Opinion ID: 2155881
Heading Depth: 1
Heading Rank: 5

Heading: Territorial Rights

Text: The Agreement provides in Section 2 that USA has the exclusive right to distribute the Programs for the Series within the United States, its territories and possessions (including Puerto Rico) and all U.S. Armed Forces Bases everywhere through the world (the `Territory').... The proposed Viacom offer would have added Canada and the Caribbean, but the purported match by USA deleted the additional territory. The Court of Chancery, in essence, held that the new territory was within the scope of what USA was obliged to match, [20] and it failed to match that provision. We disagree. The Territory defined in the Agreement (which does not include Canada and the Caribbean) sets the parameters of the matching obligation. The issue is whether the subject matter of the Series is confined to the original territorial parameters of the Series. USA makes a very cogent correlative argument: that if WWFE and Viacom simply contracted for Viacom to produce the Series in Canada or the Caribbean and not in the territory covered by the Agreement, USA would not be entitled to a right of first refusal. Therefore, the argument runs, USA is not required to match the portion of a proffered WWFE/Viacom deal that included this additional territory. If matching were required to be coextensive with the enlargement of the territory to Canada and the Caribbean (and the addition would have been significant), that result could conceivably permit enlargement of the territorial provision to any place on the planet. In effect, the conclusion of the Court of Chancery that would treat the Agreement's subject matter to the Series in isolation without confining the subject matter to the original territory, would undermine USA's right of first refusal. It could, for example, allow WWFE easily to sidestep USA's right by presenting a package deal it knows USA cannot accept simply by significantly expanding the original territory. WWFE's presentation of a third party offer to USA may not operate to expand the subject matter of the original agreement, and expanding the territory in this manner does so. It is illogical to condition USA's right of first refusal on its ability to match terms of the Viacom offer falling outside the subject matter of the Agreement. [21] Accordingly, we hold that, as to this issue, the Court of Chancery was incorrect as a matter of law.