In Smartmatic International Corp. v. Dominion Voting Systems International Corp., the Delaware Court of Chancery denied cross motions for summary judgment on the meaning of the term "in the United States" in a patent license agreement.
On May 1, 2013, the Delaware Court of Chancery issued an opinion in Smartmatic International Corp. v. Dominion Voting Systems International Corp., denying the parties' cross-motions for summary judgment on the meaning of the term "in the United States" in a patent license agreement. Focusing solely on the issue of whether "in the United States" includes Puerto Rico, the court found the term ambiguous as used in the agreement and was unable to resolve its meaning on the record. The court reached this decision by analyzing:
The term's ordinary meaning.
The term's various dictionary definitions.
Case law considering the term's definition.
The definition of United States in statutes.
The term's use in the agreement.
The court also noted that both parties' interpretations were reasonable, which underscored the contract's ambiguousness.
Practical Implications
Parties must clearly define the territory of their license agreements to avoid ambiguity. For example, if the parties intend their agreement to apply throughout the full geographic reach of the US and its territories, they may define the licensed territory as "the United States of America and all its territories and possessions, including, without limitation, all of the several United States, the District of Columbia, Puerto Rico and all United States military bases."