Matthew Powers, Tensegrity Law Group founder
Matthew Powers, Tensegrity Law Group founder (Jason Doiy)

SAN FRANCISCO — Tensegrity Law Group’s Matthew Powers has prevailed in an appellate dispute over a license agreement from hell.

The U.S. Court of Appeals for the Federal Circuit on Friday ruled that intellectual property license shop Wi-LAN Inc. promised not to sue Ericsson Inc. over four patents to 3G technology but did not grant Ericsson “most favored licensee” status for any other patents it might acquire in the future.

“We agree with Wi-LAN that it is clear the parties intended the MFL provision to only cover patents Wi-LAN owned or controlled as of the effective date of the agreement,” Judge Kathleen O’Malley wrote for a unanimous panel in an unpublished opinion.

Powers argued for Wi-LAN last month that the license was intended as a narrow agreement to cover a conflict of interest caused by Wi-LAN’s retention of McKool Smith to assert its patents on high-speed packet access. McKool Smith had previously represented Ericsson in matters involving similar technology.

“This case involves a very narrow agreement designed to solve a very narrow problem,” Powers argued to the Federal Circuit last month, while acknowledging that the license, drafted by other law firms, was “astonishingly poorly written.”

Judges in Florida and Texas had read the agreements differently, leading to conflicting summary judgment rulings.

The main point of contention was the “most favored licensee” provision, which stated that “in the event Wi-LAN owns or controls the licensing of patents not already addressed under this agreement,” Ericsson would be charged no more than any other licensee.

Holland & Knight partner Joshua Krumholz had argued that although couched in the present tense, the conditional “in the event” clearly implied the acquisition of additional patents in the future.

But O’Malley wrote in Wi-LAN v. Ericsson that under New York law that governs the contract, the present tense means the present. “We are aware of no grammatical rule that requires us to change well-established New York contract law,” she wrote. “In context, the parties clearly intended that the ‘in the event’ language refer to information that is currently unknown to the parties.”

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