Delaware Supreme Court Interprets "License" and "Assignment" in Patent Agreements
In Motorola Inc. v. Amkor Technology, Inc., (Del. Supr., Oct. 8, 2008), read opinion here, the Delaware Supreme Court interpreted patent agreements that turned on an interpretation of the meanings in the context of those agreements, of the words "license" and "assignment". Key contract interpretation principles, applicable generally to many types of cases, make this a useful decision for a business lawyer's toolbox.
Delaware's High Court also applied "trade usage" to interpret ambiguous terms in the agreement. (See page 8 of slip op.) Also, the Court recognized that there is a rule of construction that specific clauses carry more weight than general clauses (see Restatement (First) of Contracts, Section 236, which has been renumbered to Section 203 in the Restatement (Second) of Contracts). However, that rule is only a "secondary rule" that applies only after Sections 230 and 233 of the Restatement (First) of Contracts. Section 233(b) provides that:
Where a party manifests his intention ambiguously, knowing or having reason to know that the manifestation may reasonably bear more than one meaning, and the other party believes it to bear one of those meanings, having no reason to know that it may bear another that meaning is given to it.
Slip op. at 17.
The Court also addressed the doctrines of equitable estoppel and "the law of the case".
The passing mention of "trade usage" as an aid to construction begs the question. The opinion never quite says how "usage" of a term in the "trade" is proven or disputed. The Rst refers to the "parties" being "aware" of a trade definition, but in many instances, a lay expert offers an opinion about what the trade usage of a term is, or has been. That's as close to admissible hearsay as one might hear, or akin to proving character by anecdotal testimony.
Sorry that the Court glossed over this point.