      IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

AKZO NOBEL COATINGS INC.,                 )
                                          )
                   Plaintiff,             )
                                          )
      v.                                  )
                                          )        C.A. No. 8666-VCP
THE DOW CHEMICAL COMPANY,                 )
(doing business as DOW ADVANCED           )
MATERIALS),                               )
                                          )
                   Defendant.             )


                            MEMORANDUM OPINION

                           Date Submitted: January 13, 2015
                             Date Decided: June 5, 2015


Michael P. Kelly, Esq., Daniel J. Brown, Esq., Daniel M. Silver, Esq., McCARTER &
ENGLISH, LLP, Wilmington, Delaware; Michael D. Loughnane, Esq., KENYON &
KENYON LLP, New York, New York; Attorneys for Plaintiff.

Rodger D. Smith, II, Esq., Leslie A. Polizoti, Esq., Ryan D. Stottmann, Esq., MORRIS,
NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; David Lender, Esq.,
WEIL, GOTSHAL & MANGES LLP, New York, New York; Attorneys for Defendant.


PARSONS, Vice Chancellor.
       This is a dispute between two chemical companies that were parties to a joint

development agreement. The plaintiff alleges, among other things, that the defendant

breached the joint development agreement and wrongfully misappropriated intellectual

property that belongs in part or in whole to the plaintiff. The defendant has moved to

dismiss. For the reasons that follow, the motion to dismiss is granted in part and denied

in part. Specifically, the plaintiff‟s claims for breach of contract and misuse of its

confidential information survive, but its alternatively pled claims for breach of the

implied covenant of good faith and fair dealing, conversion, and unjust enrichment are

dismissed.

                               I.      BACKGROUND1

       Plaintiff, Akzo Nobel Coatings Inc. (“Akzo”), is a Delaware corporation with its

principal place of business in Strongsville, Ohio.      Akzo specializes in the design,

manufacture, and sale of various chemical coatings, including protective coatings for

food and beverage packaging and containers. Defendant, The Dow Chemical Company,

doing business as Dow Advanced Materials (“Dow”), is a Delaware corporation with its

principal place of business in Philadelphia, Pennsylvania. Among other things, Dow

develops, manufactures, and sells polymeric materials, products, and technologies,

including those suitable for use in coatings for food and beverage containers.




1
       The facts are drawn from the allegations in the plaintiff‟s Verified Complaint (the
       “Complaint”), which are assumed true for purposes of the defendant‟s motion to
       dismiss.

                                           1
      On January 25, 2010, the parties executed a Joint Development Agreement

(“JDA”).2 The provisions of the JDA are analyzed in detail in Section III.A infra. In

general and simplified terms, the purpose of the JDA was to combine the parties‟

respective areas of expertise in pursuit of the development of new protective coatings for

metal beverage and food packaging containers. The resulting output of any given project

under the JDA could be owned wholly by one of the two parties, depending on whether it

was a Target-Coating,3 which would be owned by Akzo, or a Material or Project

Material, either of which would belong to Dow. Any other output not falling into those

specific categories would be jointly owned. The Complaint also alleges that, in the

course of pursuing the various projects begun under the JDA, Akzo disclosed confidential

information to Dow.

      On or about October 24, 2011, Dow provided Akzo with a notice of termination.

The JDA, by its own terms, terminated ninety days later. 4 On or about May 18, 2012,

Dow communicated to Akzo that it intended to file two patent applications relating to



2
      Compl., Ex. A [hereinafter “JDA”]. The JDA also included several addenda as
      Exhibit A, which became “incorporated into [the] JDA” upon signature by the
      parties. The addenda were attached as Exhibit 1 to Dow‟s Motion to Dismiss.
      Consideration of the JDA and its addenda is appropriate on Defendant‟s motion
      because those documents are integral to the Complaint. See, e.g., Allen v. Encore
      Energy P’rs, 72 A.3d 93, 96 n.2 (Del. 2013); In re Gen. Motors S’holder Litig.,
      897 A.2d 162, 168-69 (Del. 2006).
3
      Unless otherwise specified, capitalized terms referenced in this Memorandum
      Opinion have the same meaning as in the JDA. Those definitions are described in
      Section III.A infra.
4
      JDA ¶ 9.5.

                                          2
potential JDA-Inventions (the “Patent Applications”). The Complaint alleges that the

Patent Applications disclose “coating compositions, applications and forming coated

containers or closure devices,”5 including Akzo‟s confidential information regarding

“polyolefin dispersions, acrylic latex emulsions and the use of phenol formaldehyde.”6

Akzo objected to Dow‟s proposed Patent Applications on or about June 12, 2012.

According to Akzo, Dow did not cooperate with Akzo to determine the appropriate

manner to proceed with the Patent Applications; instead, it acted unilaterally, in violation

of the JDA. Dow modified the Patent Applications to some extent before they were to

become public in or around mid-December 2013.

       Akzo filed its Complaint on June 20, 2013. The Complaint consists of five

Counts, asserting claims for: (1) a declaratory judgment regarding Akzo‟s ownership

rights under the JDA; (2) breach of contract and a permanent and mandatory injunction

against Dow, requiring Dow to transfer the appropriate ownership rights associated with

the Patent Applications to Akzo; (3) breach of the implied covenant of good faith and fair

dealing; (4) conversion; and (5) unjust enrichment. Dow moved to dismiss the Complaint

pursuant to Court of Chancery Rule 12(b)(6). After full briefing, I heard argument on

January 13, 2015 (the “Argument”) and took the matter under advisement.




5
       Compl. ¶ 21.
6
       Id. ¶ 22.

                                           3
                            II.     STANDARD OF REVIEW

       Pursuant to Rule 12(b)(6), this Court may grant a motion to dismiss for failure to

state a claim if a complaint does not assert sufficient facts that, if proven, would entitle

the plaintiff to relief. “[T]he governing pleading standard in Delaware to survive a

motion to dismiss is reasonable „conceivability.‟”7 That is, when considering such a

motion, a court must “accept all well-pleaded factual allegations in the Complaint as true

. . . draw all reasonable inferences in favor of the plaintiff, and deny the motion unless the

plaintiff could not recover under any reasonably conceivable set of circumstances

susceptible of proof.”8 This reasonable “conceivability” standard asks whether there is a

“possibility” of recovery.9 The court, however, need not “accept conclusory allegations

unsupported by specific facts or . . . draw unreasonable inferences in favor of the non-

moving party.”10 Moreover, failure to plead an element of a claim precludes entitlement

to relief and, therefore, is grounds to dismiss that claim.11

       Generally, the court will consider only the pleadings on a motion to dismiss under

Rule 12(b)(6). “A judge may consider documents outside of the pleadings only when: (1)


7
       Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 537
       (Del. 2011) (footnote omitted).
8
       Id. at 536 (citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002)).
9
       Id. at 537 & n.13.
10
       Price v. E.I. duPont de Nemours & Co., Inc., 26 A.3d 162, 166 (Del. 2011) (citing
       Clinton v. Enter. Rent-A-Car Co., 977 A.2d 892, 895 (Del. 2009)).
11
       Crescent/Mach I P’rs, L.P. v. Turner, 846 A.2d 963, 972 (Del. Ch. 2000) (Steele,
       V.C., by designation).

                                             4
the document is integral to a plaintiff‟s claim and incorporated in the complaint or (2) the

document is not being relied upon to prove the truth of its contents.”12

                                  III.     ANALYSIS

       At its core, this case concerns the meaning of the JDA. The interpretation of a

contract is a question of law.13 “[D]efendants are not entitled to dismissal under Rule

12(b)(6) unless the interpretation of the contract on which their theory of the case rests is

the „only reasonable construction as a matter of law.‟”14 If there is more than one

reasonable construction of contractual language, then the contract is ambiguous.15 But,

contractual language “is not ambiguous simply because the parties disagree on its

meaning.”16 Instead, the court will apply standard principles and canons of contract

interpretation in construing the contract. I begin with the JDA‟s terms, briefly describe

Dow‟s patent claims, and then analyze the five Counts in the Complaint.



12
       Allen v. Encore Energy P’rs, 72 A.3d 93, 96 n.2 (Del. 2013).
13
       See, e.g., Seidensticker v. Gasparilla Inn, Inc., 2007 WL 4054473, at *2 (Del. Ch.
       Nov. 8, 2007) (citing HIFN, Inc. v. Intel Corp., 2007 WL 1309376, at *9 (Del. Ch.
       May 2, 2007)); see also AHS N.M. Hldgs., Inc. v. Healthsource, Inc., 2007 WL
       431051, at *3 (Del. Ch. Feb. 2, 2007) (“Under general principles of contract law,
       interpretation of contractual language is purely a question of law.”).
14
       Kahn v. Portnoy, 2008 WL 5197164, at *3 (Del. Ch. Dec. 11, 2008) (quoting
       VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 615 (Del. 2003)).
15
       VLIW Tech., 840 A.2d at 615 (“Ambiguity exists „when the provisions in
       controversy are reasonably or fairly susceptible of different interpretations.‟”
       (quoting Vanderbilt Income & Growth Assocs. v. Arvida/JMB Managers, Inc., 691
       A.2d 609, 613 (Del. 1996))).
16
       E.I. du Pont de Nemours & Co. v. Allstate Ins. Co., 693 A.2d 1059, 1061 (Del.
       1997).

                                            5
                                   A.       The JDA

      The JDA sought to combine Dow‟s expertise in polymeric materials and products

with Akzo‟s expertise in protective coatings for metal beverage and food packaging

containers. To that end, the parties attempted to set forth in the JDA the terms of their

underlying rights and obligations. Various addenda to the JDA defined the scope and

goals of the specific joint projects that the parties undertook. Numerous provisions from

the JDA, which is governed by Delaware law,17 are pertinent to this dispute.

                            1.       Ownership provisions

      Section 5.2 defines the parties‟ respective ownership rights as to JDA-Inventions.

A JDA-Invention is

             any invention, whether patentable or unpatentable, that is:

                     (a)   a new Material (e.g., a new Project
                           Material), and/or
                     (b)   a new article (e.g., a new Target-
                           Coating) having a new structure and/or
                           composition, and/or
                     (c)   any new method or apparatus for
                           manufacturing Materials or Products,
                           and/or
                     (d)   any new end-use for a Material or
                           Product,

             which is first actually reduced to practice by a Party . . . alone
             or with others, and which reduction to practice occurs both
             during the Project Period and as a result of work performed in
             connection with that project.18



17
      JDA ¶ 10.5.
18
      Id. ¶ 11.13.

                                           6
Akzo “owns those JDA-Inventions that are specific to: (1) the Target-Coating, (2)

methods or apparatus for fabricating the Target-Coating, and (3) uses of the Target

Coating.”19 Dow, on the other hand, “owns those JDA-Inventions that are specific to: (1)

Materials and Project Materials, (2) methods or apparatus for manufacturing Materials

and/or Project Materials, and (3) uses of Materials, and/or Project Materials.”20

Everything not falling into one of these categories is jointly owned by Dow and Akzo.

For jointly owned inventions, neither party independently “may use for itself or license,

assign, transfer, or otherwise grant third parties any rights . . . without the other Party‟s

prior written consent, which shall not be unreasonably withheld.”21

       To prevail on its motion to dismiss, Dow must show that it is not reasonably

conceivable that the items claimed in the Patent Applications could be anything other

than a Material or a Project Material. Stated differently, if it is reasonably conceivable

that the Patent Applications claim something other than a Material or a Project

Material—e.g., a Product, a Target Coating, or, potentially, something that does not fall

within one of the other specified categories22—the motion to dismiss will be denied.




19
       Id. ¶ 5.2(a).
20
       Id. ¶ 5.2(b).
21
       Id. ¶ 5.2(c).
22
       This possibility appears to be contemplated by, e.g., Paragraph 11.13(b), which
       describes the creation of “a new article,” an undefined term. On this limited
       record, it is unclear whether the category of Products is coextensive with the
       category of items covered by Paragraph 11.13(b).

                                            7
      As Section 5.2 shows, the JDA contemplates three categories of potential JDA-

Inventions: Materials or Project Materials, Target Coatings, and Products. The pertinent

JDA definitions are as follows:

             “Material,” as used with respect to a particular Project,23
             means (a) those particular polymeric materials (including but
             not limited to neat polymers and polymer blends, and also
             compounds, formulations, or articles containing or made from
             polymers or polymer blends, including but not limited to
             films, fibers, nonwovens, foams, or a combination thereof), as
             well as (b) any other chemicals or compositions useful with
             those polymeric materials, all as more specifically defined to
             be the “Material” in the corresponding Addendum.24

             “Project Material,” as used with respect to a particular
             Project, means (a) any new Material first developed in and for
             that Project that enables the Parties to meet the Success
             Criteria of that Project, or (b) any other Material that the
             Parties otherwise mutually agree to designate as a „Project
             Material‟ for that Project.25

             “Product” as used with respect to a particular Project, means
             an article of manufacture (other than a Material per se) that is
             fabricated from a Material by (a) transforming the structure of
             the Material per se (e.g., converting a resin pellet into a film),
             and/or (b) combining the Material with other structural




23
      Project means “a particular program to be conducted by the Parties under this JDA
      to develop and commercialize a Target-Coating, as defined in the corresponding
      Addendum.” Id. ¶ 11.23. There were four Addenda to the JDA and, accordingly,
      four Projects.
24
      Id. ¶ 11.18.
25
      Id. ¶ 11.26. Because neither party based its arguments on any contention that
      something was or was not a Project Material, I limit my discussion in this
      Memorandum Opinion of JDA-Inventions that might be owned by Dow solely to
      Materials.

                                           8
             components (e.g., laminating a Material [such as a film] to a
             separate structure [such as a nonwoven web]).26

Target Coatings are one type of Product: “„Target-Coating,‟ as used with respect to a

Project, means that particular Product, as defined in the corresponding Addendum, that

the Parties intend to develop in that Project, including meeting the performance

requirements specifically defined in that Addendum.”27        The definition of Product

encompasses more than just Target-Coatings, however.         For example, a developed

coating that fails to meet the performance specifications in the Addendum still would be a

Product within the meaning of the JDA.

      These definitions show that the defined terms are heavily dependent on the

specific Projects, with each Project being described in detail in a corresponding

Addendum. The JDA includes four such Addenda. All four Addenda identically list the

specific Materials “that may be evaluated in this Project,” and “other related components

suitable for use in a Coating Formulation for the Target Application” as: “[1] Non-

commercially available BluewaveTM WB Polyolefin Dispersions; [2] Non-commercially

available Polyolefins (functionalized); [and] [3] Non-commercially available Polyolefins

(unfunctionalized).”28




26
      Id. ¶ 11.22.
27
      Id. ¶ 11.32.
28
      Id., Addenda Nos. 1-4.

                                          9
       The termination of the JDA did not affect “the respective rights or obligations of

either Party . . . under Articles 5, 6, 7 or 8, or under Paragraphs 2.1, 9.4, or 10.12.”29

                    2.    Patenting and protection of JDA-Inventions

       The JDA establishes a framework for determining into which ownership category

a JDA-Invention falls.

              Reasonably promptly after a Party becomes aware that an
              invention has been conceived or first reduced to practice that
              may be a JDA-Invention, that Party must deliver to the other
              [Party] . . . a written description of the invention, as well as
              sufficient information to enable the Parties . . . to evaluate the
              inventorship of the same. The Parties will attempt to reach a
              consensus on whether the same is a JDA-Invention and who
              is(are) the inventor(s).30

Akzo appears to construe this provision as meaning that a Project would have to be

completed before a determination of ownership would be made. The terms of Paragraph

5.4, however, do not seem to require completion of a Project before a party could attempt

to claim a JDA-Invention.

       After following the process described above, one or both of the parties could

pursue a patent on a JDA-Invention. The JDA contemplates that the parties would “focus

on drafting patent applications on JDA-Inventions using the optimal claim structure in

each case as appropriate, without considering who would own that patent application.”31

The JDA contains further detailed provisions on patenting JDA-Inventions, which need


29
       Id. ¶ 9.7(b).
30
       Id. ¶ 5.4.
31
       JDA ¶ 5.5.1.

                                            10
not be examined here, except to note that the JDA requires the Parties to cooperate in the

patenting of JDA-Inventions.32 The contours of that cooperation presumably would vary

depending on who owns the JDA-Invention and whether the parties are pursuing a Joint

JDA-Patent.33

                           3.     Confidentiality provisions

      According to the JDA,

             “Confidential Information” . . . means Background
             Information34 of the designated Party or its Affiliates
             (collectively the “Discloser”), as well as Project Information35
             first developed or discovered by that Discloser, which is
             disclosed or otherwise made available to the other Party
             and/or its Affiliates (collectively the “Recipient”) under this
             JDA, except with respect to any particular Information that
             the Recipient can prove:

                     (a)    was available to the public through no
                            fault of Recipient, or



32
      Id. ¶ 5.5.3.
33
      Id.
34
      “„Background Information‟ . . . means any Information known, owned or
      controlled by that Party or its Affiliates prior to the Effective Date, as well as any
      Information is [sic] acquired or developed by or for that Party or its Affiliates
      independently of any Project, as evidenced by written records.” Id. ¶ 11.4.
      “„Information‟ means technical or business information pertaining to (a) the
      composition, structure, and/or properties of any Material and/or Product . . . (b)
      any methods or apparatus for manufacturing Materials and/or Products, and/or (c)
      the use of a Material or Product in any end-use application.” Id. ¶ 11.11.
35
      “„Project Information,‟ as used with respect to a particular Project, means any new
      Information, owned or controlled by either Party or by its participating Affiliates,
      that is first developed or acquired both (a) during the corresponding Project
      Period, and (b) in connection with work performed on that Project.” Id. ¶ 11.25.

                                          11
                        (b)   Recipient already possessed prior to
                              receipt from Discloser, or
                        (c)   Recipient acquired from a Third Person,
                              or otherwise holds, without obligation of
                              confidence, or
                        (d)   was independently developed by or for
                              Recipient by person(s) who did not have
                              access to Discloser‟s Confidential
                              Information or Samples.36

       Article 7 imposes various obligations on the parties with respect to Confidential

Information.        For example, it provides that the parties “will cooperate to mark

Information disclosed under this JDA that either Party considers to be confidential.”37

The parties also must exercise at least as much care with respect to the Discloser‟s

Confidential Information as the Recipient uses with respect to its own such information.38

Additionally, there are restrictions on disclosure and use:

               Until 5 years after the end (either completion or earlier
               termination) of a particular Project, each Recipient receiving
               a Discloser‟s Confidential Information in connection with that
               Project agrees that (a) Recipient will maintain that
               Confidential Information in confidence and prevent the
               disclosure of the same to others, and (b) Recipient will use
               that Confidential Information exclusively (b.1) for the
               Projects, and/or (b.2) to carry out its obligations under this
               JDA.39




36
       Id. ¶ 11.6.
37
       Id. ¶ 7.1.
38
       Id. ¶ 7.3.
39
       Id. ¶ 7.2.

                                            12
The JDA does allow certain permitted disclosures, however, such as to the Recipient‟s

legal counsel or as reasonably required for regulatory review by governmental agencies. 40

                           B.      The Patent Applications

      The Patent Applications at issue here are U.S. Patent Application Nos. 72330 and

72705.41 The “Background of the Invention” section of each application makes clear that

the patents relate to coatings for food and beverage containers and cans,42 which was the

focus of the JDA. Akzo alleges that the inventions claimed in the Patent Applications

belong to it or, in the alternative, belong to it and Dow jointly. Dow contends that the

polymer compositions claimed in the Patent Applications are Materials under the JDA

and, therefore, belong solely to Dow.




40
      Id. ¶ 7.4.
41
      Patent Applications 72330 and 72705 are attached to the Complaint as Exhibits B
      and C, respectively. Apparently, those documents are internal Dow drafts and
      differ in certain respects from the actual applications Dow ultimately filed with the
      United States Patent and Trademark Office (the “PTO”). The Patent Applications
      actually filed are attached as Exhibits 2 and 3 to Dow‟s Brief in Support of the
      Motion to Dismiss [hereinafter respectively Patent Application 72330 and Patent
      Application 72705]. The Patent Applications are integral to the Complaint. Akzo
      contends that the differences between the draft Patent Applications and the filed
      versions are immaterial for purposes of Dow‟s motion. Accordingly, I will refer
      to the applications as actually filed with the PTO. Finally, I note for completeness
      that the Patent Application numbers used in this Memorandum Opinion are Dow‟s
      internal patent numbers, not the actual numbers given to the applications by the
      PTO.
42
      Patent Appl. 72330 at 1-2; Patent Appl. 72705 at 1-2.

                                          13
       Although somewhat unwieldy, I consider it appropriate, based on the technical

nature of patent claims, to include here the entire text of the first independent claim from

each of the Patent Applications. Patent Application 72330‟s first claim is:

              An aqueous based blend composition comprising:

                     [1]    an aqueous polyolefin dispersion comprising
              the melt blending product of one or more base polymers and
              one or more stabilizing agents in the presence of water and
              optionally one or more neutralizing agents, wherein the
              polyolefin dispersion has an average volume particle size
              diameter in the range of from 400 to 1500 nm, and a pH range
              from 8 to 11; and

                     [2]     an acrylic emulsion comprising acrylic solids
              having an average weight particle size diameter in the range
              of from 75 to 450 nm; an acid level in the range of from 0.25
              to 5 percent by weight of acid monomers based on the weight
              of the acrylic monomer, and a weight average molecular
              weight in the range of from 200,000 to 5,000,000 g/mole, and
              a glass transition temperature (T g) in the range of from 7 to
              100° C, and wherein said acrylic emulsion has a pH in the
              range of from 7 to 9;

                     [3]    wherein said aqueous based blend composition
              has a solid content in the range of from 15 to 70 percent by
              weight of solids, based on the weight of the aqueous based
              blend composition, wherein said solid content of said blend
              composition comprises from 20 to 95 percent by weight of
              the one or more base polymers, based on the weight of the
              solid content of the aqueous based blend composition and
              from 5 to 80 percent by weight of the acrylic solids, based on
              the weight of the solid content of the aqueous based blend
              composition, and a pH in the range of from 7 to 11.43




43
       Patent Appl. 72330 at 42.

                                          14
Claim 1 of Patent Application 72705 reads:

             An aqueous based blend composition comprising:

                    [1]    an aqueous polyolefin dispersion comprising
             the melt blending product of one or more base polymers and
             one or more stabilizing agents in the presence of water and
             optionally one or more neutralizing agents, wherein the
             polyolefin dispersion has an average volume particle size
             diameter in the range of from 400 to 1500 nm, and a pH range
             from 8 to 11; and

                    [2]    one or more crosslinking agents selected from
             the group consisting of phenolformaldehyde resins,
             hydroxyalkylamide resins, amino-formaldehyde resins; epoxy
             group containing resins, and combinations thereof, wherein
             said crosslinking agents comprise form [sic] 0.1 to 50 percent
             by weight based on the solid content of the dispersion;

                     [3]   wherein said aqueous based blend composition
             has a solid content in the range of from 15 to 70 percent by
             weight of solids, based on the weight of the aqueous based
             blend composition, wherein said solid content of said blend
             composition comprises up to 99.9 percent by weight of the
             one or more base polymers, based on the weight of the solid
             content of the aqueous based blend composition . . . and a pH
             in the range of from 8 to 11.44

In sum, Patent Application 72330 claims, at least, a combination of two elements: (1) an

aqueous polyolefin dispersion comprising (a) one or more base polymers and (b) one or

more stabilizing agents and (c) optionally, one or more neutralizing agents; and (2) an

acrylic emulsion. Patent Application 72705 also claims, at least, a combination of two

elements: (1) an aqueous polyolefin dispersion comprising (a) one or more base polymers




44
      Patent Appl. 72705 at 35.

                                         15
and (b) one or more stabilizing agents and (c) optionally, one or more neutralizing agents;

and (2) one or more crosslinking agents.

                C.      Declaratory Judgment and Breach of Contract

                            1.      Interpretation of the JDA

       As noted, to succeed on its motion to dismiss, Dow must show that the Patent

Applications do not claim anything besides a Material, such as a Product. In effect, Dow

asks this Court to conclude, without expert testimony on technical issues of polymer

chemistry and patent construction, that the Patent Applications claim only Materials. For

the reasons that follow, I conclude that, even assuming Dow‟s interpretation of the JDA

is reasonable, it is not the only reasonable interpretation of the JDA. Accordingly,

dismissal of Counts I and II is not appropriate at this time.

       Dow‟s position is that the items comprising the Patent Applications‟ claims are all

Materials under the JDA and, therefore, are owned exclusively by it, with Akzo having

no ownership rights. As stated in its brief, Dow reads Paragraph 11.18 of the JDA as

“defining „Materials‟ to include „compounds, formulations, or articles containing or made

from polymers or polymer blends, including but not limited to films, fibers, nonwovens,

foams, or a combination thereof‟ and „any other chemicals or compositions useful with

those polymeric materials.‟”45      As applied to the quoted claims from the Patent

Applications, Dow argues that the base polymers and the acrylic emulsion are “polymers

or polymer blends” and the stabilizing agents and crosslinking agents are “chemicals or



45
       Dow‟s Opening Br. 11.

                                            16
compositions useful with those polymeric materials.” Dow, therefore, reads the Patent

Applications as claiming only Materials and, as a result, being owned solely by Dow.

       Dow‟s interpretation of the JDA suffers from at least one serious shortcoming.

Namely, Dow ignores part of the definition of Materials. Dow points to the portion of the

definition beginning with the word “compounds.” As is clear from the full definition,

however, that subpart of the definition comes from an indicative list, set off in a

parenthetical, of polymeric materials.46 In fact, the portion of the definition from which

Dow derives support for its argument can be excised without the definition losing

meaning. Read in this manner, the definition would state: “„Material,‟ as used with

respect to a particular Project, means (a) those particular polymeric materials . . . as well

as (b) any other chemicals or compositions useful with those polymeric materials, all as

more specifically defined to be the „Material‟ in the corresponding Addendum.”47

Excluding the indicative parenthetical only clarifies that the meaning of the term

Materials depends upon what is listed in the Addenda.

       There were four Projects under the JDA, each of which resulted in an Addendum

numbered one through four. The relevant parts of those Addenda are identical. Each

lists three Materials in bullet points: (1) Non-commercially available BluewaveTM

Polyolefin Dispersions; (2) Non-commercially available Polyolefins (functionalized); and

(3) Non-commercially available Polyolefins (un-functionalized). According to Akzo,


46
       See supra note 24 and accompanying text.
47
       JDA ¶ 11.18.

                                           17
these three versions of Polyolefins were the Materials.            Thus, under Akzo‟s

interpretation, because the Patent Applications claim compositions comprising additional

items—e.g., stabilizing agents, crosslinking agents, and acrylic emulsions—the Patent

Applications do not claim only Materials.         Akzo‟s Complaint alleges that the

compositions comprising these other non-polyolefin items resulted from the JDA and at

least partially are owned by Akzo.

      At this preliminary stage in the litigation, I cannot say that Akzo‟s reading is

unreasonable. Dow‟s interpretation, at least on the record currently before me, arguably

sweeps too broadly. It seeks to define Materials as comprising polymeric materials and

“any other chemicals or compositions useful with those polymeric materials” without

reference to the appropriate Addendum. The universe of other chemicals or compositions

that are “useful with” polymeric materials seemingly could be limitless and would result

in interpreting Material in such a manner that it likely would encroach on the other JDA

definitions, such as Product. An interpretation of Material that unnecessarily rendered

other terms of the JDA surplusage would be unreasonable.48

      The clear language of the definition of Materials therefore supports the conclusion

that Akzo‟s interpretation of that term is reasonable. Under Akzo‟s interpretation, it is



48
      E.g., Commercial Bank v. Global Payments Direct, Inc., 2014 WL 3567610, at *8
      (Del. Ch. July 21, 2014) (“In upholding the intentions of the parties, a court must
      construe the agreement as a whole, giving effect to all provisions therein, in order
      not to render any part of the contract mere surplusage, and, if possible, reconcile
      all the provisions of the instrument.” (internal quotations and footnotes omitted))
      (collecting cases).

                                         18
reasonably conceivable that the Patent Applications claim non-Material JDA-Inventions,

which are at least co-owned by Akzo. Phrased differently, it is reasonably conceivable

that Akzo could prove at trial that the Patent Applications claim at least certain Products,

which would be JDA-Inventions co-owned by Akzo.49 Accordingly, it would not be

appropriate to dismiss Akzo‟s breach of contract count or its declaratory judgment count.

                        2.      Akzo’s confidential information

       Akzo alleges that the Patent Applications “disclose Akzo‟s confidential

information regarding polyolefin dispersions, acrylic latex emulsions and the use of

phenol formaldehyde.”50 Dow derides these allegations as so vague that they fail to place

Dow on notice of what Akzo is alleging, thereby violating Court of Chancery Rule 8.51

In making that argument, however, Dow appears to be invoking a heightened pleading

standard, despite its protestations to the contrary. But, there is no requirement that

improper disclosure of confidential information be pled with particularity.52 Rather, the




49
       Akzo technically has preserved its argument that the Patent Applications claim
       Target-Coatings, which would be wholly owned by Akzo. There are no
       allegations, however, that any Target-Coatings ever were created under the JDA.
50
       Compl. ¶ 22.
51
       Ct. Ch. R. 8 (“A pleading . . . shall contain (1) a short and plain statement of the
       claim showing that the pleader is entitled to relief . . . .”).
52
       See Ct. Ch. R. 9 (listing pleadings that require more specificity or particularized
       allegations).

                                          19
applicable standard in Delaware is notice pleading, which is a minimal pleading

standard.53

       Akzo alleges that, in violation of the confidentiality provisions in the JDA, Dow

disclosed Akzo‟s confidential information in the Patent Applications. The combined

length of the two Patent Applications is slightly more than eighty typewritten pages. The

categories of Akzo‟s confidential information that Dow allegedly misused or disclosed

relate to polyolefin dispersions, acrylic latex emulsions, and the use of phenol

formaldehyde. These allegations adequately place Dow on notice of the claims against it.

To respond to those allegations, Dow needs to examine the finite universe of the Patent

Applications and focus on the disclosures and claims that pertain to one or more of those

three categories of allegedly confidential information.

       Dow further argues that Akzo‟s allegedly confidential information previously was

disclosed publicly. If Dow succeeds in proving that, then Dow could not have breached

the JDA by disclosing such information.54 In particular, Dow points to earlier-filed

patents that include the phrases “aqueous polymer dispersion,” “acrylic polymers,” and

“phenol formaldehyde.”55      These general phrases, however, do not prove that the

information Akzo accuses Dow of improperly using or disclosing was in the public



53
       Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 536
       (Del. 2011).
54
       JDA ¶ 11.6 (excluding publicly available information from the definition of
       Confidential Information).
55
       Dow‟s Opening Br. 19 and Exs. 4-5.

                                          20
domain.        Akzo‟s claim may involve more specific disclosures within those three

categories, but those details will need to await development of the record in discovery. In

addition, whether the allegedly confidential information already was in the public domain

and, therefore, was not Confidential Information under the JDA, constitutes a disputed

issue of fact that cannot be resolved on a motion to dismiss. In sum, because Delaware

requires only notice pleading as to Akzo‟s confidential information clams,56 Dow‟s

motion to dismiss that claim is denied.

                              D.     The Remaining Counts

       Thus far, I have declined to dismiss Count I and II. The remaining Counts III-V,

respectively, are for breach of the implied covenant of good faith and fair dealing,

conversion, and unjust enrichment. Dow argues that each of these counts fails to state a

claim because the JDA governs the entirety of the relationship between the parties and

these claims are merely duplicative of Counts I and II. I agree.

          1.       Breach of the implied covenant of good faith and fair dealing

       “The implied covenant of good faith and fair dealing inheres in every contract and

„requires a party in a contractual relationship to refrain from arbitrary or unreasonable

conduct which has the effect of preventing the other party to the contract from receiving




56
       See Lazard Debt Recovery GP, LLC v. Weinstock, 864 A.2d 955, 978-79 (Del. Ch.
       2004) (noting Delaware‟s “lenient pleadings standards on a motion to dismiss”
       and allowing to proceed a sparsely pled claim for violation of a contractual duty to
       protect and not misuse confidential information).

                                           21
the fruits of the bargain.”57 “The „implied covenant of good faith and fair dealing

involves . . . inferring contractual terms to handle developments or contractual gaps that

. . . neither party anticipated.‟ It does not apply when the contract addresses the conduct

at issue.”58 The implied covenant “is recognized only where a contract is silent as to the

issue in dispute.”59 It is not a tool to re-write contracts and it “cannot be invoked to

override the express terms of the contract.”60 Indeed, “courts should be most chary about

implying a contractual protection when the contract could easily have been drafted to

expressly provide for it.”61 Thus, to state a claim for a breach of the implied covenant,

Akzo “must allege a specific implied contractual obligation and allege how the violation

of that obligation denied [it] the fruits of the contract.”62

       In its briefing and at the Argument, Akzo explained that its implied covenant

claim focuses on the timing of Dow‟s unilateral termination of the JDA: before the

Projects could be completed, but after Dow had gained access to Akzo‟s Confidential



57
       Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 888 (Del. Ch. 2009).
58
       Nationwide Emerging Managers, LLC v. Northpointe Hldgs., LLC, 112 A.2d 878,
       896 (Del. 2015) (quoting Nemec v. Shrader, 991 A.2d 1120, 1125 (Del. 2010))
       (footnotes omitted).
59
       AQSR India Private, Ltd. v. Bureau Veritas Hldgs., Inc., 2009 WL 1707910, at
       *11 (Del. Ch. June 16, 2009).
60
       Kuroda, 971 A.2d at 888.
61
       Allied Capital Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1035 (Del. Ch.
       2006).
62
       Kuroda, 971 A.2d at 888.

                                             22
Information, techniques, and know-how, which Dow then misappropriated for itself.63

These arguments, however, do not correspond to the allegations Akzo made in the

Complaint in support of its claim for breach of the implied covenant of good faith and

fair dealing. Having chosen to stand on its Complaint rather than amend it, Akzo must

live with that decision.64

       In the Complaint, Akzo cites four bases for its implied covenant claim. They are

that Dow allegedly: (1) unilaterally filed for patents based on “the information arising

from or related to research, development, data, information, knowledge, know-how,

products and inventions resulting from the composition, use or application of certain

coatings or other results of JDA activities”;65 (2) unilaterally disclosed Akzo‟s

confidential information over Akzo‟s objections; (3) failed to “honor the purpose and

intent of the JDA such that the contemplated and anticipated” output resulting from the

joint venture “would be preserved and protected for the benefit of Akzo and not marketed

or revealed as Dow‟s own”;66 and (4) “usurp[ed] to itself and for its own benefit

intellectual property entrusted to it by Akzo with the understanding and reasonable




63
       Akzo‟s Opp‟n Br. 19-20; Arg. Tr. 54-56.
64
       Ct. Ch. R. 15(aaa).
65
       Compl. ¶ 37(a).
66
       Id. ¶ 37(c).

                                         23
expectation that Akzo‟s rights and interests therein would be protected.” 67 All of these

allegations are covered by express provisions of the JDA.

       First, as detailed in the preceding Section, the JDA includes specific provisions

governing Confidential Information. I already have concluded that Akzo adequately

stated a claim for breach of the JDA relating to misuse of its Confidential Information.

Second, the JDA explicitly addresses which party owns what JDA-Inventions and, as I

previously held in this Memorandum Opinion, Akzo sufficiently stated a breach of

contract claim in that regard. I do not understand the Complaint to accuse Dow of taking

something else that is neither a JDA-Invention nor an aspect of Akzo‟s Confidential

Information.

       Based on its position at the Argument and in its briefing, Akzo also appears to

allege that Dow unfairly exercised its discretion to terminate the JDA in an effort to cut

short development of potential Target-Coatings. Viewing the allegations in the light

most favorable to Akzo, Plaintiff asserts that Akzo‟s scientists would have developed

Target-Coatings, but Dow prematurely terminated the JDA and left Akzo with, at best, a

JDA-Invention jointly owned by it and Dow, rather than a Target-Coating that would

have been wholly owned by Akzo. In this manner, Dow allegedly deprived Akzo of the

benefit of its bargain under the JDA.

       Even assuming this is what Akzo in fact is attempting to argue in connection with

its implied covenant claim, the Complaint does not contain factual allegations supporting


67
       Id. ¶ 37(d).

                                          24
such a theory. The supposed wrongful termination of the JDA is the only theory under

which Akzo conceivably could state an implied covenant claim in light of its other

allegations, all of which expressly are covered by the JDA‟s terms. Aside from the

allegations in Paragraph 37, which are quoted or summarized supra, the only relevant

allegation relating to the termination of the JDA states: “On or about October 24, 2011,

Dow provided Akzo with notice of termination of the JDA under paragraph 9.5. The

JDA thereby terminated by its own terms ninety (90) days after said notice.” 68 This

allegation says nothing about how Dow deprived Akzo of the benefit of the JDA. Indeed,

it does not even allege that the termination was wrongful. Thus, based on the allegations

in Akzo‟s Complaint—as opposed to the positions it advanced in its briefing and at the

Argument—I find that it is not reasonably conceivable that Akzo could prove a breach of

the implied covenant of good faith and fair dealing.69

                                   2.      Conversion

       “Conversion is „any distinct act of dominion wrongfully exerted over the property

of another, in denial of [that person‟s] right, or inconsistent with it.‟”70 Conversion,

however, is a tort. “Under Delaware law, „where an action is based entirely on a breach

of the terms of a contract between the parties, and not on a violation of an independent



68
       Compl. ¶ 17.
69
       With respect to the allegations explicitly governed by the JDA, Akzo‟s relief, if
       any, will be from its breach of contract claim. The same allegations cannot form
       the basis of an implied covenant claim. AQSR, 2009 WL 1707910, at *11.
70
       Kuroda, 971 A.2d at 889 (quoting Drug, Inc. v. Hunt, 168 A. 87, 93 (Del. 1933)).

                                          25
duty imposed by law, a plaintiff must sue in contract and not in tort.‟”71 “Thus, in order

to assert a tort claim along with a contract claim, the plaintiff must generally allege that

the defendant violated an independent legal duty, apart from the duty imposed by

contract.”72

       In Count IV of the Complaint, Akzo accuses Dow of conversion. In support of

that claim, Akzo alleges that, without its permission or consent, Dow “intended and

continues to deprive Akzo of the research, development, data, information, knowledge,

know-how, product and inventions resulting from the composition, use, or applications of

certain coatings and JDA inventions permanently and did so permanently deprive Akzo

of its interests in its intellectual property.”73 The crux of these allegations is that Dow

misappropriated confidential information and JDA-Inventions that are at least partially

owned by Akzo. All of these allegations are covered explicitly by the JDA, as already

discussed. Indeed, the conversion allegation specifically references JDA-Inventions, a

term with no meaning outside the context of the JDA. Akzo has not identified or pled the

existence of any independent duty violated by Dow that existed apart from the

contractual duties imposed by the JDA. Accordingly, I grant Dow‟s motion to dismiss

Count IV.




71
       AQSR, 2009 WL 1707910, at *12 (quoting Pinkert v. John J. Olivieri, P.A., 2001
       WL 641737, at *5 (D. Del. May 24, 2001)).
72
       Kuroda, 971 A.2d at 889.
73
       Compl. ¶ 42.

                                           26
                               3.      Unjust enrichment

       Akzo‟s alternatively pled unjust enrichment count suffers from the same flaws as

its conversion claim: the purported wrongs are covered by the JDA. “The elements of

unjust enrichment . . . [are]: (1) an enrichment, (2) an impoverishment, (3) a relation

between the enrichment and impoverishment, (4) the absence of justification and (5) the

absence of a remedy provided by law.”74 “Courts developed unjust enrichment, or quasi-

contract, as a theory of recovery to remedy the absence of a formal contract.” 75

Accordingly, a “claim for unjust enrichment is not available if there is a contract that

governs the relationship between parties that gives rise to the unjust enrichment claim.”76

       According to the Complaint:

              Akzo provided Dow with its confidential information relating
              to the development of protective coatings for metal beverage
              and food package containers with the express understanding
              and reasonable expectation that the confidentiality of the
              information provided would be protected and that Akzo‟s
              rights, research data, results and inventions resulting from the
              use of those compounds would be protected as contemplated
              by the JDA.77

The information Akzo provided to Dow was supplied in the context of the parties‟ joint-

development venture.     That venture was governed by the JDA, which had specific


74
       Cantor Fitzgerald, L.P. v. Cantor, 1998 WL 326686, at *6 (Del. Ch. June 16,
       1998).
75
       ID Biomedical Corp. v. TM Techs., Inc., 1995 WL 130743, at *15 (Del. Ch. Mar.
       16, 1995).
76
       Kuroda, 971 A.2d at 891.
77
       Compl. ¶ 48.

                                          27
provisions dealing with Confidential Information, ownership of JDA-Inventions, and

patenting procedure, among other things.         Akzo‟s unjust enrichment allegation

specifically references the JDA and does not invoke any cognizable legal or equitable

rights arising from outside the JDA. Because the actions complained of in Akzo‟s unjust

enrichment count are governed by the JDA, I conclude that it must be dismissed.

                               IV.      CONCLUSION

       For the foregoing reasons, Dow‟s motion to dismiss is granted in part and denied

in part. Specifically, Counts III, IV, and V are dismissed, but the motion is denied as to

Counts I and II.

       IT IS SO ORDERED.




                                          28
