[00:00:00] Speaker 00:
Our next case is Alex Sam versus Master Card, 2022, 2046.

[00:00:06] Speaker 00:
Mr. Carter.

[00:00:08] Speaker 00:
Mr. Carter, we were sorry not to be able to grant your motion to reschedule, but the panel had spent substantial time on the case.

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And we know there were four other lawyers on the brief, including one who's the author of the brief.

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I'm glad to see you here.

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I'm happy to have you address us.

[00:00:32] Speaker 01:
I appreciate the kindness of the court.

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I've been able to get some medical intervention and think I hopefully can hear everything you all say today.

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So I've reserved three minutes.

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May it please the court to present the appellant, Alexam, which is a patentee.

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It is the licensor in a license agreement.

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Two members of this tribunal are familiar because of an opinion

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a previous stage of this case filed eight and a half years ago.

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Alexum has consistently taken the position that a covenant not to sue in the license agreement bars patent infringement claims, but does not bar claims arising under the license agreement, such as the royalty claims and the obligations of MasterCard to pay royalties.

[00:01:21] Speaker 00:
That's not explicit in the covenant, though.

[00:01:24] Speaker 01:
Well, that's what Judge Glasser said at pages four and five of his opinion granting summary judgment.

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The problem, the legal error that is reversible, is that's not where you stop with contract construction.

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You have to reconcile all of the parts of the contract together and take them as a whole.

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reading a term in the covenant not to sue, such as claims for liabilities relating to license transactions, to the exclusion of the rights arising under the license agreement is inconsistent with the requirements that have been repeatedly stated by the New York courts in their expression of the canons of contract construction.

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To demonstrate our argument, let me first draw the court's attention to

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The contract itself, the license agreement, which is set forth in the appendix beginning on page 212, has numerous provisions that are as clear as the covenant not to sue, as unambiguous as the covenant not to sue, that MasterCard is liable to pay a royalty.

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So for example, in appendix page 213, section 2.1 is the grant of the license.

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And in its very first words, it says,

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in consideration of the respective covenants and promises contained herein, including the payments to be paid to Alexa under section four below.

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Alexa hereby grants the license.

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So it's clear from the beginning that the license is conditioned or is part of a mutual exchange on the payment of the license.

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The payment of the license is not illusory.

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It is not superfluous.

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It is not marginal.

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On the next page, just after the covenant not to sue, is the consideration section, beginning on page appendix 214.

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The consideration given, recited there, says as follows.

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In exchange for the rights granted to MasterCard under section two, MasterCard shall make the following payments to election, unambiguous obligation terms with respect to making the royalty payments.

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This continues on the next page.

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Section 4.1 royalties.

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First words, a MasterCard shall pay a lexem, a fee for licensed transactions.

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Below that, there's a timing and reports section.

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It says in its first words, within 45 days after the end of each month, MasterCard shall pay a lexem.

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royalties accrued it also has to provide a written report which shows the total royalty due for the month I'm turning the page to page 216 the next provision section 4.3 books and records requires and mandatory terms for MasterCard to keep complete and accurate up-to-date books and records to enable the amount of royalty due to be determined further down in the

[00:04:25] Speaker 04:
I do agree that there is not a section in section four, there's not a section that talks about if one party, if Alexa thinks there's underreporting, besides the fact that an independent accountant could be brought in, that they could bring suit.

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There's nothing that expressly says that, right?

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Well, of course it does.

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It says MasterCard shall pay.

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And then in the later part of the agreement, which I was about to get to, it says, here's the court you go to when you have a dispute arising under this agreement.

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Every contract in history has a mandatory provision like that that says you shall pay means you get to sue for that payment.

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Well, let me tell you what I hear what you're saying.

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This is one thing I was thinking about.

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I think this is a difficult issue.

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But one thing I was thinking about is, is it possible, because the termination, section seven, does not say that the duty to pay royal, I think it, I'm sorry, it says that the agreement will terminate if there's a breach.

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And then at the end of that, it also says that the provisions, I think it says that the covenant, which is I think section 2.2, is not listed as one of the paragraphs that survives termination of the agreement.

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So I wonder when the one option would have been for you to say, hey, you're breaching the contract.

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We hereby terminate.

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the agreement, because you have the right, if there's a breach, to terminate the agreement.

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And then the covenant, not to sue, would no longer apply.

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Well, that's MasterCard's argument.

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But MasterCard's argument also is you still can't sue for infringement or royalties.

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I understand that's their argument.

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But what is your response to that?

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Why isn't that something that addresses your argument that this would be an illusory contract?

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no consideration, given the breadth of the covenant not to sue.

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Given the breadth of the covenant not to sue, Alexa, which has taken the consistent position as noted in the court's prior opinion, is not able to bring a suit for patent infringement.

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The deal struck in this license agreement is you can sue for royalties

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but you can't sue for patent infringement.

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Those are the only two choices.

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And the royalties arise under the license agreement, so it's irrational to say that the Covenant not to sue applies to claims that arise under the very same agreement.

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Given that these are two sophisticated parts, and the Covenant not to sue is written so broadly, why shouldn't we read it for what it says?

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Given that there is a provision here where

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A party could say, hey, there's a breach of contract, then the covenant not to sue angry.

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I terminate the contract.

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The covenant not to sue no longer applies.

[00:07:40] Speaker 01:
It's a deceptively simple argument that runs flat in the face of New York law on construing contracts.

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Your reliance on New York law for construing contracts is that we need to look at it as a whole and try to discern what the party's intent was.

[00:07:57] Speaker 01:
That's exactly correct, Your Honor.

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And in doing so, you look at, I didn't finish listing them, I'll assume you're familiar with all the other ways in which there is mandatory language, MasterCard shall pay royalties, in addition to the royalty enforcement clauses that we mentioned in the brief.

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So if you stop, as Judge Glasser erroneously did, in our respectful opinion, at the reading of the covenant not to sue, and you don't read those shall pay provisions, you might reach that deceptively simple conclusion.

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But the courts of New York have repeatedly dealt with cases where the contract requires interpretation.

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In fact, in Matter of Freedmen, the Second Department, Appellate Division, Second Department case in 1978, wrote that it's the rare writing that requires no

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interpretation.

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They said, although separate clauses of the agreement may seem internally unambiguous, they diverge into inconsistency when the contract is read as a whole.

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That's this case.

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And seemingly unambiguous covenant not to sue is directly contrary to all of the mandatory payment provisions in the rest of the agreement.

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This calls the court to invoke the rule of construction that says, reconcile them, do your best to read them together as much as you can.

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Perhaps, for example, we are over reading the literal language

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of the covenant not to sue.

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That was the situation in the South Road Associates case decided by the Court of Appeals in 2005.

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It involved the lease to IBM of some propagated Poughkeepsie

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The premises had to be returned, restored.

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What does the word premises mean?

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And one reading, which was rejected by the Court of Appeals, was everything demised under the lease.

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But the Court of Appeals said, no, as you read the rest of the lease, you'll see that what we're really talking about in the use of that term was not all premises, but the building itself that was occupied, and therefore not the location of an underground storage tank that was the heart of the dispute in that case.

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So that's one.

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There are a couple other cases that we've cited where a deceptively simple reading runs into the rest of the contract, and you have to harmonize them.

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And here, the sensible, fair, and reasonable interpretation that we have to give, according to, for example, a third department in tougher heating and plumbing, talked about this issue, about how you've got to interpret and not give a literal construction that, quote, defeats and contravenes the purpose of the agreement.

[00:10:37] Speaker 01:
There can't be really any serious dispute that the purpose of this agreement was to give a license in exchange for a royalty payment.

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It says so.

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That expression of intent is unmistakable.

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So due consideration has to be given to the purposes of the parties in making the contract.

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And these are the operative words, a fair and reasonable interpretation.

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Consistent with that purpose, must guide the course.

[00:11:01] Speaker 02:
Going back to Judge Stoll's question, what if hypothetically, when you read this contract as a whole, what it permits the patent owner to do, if the other side's not paying royalties like it should be, is cancel the contract, terminate the contract,

[00:11:21] Speaker 02:
Now immediately, now there's total exposure for the other side for any transactions it does after the termination for possible patent infringement liability.

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And likewise, hypothetically, what if through that termination, the covenant not to sue

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Evaporates thereby permitting the patent owner in this instance to also sue for those past non-payment royalties then in that sense there is an ordering of process inside this contract that means when someone is actually not paying their royalties

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the way you handle this is, or not paying all of their royalties, what you do, the choice is the patent owners to either completely sever the relationship and then go into litigation, or to just kind of live with the non-payment while still collecting on other royalty payments.

[00:12:22] Speaker 01:
So the problem with that theory, which is argued by our opponents, is that you still don't get to collect the royalty.

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It therefore renders superfluous the audit right provision that requires tabulation of underbidding.

[00:12:34] Speaker 04:
Why are you not allowed to collect the royalty?

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If I understood Judge Chen's question correctly, you don't get to collect the contract royalty.

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You get to sue for infringement and damages, and maybe even for an injunction.

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Well, maybe you still get to sue for that period of time.

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You get to sue for back royalties for that period of time under the contract when the other side was not paying their royalties.

[00:13:00] Speaker 01:
Not if the MasterCard argument and Judge Glasser's argument about the covenant not to sue holds.

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Part of it is that the covenant not to sue evaporates and goes away once the contract, the entire contract, is terminated.

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And so therefore, the covenant not to sue no longer protects someone.

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Well, from that moment forward, it no longer protects someone.

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But what about the accumulated royalties that arose during the contract and before the covenant not to sue went away?

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That would be a lawsuit for breach of contract prior to the termination.

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Prior to the termination of the contract, the covenant not to sue is in effect in this hypothetical and borrows that suit for those royalties.

[00:13:52] Speaker 01:
That's the problem with it.

[00:13:54] Speaker 04:
Your reading the covenant not to sue is barring the collection of royalties that were due prior to the termination of the agreement.

[00:14:01] Speaker 01:
On this hypothetical, the covenant not to sue evaporates after a certain point in time and therefore operates before that point in time.

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While it operates, it borrows the royalties claim.

[00:14:11] Speaker 04:
Does it mean that royalties weren't being accrued?

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I'm not sure that follows legally.

[00:14:21] Speaker 01:
I don't see how on the language of this covenant and on this hypothetical the covenant not to sue doesn't bar the collection of royalties when the royalties accrued while the covenant was in effect.

[00:14:37] Speaker 01:
I think that's the answer to the problem.

[00:14:39] Speaker 01:
I have a more holistic answer.

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I'm running short on my time here.

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But the more holistic answer to that is that can't really be the most fair and reasonable interpretation of this contract.

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That is a crabbed and hypothetical, very clever approach.

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I'm not sure how sophisticated both sides were in drafting this contract.

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And they should have drafted it a little bit better.

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As the Friedman Court said, it's the rare writing that requires no interpretation.

[00:15:02] Speaker 01:
But the repeated purpose of this license to exchange the license for a payment of a royalty to provide for when, where, how the royalty is to be paid, underpayment is to be counted, and all of that, the fair and reasonable interpretation here of that is that the covenant doesn't apply to rights arising under the license agreement itself.

[00:15:23] Speaker 01:
For example, it doesn't apply to the confidentiality clause.

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It doesn't apply to the royalty clause.

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But it does apply to any other claim for liabilities.

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which is not a non-zero set.

[00:15:34] Speaker 00:
Counselor, you've just about exhausted all of your time.

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You have two minutes for a bottle.

[00:15:39] Speaker 00:
Thank you very much.

[00:15:59] Speaker 03:
Thank you, Your Honor.

[00:16:00] Speaker 03:
May it please the court, Ellie Williams for MasterCard.

[00:16:03] Speaker 03:
Judge Blaster here correctly recited New York contract law.

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He correctly read the agreement.

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He commented on the symbiotic relationship among the various provisions of the agreement.

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And he enforced the clear, unambiguous test of the covenant not to sue.

[00:16:16] Speaker 02:
He didn't look at all the terms of the contract, though, and didn't figure out whether the result that he was reaching was perhaps creating an absurd

[00:16:26] Speaker 03:
Well, the argument, I mean, it's true, his opinion doesn't recite all the language of the agreement.

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There's no law that would require him to do that.

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It was clear that the agreement was... Be fair to my question.

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Let's be fair to my question, okay?

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There were plenty of sections of agreement that he completely ignored.

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And if you just look at the four corners of his opinion,

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he doesn't weigh or consider the possibility that his interpretation leads to an illusory, absurd contract.

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So I think it's fair to say his opinion doesn't go into those details.

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All of those arguments were, of course, before him at the time.

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MasterCard made the same arguments there that it's making an appeal.

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And Alex Sam made many of the same arguments there that it's making an appeal.

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They make some new ones now that weren't before Judge Glasser.

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But the agreement was before him, and these arguments were before him.

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And I'll get, of course, to why there's nothing inappropriate about the way he's interpreted this agreement on reading the entirety of the agreement together.

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But the point is the covenant not to sue is very clear and unambiguous.

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And I think it's important to point out some things about it that maybe were not addressed by my friend on the other side a moment ago, which is that the covenant not to sue itself tells you when it terminates.

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It's specific about that.

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What it says is, this is Appendix 214, it says that Alexam agrees in covenants to not at any time initiate, assert, or bring these claims.

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And then it tells you what kind of claims it's talking about.

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It's claims relating to the licensed transactions that are occurring before or during the term of this agreement.

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So while the agreement is in force,

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Licensed transactions are off the table.

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There's no lawsuit about licensed transactions.

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So their remedy was, as we point out, if they disagreed with what we reported were the licensed transactions for which royalties were due during that month, they would tell us that we were in breach, that they disagreed, and then they could terminate the agreement.

[00:18:26] Speaker 03:
And that's not what Alexam chose to do.

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Alexam continued to accept the royalty payments, and only later did it assert that we had somehow underpaid for royalties that had been due all along.

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And that fundamentally was, I think, the problem here.

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The real dispute among the parties had to do with which transactions were licensed transactions, what was really covered by this patent.

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And it was only much, much later that we discovered that that was the fundamental disagreement here.

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Now, below, MasterCard first made the attempt to address this problem by bringing it to Clark-Joy judgment action of invalidity and then going to the PTAB, the Recovered Business Method Review Program.

[00:19:02] Speaker 03:
on that basis to invalidate the patent so that this would have been clear for everybody, including the market participants, other than MasterCard.

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But because of this covenant, we were unable to do so.

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And so that's why we're here today.

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It is the text of this covenant that prevented MasterCard from challenging the validity of the patent.

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And it's because of the breadth of that covenant that Alex Sam should be unable to collect for royalties below.

[00:19:22] Speaker 03:
So there's nothing absurd or inappropriate about it.

[00:19:25] Speaker 04:
Now, the covenant nausea, too, this license agreement was in effect at the time of the CBM filing, right?

[00:19:33] Speaker 03:
Yes.

[00:19:34] Speaker 03:
Well, certainly Alex M. has told everybody that, told the PTAB that, told Judge Glasser that the covenant was in effect at the time.

[00:19:42] Speaker 03:
Yes.

[00:19:43] Speaker 03:
It was.

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Now, I should say the... The agreement had not yet terminated.

[00:19:48] Speaker 03:
Correct.

[00:19:48] Speaker 04:
Because the patents had not yet expired.

[00:19:51] Speaker 03:
Correct.

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Although they did at some point during that, after the CBM was filed, but before it was

[00:19:59] Speaker 03:
No, so the patents expired in July of 2017.

[00:20:02] Speaker 03:
Alexam provided a further briefing to the PTAB the next month, in August of 2017, where they said that covenant not to sue was still in effect and prevents us from being sued for infringement.

[00:20:11] Speaker 03:
I mean, their theory was it only applied to infringement claims, not to the disputed royalty claims.

[00:20:15] Speaker 03:
But that dispute is kind of irrelevant to the point I'm making, which is they themselves have told the PTAB that the covenant not to sue was still in effect then.

[00:20:23] Speaker 03:
And that would have been after the agreement had terminated by effect of the patents expiring the month before.

[00:20:31] Speaker 02:
And that was the basis for denying the CBM?

[00:20:35] Speaker 03:
So the basis for denying the CBM was the existence of the covenant not to sue.

[00:20:38] Speaker 03:
I mean, the board said to us, MasterCard, hey, it looks like you have a point.

[00:20:43] Speaker 03:
Because under MedImmune, when you have a dispute over royalties, you're allowed to sue for declaratory judgment, which would get you into the PTEP, because it's the same standard.

[00:20:51] Speaker 03:
The PTEP used the declaratory judgment standard.

[00:20:54] Speaker 03:
But the PTEP said, unfortunately for you, MasterCard,

[00:20:56] Speaker 03:
This license prohibits you from being sued, and it's very broad.

[00:21:00] Speaker 03:
And maybe Alex Sam has acted inappropriately by bringing in the contract action, but that's a district court issue.

[00:21:05] Speaker 03:
Now, for us, what we're concluding is because of the covenant, you can't bring the CBMR.

[00:21:09] Speaker 03:
So MasterCard was stripped of the statutory right it had to have the patents declared invalid in the PTA.

[00:21:14] Speaker 03:
And that's how we got here the first time, where we pointed out, well, that created a judicial estoppel argument, which the court rejected.

[00:21:19] Speaker 03:
We understand.

[00:21:20] Speaker 03:
So then we just went to the merits.

[00:21:21] Speaker 03:
OK, well, let's look at this clear text of the covenant not to sue.

[00:21:23] Speaker 03:
What does it actually mean?

[00:21:24] Speaker 03:
Does it preclude these royalty claims or not?

[00:21:26] Speaker 03:
And district court said, yes, it does, which is the correct result.

[00:21:29] Speaker 03:
That's why.

[00:21:30] Speaker 04:
The August 2017 submission to the PTO, is that in our appendix?

[00:21:34] Speaker 03:
It is.

[00:21:35] Speaker 04:
Because I was looking at the June 2017.

[00:21:37] Speaker 03:
Yeah, so this is a supplemental brief.

[00:21:39] Speaker 03:
It is in the appendix.

[00:21:43] Speaker 03:
And I'm sure I have this site somewhere else.

[00:21:45] Speaker 03:
Just give me one moment.

[00:21:46] Speaker 03:
I apologize, Your Honor.

[00:21:49] Speaker 03:
I'm going to say that's 1628.

[00:21:57] Speaker 03:
Let me just double check.

[00:22:08] Speaker 03:
Yeah, it actually starts at 1626 of the record.

[00:22:15] Speaker 03:
And they say it several times, for instance, on page 1631.

[00:22:18] Speaker 03:
They say, the covenant not to sue further clarifies patent owner cannot sue petitioner for patent infringement.

[00:22:24] Speaker 03:
And again, that was submitted in August 30, 2017.

[00:22:26] Speaker 03:
This is page 1631.

[00:22:31] Speaker 03:
And the P-type relied on these statements, obviously, pointing out that these covenants could not

[00:22:40] Speaker 03:
said it wasn't contingent on royalty payments, said it applied at any time.

[00:22:43] Speaker 03:
I mean, they go into great detail about it.

[00:22:48] Speaker 03:
Just a few other things I wanted to point out and have to answer.

[00:22:51] Speaker 03:
Of course, any questions that the court has.

[00:22:53] Speaker 03:
But the

[00:22:58] Speaker 03:
There were obviously other considerations.

[00:23:00] Speaker 03:
This was not a pure patent license agreement.

[00:23:02] Speaker 03:
I just think we need to point that out, that there were various other provisions that were very important to Alexam, including the ability to report to others about MasterCard being a licensee.

[00:23:11] Speaker 03:
I can't go much further into that, because that portion of the record has been designated confidential by Alexam.

[00:23:16] Speaker 03:
But you'll see it cited in our brief.

[00:23:18] Speaker 03:
And it's very clear that Alexam's principal found the relationship with MasterCard very important, and his ability to talk about it very important to his commercial interests.

[00:23:28] Speaker 03:
So that in itself shows that this was not just a pure patent license agreement.

[00:23:33] Speaker 03:
So, I mean, it's true, ultimately, if you apply applying the text of this agreement, there is the potential that they would be out for 30 days of royalties that they just could never collect for if they decided not to terminate.

[00:23:42] Speaker 03:
But that's the deal that the parties

[00:23:44] Speaker 03:
And they made that deal in connection with a lot of other terms that do a lot of other things, all of which are consistent with there being more than sufficient consideration to support this agreement.

[00:23:53] Speaker 04:
The two of you, I understand that the covenant not to sue continues after termination the agreement, even though it's not identified in the termination clause as being a clause that survived termination.

[00:24:10] Speaker 03:
That's right.

[00:24:11] Speaker 03:
In our view, the covenant not to sue itself has its own survival term.

[00:24:14] Speaker 03:
It specifically says it applies at any time.

[00:24:18] Speaker 03:
So by definition, that's going to survive termination.

[00:24:21] Speaker 03:
It doesn't say it applies during the term.

[00:24:23] Speaker 04:
And in your view, that's more specific than the termination clause?

[00:24:27] Speaker 03:
Correct.

[00:24:27] Speaker 03:
Our point is the survival clause of the termination agreement obviously addresses terms that don't themselves have specific survival provisions in them.

[00:24:34] Speaker 03:
So that's necessary for the contract.

[00:24:36] Speaker 03:
But this one specifically does, because the covenant not to sue specifically says at any time.

[00:24:40] Speaker 03:
Now, it itself does have its own limit as to what that applies to.

[00:24:44] Speaker 03:
As I pointed out, it would only apply to transactions during the term.

[00:24:48] Speaker 03:
So there has to be a transaction during the term of the agreement, and then the covenant not to sue applies to that thing forever.

[00:24:54] Speaker 03:
So if it happened during the term, you can't sue for that.

[00:24:57] Speaker 03:
If it happened after the term, if they terminated, and then we tried to do a transaction, well, that would potentially be an infringing transaction that they could then sue for patent infringement on.

[00:25:05] Speaker 03:
The covenant wouldn't have applied there, because if they had terminated,

[00:25:09] Speaker 03:
then for sure there's no covenant that would apply going forward.

[00:25:11] Speaker 04:
So to make sure I understand, you're saying that after termination of the agreement, they can file suit for patent infringement, and they're not prohibited by the covenant not to sue?

[00:25:20] Speaker 04:
Because the covenant not to sue, when it says at any time, it's really just referring to royalties that were accrued under the agreement.

[00:25:28] Speaker 03:
Yeah, it's a covenant to not sue at any time regarding transactions that occurred during the agreement.

[00:25:34] Speaker 03:
So if there was a licensed transaction that occurred during the agreement, that's off the table.

[00:25:39] Speaker 03:
They can't sue for that.

[00:25:40] Speaker 03:
If there's something that happens after the termination agreement, the covenant has to sue says nothing about it.

[00:25:45] Speaker 03:
So yes, they could sue for patent infringement.

[00:25:47] Speaker 03:
And that's the remedy that they had, that they negotiated for, that they received, along with a lot of other provisions.

[00:25:53] Speaker 03:
Obviously, this agreement where MasterCard was taking on commercial obligations on Alex Ham's behalf.

[00:25:57] Speaker 03:
I mean, there's lots of other terms going on here.

[00:26:00] Speaker 03:
It's not a pure patent license.

[00:26:04] Speaker 03:
I just want to point out, there was a new argument raised in reply that suggested that we were essentially trying to get the court to enforce specific performance of the covenant.

[00:26:13] Speaker 03:
But that's not what happened below.

[00:26:15] Speaker 03:
What happened below is MasterCard essentially moved for summary judgment, pointing out Alexam wouldn't be able to prevail on its contract claim for various reasons, including that they hadn't performed.

[00:26:23] Speaker 03:
The covenant not to sue is one of the obligations.

[00:26:25] Speaker 03:
It didn't perform.

[00:26:26] Speaker 03:
Therefore, they couldn't collect for breach.

[00:26:28] Speaker 03:
We're not trying to bring some declaratory judgment action that they could never sue us.

[00:26:32] Speaker 03:
They already had sued us.

[00:26:34] Speaker 03:
Their claims fail, and there's numerous cases under New York law applying covenants not to sue, dismissing claims on exactly the same kind of facts.

[00:26:43] Speaker 03:
Unless the court had any further questions, I'm happy to sit down and request a court firm.

[00:27:02] Speaker 01:
Thank you very much, and may it please the court.

[00:27:05] Speaker 01:
The other business terms of the license agreement to which MasterCard referred a moment ago that had to do with business development issues are not specifically identified, unlike the royalty provisions are specifically identified, as one of the chief

[00:27:25] Speaker 01:
reasons for or consideration for the license given.

[00:27:29] Speaker 01:
I read through the court from the beginning of section 2.1 which is the grant of license where it specifically identifies not just mutual covenants but the payment obligation.

[00:27:39] Speaker 01:
And similarly the word consideration begins section 4 and again focuses on the payment.

[00:27:44] Speaker 01:
So saying that the enforcement provisions are about these other ancillary provisions of the agreement is not, I submit, consistent with the New York law requirement for a fair and reasonable interpretation

[00:27:56] Speaker 01:
of the purpose of the agreement as expressed by the language of the parties.

[00:28:00] Speaker 01:
The second point was that MasterCard referred to the fact that this was a decision on a motion for summary judgment.

[00:28:08] Speaker 01:
It was MasterCard's motion for summary judgment, as our papers pointed out.

[00:28:12] Speaker 01:
And the inference that the covenant not to sue and its language is so broad as to wipe out the rest of the license agreement's fundamental terms, economic terms, is an inference that should not have been given on a summary judgment motion in any event.

[00:28:25] Speaker 01:
to MasterCard, the movement, nor should it have been given to MasterCard as the party invoking the covenant not to sue.

[00:28:32] Speaker 01:
Finally, cases applying covenants not to sue.

[00:28:35] Speaker 01:
Well, I've done my best to study the cases in both sets of briefs here.

[00:28:40] Speaker 01:
And what I can say about covenants not to sue in New York is the following.

[00:28:44] Speaker 01:
First, like any contract, they must be read according to their language and determine the party's intent.

[00:28:50] Speaker 01:
Some covenants not to sue include language over a lease.

[00:28:53] Speaker 01:
Some don't.

[00:28:54] Speaker 01:
Some operate, therefore, like a retrospective waiver of claims.

[00:28:57] Speaker 01:
Some operate like a prospective covenant.

[00:29:00] Speaker 01:
Some are in contracts that have an attorney's fees provision.

[00:29:04] Speaker 01:
The decision, it was Judge Forrest, let me put my hands on it, in the Southern District, found that a breach of the covenant not to sue is remedied through a damages cause of action.

[00:29:16] Speaker 01:
About half the cases cited by both sides follow that line of thought.

[00:29:20] Speaker 01:
The other half find the covenant not to sue may be relied upon to dismiss a claim under certain circumstances.

[00:29:26] Speaker 01:
And they all do the same thing, a fact-specific intent-based assessment.

[00:29:31] Speaker 01:
The conclusion that I draw is that this covenant not to sue, unlike many of the ones I just referred to, lives in a contract with other provisions that are either at war with it if you adopt the district court's erroneous interpretation or can be reconciled with it under our formula, which is that the covenant not to sue should be construed not to bar claims arising under the license agreement.

[00:29:54] Speaker 01:
And therefore, the summary judgment below was clear was an error as a matter of law and can be reversed

[00:30:01] Speaker 01:
by this court.

[00:30:02] Speaker 01:
Our client's breach of contract claim was filed eight and a half years ago, and we're hopeful to one day not have to return to this court before trial again.

[00:30:11] Speaker 01:
Thank you very much.

[00:30:12] Speaker 00:
Thank you.

[00:30:13] Speaker 00:
We appreciate both arguments for cases submitted.