The Third Circuit agreed with the district court that section 7.3 of the assignment agreement, which provided instructions on how any recovery of damages from an infringement suit or settlement would be split between BSC and Jang, unambiguously referred to cash received or monetary profits. Jang, however, argued that the Cordis settlement produced a monetary gain for BSC by offsetting (and lowering to $1.725 billion) the amount it was required to pay to Cordis.

The Third Circuit agreed with Jang that the offset was the functional equivalent of a cash payment to BSC and therefore was a "recovery of damages" that BSC was obligated to share with Jang under the terms of the assignment agreement. The court pointed out that BSC won its infringement suit against Cordis based on Jang's patent and that this entitled BSC to recover monetary damages. The fact that BSC combined its winnings and losses into one payment did not change the fact that Jang's patent produced a monetary gain for BSC.

However, while the court found that there was no question that BSC's gain qualified as a "recovery of damages," it found that section 7.3 of the assignment agreement was ambiguous on whether it applies only when there is a net recovery in a suit or settlement taken as a whole, or if it applies to any entitlement to recovery of damages on an individual claim. Given this ambiguity, the court found that the district court erred in dismissing Jang's breach of contract claim as a matter of law and vacated the judgment so that the case could proceed to discovery on whether section 7.3 requires BSC's payment to Jang of his share of the BSC recovery that was factored into the Cordis settlement's cash offset.

Jang also argued that he was entitled to receive a share of the value of the licenses BSC recovered in the Cordis settlement. He argued that the parties did not contemplate the possibility of a non-monetary settlement and section 7.3 of the assignment agreement was therefore ambiguous concerning the treatment to be accorded the Cordis licenses. Jang further argued that if the assignment agreement was construed to exclude non-monetary settlements, it would allow BSC to evade its obligations by structuring any future recoveries in non-monetary forms.

The Third Circuit rejected these arguments, finding that:

However, Jang also argued, in the alternative, that BSC violated the implied covenant of good faith and fair dealing by structuring its settlement to avoid sharing its infringement recovery. The Third Circuit noted that, contrary to district court's reasoning, even where there has been no breach of the express contract terms, a party may still breach the covenant of good faith and fair dealing that applies to all contracts. The court therefore found that issues of material fact remained on whether the assignment agreement was broadly intended to require BSC to share all kinds of recoveries for infringement and whether Jang therefore had a reasonable expectation of sharing in BSC's infringement recovery.

In her dissent, Circuit Judge Barry argued that the agreement clearly specified that Jang could only recover from the balance, if any, of any settlement recovery. Given this clear meaning and the absence of any net recovery for BSC under the Cordis settlement agreement, Judge Barry concluded that the payment obligations under section 7.3 of the assignment agreement were not triggered and BSC should prevail. She further dissented from the court's application of the implied covenant of good faith and fair dealing, observing that BSC's ability to control and resolve suits under the agreement undermined the claim that BSC violated any implied covenant.