Clarifying Provisions Avoid Ambiguity In Patent License Agreement

Abstract

To interpret an ambiguous term in a license agreement that was subject to several reasonable interpretations, a Delaware court relied on a clarifying provision and read the agreement as a whole.

Background

Lantiq paid Aware to develop DSL technology for Lantiq DSL chips. In return, Lantiq obtained a license to any patents obtained by Aware covering DSL chips. As Aware invented new technology, it entered into new agreements with Lantiq. Lantiq later purchased Aware’s DSL business, acquiring several of Aware’s DSL patents and renewing its license to all other Aware DSL patents.

TQ Delta purchased the patents from Aware, subject to the license with Lantiq. Two years later, TQ Delta sued Adtran for patent infringement. Adtran responded by arguing that its products contained Lantiq chips, and that it therefore had a license to the patents-in-suit. The court agreed that Adtran was licensed.