Opinion ID: 207814
Heading Depth: 3
Heading Rank: 1

Heading: The Agreement's Unambiguous Use of Subsidiary

Text: Looking to the plain language of the Subsidiary definition, the use of the phrase now or hereafter connotes that Subsidiaries may come into existence at some unspecified future time. The parties defined Subsidiary as a business organization as to which the party now or hereafter has more than a fifty percent (50%) ownership interest. Merriam Webster's Collegiate Dictionary defines hereafter to mean after this in sequence or in time or in some future time or state. Merriam Webster's Collegiate Dictionary 542 (10th ed.1996). [4] Had the parties chosen to limit a Subsidiary to those in existence at the time of execution, the parties could have omitted or hereafter in favor of nowor they could have simply listed the relevant subsidiaries then in existence. The use of hereafter thus compels the conclusion that Subsidiary includes entities in which the parties did not own 50% at the time of execution but in which they later acquired at least a 50% ownership interest at some point following the Agreement's effective date. The plain language of Section 13 contains no explicit temporal limitation, and this court is extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include. Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475, 775 N.Y.S.2d 765, 767-68, 807 N.E.2d 876, 879 (2004). Further, the absence of a temporal limitation in the Section 13 Subsidiary definition is especially apparent when compared to the Section 12 Licensed Patents definition that immediately precedes Subsidiary in the Agreement. Unlike the Subsidiary definition, the Licensed Patents definition explicitly references the Agreement's expiration date. Where one provision of an agreement contains a particular reference, the omission of this reference from any similar provision must be assumed to have been intentional under accepted canons of contract construction. U.S. Fid. & Guar. Co. v. Annunziata, 67 N.Y.2d 229, 233, 501 N.Y.S.2d 790, 792, 492 N.E.2d 1206, 1208 (1986); see also Sterling Investor Servs., Inc. v. 1155 Nobo Assoc., L.L.C., 30 A.D.3d 579, 581, 818 N.Y.S.2d 513, 516 (App.Div.2006). Although the parties could have referenced the expiration date in the definition of Subsidiary, they did not. The three-part Licensed Patents definition indicates that the parties wanted the licenses to include later-filed or acquired patents. Rather than a static list of patents, the parties drafted three criteria that determine the scope of Licensed Patents. This pool of patents is limited by: (1) ownership, in Section 12(1); (2) relevant technology, in Section 12(2); and (3) filing and/or priority date, in Section 12(3). Each subsection adds a separate criterion, but only Section 12(3) references the expiration date explicitly. The parties could have referenced the expiration date in the preamble of Section 12, to modify all subparts equally, or they could have chosen to omit the reference from Section 12(3), to make clear, based on parallelism, that the expiration date applied to each subpart in the same way. [5] Applying the district court's logic, the expiration clause must be imported into Sections 12(1), 12(2), and 12(3), as well. Reading the expiration date into each subpart of Section 12, however, improperly limits Section 12(1) to only those patents and applications owned or controlled by the parties prior to the expiration date thus excluding any patents filed after March 1, 2000, but claiming priority to pre-March 1, 2000 applications. [6] As a result, even if Imation filed (or acquired) a patent on March 2, 2000, that was absolutely crucial to Philips's products, Philips would not receive the benefit of that patenteven if the patent had a pre-2000 priority date, as required by Section 12(3) and otherwise met the technology limitation of Section 12(2). Even Philips rejects this result, however, because Philips interprets the Licensed Patents definition as including patents and applications filed after the Agreement's March 1, 2000 expiration: `[L]icensed patents' includes not only patents issued on applications filed prior to expiration, but also those issued on later filed applications having priority dates prior to expiration. Appellees' Br. 38 n. 16 (noting by example a post-March 1, 2000 application claiming pre-March 1, 2000 priority to a foreign application). In addition, importing the expiration date into Section 12(1) renders Section 12(3) superfluous because any patent or application that met the ownership limitation in Section 12(1) as of the expiration date necessarily had a filing date, or claim[ed] priority from a date on or before the expiration date. Under this interpretation, Section 12(3)'s priority date limitationand its explicit reference to the expiration dateserves no purpose. The expiration date thus cannot implicitly apply to Section 12(1) because New York law forbids any interpretation that renders language in the agreement superfluous. Lawyers' Fund for Client Prot. v. Bank Leumi Trust Co., 94 N.Y.2d 398, 404, 706 N.Y.S.2d 66, 69, 727 N.E.2d 563, 566 (2000). [7]