business, being the subject matter of Best Theratronics’ application for permits or licenses with your organization. 4/6/11 Tr. at 116:19-17:4; D.E. CG. 82. MDS is not presently developing, manufacturing, marketing or selling any x-ray irradiators. J.P.S. ¶ 29. N. Rad Source learns that MDS/Best deal closed, but takes no action 83. In May or June 2008, Rad Source learned that the MDS/Best transaction had closed through an article, MDS press release, and public filings. 4/11/11 Tr. at 197:17-25; 200:4-15; 201:5-8; D.E. F, G. Despite Rad Source’s concern that Best now had Rad Source’s technology, Rad Source did not send a default notice to MDS because Rad Source “believed it would be futile” and that legal action would be expensive and time consuming. 4/11/11 Tr. at 207:4-16. 84. Rad Source never contacted Nordion or Best to regarding Best’s use and possession of the Licensed Technology. 4/6/11 Tr. at 97:3-15; 102:3-7. Mr. Kirk conceded that Rad Source did nothing in response to the knowledge that Best and Nordion had closed their deal. 4/6/11 Tr. at 102:8-10. According to Mr. Kirk, Rad Source did not think it was very important that Best had the Licensed Technology based on the patents in Mr. Kirk’s name or that Best was manufacturing, marketing, and selling the Raycell because Rad Source was a small company and could not afford to “provoke[ ] a lawsuit.” 4/6/11 Tr. at 97:23-98:20. 85. Eventually, Rad Source sent a default notice and notice of termination to MDS after Rad Source received notice of the instant litigation. 4/11/11 Tr. at 217:9-11; 217:16; D.E. I; J.E. 28. O. RS 3400 86. In approximately August 2008, Rad Source began developing a new blood irradiation device, the RS 3400. 4/6/11 Tr. at 43:21-24; 4/11/11 Tr. at 208:11-21; D.E. H. The RS 3400 was intended to be a blood irradiation device. 4/6/11 Tr. at 69:4-6. At least by August 19, 2008, Rad Source was designing and developing the RS 3400 to reduce the risk of Graft Versus Host Disease or other blood borne pathogens. 4/6/11 Tr. at 31:2-5; 43:21:24; D.E. H. 87. On or about September 26, 2008, Rad Source submitted an FDA 510(k) application (Application K082921) seeking approval to market a blood irradiation device, assigning RS 3400 as the name for the proposed device. J.P.S. ¶ 34; 4/6/11 Tr. at 30:23-31:1. On September 29, 2008, at a Nuclear Regulatory Commission hearing, Rad Source announced that it had filed the 510(k) application for its new x-ray blood irradiator. J.P.S. ¶ 35. On February 17, 2009, the FDA issued a clearance letter in response to Rad Source’s 510(k) application. J.P.S. ¶ 36; 4/11/11 Tr. at 211:3-9. 88. Rad Source has not completed its design and development of the RS 3400. J.P.S. ¶33. Rad Source has not sold a single RS 3400. J.P.S. ¶ 41. The expected selling price for the RS 3400 is approximately $180,000. 4/11/11 Tr. at 210:4-5. P. Rad Source markets the RS 3400 89. In September 2009, Rad Source began to market the RS 3400. 4/11/11 Tr. at 211:13-17. On September 9, 2009, Rad Source announced the new RS 3400 on its website, stating that it was “a direct medical upgrade of the Rad Source RS 2400 research and industrial irradiator” and that the RS 3400 would be ready for delivery to purchasers in the first quarter of 2010. J.P.S. ¶ 37; J.E. 15. 90. Potential customers interested in the RS 3400 contacted Rad Source, and Rad Source discussed the RS 3400 with some of those customers. J.P.S. ¶ 38. In the fall of 2009, Rad Source submitted written quotes to two potential customers for purchase of an RS 3400, representing that the new device could be delivered by March 30, 2010. J.P.S. ¶ 39; 4/11/11 Tr. at 211:18-22. 91. Rad Source placed a statement in a commercial advertisement for the October 2009 American Association of Blood Banks (“AABB”) annual trade show, the largest and most important trade show in the blood irradiation industry, announcing that Rad Source had a new x-ray blood irradiator for sale and arranged to have a booth at the trade show. J.P.S. ¶ 40. Due to the entry of the injunction in this case, Rad Source did not attend or set up its booth at the trade show. J.P.S. ¶ 40. 92. In response to Plaintiffs’ September 30, 2009 Cease and Desist letter demanding that Rad Source cease design, marketing, and promotion of the RS 3400 by letter dated October 2, 2009, Rad Source notified Nordion under Article 12 of the License Agreement, for the first time, that Rad Source considered Nordion to be in breach of the License Agreement. P. E. 69. 1. On October 8, 2009, Nordion responded to Rad Source’s October 2, 2009 notice asserted that the notification was insufficient to constitute notice under Article 12 of the License Agreement. P.E. 69. On October 15, 2009, Plaintiffs filed the instant suit. J.P.S. ¶ 43. Q. Expiration of '255 Patent 93. Plaintiffs contend that Rad Source breached Articles 3.7 and 11.1(e) of the License Agreement by failing to maintain the '255 Patent in good standing and failing to pay all prosecution, processing, and maintenance fees with respect to that patent. See [ECF No. 286]. 94. Article 3.7, titled “Maintenance Fees,” states: Until termination or expiration of this Agreement, Rad Source shall be responsible for prosecuting and maintaining the Patents in good standing and shall be responsible for the payment of all prosecution, processing and maintenance fees with respect to the Patents. Within thirty (30) days following each due date of such maintenance fees, Rad Source shall provide to [MDS] written notice of having paid the Patent maintenance fees. In the event it is determined that any such fees are outstanding, Rad Source shall make immediate arrangements for payment failing which [MDS] may pay such fees and, in addition to any other remedies it may have, may deduct the amount of such fees, and associated costs (including reasonable attorney’s fees) from any amounts owing by [MDS] pursuant to this Agreement. Rad Source shall provide [MDS] an update on the status of Patent prosecution as requested by [MDS] from time to time. Section 11.1(e), titled “Rad Source Representation and Warranty,” states: Rad Source represents and warrants to [MDS] that as at the time of entering into this Agreement and as at the Closing Date: (e) The Licensed Technology and System do not and will not to Rad Source’s best information and belief, infringe any patents, copyright, or other industrial or intellectual property rights of third parties and the Patents are in good standing, will be maintained in good standing and all maintenance fees have and will be paid by Rad Source. 95. Article 3.7 required Rad Source to provide to Nordion written notice of having paid the patent maintenance fees within 30 days following each due date of such maintenance fees. 4/5/11 Tr. at 107:1-5; J.E. 1. Further, pursuant to Article 3.7, if any patent maintenance fees remained outstanding, “Rad Source shall make immediate arrangement for payment, failing which Nordion may pay such fees.” 4/5/11 Tr. at 107:6-8; J.E. 1. 96. In February 2010, Plaintiffs discovered that the '255 Patent had expired in May 2005 due to Rad Source’s failure to pay the required maintenance fees. J.E. 1, 18; Plaintiffs’ Exhibit (“P.E.”) 1. MDS never received any notice from Rad Source that any of the patents referred to in the License Agreement had expired for failure to make the payments. 4/5/11 Tr. at 107:19-23. 97. Rad Source first became aware that the '255 Patent expired after the instant litigation began in 2010. 4/11/11 Tr. at 224:6-8. In April 2010, Rad Source filed a petition to reinstate the '255 Patent with the United States Patent and Trademark Office, which was denied. J.P.S. ¶ 53; J.E. 1,18; P.E. 56. R. January 2011 termination notice 98. In January 2011, Rad Source sent a termination notice to Nordion asserting that Rad Source considered the License Agreement to be terminated. 4/5/11 Tr. at 198:14-23; J.E. 28; P.E. 63; 64. Rad Source also sent “cease and desist” letters to Best Medical and Best Theratronics demanding that they cease marketing and promoting the Raycell and Mk2. 4/6/11 Tr. at 180:20-24; P.E. 63; 64. By that time, Best Theratronics was manufacturing, marketing and selling the Rayeell for over 2.5 years since May 1, 2008. 4/6/11 Tr. at 181:14-19. 99. Nordion, Best Medical, and Best Theratronics responded to Rad Source’s correspondence by letter dated January 18, 2011, disputing Rad Source’s “Improper Notice of Termination” by pointing out, inter alia, Rad Source’s waiver of any right to attempt to terminate the License Agreement based on information actually known to Rad Source two years earlier. J.P.S. ¶45; P.E. 69. S. License Agreement I now address specific provisions of the License Agreement at issue in this ease. 1. Article 3.1 — Grant of License 100. Article 3.1, titled “Grant of License,” states in full: As of the Closing Date, Rad Source hereby grants to [MDS], and [MDS] accepts, for the term of the license as set out in Section 12.1, subject to the second sentence of this Section 3.1, an exclusive right and license (transferable, with the right to grant sublicenses to third parties (“Sublicensees”) on such terms as are consistent with this Agreement to Use the Licensed Technology for the System (including as modified by [MDS]) and for the single power supply version of the System, in the Territory. The foregoing grant of exclusivity is made subject to Rad Source’s retention of the right to use the Licensed Technology to develop, manufacture or have manufactured, distribute, promote, market, sell, lease and service products other than the System and single power supply version of the System, in the Territory. For the avoidance of doubt, Rad Source’s retained right to use the Licensed Technology (as set out in the preceding sentence) shall not, during the term of the license, in the Territory, include the right, directly or indirectly, to develop, manufacture or to have manufactured, distribute, promote, market, sell or lease a medical device for blood or blood product irradiation, which is used or useable to reduce the risk of Graft Versus Host Disease or other blood borne pathogen, and which embodies, in whole or in part, the Patents. J.E. 1. The term “Use” is defined in Section 1.12 as: “Use” in connection with the Licensed Technology and the System shall mean the right to enjoy, copy, commercialize and exploit as well as manufacture, have manufactured, assemble, and use, the apparatus, machinery and all devices embodied in the Licensed Technology and the System and putting it into practice and to distribute, promote, market, sell, lease and service and/or otherwise provide the services of the apparatus, machine(s) or devices forming the System. J.E. 1. 101. Article 1.6 defines “Licensed Technology” as “the Patent(s), and Technical Information as set out in Schedule A.” 4/5/11 Tr. at 86:15-23; 4/6/11 Tr. at 63:19-22; J.E. 1. 102. Article 1.8 defines “Patents” as “U.S. Patent Nos. 6,389,099 and 6,212,255 and United States patent pending application No. 101244-209 (including divisional applications thereof), including such patents as are filed in the Territory.” J.E. 1; 4/6/11 Tr. at 138:14-22; see also 4/6/11 Tr. at 139:13-21 (“[The Court]: Is it not correct that the definition of ‘patents’ is tied directly to the definition of system, that is, the system, which means the ... RS 3000, is that which is included in the patents as defined? A: Yes. [The Court]: That’s what was intended? A: Yes. [The Court]: Not something else? A: Right.”). 103. Article 1.9 defines “System” as “the Rad Source RS 3000 x-ray blood irradiation system, including modifications thereto, exploited and/or marketed by Rad Source as at the Closing Date.” J.E. 1. 104. Article 3.1 includes the right to grant sublicenses to third parties as such terms are consistent with the License Agreement to use the Licensed Technology for the System. 4/5/11 Tr. at 163:8-18. 105. Unlike Article 13.9 requiring consent to assignment, there is no requirement that Rad Source consent to a sublicense. 4/5/11 Tr. at 171:10-15. 2. Article 5.3 — non-compete provision 106. Article 5.3 of the License Agreement is the non-compete provision which defines the prohibited competitive activities — designing, promoting, manufacturing, selling or leasing, or carrying out any other activities which compete with the blood irradiation business of Nordion. 4/5/11 Tr. at 100:21-25. 107. Article 5.3 provides: Subject to the terms and conditions of this Agreement, for a period of seven (7) years from the Closing Date, Rad Source, its respective officers and its Affiliates shall not, directly or indirectly, within the Territory design, promote, manufacture, sell, lease or carry on any other activities, which compete in any way with the blood irradiation business (including irradiation of blood and blood products) carried on by [MDS], including with respect to the System. Subject to section 6.2, Rad Source, its respective offices and its Affiliates, shall not, for a period of seven (7) years from the Closing Date, directly or indirectly, within the Territory, provide service or maintenance of the System (or the System as modified by [MDS]) to third parties, or provide servicing or maintenance to any product, system or components thereof to third parties, which compete with the System. J.E. 1. 108. The non-compete period under Section 5.3 ended on September 26, 2010. J.P.S. ¶ 55; 4/6/11 Tr. at 32:7-8. Rad Source started to design, develop, and promote the RS 3400 prior to September 26, 2010. 4/6/11 Tr. at 32:24-33:4; 33:14-16; 103:5-7. 3. Article 3.8 — right of ftrst negotiation 109. Article 3.8 of the License Agreement regarding the right of first negotiation was included because Nordion was interested in the technologies that Rad Source was developing, i.e., long tube technology, and sought a right of first negotiation to those technologies. 4/5/11 Tr. at 109:15-20; 4/6/11 Tr. at 57:23-58:8. 110. Article 3.8 states: During the term of this Agreement, Rad Source hereby provides to [MDS] a right of first negotiation for the right to acquire from Rad Source, by license or otherwise, the right to use all other irradiation application technology developed by Rad Source. Such negotiations may be initiated by either party and shall endure for a period of one hundred and twenty (120) days. If the parties fail to reach an agreement with respect to the terms and conditions of license within the aforementioned one hundred and twenty (120) day period, Rad Source shall be free to negotiate with such third parties as it deems fit, provided that the terms and conditions offered to such third parties shall be no less favourable to Rad Source than those last offered to [MDS] pursuant to this Section 3.8. J.E. 1. 111. Nordion had the right of first negotiation with respect to all other irradiation application technology developed by Rad Source. 4/6/11 Tr. at 105:22-106:1. 112. On October 22, 2009, Rad Source sent a letter to Nordion purporting to offer to negotiate the rights to the RS 3400. P.E. 42. Rad Source’s letter includes no reference to the meetings during the summer of 2007. P.E. 42. In response to Rad Source’s offer, Nordion asked Rad Source to provide documentation necessary to assess the RS 3400, as well as any other irradiation application technologies developed by Rad Source, and to determine whether Nordion wished to enter negotiations for that technology. P.E. 44. 4. Article 8.1 — conñdentiality 113. Article 8.1 of the License Agreement, titled “Confidentiality and Exceptions,” states in pertinent part: Rad Source and [MDS] acknowledge that the content of the transactions contemplated herein, the Technical Information, the business affairs and operations of the other, and such other information which has been marked Confidential or otherwise provided in confidence (“Confidential Information”) which it receives or otherwise learns during the term of this Agreement, is valuable property of the party providing such information. The parties acknowledge the need to preserve such confidentiality and secrecy of such Confidential Information and agree that, both during the term of this Agreement and after termination or expiration of this Agreement, it shall not disclose such Confidential Information. This obligation of confidentiality shall not apply to information: d) confidential information which is disclosed with the written consent of the other party, J.E. 1. 5. Article 13.9 — Assignment 114. Article 13.9 of the License Agreement, titled “Assignment,” requires that either party seeking assignment to request express written consent from the other party. 4/5/11 Tr. at 161:14-23; 4/6/11 Tr. at 79:17-19; 108:6-9; J.E. 1. Article 13.9 states: This Agreement shall inure to the benefit of and shall be binding upon the heirs, successors and permitted assigns of the parties. Neither [MDS] nor Rad Source may assign any of its rights or delegate any of its obligations under this Agreement without the express written consent of the other party, such consent not to be unreasonably withheld; provided that (i) either party may assign any of its rights or delegate any of its obligations under this Agreement, in whole or in part, to any of its Affiliates, without consent of the other party, but without relieving the delegating party from the responsibility for performance of any of such obligations and (ii) either party may assign its rights and delegate its duties and obligations (in whole and not in part) under this Agreement to an entity which acquires all, or substantially all, of its assets or business, without the consent of the other party, provided that such assignee duly and effectively assumes all of the obligations of the assigning party hereby by instrument satisfactory to the other party. Any assignment in violation of the provisions of this section shall be void. J.E. 1. T. Claim 6 of the '255 Patent 115. I now address facts regarding the patent/technical analysis in Phase II. The preamble of Claim 6 of the '255 Patent characterizes the “transfusion blood bag” as “said bag being in the form of a rectangular box-like container.” J.E. 2; D.E. K. The term “transfusion blood bag” is referred to in the body of the claim in clause b), where it states “said bag.” J.E. 2. There is no other transfusion blood bag referred to in the claim, other than the transfusion blood bag, being in the form of the rectangular box-like container. J.E. 2; D.E. K. 116. The '255 Patent provides a number of places where the position of the blood bag relative to the X-ray tubes is discussed. J.E. 2. These sections disclose a canister as the “means for positioning” the blood bag. J.E. 2; D.E. K. The structures of a “means for positioning” disclosed in the '255 Patent are a canister, a container, a cylinder, and those structures limiting the blood bag to the form of a rectangular box-like container. J.E. 2; D