Opinion ID: 207814
Heading Depth: 3
Heading Rank: 2

Heading: The Plain Meaning of Hereafter

Text: Section 12(1), like Section 13, relies on the term hereafter to convey the lack of a temporal limitation. This consistent usage reinforces the interpretation that neither section contains a temporal limitation. A proper interpretation of a contract generally assumes consistent usage of terms throughout the Agreement. Finest Inv. v. Sec. Trust Co. of Rochester, 96 A.D.2d 227, 230, 468 N.Y.S.2d 256, 258 (App.Div.1983), aff'd, 61 N.Y.2d 897, 474 N.Y.S.2d 481, 462 N.E.2d 1199 (1984) (New York courts presume that the same words used in different parts of a writing have the same meaning.). Philips responds that Imation's reading of hereafter is too expansive because it would allow subsidiaries to acquire licenses beyond the term of the Agreement. Setting aside the inconsistency in Philips' logicbecause, as Philips admits, patents filed after the expiration date may still qualify as Licensed PatentsPhilips does not address the plain meaning of hereafter and instead relies, as did the district court, on nonbinding precedent involving insurance contracts. GE Engine Servs. UNC Holding I, Inc. v. Century Indem. Co., 250 F.Supp.2d 1237 (C.D.Cal.2001), for example, interpreted a Named Insured provision that included subsidiaries that are owned or financially controlled ... as now exist or hereafter constituted.  Id. at 1242 (emphasis in original). Applying California law, the GE Engine court held that the insurance policy period necessarily limited the covered subsidiaries because the policy period is an essential element of a liability insurance contract which must be taken into consideration when looking at the policy as a whole. Id. This holding makes sense in the context of occurrence-based insurance coverage, where the coverage ends with the policy periodit would be absurd to require an insurer to cover an occurrence falling within a particular policy period where the primary insured did not acquire the subsidiary until after the policy had expired. Occurrence-based insurance polices are a poor analog for patent license agreements, however, because licenses do not necessarily run concurrently with agreements. Indeed, the licenses granted here do not terminate with the Agreement's expiration but rather extend for the life of each relevant patent. As the parties clearly contemplated receiving the benefits of the licenses for the life of each licensed patent, there is no reason to deny this benefit to the Subsidiaries formed or acquired after the Agreement's expiration. In addition, the Subsidiary definition here differs from that considered by the GE Engine court because the definition here includes an additional 50% ownership requirement. As a result, Imation subsidiaries are licensed only as long as Imation retains a 50% ownership interest in themthus preventing the bizarre result of Imation acquiring a subsidiary in 2001 and retroactively immunizing pre-2000 sales. A plain reading of the Agreement as a harmonious, integrated whole, as New York law requires, Westmoreland Coal, 100 N.Y.2d at 358, 763 N.Y.S.2d at 528, 794 N.E.2d at 670, establishes that these sophisticated parties created broad cross-licenses that enabled the parties to operate in a given area of technology, free of the risk that the other party would threaten infringement. To make this possible, the parties constructed licenses with a fluid scope that grew with the acquisition of additional patent rights and a fluid membership that changed as the partiessophisticated corporations operating throughout the worldchanged their corporate structures. The court thus holds that the licenses granted by the Agreement extend to any subsidiary of either Imation or Philips that otherwise meets the Subsidiary definition of Article 1, Section 13, regardless of when Imation or Philips acquired or formed that subsidiary.