Opinion
C.A. No. 02C-08-160 CHT.
Submitted: October 4, 2006.
Decided: November 14, 2007.
Daniel V. Folt, Esquire, DUANE MORRIS, LLP, Wilmington, DE, Attorney for the Plaintiff/Counterclaim Defendant.
J. Timothy Eaton, Esquire, SHEFSKY FROELICH, LTD., Chicago, IL, Ross E. Kimbarovsky, Esquire, UNGARETTI HARRIS LLP, Chicago, IL, Jeffrey L. Moyer, Esquire, RICHARDS LAYTON FINGER P.A., Wilmington, DE, Attorneys for Defendant/Counterclaim Plaintiff.
FINDINGS OF FACT AND CONCLUSIONS OF LAW FOLLOWING A NONJURY TRIAL
INTRODUCTION
That which follows represents this Court's findings of fact and conclusions of law following a nonjury trial. The trial resulted from the decision of the Delaware Supreme Court reversing the entry of summary judgment by this Court in favor of Amkor Technology, Inc. and against Motorola, Inc. The matter was remanded for purposes of accepting parol evidence relative to the intent of the original parties to the contract in question in inserting certain language in that agreement. Based upon that evidence or the lack thereof, this Court was directed to return to and resolve the underlying dispute taking into consideration the record in its entirety.
With the exception of the allegations as to the tenor, content and direction of the negotiations involved in the agreement to be described infra, the facts upon which this litigation is premised are essentially undisputed. They are more particularly set forth in the opinions rendered by this Court herein on October 16, 2003, and the May 27, 2004 decision of the Delaware Supreme Court reversing the Superior Court. See Amkor Technology, Inc. v. Motorola, Inc., Del. Super., C.A. No. 02C-08-160, Toliver, J., at 15-16 (October 6, 2003) (Mem. Op.), Motorola v. Amkor, 849 A.2d 931, (Del. 2004). The facts will be repeated here only to the extent relevant to the remand from the Delaware Supreme Court.
FINDINGS OF FACT
The Initiation of Contractual Relationships Between the Parties
The entities involved in this litigation, either as parties or their predecessors, are Amkor Technology, Inc., Motorola, Inc. and Citizen Watch Co., Ltd. At all times relevant to the litigation, Amkor and Motorola were in the business of, among other things, developing and providing semiconductor assembly test services, also known as ball grid array packages ("BGA Packages"). BGA Packages are used to house integrated circuits in the manufacture of semiconductor products. Both Motorola and Amkor hold patents relating to BGA Packages. Citizen too was recognized as a developer of BGA Packages and printed circuitry used in microprocessors and/or semiconductor manufacture. At the core of this dispute are the relationships between the three, i.e., between Motorola and Citizen, Motorola and Amkor, and Amkor and Citizen.The relationship between Motorola and Citizen appears to have begun in 1987, when Citizen began performing essentially all microprocessor assembly processes for Motorola. It was then that these two companies entered into agreements whereby Citizen sold Motorola BGA Packages and printed circuitry while Motorola and Citizen jointly developed BGA technology. Both Motorola and Citizen shared confidential and technical information; each retaining their exclusive right to ownership of their individual data. However, at the same time it was engaged in that joint effort, Motorola filed applications seeking to patent the underlying technology, allegedly without consulting with, or providing notice to, Citizen. The applications were granted as Patent No. 5,241,133 ("Mullin Patent") on August 31, 1993, and No. 5,216,278 ("Lin Patent") on or about June 1, 1993.
In this Court's October 6, 2003 opinion, the patents are referred to as Nos. `133 and `278. In the Delaware Supreme Court's May 27, 2004 opinion, they are referenced as the Mullin and Lin patents. To avoid any confusion, this Court will adopt the labels affixed by the Supreme Court from this point forward.
The next step in this saga occurred on June 30, 1993, when Motorola and Amkor entered into an arrangement embodied in a document entitled as an "Immunity Agreement". Each was obligated to provide the other with cross-releases and cross-licenses for their respective BGA Package patents. In exchange for the use of Motorola's BGA Package patents, Amkor was required to pay royalties to Motorola quarterly. By its terms, the agreement was to expire on December 31, 2002.
Notwithstanding the fact that the parties enjoyed a business relationship as described above up to that point in time, in December 1993, Motorola demanded that Citizen purchase a "royalty bearing license" which would allow Citizen to use the technology covered by the Mullin and Lin Patents. If Citizen did not accede to that ultimatum, Motorola indicated that it would sue Citizen, presumably for infringing upon those patents. Citizen did in fact refuse, believing that it had co-developed the inventions upon which the Mullin and Lin Patents were based. Citizen felt, therefore, that it had a viable basis upon which to invalidate and claim co-ownership of one, if not both, of those patents. Discussions began in an effort to resolve the dispute. They included requests for and exchanges of information along with face to face negotiations between the principal representatives of each party.
On January 25, 1996, the efforts by Motorola and Citizen resulted in what was entitled as a "Patent License Agreement" or "PLA". It was recorded with the United States Patent Office pursuant to § 4.2 of the PLA and § 261 of the U. S. Patent and Trademark Act. The PLA granted Citizen the right to use the same Motorola BGA Package patents that are the subject of the Immunity Agreement between Motorola and Amkor. However, it grants at least two specific rights to Citizen that were not granted to Amkor.
The federal statute, 35 U.S.C.A. § 261 (2001), reads as follows:
Subject to the provisions of this title, patents shall have the attributes of personal property.
Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States.
A certificate of acknowledgment under the hand and official seal of a person authorized to administer oaths within the United States . . . shall be prima facie evidence of the execution of an assignment, grant or conveyance of a patent or application for patent.
An assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.
First, Motorola and Citizen cross-licensed their respective patents governing BGA packaging technology on a royalty-free basis. Second, the PLA includes an assignment from Motorola to Citizen of an undivided one-half interest in the Mullin and Lin Patents. Unlike Citizen, Amkor was required to pay Motorola for use of these two patents under the 1993 Immunity Agreement between Amkor and Motorola. Nor was Amkor granted any ownership interest in those patents.
The PLA also contains restrictions on Citizen's ability to transfer the rights and privileges obtained thereunder to third parties. These restrictions are set forth in § 4.1 and § 5.5 of the PLA. Section 4.1 of the PLA expressly prohibits Citizen from entering into contracts involving the royalty-free rights to the Mullin and Lin patents with a fixed list of companies:
Citizen agrees not to offer to enter into or to enter into a contract with current BGA licensees of Motorola, including those listed in Appendix A [ inter alia, Amkor], for a license to make, have made, or sell BGAs under U.S. Patent Nos. 5,241,133 [Mullin] and/or 5,216,278 [Lin].
Section 5.5 of the PLA limits Citizen's ability to transfer or assign its rights under the agreement, as follows:
The rights or privileges provided for in this Agreement may be assigned or transferred by either party only with the prior written consent of the other party and with the authorization or approval of any governmental authority as then may be required, except to a successor in ownership of all or substantially all of the assets of the assigning party relating to the business unit employing the patents licensed hereunder but such successor, before such assignment or transfer is effective, shall expressly assume in writing to the other party the performance of all the terms and conditions of this Agreement to be performed by the assigning party.
On March 28, 2002, Amkor purchased substantially all of the assets of Citizen's BGA assembly unit. At the same time, Citizen and Amkor entered into an agreement that assigned to Amkor Citizen's one-half interest in the Mullin and Lin patents. That document, nominated as the "Intellectual Property Assignment Agreement" required Citizen to obtain consent for the assignments from all relevant entities but "exclude[d] any consent that may be required from Motorola."
Following the execution of that agreement, Amkor advised Motorola that Amkor had taken over Citizen's ownership rights in the Mullin and Lin patents, and acquired a royalty-free license to the Motorola BGA patent portfolio under the PLA. Motorola informed both Citizen and Amkor that they were in material breach of their respective agreements with Motorola, and that the alleged transfers were invalid under § 4.1 of the PLA. Nevertheless, Amkor stopped paying royalties to Motorola after the first quarter of 2002.
It appears that Amkor paid Motorola approximately $36.8 million for the use of the technology in question via the Immunity Agreement, which, as noted above, ended on December 31, 2002.
Initiation of Litigation
On August 26, 2002, Amkor filed a declaratory judgment action in the Superior Court. It sought a declaration that Citizen's transfer of the Mullin and Lin Patents and the assignment of the PLA were valid. Amkor also sought a declaration that it was not required to make royalty payments to Motorola for the duration of the Immunity Agreement.
Motorola filed its opposition to that petition on October 7, 2002 and counterclaimed against Amkor for breach of the Immunity Agreement. The essence of Motorola's position is that the assignment from Citizen to Amkor violated the PLA and that Motorola was entitled to a declaration that Amkor was obligated to make timely royalty payments to Motorola under the Immunity Agreement. Motorola's claim that it was entitled to royalty payments from Amkor was formally resolved on June 24, 2003, when Motorola and Amkor filed a "Stipulation and Order Dismissing Certain Claims" that outlined their agreement. No explanation as to why this aspect of the litigation was terminated has been provided.
As to the transfer of the patent rights and the validity of the assignment, this Court, by order and opinion dated October 6, 2003, granted Amkor's motion for summary judgment and denied Motorola's cross-motion. Motorola's claim that a license is subsumed in the definition of an assignment was rejected. Instead, the Court concluded:
Since neither party to the Motorola/Citizen PLA deemed it necessary to included definitions of a license or assignment, the Court must look to the `commonly accepted meaning', as the law requires. A `license' and an `assignment' are distinct and separate, as used in § 4.1 and § 5.5, involving different obligations and responsibilities. . . . Although Motorola may not have intended to allow Citizen and Amkor to circumvent § 4.1 by assigning the patents to Amkor via § 5.5, that is what is permitted by the clear meaning of the language of the PLA.
Amkor, C. A. No. 02C-08-160, at 15-16.
For obvious reasons, Motorola sought review of that decision by the Delaware Supreme Court. That Court rendered its response on May 27, 2004, reversing this Court's ruling in favor of Amkor. The Supreme Court opined:
As a general rule, whenever it is possible, a court must preserve the reasonable expectations that form the basis of the parties' contractual relationship. (Citing Eagle Industries v. DeVilbiss Healthcare, 702 A.2d 1228, 1232-99 (Del. 1997)). In this case, contrary to that legal principle, the Superior Court held that the language in § 5.5 bound Motorola to what may have been the unintended consequences that § 4.1 prohibited. The Superior Court's construction of § 5.5, in apparent isolation from § 4.1, was contrary to the law of Illinois. . . .
Motorola, 849 A.2d at 938.
It went on to conclude that:
Contract terms are controlling when they establish the parties' common meaning so that a reasonable person in the position of either party would have no expectations inconsistent with the contract language. When the provisions in controversy are fairly susceptible of different interpretations or may have two or more different interpretations, there is ambiguity. In those circumstances, the interpreting court must look beyond the language of the contract to ascertain the parties' intentions.
Id.
The matter was remanded so that this Court could interpret the intent of the parties relative to the provisions in controversy in light of whatever the parol evidence existed in this regard.
The Trial
Once the matter was returned to this Court, the parties engaged in a course of discovery in an effort to establish their respective intentions in including § 4.1 and § 5.5 in the PLA as well as their relationship to each other and the entire agreement. A non-jury trial was subsequently held over a period of six days, beginning December 8, 2005 and concluding on January 27, 2006. Testifying for Amkor were Stuart Lubitz, Esquire, Hirotoki Takamune and Walter Bralic. Appearing for Motorola was James L. Clingan, Esquire.
Amkor v. Motorola, Toliver, J., C.A. No. 02C-08-160, at 8 (September 25, 2005)(Order).
The scope of the discovery should be limited . . . to that which is reasonably calculated to produce admissible evidence helpful in that search. Intent in this context, by definition, is identified by the parties' course of conduct while negotiating and contemplating the binding effects of the contract. In other words, the parties' intent must be determined by reviewing that process which ended in a ratified agreement. Any information or evidence outside of this narrow frame of reference is not likely to be helpful.
Mr. Lubitz is a intellectual property attorney with in excess of forty-four years experience in national and international patent law. In addition to being employed as a partner in an international law firm, he taught patent law for twelve years at the Loyola Law School in Los Angeles, California. He served as the first American on the board of directors of a large publicly held Japanese corporation and is similarly associated with several major international corporations. Mr. Lubitz was employed as the primary negotiator on behalf of Citizen in the discussions with Motorola culminating in the PLA.
Mr. Takamune, during the negotiations between Citizen and Motorola, was the general manager of Citizen's patent division. At some point in time following the conclusion of those negotiations, he left Citizen and began serving as a director of the Takamune Patent Office where he consults with corporations relative to patent licensing matters. Mr. Lubitz reported to and took direction from Mr. Takamune during the course of the Citizen/Motorola negotiations.
Mr. Bratic is a certified public accountant who has provided consulting advice in patent matters for more than twenty-five years. He had no role in the negotiations between Citizen and Motorola or the agreement that resulted. Mr. Bratic was retained by Citizen to testify concerning the definitions and usage of the terms "license" versus "assignment", how they were commonly used in patent licensing matters and which view of the PLA was most consistent with the general practice of patent law. Lastly, he presented information about the value of the agreement to each party in light of the interpretation being advocated by the other party.
Mr. Clingan is a patent attorney who represented Motorola as its chief negotiator and Mr. Lubitz's counterpart during its negotiations with Citizen. He was in-house counsel for Motorola and occupies that same position for a successor or "spinoff" company, Freescale Semiconductor, Inc. His entire career has been spent in that employment. He has never taught or litigated matters involving patent law. It was Mr. Clingan who initiated the exchange of language which culminated in the PLA. He chose as well the specific language of § 5.5.
There were several other individuals employed by Motorola who were involved significantly in the negotiations with Citizen. They were identified as Vince Ingressia, Jim Smith and Don Walker. While those individuals were deposed, they were not called as witnesses by Motorola. Of that group, only Mr. Clingan remains so employed.
Positions Advocated by the Parties
Specifically, and again, Motorola argues that the provisions of § 4.1, which prevented Citizen from entering into licensing agreements with assembly houses already under contract as licensees to Motorola, were incorporated within the references in § 5.5 to assignment by Citizen to a third party. In addition, it appears that Motorola has in the past contended that a license and an assignment are synonymous and convey the same rights. At the very least, Motorola argues that the term "license" is subsumed within the term "assignment". Under either theory, since Amkor was such a licensee, it could not obtain by virtue of § 5.5 what it and Citizen were prevented from obtaining in § 4.1.
Stated differently, Motorola argues that Citizen could not do indirectly what it could not do directly. Nor did Motorola contemplate such a relationship because to do so would interfere with Motorola's efforts to secure its share of this emerging market. Finally, Motorola contends that defeat would further result in a substantial loss of revenue.
Amkor has steadfastly maintained that the assignment is permissible under § 5.5 of the PLA. The language of that section, Amkor argues, permits the exchange of interests where either Motorola consents to it or Citizen sold the business unit employing the patents upon which the PLA was focused. According to Amkor, a license and an assignment are not the same, and since the conditions set forth in § 5.5 were met, Motorola's challenge should be denied.
Amkor goes on to contend that without the ability to sell or otherwise divest itself of the interests gained via the PLA, Citizen would have gained nothing more than a license to use the Mullin and Lin patents, not the ownership interest Citizen sought and believed obtained at the conclusion of its 1993-1996 negotiations with Motorola. Citizen would not have otherwise given up its claim to the Mullin and Lin patents. It would have continued with its efforts to challenge their viability and/or Motorola's alleged ownership of them.
Trial Testimony
At the conclusion of the trial following the Supreme Court's remand, it was and remains readily apparent that there was no evidence, parol or otherwise, that either side discussed the relationship, if any, between § 4.1 and § 5.5 of the PLA. The negotiations lasted for approximately two years before the execution of the PLA without any reference to a definition of license or assignment. Similarly absent was any testimony or other evidence that the restrictions set forth in § 4.1 were subsumed or otherwise incorporated by reference in § 5.5. This critical absence of evidence must be viewed in light of the fact that both parties are major corporations as well as players in what was an emerging technology, represented by experienced and/or knowledgeable representatives, legal and nonlegal.
What was confirmed was the focus of each party.
The parties have made more than passing references in their respective arguments concerning which experts were the most impressive. Given the fact that there is no significant disagreement between them on this point, there is no need to decide which of the witnesses so proffered were the most qualified or more persuasive. For much the same reason, it is also not necessary to consider the testimony of Mr. Bratic relative the value of the transaction in light of the respective interpretations of the PLA by the parties. However, the Court does note the breath of the experience of Messrs. Bratic, Lubitz and Takamune versus that of Mr. Clingan where there is disagreement in other areas of discussion.
Motorola's objective was twofold. It wanted to secure the markets for manufacturing and assembling § 4.1 semiconductors as well as to eliminate any challenge to the Mullin and Lin patents. Citizen, on the other hand, sought to achieve unrestricted use and/or ownership of the aforementioned patents. Both argued that the legal position taken by the other would be inconsistent with their objectives in negotiating and consummating the PLA, but again, what could or could not be done via § 4.1 and/or § 5.5, was never discussed. In short, the focus was on those goals, nothing else appeared to have been communicated between them.
As noted in Footnote 9, supra, there were at least three persons involved in the negotiations of behalf of Motorola. However, none were called as witnesses to appear at trial in person or by deposition by Motorola. Given the testimony by Mr. Clingan in this regard, the Court must assume that they had nothing to offer that would have been helpful, at least to Motorola.
Evidence was presented concerning the meanings attached to the terms license and assignment in the patent industry and by the parties themselves. Testimony by Messrs. Takamune, Lubitz and Bratic established that the terms have different meanings. In the patent world, they emphatically stated that a license was a right to use a patent and not be sued doing so. An assignment, the witnesses opined, was equal to ownership, that is an unrestricted or complete transfer of all or some interest in the patent which included the right to enforce the patent. Lastly, Mr. Takamune and Mr. Lubitz, as participants in the negotiations on behalf of Citizen, explained that they did not address the subject with the representatives of Motorola because the definitions in question were common in the industry.
Mr. Clingan, for Motorola, agreed that the definitions so proffered were commonly used in the industry and that the view held by Motorola was contrary to that usage. He went on to state that Motorola's view that § 4.1 was subsumed with § 5.5 was never communicated to Citizen. That omission, Mr. Clingan felt, was of no consequence because Citizen should have known how Motorola viewed the PLA given the focus of the negotiations.
CONCLUSIONS OF LAW
Controlling Authority
As noted in this Court's opinion granting summary judgment in favor of Amkor, the parties appear to agree that there is an absence of material dispute of fact, and that each felt as a result, entitled to entry of judgment as a matter of law. In remanding this matter, the Delaware Supreme Court did not override the basic statements of law referenced by this Court. It in effect held that ambiguity existed in and/or between the meanings of § 4.1 and § 5.5 of the PLA. The error committed by this Court was not in the definition of the applicable law. Rather, the error was in attempting to apply that authority without first fully developing the record regarding the intention of the parties in agreeing to the language in question.In any event, direction was given to take additional evidence and return to the interpretation of the PLA. The supplementation of the record having been completed, the Court finds it necessary to return to and expand the statement of the law previously found applicable before completing that process.
In this regard, the law of Illinois is well settled. The cardinal rule of contract interpretation is to give effect to the parties' intent, which is to be discerned from the contract language. If the contract language is unambiguous, it should be given its plain and ordinary meaning. The legal effect to be given an instrument is not determined by the label it bears or the technical terms it contains.
Virginia Surety Co. Inc. v. Northern Insurance Co. of New York, 866 N.E.2d 149 (Ill. 2007).
Id.
Bonde v. Weber, 128 N.E.2d 883 (Ill. 1955).
The parties to a contract need not provide for every contingency. Nor should a contract be judicially rewritten in order to protect parties or to benefit one party as opposed to the other. The law does not favor including terms in a contract by implication. To the contrary, it presumes that terms that would have been easy to include in a contract but were not, were intentionally omitted by the parties.
Regency Commercial Associates, LLC v. Lopax Inc., 869 N.E.2d 310 (Ill.App. 5 Dist. 2007).
Id.
Id.
These basic principles of contract interpretation and ultimately contract construction are based on the notion that there is no ambiguity in the contract in question. However, when there is an ambiguity in a contract provision or term, courts look to extrinsic evidence in order to give effect to the parties' intent. The most common form of extrinsic evidence is parol evidence.
Extrinsic evidence is evidence which does not appear on the face of an agreement, contract or other document, but which relevant to and available from other sources such as stateme is as statements by the parties and other circumstances surrounding the transaction. BLACK'S LAW DICTIONARY 588-599 (7th Ed. 1999).
At the risk of being overly simplistic, for present purposes, parol evidence will be defined as extrinsic evidence derived from oral testimony of the parties to an agreement or contract regarding its terms and/or interpretation. BLACK'S at 1117.
If an instrument appears complete, certain, and unambiguous, then parol evidence of a prior or contemporaneous agreement is inadmissible to vary the terms of the instrument. But where the terms are ambiguous or capable of more than one interpretation, parol evidence is admissible to determine the intent of the parties. The value of such evidence from the parties themselves is sometimes questionable in that it allows self-serving testimony as to what they agreed to in the negotiations leading up to the signing of the contract. The testimony of independent experts may be considered as a more reliable form of such evidence.
Hartbarger v. SCA Services, Inc., 558 N.E.2d 596 (Ill.App. 5 Dist. 1990.).
Quake Construction Corp. v. American Airlines, Inc., 565 N.E.2d 990, 994 (Ill. 1990).
R. Posner The Law and Economics of Contract Interpretation, 83 Tex. L. Rev. 1581, 1600 (2005).
Regency, 869 N.E.2d at 316.
Course of performance, course of dealing, and trade and local usage are among the varieties of extrinsic evidence most frequently and most readily admitted by courts in order to discern the meaning of contract terms. Course of performance and course of dealing are of no consequence to the instant dispute and will not be discussed further. Trade and/or local usage is, however, relevant.
Margaret N. Kniffin, Corbin on Contracts § 24:13 (rev. ed. 1998).
Trade and local usage is defined in the Uniform Commercial Code as "any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question." Unless a different intention is manifested, in cases where language has a generally prevailing meaning, it is interpreted in accordance with that meaning.
Id. (citing Uniform Commercial Code § 1-205(3)).
Id. (citing Restatement (Second) of Contracts § 202(3)(a)).
Where trade usage or local custom affixes a particular meaning to certain terms or words, the Restatement (Second) of Contracts, § 201(2)(b), may be a key to deciding which view of disputed contractual language should prevail. It states:
Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party.
Consequently, where the parties to a contract are aware that trade usage or local custom attaches meanings to certain words or phrases, a party's reliance thereon will be upheld where: (1) the opposing party had a contrary view but failed to communicate it to the former; and (2) the first party was unaware that opposing party held a view contrary to the trade usage or local custom. The view of the party least responsible for the dispute is that which is most likely to be adopted in a court of law.
Margaret N. Kniffin, Corbin on Contracts § 24:5 (rev. ed. 1998).
It is in light of the authorities referenced above that the record as it now exists will be reviewed and the controversy addressed anew.
The Impact of Extrinsic Evidence
Simply put, while a number of issues were discussed by Amkor and Citizen, the evidence presented in connection with the trial of the matter clearly establishes that the interrelationship between § 4.1 and § 5.5 was never discussed. Equally apparent is that the parties did not, as this Court held previously, discuss or define the terms "license" and "assignment". Nor was the subject of whether the restrictions of § 4.1 were subsumed by § 5.5 ever raised in any fashion by either side.
The evidence did, however, confirm at least four points of consequence. The first is that within the patent industry or trade, license and assignment have entirely different meanings, use versus ownership, and that Motorola's proposed use of the terms was contrary to those meanings. The second is that Mr. Clingan, on behalf of Motorola, recorded the PLA with the U. S. Patent Office. In testifying about that effort, he conceded that licenses to use a patent are not generally recorded and that the recordation made no reference to the limitations alleged by Motorola or how notice of those limitations was to be given to third parties. Third, Motorola did not challenge Citizen's claim that it had a viable challenge to Motorola's ownership of the Mullin and Lin patents. Nor did Motorola contest the proposition put forth by Citizen that Citizen's refusal to purchase a royalty free license formed the basis of negotiations which led to the drafting and execution of the PLA. Fourth, that it was Mr. Clingan who submitted the initial draft of the PLA which he compiled from several sources.
See 35 U.S.C.A. § 261, which references assignments only.
The PLA Should Be Construed To Allow Citizen To Assign Its Interests Thereunder To Amkor
The Court's view of the definitions of license and assignment as well as the interrelationship between § 4.1 and § 5.5 remains unchanged.
This conclusion is, in the first instance based upon the plain reading of the language in question and after considering the agreement as a whole. It is not based upon a myopic view of the agreement or either section in isolation. Again, as previously noted, the sections relate to two different interests, concerns and/or types of transactions. Section 4.1 relates to the licensing of assembly houses while § 5.5 addresses the assignment of all of Citizen's interests under the PLA. The two sections do not conflict with each other or the PLA as a whole.
Second, Motorola's argument that the meanings of license and assignment are synonymous, is simply untenable given the record that has been established. The same conclusion applies to its contention that the restrictions on licensing contained in § 4.1 are subsumed within the meaning of assignment in § 5.5.
At the risk of being repetitive, that view was never communicated to Citizen and runs contrary to existing case law and other definitions previously referenced by the Court. It also conflicts with patent industry or trade usage as Mr. Clingan reluctantly conceded at trial. Yet Motorola offered no evidence as to what would have put anyone on notice who could not read Mr. Clingan's mind, that all Citizen received under the PLA was a royalty free license, particularly given the recordation of the document.
Section 261 of the U. S. Patent and Trademark Act as quoted in Footnote 3 above, specifically provides that an interest in a patent may be assigned to a third party as long as it is done in writing. Presumably this would have allowed Motorola to have expressly stated the limitations on Citizen's right to assign its interests in the PLA pursuant to § 5.5, if any existed prior to the recordation of that document. The section does not, however, make any references mentioning licenses, equate them with assignments or state that licenses are included within the definition of an assignment.
Since the parties admittedly did not discuss or otherwise reference these issues, the Court must turn to the view adopted by the Illinois courts via the relevant language of § 201 and § 202 of the Restatement (Second) of Contracts referenced above. That authority, in these circumstances, would decree that the disputed language is to be interpreted in accordance with the view of the party least responsible for the controversy. In this case, that would be Citizen which subscribed to the patent industry definitions and usage of the terms in question, It also had no know reason to know that Motorola had a different and contrary view apparently unsupported by any authority or source other than Mr. Clingan. No other conclusion is viable given the scope of the remand and the resulting record.
Third, the Citizen/Amkor view is also consistent with the goals and objectives of the parties. Motorola wanted to remove any threat to the continued viability of the Mullin and Lin Patents along with the expenses that might be associated therewith, secure the emerging markets to be serviced by the technology covered by those patents and avoid any reduction of income that might result from competition with Citizen. The assignment from Citizen to Amkor does not interfere with achieving these goals. Any licensees listed in connection with § 4.1, as was noted by the Court during the trial, would remain contractually bound to Motorola. There would not, as a consequence, be any diminution of revenue regardless of an assignment from Citizen or a successor in interest. Once a licensing agreement via § 4.1 expired, Motorola would not be receiving any income so there would not be any to lose.
To the extent Motorola argues that once an entity enters an licensing agreement pursuant to § 4.1, that entity is forever barred from entering into a similar agreement with Citizen or purchasing its assets pursuant to § 5.5, it has offered no support from any source for such an extreme view. In addition, § 4.1 references "current licenses".
Citizen sought to obtain unrestricted use as well as ownership rights to the Mullin and Lin patents. That claim was based upon what Citizen alleged was the joint development of the underlying technology. Any other construction of the PLA would have given it nothing more than what Motorola initially demanded from Citizen in December 1993, a demand which Citizen refused.
The Delaware Supreme Court was concerned with the unintended consequences to Motorola of this Court's interpretation of § 4.1 and § 5.5. However, that was prior to the completion of the record which does not now evince the need for any such solicitude.
Specifically and for the final time, the record establishes that Motorola and Citizen were at all times relevant to this litigation represented by competent and experienced counsel. Those representatives were conversant with patent industry terminology and usage. The negotiations lasted in excess of two years before the PLA was executed. The initial draft was presented by Motorola which knew its definition and/or interpretation of license and assignment was inconsistent with that of the industry. Yet that view was never communicated to Citizen. Responsibility for what Motorola did not convey or achieve, must therefore be borne by Motorola, and not Citizen.
Amkor Is Entitled To The Entry Of Judgement In Its Favor
Viewing the contract as a whole, after giving due consideration to the expectations and goals of the parties the Court concludes that Amkor is entitled to the entry of judgment in its favor. No matter how it is viewed, "license" and "assignment" have separate and distinct meanings, i.e., the right to use the Mullin and Lin patents versus an ownership interest in them. Section 4.1 as a result prohibits Citizen only from entering into licensing relationships with the entities referenced therein then so bound to Motorola. No such restriction was carried over into or subsumed within § 5.5 which allowed Citizen to divest itself, by way of assignment, of the ownership interests it acquired by virtue of the PLA, assuming it met the conditions set forth in the section.
In this case, given the fact that there is no dispute as to whether Citizen and Amkor did in fact comply with those conditions, the assignment from Citizen to Amkor must be approved. The worse that can now be said in light of the instant record is that Citizen simply got the better of the bargain. Without more, such a result does not contravene any principal of law applicable in this jurisdiction. Consequently, judgment must be, and hereby is, entered in favor of Amkor and against Motorola.
IT IS SO ORDERED.