Babcock & Wilcox Co. v. Areva NP, Inc.
292 Va. 165
| Va. | 2016Background
- Areva (formerly Framatome ANP) sued Babcock & Wilcox (B&W) and affiliates for breach of a 2004 "Sub-License of Nuclear Technology" and for misappropriation under Virginia's Uniform Trade Secrets Act after earlier federal litigation and a settlement.
- The Sub-License granted B&W sublicensees a perpetual, worldwide right to use Areva-"exclusive" OTSG-related nuclear technology "for all purposes" in the field of commercial nuclear services, but conditioned a 4% royalty on the sublicensee’s use of Areva’s exclusive technology "at OTSG plant sites described in Exhibit A." A $250,000 one-time payment would cover the "first contract" exceeding $100,000 performed "at an OTSG site."
- The trial court granted partial summary judgment holding the royalty provision unambiguous and excluded royalties for off-site design, manufacture, and sale of ROTSG (replacement once-through steam generator) heavy components.
- At trial Areva sought royalties on 15 customer contracts (including three ROTSG manufacture contracts and several engineering/service contracts). The jury awarded Areva $16,075,000 and found misappropriation of trade secrets. B&W moved for JNOV/ new trial.
- The Virginia Supreme Court reviewed contract interpretation de novo and parsed three focal contract questions: (1) scope of Areva-"exclusive" technology; (2) whether royalties require use "at OTSG plant sites"; and (3) application of the "first contract" $250,000 exclusion.
Issues
| Issue | Plaintiff's Argument (Areva) | Defendant's Argument (B&W) | Held |
|---|---|---|---|
| Scope of "exclusive" Nuclear Technology | Areva: its exclusive license covers various reactor engineering and field services and the Sub-License grants broad rights to sublicensees. | B&W: 1991 License reserved manufacturing and detailed design of heavy components to B&W; many activities (manufacture, manufacturing detail design) are B&W-exclusive or shared and not Areva-exclusive. | Court: The contracts read together show Areva’s exclusivity is limited to commercial nuclear services (engineering/field services), while manufacture/manufacturing detailed design of heavy components was B&W-exclusive or shared. |
| Royalty trigger: "use ... at OTSG plant sites" — does on-site requirement apply literally? | Areva: royalty should apply whenever the sublicensee’s work results in use at an OTSG site (including off-site office work that is "applied" at site); contractual language is a jury question. | B&W: The royalty applies only when the sublicensee itself uses Areva-exclusive technology on-site at an Exhibit A OTSG plant; off-site work does not trigger royalty. | Court: The on-site qualifier is unambiguous; royalties require the sublicensee’s actual use of Areva-exclusive technology at an OTSG plant listed in Exhibit A. Whether that occurred is a factual question, but the meaning is for the court. |
| ROTSG manufacture contracts (off-site heavy component work) | Areva: claimed royalties for ROTSG-related contracts based on engineering elements. | B&W: ROTSG contracts are for manufacture and manufacturing-design, activities B&W retained or shared, and were performed off-site — thus no royalties per the Sub-License and court’s summary judgment. | Court: No royalty liability as a matter of law for the three ROTSG contracts (Davis-Besse, Crystal River, TVA Bellefonte): activities were B&W-exclusive/shared and not on-site uses of Areva-exclusive tech; TVA Bellefonte also failed the "if completed" Exhibit A condition. Verdict for these contracts should be set aside. |
| "First contract" $250,000 exclusion | Areva: lump sum was in addition to 4% royalty (i.e., not in lieu). | B&W: the $250,000 was expressly in lieu of the 4% royalty for the first qualifying contract > $100,000 performed at an Exhibit A OTSG site. | Court: The plain language excludes the first contract from the 4% royalty and makes the $250,000 lump sum payable in lieu of the royalty; the provision is unambiguous. |
| Trade secrets claim | Areva: unauthorized use of Areva-exclusive technology constituted statutory misappropriation. | B&W: the Sub-License expressly authorized sublicensees to practice, use, and disclose the relevant technology; contractual authorization precludes VUTSA liability. | Court: Where contract expressly authorizes disclosure/use, VUTSA misappropriation cannot stand as a matter of law; the trade-secrets verdict was reversed and dismissed. |
Key Cases Cited
- School Bd. of Newport News v. Commonwealth, 279 Va. 460 (2010) (contract interpretation is a question of law reviewed de novo)
- Pocahontas Mining L.L.C. v. Jewell Ridge Coal Corp., 263 Va. 169 (2002) (a contract is not ambiguous merely because parties disagree)
- Bentley Funding Grp. v. SK&R Grp., 269 Va. 315 (2005) (court must declare what the instrument itself says; no creative rewrites to save a party from a bad bargain)
- Collelo v. Geographic Servs., Inc., 283 Va. 56 (2012) (application of Virginia Uniform Trade Secrets Act principles)
- Navar, Inc. v. Fed. Bus. Council, 784 S.E.2d 296 (Va. 2016) (contractual authorization can preclude a VUTSA claim)