[00:00:27] Speaker 01:
Do we have Mr. Thompson here?

[00:00:30] Speaker 00:
Hang around.

[00:00:31] Speaker 01:
Please.

[00:00:34] Speaker 01:
Here.

[00:00:35] Speaker 01:
The next case is the Edward D. Ioli Trust versus Vigilant Video, 2014, 1714.

[00:00:47] Speaker 01:
Mr. Thompson, I have here that you wanted to break up your 15 minutes, five and 10.

[00:00:53] Speaker 03:
That would be good.

[00:00:54] Speaker 01:
So we'll set it at five.

[00:00:57] Speaker 01:
And obviously, if you wanted to run over the five, that's all right.

[00:01:02] Speaker 01:
You have 15 minutes total.

[00:01:05] Speaker 03:
Could please the court.

[00:01:06] Speaker 03:
Your Honor, I'm here also today with Ms.

[00:01:08] Speaker 03:
Amy Bogan on behalf of our client vigilante.

[00:01:12] Speaker 03:
Could please the court.

[00:01:14] Speaker 03:
Your Honor, I'm here today on a contract case, essentially, which dealt with intellectual property, but really comes down to the construction of the contract, which was settled

[00:01:24] Speaker 03:
between an affiliate of our client, DRN, our subsidiary.

[00:01:29] Speaker 01:
In other words, the case breaks down to the relative importance of the affiliate provision versus the other defendant's provision.

[00:01:37] Speaker 03:
Absolutely.

[00:01:38] Speaker 03:
And so to get right to the heart of the matter, we are named as an affiliate.

[00:01:44] Speaker 03:
The definition of affiliate seems incredibly clear.

[00:01:47] Speaker 03:
Our release is the broadest release that could possibly be contemplated.

[00:01:50] Speaker 00:
Okay.

[00:01:50] Speaker 00:
Can I just, one further background principle that the way that this case comes to us for you to win, you have to persuade us that the contract unambiguously requires your result.

[00:02:06] Speaker 00:
It's not enough for you to say, well, this is actually ambiguous on its face.

[00:02:12] Speaker 00:
Let's have a trial.

[00:02:13] Speaker 03:
No, actually it's not ambiguous and I agree with what you said.

[00:02:17] Speaker 03:
I agree with that statement.

[00:02:18] Speaker 03:
Okay.

[00:02:19] Speaker 03:
Unambiguously.

[00:02:20] Speaker 03:
I point out to the court.

[00:02:22] Speaker 00:
And that's because you set up a final judgment so that you have to prevail on your motion for summary judgment.

[00:02:28] Speaker 03:
Absolutely.

[00:02:31] Speaker 03:
I would note for the court, no ambiguity was pled after I amended my complaint and added the release, the covenant not to sue and the license

[00:02:43] Speaker 03:
ambiguity was not then pled in response to that.

[00:02:46] Speaker 03:
I don't know that it's ever been raised in the matter.

[00:02:48] Speaker 03:
However, I think of greatest importance to mine, as you say, prevailing unequivocally is the integration clause, which is contained in the contract, which essentially seems to be one of the more, again, as I said, distinctly comprehensive integration clauses that could be contained in

[00:03:12] Speaker 03:
There's a review of the Texas Supreme Court cases regarding that.

[00:03:16] Speaker 03:
They seem to be clear that once there's been an integration clause, that the first inquiry with a contract is whatever its terms.

[00:03:25] Speaker 01:
And then if the contract is integrated... The integration clause simply means no extrinsic evidence.

[00:03:32] Speaker 01:
Look at the contract.

[00:03:34] Speaker 01:
And the other defendant's provision says, except as specifically set forth herein,

[00:03:40] Speaker 01:
They, plaintiffs can go against other defendants in the litigation.

[00:03:46] Speaker 01:
Where is it specifically set forth herein that you can continue to go after this other defendant?

[00:03:55] Speaker 03:
It's not specifically stated.

[00:03:56] Speaker 03:
What's specifically stated is that I'm an affiliate of DRN and that all affiliates are completely released, that we have a covenant.

[00:04:05] Speaker 00:
That's half right.

[00:04:06] Speaker 00:
It does specifically say that all affiliates are released.

[00:04:10] Speaker 00:
It does not specifically say that you are an affiliate.

[00:04:13] Speaker 03:
No, and that is the argument I noticed of my opposing counsel, that I must be specifically named and it specifically the lower court said... Isn't that one reasonable way of giving meaning to the word specifically?

[00:04:25] Speaker 03:
It is one way to do that.

[00:04:26] Speaker 00:
However... But if that's right, then don't you lose because at best the thing is ambiguous.

[00:04:32] Speaker 03:
No.

[00:04:32] Speaker 03:
Because essentially the word specifically in that clause is intended to refer to the specific language preceding the clause, those that grant the release.

[00:04:43] Speaker 00:
Well, maybe yes, maybe no.

[00:04:44] Speaker 00:
And intent is not the question if we're in unambiguity, lack of ambiguity land.

[00:04:52] Speaker 03:
And if this contract is ambiguous, does it then need to go back for a trial?

[00:04:57] Speaker 00:
That's why I asked you the first question.

[00:04:59] Speaker 00:
You have not

[00:05:01] Speaker 00:
sought a trial on how to resolve the ambiguity.

[00:05:06] Speaker 03:
But construction of contracts is a question of law for the court.

[00:05:09] Speaker 03:
It is not one for a jury, is it?

[00:05:11] Speaker 00:
Well, the Texas law says, like every other law, when you get an unambiguous answer out of the language of the contract, the court decides it.

[00:05:20] Speaker 00:
And if you don't, then it becomes a question of parties intent for trial for the fact finder.

[00:05:25] Speaker 00:
But you've given that latter piece up.

[00:05:28] Speaker 00:
That's why it seems to me actually really quite important

[00:05:31] Speaker 00:
that the sole ground on which you have premised your argument is you win because the contract is unambiguously for you.

[00:05:44] Speaker 00:
And what I'm saying is the word specifically has wiggle room in it.

[00:05:51] Speaker 03:
May I would refer the court, however, to the clause that proceeds it immediately and suggest that that wiggle room has been essentially removed

[00:06:01] Speaker 03:
I look at the contract myself and notice that the other defendant's clause, number two, is what is being referred to, but if one were to step forward just to the covenants clause above it, in paragraph one, no other rights and no exhaustion, I note where it says that the parties agree that except as set forth in article two above, again, except as set forth in two, now article two is identified, and that is the one that contains the lease, license, covenant.

[00:06:28] Speaker 03:
The license and covenants set forth in this agreement do not grant rights to any third party for any method, system, product, services, and or components supplied by such third party to any person other than to or on behalf of defendants and its affiliates.

[00:06:45] Speaker 03:
The parties further agree that except is set forth in Article 2 above, this agreement does not limit or extinguish plaintiffs' rights to seek to enjoin, control, or extract royalties or other damages

[00:06:58] Speaker 03:
with respect to any methods, systems, products, services, and or components applied by such third party to any person other than to or on behalf of defendants and its affiliates.

[00:07:14] Speaker 03:
So you see above, immediately in that clause, it says, yes, they may continue to pursue, but defendants and its affiliates are out of this transaction, and it's very specific.

[00:07:27] Speaker 03:
And as I read the Texas case law, language that precedes language in a contract tends to get preferential treatment.

[00:07:36] Speaker 03:
And so I see right above it that the affiliates are specifically named when they speak in the contract about the rights of what the plaintiff may continue to pursue.

[00:07:48] Speaker 03:
It's only that the word affiliates is not in my paragraph.

[00:07:52] Speaker 03:
And yet, affiliates is immediately above it when it talks about what rights they may do.

[00:07:57] Speaker 00:
Exhibit A, the stipulated motion for dismissal, that's part of the settlement agreement.

[00:08:02] Speaker 00:
Absolutely.

[00:08:03] Speaker 00:
And that dismisses only DRN, not Vigilant.

[00:08:06] Speaker 03:
And why would it dismiss Vigilant when DRN's counsel is not ours?

[00:08:09] Speaker 03:
How could DRN's counsel possibly ethically have entered into any agreements on our behalf or dismissed our counterclaims without my signature?

[00:08:18] Speaker 03:
They are our subsidiary, not my counsel.

[00:08:21] Speaker 03:
They would have no authority to have dismissed any of my acts.

[00:08:25] Speaker 00:
So the agreement

[00:08:26] Speaker 00:
implicitly in fact required the dismissal, but the only dismissal stipulated motion was as the DRN, but not as the visual.

[00:08:36] Speaker 03:
It would seem the only ethical one.

[00:08:42] Speaker 01:
I don't know where I am on time, but then in going forward... Well, you're beyond five you wanted to use.

[00:08:48] Speaker 01:
Then I'm going to... You have plenty of time.

[00:08:50] Speaker 03:
I'm going to break for a moment.

[00:08:51] Speaker 01:
Fine.

[00:08:52] Speaker 01:
Fine.

[00:08:53] Speaker 01:
Mr. Bufner, is it?

[00:08:54] Speaker 01:
Yes, Your Honor.

[00:08:57] Speaker 02:
May it please the court, Eric Buter for the respondents, and I'm going to call it GTC for short, and the holy.

[00:09:05] Speaker 02:
The court should affirm the district court's denial of vigilance motion for summary judgment because we believe that the contract as a whole and the other defendant's provision in particular reflect the intent that vigilant was not to benefit from the agreement and in particular the license release and covenant not to sue.

[00:09:24] Speaker 02:
The other defendant's provision is the only provision in the contract that talks about other defendants such as vigilant.

[00:09:31] Speaker 02:
It clearly indicates an intent to preserve the status quo and does provide an exception, but as the court has noted, has the very limiting language of as, except as specifically set forth herein.

[00:09:44] Speaker 00:
But what, I mean, let me ask you, why do you think that that is possible to characterize as very limiting?

[00:09:54] Speaker 02:
Well, I think because it has to be specifically set forth herein.

[00:09:58] Speaker 02:
Other language that has an exception preamble, if you will, talks about it as provided otherwise.

[00:10:04] Speaker 00:
But why isn't the affiliate clause pretty darn specific?

[00:10:08] Speaker 00:
Whoever the affiliates happen to be, including future ones.

[00:10:11] Speaker 02:
It's a very general provision.

[00:10:13] Speaker 02:
It is not entity specific at all.

[00:10:15] Speaker 02:
It describes corporate relationships in the abstract, whereas this provision is the one provision that deals with who

[00:10:23] Speaker 02:
is not to be benefited under this agreement.

[00:10:25] Speaker 02:
Whose claims that GTC has against are not affected by this agreement.

[00:10:35] Speaker 02:
And the literal language is any other defendant, including vigilant, is not affected by this agreement unless specifically set forth herein.

[00:10:47] Speaker 02:
So vigilant is clearly included in the language that

[00:10:51] Speaker 02:
GTC's claims against it are not affected by the settlement unless it can be established that the agreement, looking at it broadly or that provision specifically, but let's take a look at the agreement as a whole, specifically sets forth something to the contrary.

[00:11:07] Speaker 02:
And the general definition of affiliates, which again is not just general, it is abstract, if you will.

[00:11:17] Speaker 00:
Well, but why isn't the specific provision, the one in Article 2, paragraph 1, Plink is hereby released defendant and each of their affiliates, blah, blah, blah?

[00:11:25] Speaker 02:
Again, because in trying to shoehorn Vigilant into the affiliates language, you're... You know, but you don't dispute that they are, in fact.

[00:11:33] Speaker 00:
Oh, no.

[00:11:33] Speaker 02:
They clearly became an affiliate shortly before... So what's missing?

[00:11:37] Speaker 00:
to satisfy the specifically provided here?

[00:11:40] Speaker 02:
When you take a look at the second sentence of the other provision, other defendant's provision, that specifically says that no consideration relating to GTC's claim against vigilant was given.

[00:11:53] Speaker 02:
That is, the parties clearly stated that any consideration given in this agreement, none of it is for compensation to GTC for its claims against any other defendant.

[00:12:06] Speaker 02:
is unequivocal, no wiggle room one way or the other on that.

[00:12:12] Speaker 02:
And we believe that clearly shows the party's intent, which is the overall goal here, to not allow any other defendant to benefit from the language and the release and the license and the agreement.

[00:12:26] Speaker 02:
Vigilant was clearly an active defendant in the case.

[00:12:29] Speaker 02:
It was not mentioned specifically in the other defendant's provision.

[00:12:33] Speaker 02:
And the general language of the affiliates language simply is not specific enough when the language calls for specificity to divine an intent to allow vigilance to be included in the license and release provided by the agreement.

[00:12:50] Speaker 02:
And then when you look at the fact that the dismissal form and the one that was actually filed did not mention vigilance, that's further evidence in terms of looking at the contract as a whole

[00:13:01] Speaker 02:
that there was no intent to benefit Vigilant here.

[00:13:05] Speaker 02:
And although DNR's counsel did not represent Vigilant, certainly GTC could have stipulated to dismiss not just DRN but also Vigilant if it was the intent of the parties to grant Vigilant the benefits under this contract.

[00:13:21] Speaker 01:
In other words, your view was that specifically means that Vigilant had to have been named.

[00:13:26] Speaker 02:
Either by name or by some other reference that clearly identified it as a defendant that is being released.

[00:13:33] Speaker 01:
Of course affiliates included future parents.

[00:13:39] Speaker 02:
We do not deny that vigilant qualifies as an affiliate.

[00:13:45] Speaker 02:
We don't deny that.

[00:13:47] Speaker 02:
But what we say is that when you look at... That's just not specifically.

[00:13:51] Speaker 02:
It's a generic abstract concept.

[00:13:55] Speaker 02:
And when you look at the specific language of the other defendant's provision, which again says no compensation is intended for GTC's claims against any other defendant, which includes vigilant, that is very clear language as to what the party's intent was.

[00:14:11] Speaker 02:
When you couple that with the stipulation and the fact that vigilant isn't mentioned at all by name or some pseudo name, that reflects to me a clear intent that vigilant was not to benefit from this contract.

[00:14:25] Speaker 01:
Mr. Thompson mentioned the integration clause.

[00:14:29] Speaker 01:
What's the relevance of that clause to our decision?

[00:14:33] Speaker 02:
I think what it says is that the parties cannot vary the terms of the agreement by something extraneous to the agreement.

[00:14:41] Speaker 02:
But I disagree with vigilance counsel on the notion that the court must blind itself to the surrounding circumstances regarding the negotiations

[00:14:51] Speaker 02:
And when you look at those surrounding circumstances, not to vary the terms of the agreement, but to understand what the thinking of the parties was as they negotiated this, it becomes even more abundantly clear that the parties did not intend to benefit vigilant.

[00:15:05] Speaker 01:
That's a slippery slope from your standpoint.

[00:15:09] Speaker 01:
Talking about surrounding circumstances, you want to focus on that.

[00:15:13] Speaker 01:
I agree.

[00:15:15] Speaker 02:
I think that's where the analysis should end.

[00:15:17] Speaker 02:
You only need to look at surrounding circumstances if there's still some reasonable question about what the party's intent was.

[00:15:24] Speaker 02:
We don't think there is any reasonable question.

[00:15:26] Speaker 02:
We think that it is clear.

[00:15:27] Speaker 02:
But as to your question about ambiguity, although the parties can claim that the contract is not ambiguous, the court can certainly conclude otherwise as a matter of law.

[00:15:39] Speaker 02:
It's similar to

[00:15:40] Speaker 02:
the parties saying that they don't think that a claim term needs further construction, but if the court believes that it does, then it has to be construed and interpreted.

[00:15:51] Speaker 02:
So the fact that it's a question of law doesn't mean that the court couldn't find it ambiguous.

[00:15:58] Speaker 02:
And furthermore, when you

[00:16:02] Speaker 02:
look at the failure to mention Vigilant anywhere in this agreement, it belies the notion that the parties intended to let Vigilant go, even though the parties acknowledged that no consideration was given to compensate GTC for its claims against Vigilant.

[00:16:24] Speaker 02:
All of those facts, I think, tip strongly in favor of viewing that the intent of the parties was the only party being released was DRN.

[00:16:33] Speaker 02:
or an affiliate that was not an other defendant, that the other defendant clause is the one specific clause dealing with this issue and Vigilant has not shown that the exception language specifically set forth herein is satisfied by that, again, vague abstract concept of affiliate.

[00:16:51] Speaker 02:
That was not the intent of the parties as the words show and as the surrounding circumstances show.

[00:16:56] Speaker 01:
Thank you, Your Honor.

[00:16:58] Speaker 01:
Thank you, Mr. Buter.

[00:16:59] Speaker 01:
Mr. Thompson has some time left if he needs it.

[00:17:03] Speaker 03:
Thank you, Your Honor.

[00:17:04] Speaker 03:
Just to go briefly for a moment to the last comment by Mr. Buettler dealing with ambiguity.

[00:17:08] Speaker 03:
The court, of course, has the authority to do anything.

[00:17:11] Speaker 03:
You can consider the ambiguity.

[00:17:13] Speaker 03:
But why would we resolve an ambiguity in favor of a party that never pledged it when we, after the settlement by DRN, amended our complaint, amended it, and changed and pled release, fled the covenant, fled the license,

[00:17:30] Speaker 03:
No answer came back with, this is ambiguous and he cannot do that.

[00:17:33] Speaker 03:
Now he wants ambiguity and he wants it to result in his favor.

[00:17:37] Speaker 03:
And we say, excuse me.

[00:17:38] Speaker 00:
Do you have to plead ambiguity and you file, you filed the complaint, right?

[00:17:43] Speaker 00:
And you say, um, I don't know what the complaint is, uh, um, patent infringement and other things, right?

[00:17:52] Speaker 03:
And then, um, actually we're the defendants.

[00:17:54] Speaker 00:
They file the complaint.

[00:17:56] Speaker 00:
You file, you file a motion saying,

[00:17:58] Speaker 00:
saying, we have a contract that entitles us to prevail on this.

[00:18:10] Speaker 00:
And they say, on motion for summary judgment, no, you don't.

[00:18:14] Speaker 00:
So when Judge Gilstrop was done with that ruling, that matter is going to trial.

[00:18:22] Speaker 00:
And then you do whatever you do to arrange for there to be a final judgment in which you're not going to actually have a trial.

[00:18:30] Speaker 03:
Yes.

[00:18:31] Speaker 00:
So I'm not sure what the role of pleading is.

[00:18:36] Speaker 00:
When Judge Gilstrap was done with his ruling, you have a contract defense that is now presents a triable issue of fact.

[00:18:46] Speaker 03:
Correct.

[00:18:47] Speaker 03:
I believe that is correct.

[00:18:48] Speaker 03:
And essentially,

[00:18:51] Speaker 03:
The ambiguities I spoke of, I've not brought a citation that specifically states that the failure to raise ambiguity is fatal, simply that ambiguity would be a defense to our counterclaim.

[00:19:05] Speaker 03:
We raised in our answer, release and license as affirmative defenses, but the covenant not to sue as an affirmative counterclaim seeking damages.

[00:19:16] Speaker 03:
Certainly it would be the duty then of the plaintiff to defend that claim for relief with at least what their defenses were.

[00:19:25] Speaker 03:
And if ambiguity be one of them, then to say so then, except it does not come in to their reply to the counterclaim.

[00:19:32] Speaker 03:
And so in going to trial, are we going to allow a defense that has never been pled to be brought up during the trial?

[00:19:40] Speaker 03:
This of course would be at the discretion of the court, but again,

[00:19:43] Speaker 03:
The district court held that the agreement was not a model of clarity, but said that it was a bridge too far to cross to say that we must be specifically mentioned.

[00:19:52] Speaker 03:
And yet I think counsel knows, as I do, we write all our releases extremely broadly.

[00:19:58] Speaker 03:
I, myself, have mentioned in the release attorneys, but not specifically as Roy Thompson.

[00:20:03] Speaker 03:
But the question would be then, was Roy Thompson released, if not specifically named?

[00:20:08] Speaker 03:
And so I do write all my releases incredibly broadly.

[00:20:11] Speaker 03:
but I must say this is one of the broadest that I've ever encountered.

[00:20:14] Speaker 03:
But I would just go back for a moment to the integration clause, because I note that Mr. Bluther, he keeps talking about this contract rather than what it says.

[00:20:24] Speaker 03:
And the integration clause says, no oral explanation or oral information by any party thereto shall alter the meaning or interpretation of this agreement.

[00:20:36] Speaker 03:
What I've heard from him is those oral things.

[00:20:39] Speaker 03:
Look to the surroundings.

[00:20:40] Speaker 03:
Look what the facts and circumstances were.

[00:20:42] Speaker 03:
And it was highly disturbing when he said that shortly before the settlement, shortly before, that we became the parent court.

[00:20:51] Speaker 03:
Not true.

[00:20:52] Speaker 03:
One looks at the brief and the statement of facts by counsel himself.

[00:20:56] Speaker 03:
He says that negotiations began in March with no date.

[00:21:00] Speaker 03:
But if one examines in the abstract or in the documents that were agreed to the stock ledger,

[00:21:07] Speaker 03:
Vigilant became the parent on March 2nd of 2012.

[00:21:11] Speaker 03:
If he began negotiations in March of settlement, he would have had to have begun them on the 1st of March.

[00:21:19] Speaker 03:
But the settlement does not occur till May 12th.

[00:21:22] Speaker 03:
And we are now the parent for all that period of negotiation.

[00:21:27] Speaker 03:
He then, at other times in the brief, in a footnote says, the negotiations began in February of 2012.

[00:21:35] Speaker 03:
And yet that fact is contrary to his own statement of facts.

[00:21:40] Speaker 03:
His footnote contradicts his own statement of facts.

[00:21:43] Speaker 03:
These types of discrepancies become disturbing when he is asking the court to rely on the facts and circumstances surrounding the contract as he represents them.

[00:21:56] Speaker 03:
I refer the court to footnote two, where it quotes,

[00:22:00] Speaker 03:
For example, vigilance served its invalidity contentions on February 2nd, 2012, and was in the midst of the claim construction process when the DRN settlement was being negotiated.

[00:22:13] Speaker 03:
February 2nd?

[00:22:14] Speaker 03:
No.

[00:22:15] Speaker 03:
His statement of facts says negotiations began in March of 2012, and so we have differing facts as they are presented.

[00:22:24] Speaker 03:
It's disturbing to me.

[00:22:32] Speaker 03:
However, am I within the zone here?

[00:22:38] Speaker 03:
All right.

[00:22:40] Speaker 01:
Your lights in front of you should indicate that you have amazing 40 seconds left if you need it.

[00:22:46] Speaker 01:
Thank you very much.

[00:22:47] Speaker 03:
I did not notice that and I appreciate it.

[00:22:54] Speaker 03:
Most disturbing to me about this is contained in the brief at page 28, which says, during the settlement negotiations, plaintiff's counsel specifically inquired of DRN's counsel whether Vigilant was interested in discussing a group settlement and refers us to page of the appendix 258.

[00:23:13] Speaker 03:
I go to page 258 and there is no such evidence.

[00:23:17] Speaker 03:
In fact, it's the citation to another case.

[00:23:21] Speaker 03:
DRN's counsel responded by stating,

[00:23:24] Speaker 03:
And this is a quote in their brief that DRN, our subsidiaries council stated, the impression that Vigilant has significantly different views on settlement than DRN does, even though they are working together in the marketplace.

[00:23:40] Speaker 03:
That is accurate, but contained in an email on April 4th.

[00:23:44] Speaker 03:
And that's in the appendix at 115.

[00:23:46] Speaker 03:
But the next sentence of the brief says, the preliminary indication from Vigilant, and I'm quoting now,

[00:23:53] Speaker 03:
remains that they are not interested in discussing settlement and that quote, I have to proceed with the assumption they are not interested.

[00:24:03] Speaker 03:
Appendix 257 to 258.

[00:24:06] Speaker 03:
Not only is that quote not there, there is no document to support it and so you see much of the surrounding circumstances here are the creation of opposing counsel.

[00:24:17] Speaker 01:
Thank you, Mr. Thompson.

[00:24:19] Speaker 01:
I think we have your argument.

[00:24:21] Speaker 01:
If you can trust, we'll be vigilant in trying to decide the case correctly.

[00:24:25] Speaker 01:
Thank you very much.