competition laws because Rolex threatened to sue and actually sued Jurgensen for marketing certain watches protected by defendant's trademarks, patents, tradedress, etc. (Amended Complaint at para. 18). In addition to the antitrust and unfair competition claims, Jurgensen seeks a declaratory judgment that a 1981 settlement agreement ("the 1981 agreement") to which Jurgensen and Rolex were parties, did not prohibit the sale of a current Jurgensen design ("the current design"). The 1981 agreement resolved a law suit brought by Rolex against Jurgensen in which Rolex sought to enjoin Jurgensen from distributing certain watch bracelets. Paragraph 11 of the 1981 agreement provided, inter alia, that Jurgensen shall not distribute watches with "bracelets identical or substantially identical in appearance to bracelets as exemplified in Exhibit 5" ("the prohibited design"). (Ex. C to Rolex Motion for Summary Judgment).
Before the case was assigned to us, Judge Pollak dismissed plaintiff's antitrust and unfair competition claims, leaving only the declaratory judgment claim. After extensive discovery before Magistrate Hall and subsequent discovery before this court, both parties moved for summary judgment.
Fed.R.Civ.P. 56(c) instructs a court to enter summary judgment when the record reveals that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." This rule provides the court with a useful tool when the critical facts are undisputed, facilitating the resolution of a pending controversy without the expense and delay of conducting a trial made unnecessary by the absence of factual dispute. Peterson v. Lehigh Valley District Council, 676 F.2d 81, 84 (3d Cir. 1982); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977). Summary judgment is inappropriate, however, where the evidence before the court reveals a genuine factual disagreement requiring submission to a jury. An issue is "genuine" only if the evidence is such that a reasonable jury could find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). At the summary judgment stage, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249.
In a summary judgment action, the moving party bears the initial burden of identifying for the court those portions of the record which it believes demonstrate the absence of a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). To defeat summary judgment, the non-moving party must respond with facts of record which contradict the facts identified by the movant, and may not rest on mere denials. Id. at 321 n.3 (quoting F.R.Civ.P. 56(e)); See First National Bank of Pennsylvania v. Lincoln National Life Insurance Co., 824 F.2d 277, 282 (3d Cir 1987). The non-moving party must demonstrate the existence of evidence which would support a jury finding in its favor. See Anderson, 477 U.S. at 248-49.
Because this is a diversity action, this court must apply state law. See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). The parties have stipulated that we should apply Pennsylvania law.
The only remaining issue in this case is whether the current Jurgensen design is identical to or substantially identical to the prohibited Jurgensen design. Jurgensen argues that to resolve this issue, under the parol evidence rule, this Court may look only to the explicit and unambiguous language of the agreement. In doing so, Jurgensen urges that we compare the current design to the prohibited design, and by noting their structural differences, we should conclude that as a matter of law the two bracelets are not substantially identical. Rolex argues, on the other hand, that our inquiry should not be so restrictive. Rolex insists that the agreement on its face is ambiguous, and thus we should look beyond the language of the agreement to discern its true meaning.
If we examine the relevant extrinsic evidence, Rolex concludes, we would find that as a matter of law the current Jurgensen bracelet is identical or substantially identical to the prohibited design. We agree with Rolex.
Determining whether contract terms are clear or ambiguous is a question of law. Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001, 1011 (3d Cir. 1980). In making this determination, Pennsylvania law does not constrain the court to the "four corners" of the document; a court may consider the words of the agreement, alternative meanings suggested by counsel, and objective, extrinsic evidence offered in support of those meanings. Id. at 1011. After an examination of these factors, if the court finds the contract unambiguous, the parole evidence rule precludes the court from considering extrinsic evidence in interpreting the contract. Id. at 1010 n.9. If the court deems the contract ambiguous, it may consider extrinsic evidence in interpreting the terms of the contract.
The paramount consideration in the construction of all contracts is the intent of the parties. Id. at 1010; Ludwig Honold Manufacturing Co. v. Fletcher, 405 F.2d 1123, 1131 (3d. Cir. 1969). Courts must not labor over the parties' subjective intent, but instead should bind the parties by the objective manifestations of their intent. Mellon Bank, 619 F.2d at 1009. Courts must construe contracts as a whole and avoid rendering the performance of the contract meaningless. Ludwig, 405 F.2d at 1131; New Wrinkle v. John L. Armitage & Co., 238 F.2d 753, 757 (3d Cir. 1956).
Rolex asserts that the implicit and fundamental purpose of paragraph 11 of the 1981 settlement agreement was to prevent Jurgensen from imitating a Rolex bracelet called the Jubilee. Rolex argues that although this prohibition was not explicitly stated, it becomes obvious when we consider the objective indicia of the parties' intent.
"It very often happens that when two parties are trying to integrate their agreement in a writing they omit to state some fundamental assumption on the basis of which, as both of them well know, the agreement is being made. The mere existence of the writing should never be held to exclude testimony of such an unstated fundamental assumption. The truth of this assumption -- the existence of the fact that is assumed -- is a condition of the obligation of the written promise; . . . Justice requires the courts, with the advantage of hindsight, to fill some of these gaps. Evidence of the facts tending to show that such a fundamental assumption was made, though not expressed in the writing, should never be excluded by any 'parole evidence rule.'" 3 Corbin on Contracts Sec. 590 (1960).