Opinion ID: 2552191
Heading Depth: 3
Heading Rank: 3

Heading: Royalties on Software Sales Made After the 1994 Stock Sale

Text: ¶ 25 Third, Softsolutions argues that the district court erred in refusing to vacate or modify the award because the arbitrator ignored express provisions in the Agreement by awarding $935,000 in royalties on software sales made by non-affiliates of Softsolutions, namely, WordPerfect and Novell. Essentially, Softsolutions argues that royalties on sales by WordPerfect and Novell were not earned under paragraph 4.1A of the Agreement because these companies were not affiliates of Softsolutions, as defined by paragraph 1.1 of the Agreement. Softsolutions maintains that its royalty obligations ceased when STC, an affiliate of Softsolutions, was purchased by WordPerfect on January 24, 1994, and was later acquired by Novell. However, STC remained an affiliate even after the sale of control of STC to WordPerfect and eventually to Novell. ¶ 26 Furthermore, the parties' Agreement described which sales were subject to royalties. Paragraph 2.1 of the Agreement provided: BYU hereby grants . . . Softsolutions the. . . right and license to utilize the Licensed Technology, specifically identified as D-Search . . . until such time as this agreement is terminated. This grant will extend to the manufacture, sale, lease, transfer or other disposition of Licensed Products or Licensed Processes through an Affiliate. ¶ 27 Paragraph 4.1A of the licensing agreement provided that Softsolutions shall pay to BYU an `earned' royalty in the amount of five (5) percent of the Net Sales of the Licensed Products or Licensed Processes used, leased or sold by or for Softsolutions and its Affiliates. ¶ 28 In denying Softsolutions' motion to vacate the arbitrator's award, the district court considered the two factors set forth in Buzas. It determined that the first prong in Buzas was met because one of the issues to be arbitrated was the amount of royalties Softsolutions owed to BYU. It found that an award based on royalties before or after January 24, 1994, was well within this question. Moreover, the court found that award was not irrational or inconsistent with the wording of the Agreement to award royalties. ¶ 29 We agree with the district court that there is no basis to vacate the award under section 78-31a-14(1)(c) of the Utah Code. The arbitrator clearly stayed within the confines of the Submission Agreement, and his ruling had a foundation in reason and fact. Therefore, the district court did not err in determining that the arbitrator did not exceed his powers. Moreover, we agree with the district court that because this matter falls within the issues submitted for arbitration, there was no basis for the district court to modify the award under section 78-31a-15(1)(b) of the Utah Code.