       NOTE: This disposition is nonprecedential.


  United States Court of Appeals
      for the Federal Circuit
                ______________________

    BUCKHORN INC., AND SCHOELLER ARCA
             SYSTEMS, INC.,
            Plaintiffs-Appellees,

                           v.

              ORBIS CORPORATION,
                Defendant-Appellant,

                         AND

        ORBIS MATERIAL HANDLING INC.,
                 AND DOES 1 - 6,
                    Defendants.
              ______________________

                      2012-1643
                ______________________

   Appeal from the United States District Court for the
Southern District of Ohio in No. 08-CV-0459, Judge
Timothy S. Black.
                ______________________

             Decided: September 19, 2013
               ______________________

    PAUL GRANDINETTI, Levy & Grandinetti, of Washing-
ton, DC, argued for plaintiffs-appellees.
2                      BUCKHORN INC.   v. ORBIS CORPORATION


   GASPARE J. BONO, McKenna Long & Aldridge LLP, of
Washington, DC, argued for defendant-appellant. With
him on the brief were STEPHEN M. CHIPPENDALE and
JOHN W. LOMAS, JR.
               ______________________

Before RADER, Chief Judge, O'MALLEY, and REYNA, Circuit
                        Judges.
O’MALLEY, Circuit Judge.
     Defendant ORBIS Corporation (“ORBIS”) appeals the
decision of the United States District Court for the South-
ern District of Ohio denying its motion for fees, costs,
reasonable attorney fees, and expenses. In denying the
motion, the district court found that a settlement and
license agreement’s fee provision did not apply when
Plaintiffs allegedly had “no knowledge of the [settlement
and license agreement] at the time the litigation was
initiated.” Further, the district court stated that it would
be unconscionable to require Plaintiffs to pay fees and
costs under that settlement and license agreement.
    On appeal, ORBIS challenges the district court’s rul-
ings regarding the applicability and unconscionability of
the fee-shifting provision in the settlement and license
agreement. For the reasons below, we reverse the district
court’s denial, and remand for further proceedings.
                       BACKGROUND
     In 1990, Plaintiff-Appellee Schoeller Arca Systems,
Inc.’s (“Schoeller”) predecessors-in-interest, Xytec Plas-
tics, Inc. and Perstorp Xytec, Inc. (collectively, “Xytec”)
filed a patent infringement action regarding certain bulk
containers against ORBIS’s predecessor-in-interest,
Ropak Corporation (“Ropak”). In 1992, Xytec entered into
a settlement and license agreement (“Ropak-Xytec
BUCKHORN INC.   v. ORBIS CORPORATION                        3
Agreement”) with Ropak. 1 The Ropak-Xytec Agreement
resolved the on-going litigation and provided Ropak with
a license to four patents, including U.S. Patent No.
4,967,927 (“the ’927 patent”) along with any correspond-
ing divisional, continuations, continuations-in-part,
extensions, or reissues. One of the corresponding child
patents of the ’927 patent is U.S. Patent No. 5,199,592
(“the ’592 patent”).
   In addition to the licensing provisions, the Ropak-
Xytec Agreement included a fee-shifting provision titled
“Resolution of Future Disputes” that states:
   In any litigation based on a controversy or dispute
   arising out of or in connection with this Agree-
   ment or its interpretation, the prevailing party
   shall be entitled to recover all fees, costs, reasona-
   ble attorney’s fees, and other expenses attributa-
   ble to the litigation.
Joint Appendix (“J.A.”) at A951.   The Ropak-Xytec
Agreement also contained a provision governing the
transfer of the rights granted:
   ROPAK agrees that, unless it receives the express
   written consent of XYTEC, it will not assign, sub-
   license, or transfer by way of acquisition or any
   other transaction or restructuring which would
   result in the transfer of the Licensed Rights to
   any entity who manufactures or sells material
   handling products except in connection with the
   sale or merger of substantially all of ROPAK with
   another such entity. This provision expressly and


   1     The Ropak-Xytec Agreement included a non-
exclusive, fully paid-up, world-wide license for the dura-
tion of any and all patents included in the Licensed
Rights. The Agreement also required Ropak to pay royal-
ties totaling $1.4 million.
4                        BUCKHORN INC.   v. ORBIS CORPORATION
      specifically prohibits ROPAK from selling, or in
      any other way divesting itself of all, or substan-
      tially all, of its non-material handling business,
      and then executing the transfer described above.
      As to a transfer of rights to any entity which at
      the time of the transfer does not compete with
      XYTEC in the material handling market, no such
      written consent is required, provided that the
      transfer of these rights includes a transfer of sub-
      stantially the entirety of ROPAK’s material han-
      dling business.
Id.
    In 2000, Ropak transferred its entire materials han-
dling business, including its rights under the Ropak-Xytec
Agreement, to Linpac Materials Handling, Inc. (“LMH”).
In 2006, ORBIS acquired LMH. After the acquisition,
LMH changed its name to Orbis Corporation Material
Handling, Inc. (“OMH”).
     In 2007, Schoeller licensed several patents, including
the ’592 patent, to Myers Industries, Inc. (“Myers”). This
license agreement permitted Myers to commence in-
fringement actions relating to the licensed patents. It
also allowed Myers to transfer its rights or obligations
under the agreement to a subsidiary without notice to
Schoeller. Plaintiff-Appellee Buckhorn Inc. (“Buckhorn”)
is a wholly-owned subsidiary of Myers.
     In 2008, Plaintiff Buckhorn sued Defendants ORBIS,
OMH, and Does 1 through 6 (collectively, “Defendants”)
for infringement of the ’592 patent. Defendants moved to
dismiss the initial complaint for lack of standing as Buck-
horn was only a licensee, not the patent owner. To pre-
vent dismissal for lack of standing, Buckhorn joined the
patent owner, Schoeller, through the filing of an amended
complaint. In their answer, ORBIS and OMH asserted
their rights under the Ropak-Xytec Agreement as an
BUCKHORN INC.   v. ORBIS CORPORATION                     5
affirmative defense. In particular, the eleventh affirma-
tive defense 2 regarding OMH stated:
   Because Orbis Material Handling, Inc. f/k/a
   Linpac Materials Handling, Inc. is a successor-in-
   interest to Ropak Corporation, a licensee of U.S.
   Patent No. 4,967,927 and its progeny, of which
   U.S. Patent No. 5,199,592 is one, under a Settle-
   ment and License Agreement dated September 15,
   1992 between Ropak Corporation and Xytec Plas-
   tics, Inc. and Perstorp Xytec, Inc., Orbis Material
   Handling, Inc. f/k/a Linpac Materials Handling,
   Inc. has been licensed and permitted and is li-
   censed and permitted to make, use and sell prod-
   ucts in the United States and throughout the
   world covered under U.S. Patent No. 5,199,592 for
   the duration of the patent.



   2    The Answer also included a similar twelfth af-
firmative defense regarding ORBIS:
   Because Orbis Corporation is a successor-in-
   interest to Ropak Corporation, a licensee of U.S.
   Patent No. 4,967,927 and its progeny, of which
   U.S. Patent No. 5,199,592 is one, under a Settle-
   ment and License Agreement dated September 15,
   1992 between Ropak Corporation and Xytec Plas-
   tics, Inc. and Perstorp Xytec, Inc., Orbis Corpora-
   tion has been licensed and permitted and is
   licensed and permitted to make, use and sell
   products in the United States and throughout the
   world covered under U.S. Patent No. 5,199,592 for
   the duration of the patent.
Answer to Amended Complaint at 11, Buckhorn Inc. v.
Orbis Corp., No. 3:08-CV-0459 (S.D. Ohio Oct. 2, 2009),
ECF 22.
6                      BUCKHORN INC.   v. ORBIS CORPORATION
Answer to Amended Complaint at 10–11, Buckhorn Inc. v.
Orbis Corp., No. 3:08-CV-0459 (S.D. Ohio Oct. 2, 2009),
ECF 22.
    On December 31, 2009, OMH merged into ORBIS,
thereby purporting to transfer all of OMH’s assets to
ORBIS, including its rights under the Ropak-Xytec
Agreement. On April 6, 2010, the ’592 patent expired.
     On November 22, 2011, the district court granted
ORBIS’s motion for partial summary judgment regarding
its affirmative license defense, which resolved most of the
Plaintiffs’ infringement suit in ORBIS’s favor. In grant-
ing the motion, the district court found that ORBIS was
licensed as the successor-in-interest to rights under the
Ropak-Xytec Agreement for the ’592 patent and that the
transfer of those rights to ORBIS was consistent with the
transfer provision of the Ropak-Xytec Agreement. The
district court then dismissed Buckhorn’s complaint for
patent infringement with prejudice for lack of standing,
which resolved the remainder of the case in ORBIS’s
favor. The district court entered judgment for ORBIS,
and deemed ORBIS the prevailing party. Plaintiffs chose
not to appeal those decisions.
     ORBIS then timely moved for fees and costs from
Schoeller pursuant to the fee-shifting provision of the
Ropak-Xytec Agreement.        The district court denied
ORBIS’s motion, stating that this “case cannot be a litiga-
tion based on a controversy or dispute arising out of or in
connection with the License when Plaintiffs clearly had no
knowledge of the License at the time the litigation was
initiated.” J.A. at A22. The district court also found that
enforcing the fee-shifting provision would be unconscion-
able.
    ORBIS appeals that ruling to this Court. We have ju-
risdiction pursuant to 28 U.S.C. § 1295(a)(1).
BUCKHORN INC.   v. ORBIS CORPORATION                      7
                        DISCUSSION
                   I. Standard of Review
    Generally, interpretation of a settlement agreement is
not an issue unique to patent law, even if arising in the
context of a patent infringement suit. Novamedix, Ltd. v.
NDM Acquisition Corp., 166 F.3d 1177, 1180 (Fed. Cir.
1999) (citations omitted). For issues not unique to patent
law, we apply the law of the appropriate regional circuit.
     As the Ropak-Xytec Agreement expressly states that
the agreement shall be governed by and construed under
the laws of the State of California, this Court, as would
the United States Court of Appeals for the Sixth Circuit,
applies California contract law principles. Power Lift, Inc.
v. Weatherford Nipple-Up Sys., Inc., 871 F.2d 1082, 1085
(Fed. Cir. 1989); Tele-Save Merch. Co. v. Consumers
Distrib. Co., 814 F.2d 1120, 1122-24 (6th Cir. 1987)
(providing that Ohio’s choice-of-law generally applies the
law of the state chosen by the parties to govern in a
contract). Under California state law, contracts are
interpreted without deference on appeal. Epistar Corp. v.
Int’l Trade Comm’n, 566 F.3d 1321, 1332 (Fed. Cir. 2009)
(citation omitted). Further, whether contracts, or provi-
sions thereof, are unconscionable ultimately is a question
of law. Am. Software, Inc. v. Ali, 46 Cal. App. 4th 1386,
1391 (Cal. Ct. App. 1996).
       II. Fees Under the Ropak-Xytec Agreement
           A. Applicability of Fee Provision and
             Alleged Knowledge Requirement
    “Except as attorney’s fees are specifically provided for
by statute, the measure and mode of compensation of
attorneys and counselors at law is left to the agreement,
express or implied, of the parties.” CAL. CIV. PROC. CODE
§ 1021 (West 2013). Under California law, a contract may
be the basis for an award of fees to a prevailing party for a
tort related to a contract when the type of claim is within
8                       BUCKHORN INC.   v. ORBIS CORPORATION
the scope of the provision. Gil v. Monsano, 121 Cal. App.
4th 739, 743 (Cal. Ct. App. 2004). Here, the fee provision
entitled the prevailing party to an award of fees and costs
“[i]n any litigation based on a controversy or dispute
arising out of or in connection with this Agreement or its
interpretation.” J.A. at A951.
     To determine whether a contract permits the award of
fees, we review its terms in view of California principles of
contract interpretation. Under California statutory rules
of contract interpretation, “[a] contract must be so inter-
preted as to give effect to the mutual intention of the
parties as it existed at the time of contracting.” CAL. CIV.
CODE § 1636 (West 2013). For contracts reduced to writ-
ing, “the intention of the parties is to be ascertained from
the writing alone.” Id. § 1639. Further, “[t]he language of
a contract is to govern its interpretation, if the language
is clear and explicit, and does not involve an absurdity.”
Id. § 1638. In addition, “[t]he words of a contract are to
be understood in their ordinary and popular sense, rather
than according to their strict legal meaning; unless used
by the parties in a technical sense, or unless a special
meaning is given to them by usage.” Id. § 1644.
    The district court erred by denying ORBIS’s motion
for fees and costs based solely on the fact that the Buck-
horn plaintiff was unaware of the Ropak-Xytec Agreement
when it instituted the infringement action against ORBIS
and OMH. 3 Apparently, the trial court believed that an

    3   While the trial court repeatedly referred to the
“Plaintiffs’” lack of knowledge, Schoeller does not contend
it lacked knowledge of the Ropak-Xytec Agreement; it
only denied being aware that the agreement covered the
’592 patent. In fact, Schoeller produced the Ropak-Xytec
Agreement in its initial productions during discovery and
produced documents and witnesses reflecting knowledge
of the agreement prior to the litigation. Thus, while we
address whether knowledge of the agreement at the time
BUCKHORN INC.   v. ORBIS CORPORATION                      9
action could only arise out of the license agreement if the
action included an express attempt to enforce or rescind
it. While the district court conceded that “the express
language of the provision does not state that Plaintiffs
required knowledge of the License when the litigation was
initiated,” it nevertheless found that “[t]his case cannot be
a litigation based on a controversy or dispute arising out
of or in connection with the License when Plaintiffs clear-
ly had no knowledge of the License at the time the litiga-
tion was initiated.” J.A. at A22 (emphasis added). We
disagree with the district court that knowledge at the
time the litigation was initiated is a necessary prerequi-
site to the right to fees under the Ropak-Xytec Agreement.
     The “clear and explicit” language of the fee provision
does not require knowledge of either the Agreement or the
scope of rights thereunder at the time the litigation was
initiated. See CAL. CIV. CODE § 1638. The Ropak-Xytec
Agreement makes clear that the parties intended to
resolve both current and future patent disputes with
respect to the invention claimed in the ’927 patent and its
progeny. With respect to future disputes, the parties
explicitly included a section titled “Resolution of Future
Disputes,” which provided a reciprocal fee-shifting provi-
sion applying “[i]n any litigation based on a controversy or
dispute arising out of or in connection with this Agree-
ment or its interpretation.” J.A. at A951. We find this fee
provision very broad and the trial court’s interpretation of
it too narrow.
    Specifically, we find that the trial court failed to give
effect to the “in connection with” language in the fee
provision. While it is true that the litigation at issue here


of filing is a prerequisite to enforcement of rights under
the fee provision, the only plaintiff with obligations under
the fee provision did have knowledge of the agreement at
all relevant times.
10                      BUCKHORN INC.   v. ORBIS CORPORATION
was not a direct action under the Ropak-Xytec Agree-
ment, it is just as true that this litigation related to the
very intellectual property rights addressed in that
Agreement. And, the district court concluded that it was
the existence of the license agreement which resolved the
parties’ dispute regarding their respective rights as to
that intellectual property.
    Here, Plaintiffs asserted infringement of the ’592 pa-
tent against Defendants. In the Answer, Defendants
raised an affirmative defense alleging that ORBIS and
OMH were licensed under the Ropak-Xytec Agreement
and that the Agreement covered rights under the ’592
patent. After the district court interpreted the Ropak-
Xytec Agreement, it granted ORBIS’s motion for sum-
mary judgment regarding its affirmative license defense.
The district court acknowledged in its decision that the
resolution of the Ropak-Xytec Agreement “eliminated all
but four of the more than fifty accused products from this
case, abrogated constitutional standing for Plaintiffs’
remaining claims against those four remaining products,
and induced the dismissal of Plaintiffs’ entire claim in
Orbis’s favor.” J.A. at A21. As the language of the fee
provision is “clear and explicit,” this action fell within the
fee provision as a “litigation based on a controversy or
dispute arising out of or in connection with [the Ropak-
Xytec Agreement] or its interpretation.” See CAL. CIV.
CODE § 1638; J.A. at A951 (emphasis added). It is clear,
moreover, given the parties’ desire to resolve future
disputes via the license agreement that the fee provision
applies equally to litigations where the license is raised as
a defense. See Thompson v. Miller, 112 Cal. App. 4th 327,
335-37 (Cal. Ct. App. 2003) (finding a broad fee provision
to allow an award based on the assertion of a defense).
    Consequently, as the prevailing party in a “litigation
based on a controversy or dispute arising out of or in
connection with [the Ropak-Xytec Agreement] or its
interpretation,” ORBIS is entitled to recover “all fees,
BUCKHORN INC.   v. ORBIS CORPORATION                     11
costs, reasonable attorney fees, and other expenses at-
tributable to the litigation.”
              B. Enforcing the Fee Provision
                  Is Not Unconscionable
     Under California law, an unconscionable contract or-
dinarily involves both a procedural and a substantive
element: (1) oppression or surprise due to unequal bar-
gaining power, and (2) overly harsh or one-sided results.
Armendariz v. Found. Health Psychcare Servs., Inc., 6
P.3d 669, 689–90 (Cal. 2000). Determining unconsciona-
bility requires the application of a “sliding scale” between
procedural and substantive unconscionability. Id. at 690.
Further, “[i]f the court as a matter of law finds the con-
tract or any clause of the contract to have been uncon-
scionable at the time it was made the court may refuse to
enforce the contract.” CAL. CIV. CODE § 1670.5(a) (empha-
sis added); see also Am. Software, 46 Cal. App. 4th at 1391
(“[t]he critical juncture for determining whether a con-
tract is unconscionable is the moment when it is entered
into by both parties-not whether it is unconscionable in
light of subsequent events”).
     In denying fees and costs, the district court found that
“[i]t would be unconscionable to require Plaintiffs to pay
fees and costs under the License, as Plaintiffs were not
even given a copy of the License until May 28, 2010, over
18 months after the case was filed.” J.A. at A22. It also
stated that applying the fee provision “would be uncon-
scionable given the timeline and facts of this case,” noting
the distinction from other cases based on Plaintiffs’ al-
leged lack of awareness of the Ropak-Xytec Agreement as
of the filing of the lawsuit. Id. The district court erred by
basing its finding of unconscionability on events taking
place after Ropak and Xytec entered into their agreement
rather than at the time they entered it. As a determina-
tion of unconscionability considers factors at the time the
12                     BUCKHORN INC.   v. ORBIS CORPORATION
contract was made, the district court erred by considering
subsequent events. See CAL. CIV. CODE § 1670.5(a)
    An analysis of events surrounding the time the par-
ties entered into the contract shows that the fee provision
was not unconscionable; indeed, Schoeller does not seri-
ously contend that it was. In assessing the procedural
element, we find no oppression or surprise due to unequal
bargaining power. See Armendariz, 6 P.3d at 690. “‘Op-
pression’ arises from an inequality of bargaining power
which results in no real negotiation and ‘an absence of
meaningful choice.’” A & M Produce Co. v. FMC Corp.,
135 Cal. App. 3d 473, 486 (Ct. App. 1982) (citations omit-
ted). “‘Surprise’ involves the extent to which the suppos-
edly agreed-upon terms of the bargain are hidden in a
prolix printed form drafted by the party seeking to enforce
the disputed terms.” Id. The Ropak-Xytec Agreement
involved negotiations between sophisticated business
parties that worked out a six-page settlement and license
agreement involving multiple patents, royalty payments
over a million dollars to Schoeller’s predecessor-in-
interest, and a reciprocal fee provision to resolve future
disputes. As such, we determine that the procedural
inquiry provides little support for a finding of unconscion-
ability.
    Turning to the substantive inquiry, we see nothing
about the fee shifting contemplated in the fee provision
that “shock[s] the conscience.” Am. Software, 46 Cal. App.
4th at 1391. The Ropak-Xytec Agreement resolved a
lengthy patent litigation between sophisticated business
parties, resolved future disputes relating thereto, and
included a reciprocal fee-shifting provision. As the fee
provision is reciprocal, Appellees would have been able to
collect fees and costs if they were the prevailing party.
    Appellees’ primary argument in support of the trial
court’s unconscionability finding is that ORBIS and OMH
were in a better position than they to assess the validity
BUCKHORN INC.   v. ORBIS CORPORATION                    13
of the transfer of rights under the license agreement and
that ORBIS and OMH did not timely provide Buckhorn
and Schoeller with the information necessary to confirm
the chain of transfer. Schoeller questioned ORBIS’s right
to rely on the license agreement as a defense to Plaintiffs’
infringement claims, but asserts it was unable to fully
assess the validity of its own position because ORBIS and
OMH delayed the production of evidence regarding the
changes in the corporate structure of their predecessors-
in-interest.
    Specifically, Schoeller focuses on the fact that the li-
cense agreement was only transferrable upon the express
consent of Xytec except when “in connection with the sale
or merger of substantially all of ROPAK with another
such entity.” J.A. at A951. Without the evidence to know
whether this exception applied, Schoeller asserts, it could
not know whether the transfer of rights under the license
was valid or enforceable. These facts do not impact
ORBIS’s right to rely on the fee provision, however. Once
it was determined that ORBIS received its rights under
the Ropak-Xytec Agreement lawfully, its right to rely on
the fee provision was established.
    While dilatory conduct on the part of ORBIS during
discovery may impact the reasonableness of the fee
award, any discovery delays by ORBIS do not make its
request to enforce its contractual right to fees “uncon-
scionable.” On remand, the district court may factor the
conduct of ORBIS and OMH into its analysis of the rea-
sonableness of any fee award; it may not, however, refuse
to make an award given the unambiguous terms of the
contract.
                       CONCLUSION
    For the foregoing reasons, we reverse and remand for
further proceedings.
            REVERSED AND REMANDED
