Contract Has Latent Ambiguity If Objective Evidence Supporting Reasonable Alternative Meaning Exists

Mylan Inc. v. SmithKline Beecham Corp.

Addressing the issue of whether the terms of a licensing agreement were ambiguous, the U.S. Court of Appeals for the Third Circuit reversed summary judgment against plaintiff on breach of contract and remanded, finding the lower court had erred in refusing to consider objective extrinsic evidence supporting a reasonable alternative meaning of the disputed terms. Mylan Inc. v. SmithKline Beecham Corp., Case No. 12-1539 (3d Cir., July 22, 2013) (Ambro, J.).

SmithKline Beecham (GSK) holds the original FDA authorization for paroxetine hydrochloride controlled release tablets (paroxetine). Mylan filed an application to sell generic paroxetine, challenging GSK's patent covering the product; GSK sued for patent infringement under the provisions of the Hatch-Waxman Act.  The parties settled soon thereafter. The settlement agreement, dated August 2007, provided Mylan an exclusive license to market and sell generic paroxetine for