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FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023
S UP RE ME C O U RT OF T HE ST ATE OF NE W Y O R K
C O U NT Y OF NE W Y O R K
S A M S U N G E L E C T R O NI C S C O., L T D. , I n d e x N o. 6 5 6 3 1 2 / 2 02 2
Pl ai ntiff , I A S P art 6 0
v. H o n. M eliss a A. Cr a n e , J. S. C.
M P E G L A, L. L. C. ,
O R A L A R G U M E N T R E Q U ES T E D
D ef e n d a nt.
M oti o n S e q u e n c e N o. 8
M E M O R A N D U M O F L A W I N F U R T H E R S U P P O R T O F S A M S U N G’ S M O TI O N
F O R S U M M A R Y J U D G M E N T O N I T S B R E A C H O F C O N T R A C T C L AI M A N D I N
O P P O SI TI O N T O M P E G L A’ S C R O S S -M O TI O N F O R S U M M A R Y J U D G M E N T
Q UI N N E M A N UEL U R Q U H ART & S U L LI V A N ,L L P
Mi c h a el B. C arli ns k y
Willi a m B. A d a ms
O w e n F. R o b erts
5 1 M a dis o n A v e n u e, 2 2 n d Fl o or
N e w Y or k, N e w Y or k 1 0 0 1 0
( 2 1 2) 8 4 9-7 0 0 0
mi c h a el c arli ns k y @ q ui n n e m a n u el. c o m
w illi a m a d a ms @ q ui n n e m a n u el. c o m
o w e nr o b erts @ q ui n n e m a n u el. c o m
K e vi n H ar d y ( a d mitt e d pr o h a c vi c e )
1 3 0 0 I Str e et, N. W., S uit e 9 0 0
W as hi n gt o n, D C 2 0 0 0 5
( 2 0 2) 5 3 8-8 0 0 0
k e vi n h ar d y @ q ui n n e m a n u el. c o m
Att or n e ys f or Pl ai ntiff S a ms u n g El e ctr o ni cs C o., Lt d.
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T A B L E OF C O N T E N TS
P a ge
T A B L E O F A U T H O RI TI E S ......................................................................................................... iii
P R E LI MI N A R Y S T A T E M E N T .....................................................................................................1
A R G U M E N T ...................................................................................................................................3
I. M P E G L A F AI L S T O C R E A T E A N Y T RI A B L E I S S U E O V E R I T S O W N
F AI L U R E T O P A Y S A M S U N G T H E R O Y A L TI E S M A N D A T E D B Y T H E
L A A .....................................................................................................................................3
A. M P E G L A’s I nt er pr et ati o n C o ntr a di cts T h e L A A’s T e xt, Str u ct ur e, A n d
P ur p os e .....................................................................................................................3
1. L A A § 6. 3 D o es N ot All o w M P E G L A T o Disr e g ar d T h e
M a n d at or y F or m ul a I n A A L § 5. 1 ...............................................................4
2. L A A § 5. 2 D o es N ot All o w M P E G L A T o A p pl y A P ur p ort e d
A m e n d m e nt T h at C o ul d Di mi nis h S a ms u n g’s Ri g hts .................................8
3. M P E G L A Is T h e O nl y N e c ess ar y D ef e n d a nt F or T h e Cl ai m e d
Br e a c h Of Its P a y m e nt O bli g ati o ns U n d er T h e L A A ................................1 0
B. M P E G L A’s Ar g u m e nts T h at T h e A A L W as A m e n d e d All F ail As A
M att er Of L a w ........................................................................................................1 2
1. T h e P ur p ort e d A m e n d m e nt Is Pr o hi bit e d B y N e w Y or k L a w T h at
M P E G L A L ar g el y I g n or es ........................................................................1 2
2. T h e P ur p ort e d A m e n d m e nt Di d N ot C o m pl y Wit h T h e A A L’s
A m e n d m e nt R e q uir e m e nts .........................................................................1 5
3. T h e P ur p ort e d A m e n d m e nt W as Dr aft e d Aft er It W as P ur p ort e dl y
A d o pt e d, I n Vi ol ati o n Of F u n d a m e nt al C o ntr a ct Pri n ci pl es .....................1 6
4. T h e P ur p ort e d A m e n d m e nt D o es N ot C h a n g e M P E G L A’s
O bli g ati o n T o A p pl y A A L § 5. 1 ................................................................1 7
C. M P E G L A Wr o n gl y S e e ks T o H ol d O n O we d T o
S a ms u n g .................................................................................................................1 8
II. S A M S U N G’ S I M P LI E D C O V E N A N T C L AI M C A N N O T B E R E S O L V E D
WI T H O U T A T RI A L ........................................................................................................2 0
A. S a ms u n g R e as o n a bl y E x p e ct e d M P E G L A N ot T o I nt erf er e Wit h
S a ms u n g’s Ess e nti al P ur p os e I n L i c e nsi n g Its P at e nts F or A F air R at e ................2 1
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B. M P E G L A I m pr o p erl y As ks T h e C o urt T o R es ol v e N u m er o us Dis p ut e d
F a cts I n Its F a v or O n S u m m ar y J u d g m e nt ............................................................2 4
C. M P E G L A’s Fl a w e d I nt er pr et ati o n Of T h e L A A D o es N ot P er mit It T o
A v oi d Tri al Of T h e I m pli e d C o v e n a nt Cl ai m ........................................................2 7
1. L A A § 5. 1 D o es N ot P er mit M P E G L A T o Or c h estr at e
A m e n d m e nts T o P u nis h Li c e ns ors F or E x er cisi n g T h eir Ri g hts ...............2 7
2. A A L § 6. 1 D o es N ot P er mit M P E G L A T o Di ct at e T h e
A m e n d m e nt V oti n g R ul es ..........................................................................2 9
C O N C L U SI O N ..............................................................................................................................3 0
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T A B L E O F A U T H O RI TI E S
P a g e (s)
C as es
2 1st C e nt ur y Di a m o n d, L L C v. Allfi el d Tr a di n g, L L C ,
1 1 0 A. D. 3 d 6 1 5 ( 1st D e p’t 2 0 1 3) ............................................................................................2 4
Al v ar ez v. Pr os p e ct H os p. ,
6 8 N. Y. 2 d 3 2 0 ( 1 9 8 6 ) ..............................................................................................................1 0
Ar g e nti n a v. Ost e g o M ut. Fir e I ns. C o. ,
8 6 N. Y. 2 d 7 4 8 ( 1 9 9 5) ................................................................................................................9
A y ers v. Gr a n d L o d g e of A n ci e nt Or d er of U nit e d W or k m e n of St at e of N. Y. ,
1 8 8 N. Y. 2 8 0 ( 1 9 0 7) ..........................................................................................................1 4 , 1 5
A yr es v. N e w Y or k St at e C o m m’r of T a x ati o n & Fi n. ,
2 5 2 A. D. 2 d 8 0 8 ( 3 d D e p’t 1 9 9 8) .............................................................................................1 1
B a n c o N a ci o n al Ultr a m ari n o, S. A. v. C h a n ,
6 4 1 N. Y. S. 2 d 1 0 0 6 ( S u p. Ct. N. Y. Ct y. 1 9 9 6) ........................................................................1 1
C el a ur o v. 4 C F o o ds C or p. ,
1 8 7 A. D. 3 d 8 3 6 ( 2 d D e p’t 2 0 2 0) .............................................................................................2 6
C or d er o v. Tr a ns a m eri c a A n n uit y S er v. C or p. ,
3 9 N. Y. 3 d 3 9 9 ( 2 0 2 3) ........................................................................................................2 0 , 2 4
D alt o n v. E d u. T esti n g S er v. ,
8 7 N. Y. 2 d 3 8 4 ( 1 9 9 5) ........................................................................................................2 1 , 2 8
D a nzi g v. Di k m a n ,
7 8 A. D. 2 d 3 0 3 ( 1st D e p’t 1 9 8 0) ....................................................................................2 , 1 3 , 1 4
D el e o n v. N. Y. C. S a nit ati o n D e p’t ,
2 5 N. Y. 3 d 1 1 0 2 ( 2 0 1 5) ............................................................................................................1 0
G essi n El e c. C o ntr a ct ors, I n c. v. 9 5 W all Ass o cs., L L C ,
7 4 A. D. 3 d 5 1 6 ( 1st D e p’t 2 0 1 0) ................................................................................................4
Gl e as o n v. Gl e as o n ,
2 6 N. Y. 2 d 2 8 ( 1 9 7 0) ................................................................................................................1 3
Gr oss v. E m pir e H e alt h c h oi c e Ass ur., I n c. ,
8 1 9 N. Y. S. 2 d 2 1 0 ( S u p. Ct. N. Y. Ct y. 2 0 0 6) ..........................................................................2 1
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H a n o v er I ns. C o. v. U nit e d St at es ,
2 7 9 F. S u p p . 8 5 1 ( S. D. N. Y. 1 9 6 7) ..........................................................................................1 1
Kir k e L a S h ell e C o. v. P a ul Ar mstr o n g C o. ,
2 6 3 N. Y. 7 9 ( 1 9 3 3) ..................................................................................................................2 1
K ol b e v. Ti b b ets ,
2 2 N. Y. 3 d 3 4 4 ( 2 0 1 3) ..............................................................................................2 , 1 2 , 1 3 , 1 4
M a dis o n A v e. L e as e h ol d, L L C v. M a dis o n B e ntl e y Ass o cs. L L C ,
3 0 A. D. 3 d 1 ( 1st D e p’t 2 0 0 6) ..............................................................................................4 , 15
M att er of B o m b a y R e alt y C or p. v M a g n a C art a ,
1 0 0 N. Y. 2 d 1 2 4 ( 2 0 0 3) ..............................................................................................................6
M c Cl e m e nt v. S u p. Ct. of I n d. Or d er of F or est ers ,
2 2 2 N. Y. 4 7 0 ( 1 9 1 8) ..........................................................................................................1 4 , 1 5
P e ars all v. Gr e at N. R y. ,
1 6 1 U. S. 6 4 6 ( 1 8 9 6) .................................................................................................................1 3
P er n et v. P e a b o d y E n g’ g C or p. ,
2 0 A. D. 2 d 7 8 1 ( 1st D e p’t 1 9 6 4) ..............................................................................................2 1
P o k oi k v . P o k oi k,
1 1 5 A. D. 3 d 4 2 8 ( 1st D e p’t 2 0 1 4) ............................................................................................1 0
R e b e c c a Br o a d w a y L. P. v. H ott o n ,
1 4 3 A. D. 3 d 7 1 ( 1st D e p’t 2 0 1 6) ........................................................................................2 1 , 3 0
Ri c h b ell I nf o. S er vs., I n c. v J u pit er P art n ers, L. P. ,
3 0 9 A. D. 2 d 2 8 8 ( 1st D e p’t 2 0 0 3) ................................................................................2 1 , 2 6 , 2 8
R o dri g u ez P ast or v. D e G a et a n o ,
1 2 8 A. D. 3 d 2 1 8 ( 1st D e p’t 2 0 1 5) ............................................................................................2 1
S a c as a v. D a vi d Tr. ,
1 9 7 A. D. 3 d 7 5 0 ( 2 d D e p’t 2 0 2 1) .............................................................................................1 2
S al er n o v. C o a c h, I n c. ,
1 4 4 A. D. 3 d 4 4 9 ( 1st D e p’t 2 0 1 6) ............................................................................................1 6
Si g n at ur e B a n k v. F ai bis h ,
1 4 2 A. D. 3 d 1 0 6 9 ( 2 d D e p’t 2 0 1 6) ...........................................................................................1 0
Si n g h v. P G A T o ur, I n c. ,
1 6 2 A. D. 3 d 5 5 6 ( 1st D e p’t 2 0 1 8) ............................................................................................2 1
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St a nl e y v. A m alit h o n e R e alt y, I n c. ,
9 2 1 N. Y. S. 2 d 4 9 1 ( S u p. Ct. N. Y. Ct y. 2 0 1 1) ..........................................................................1 1
T h o e ns v. J. A. K e n n e d y R e alt y C or p. ,
2 7 9 A. D. 2 1 6 ( 1st D e p’t 1 9 5 1) ................................................................................................1 7
Tirs c h w ell v. T C W Gr p., I n c. ,
1 9 4 A. D. 3 d 6 6 5 ( 1st D e p’t 2 0 2 1) ............................................................................................2 1
W o o d v. L u c y, L a d y D uff -G or d o n ,
2 2 2 N. Y. 8 8 ( 1 9 1 7) ..................................................................................................................2 1
St at ut es a n d R ul es
2 2 N Y C R R 2 0 2. 7 0( g) ....................................................................................................................3 2
C P L R 1 0 0 1( b) ................................................................................................................................1 2
Ot h e r A ut h o riti es
Bl a c k’s L a w D i cti o n ar y ( 1 1t h e d. 2 0 1 9)..........................................................................................8
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P R E LI MI N A R Y S T A T E M E N T
T o h e ar M P E G L A t ell t h e st or y of t his c as e, o n c e S a ms u n g e x er cis e d its ri g ht t o l e a v e
M P E G L A’s p at e nt p o ol, M P E G L A h a d n o c h oi c e b ut t o f oll o w ot h er L i c e ns ors’ dir e cti v es t o
p u nis h S a ms u n g b y wit h h ol di n g t h e r o y alti es S a ms u n g e ar n e d, i
. T his “ j ust f oll o wi n g or d ers” d ef e ns e f ails b ot h as a m att er of u n dis p ut e d f a ct
a n d g o v er ni n g N e w Y or k l a w a n d t h us pr o vi d es M P E G L A wit h n o b asis t o a v oi d li a bilit y f or
br e a c hi n g its c o ntr a ct wit h S a ms u n g. S a ms u n g g r a nt e d M P E G L A a ri g ht t o s u bli c e ns e
S a ms u n g’s p at e nts, e v e n aft er S a ms u n g’s t er mi n ati o n . In e x c h a n g e , M P E G L A c o m mitt e d t o p a y
S a ms u n g its f ull s h ar e of r o y alti es, e v e n aft er S a ms u n g’s t er mi n ati o n. N ot hi n g i n t h e g o v er ni n g
c o ntr a cts or N e w Y or k l a w p er mits M P E G L A t o d o ot h er wis e. A n d e v e n if t h e C o urt w er e t o
a c c e pt M P E G L A’s d ef e ns e t o t h e br e a c h of c o ntr a ct cl ai m , d oi n g s o w o ul d o nl y r ei nf or c e t h e
n e e d f or a tri al t o r es ol v e M P E G L A’s li a bilit y o n t h e cl ai m f or br e a c h of t h e i m pli e d c o v e n a nt.
O n t h e c o ntr a ct cl ai m, M P E G L A b ol dl y m ai nt ai ns t h at t h e L A A p er mit s it t o wit h h ol d
S a ms u n g’s r o y alti es r e g ar dl ess w h et h er t h e p ur p ort e d a m e n d m e nt t o t h e A A L t h at M P E G
L A c o n c ei v e d a n d c h a m pi o n e d is v ali d u n d er N e w Y or k l a w a n d w as d ul y a d o pt e d b y t h e
Li c e ns ors . U n d er M P E G L A’s vi e w, it n e e d o nl y h a v e “ b eli e v e d ” t h e s u p p os e d a m e n d m e nt “t o
b e g e n ui n e ” i n or d er t o r e d u c e S a ms u n g’s r o y alti es. B ut w er e t h at s o, it w o ul d m e a n t h at M P E G
L A c o ul d a b a n d o n all of t h e g o v er ni n g d o c u m e nts of t h e p at e nt p o ol a n y ti m e it w as f a c e d wit h
a c o nfli cti n g d o c u m e nt t h at it “ b eli e v e d t o b e g e n ui n e.” T his a bs ur d a n d c o m m er ci all y
u nr e as o n a bl e i nt er pr et ati o n is pr o hi bit e d b y t h e L A A ’s t e xt ( n eit h er of t w o pr o visi o ns o n w hi c h
M P E G L A r eli es, L A A § § 5. 2 & 6. 3. 2 , r eli e v es it of its c o ntr a ct u al o bli g ati o ns), t h e L A A ’s
str u ct ur e (w hi c h r e p e at e dl y r eit er at es S a ms u n g’s e ntitl e m e nt t o t h e s h ar e m a n d at e d b y A A L
§ 5. 1 ), a n d t h e L A A ’s p ur p os e ( w hi c h is t o di ct at e h o w Li c e ns ors g et p ai d, n ot l e a v e a g a pi n g
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h ol e i n t h at o bli g ati o n). M P E G L A’s i nt er pr et ati o n a d diti o n all y cr e at es c o nfli ct wit h i n t h e
c o ntr a ct a n d r e n d ers i m p ort a nt pr ot e cti o ns s u p erfl u o us . T h e C o urt s h o ul d r ej e ct it.
B e c a us e M P E G L A m ai nt ai ns t h at it w as fr e e t o tr e at t h e a m e n d m e nt
e v e n if it n e v er a ct u all y p ass e d , it f ails t o off er e v e n a c ol or a bl e ar g u m e nt
t h at t h e A A L w as pr o p erl y a m e n d e d . T h e c o ntr a ct t h at S a ms u n g a n d M P E G L A a ct u all y si g n e d
u n dis p ut e dl y r e q uir e d M P E G L A t o p a y S a ms u n g its f ull s h ar e of r o y alti es , b ot h b ef or e a n d aft er
t er min ati o n, a n d t h at ri g ht c o ul d n ot b e c h a n g e d wit h o ut S a ms u n g’s c o ns e nt . M P E G L A d o es
n ot pr o vi d e a n y a n al ysis of D a nzi g v. Di k m a n , 7 8 A. D. 2 d 3 0 3 ( 1st D e p’t 1 9 8 0), a n d d o es n ot e v e n
cit e K ol b e v. Ti b b ets , 2 2 N. Y. 3 d 3 4 4 ( 2 0 1 3), t h e bi n di n g pr e c e d e nt t h at pr o hi bit s c h a n gi n g a
t er mi n at e d p art y’s ri g hts. N or d o es M P E G L A dir e ct t h e C o urt t o a n y c o ntr a ct u al pr o visi o n
all o w i n g it t o di ct at e t h at a Li c e ns or’s sil e n c e c o nstit ut es ass e nt t o a n a m e n d m e nt, or dis p ut e t h at
t h e a m e n d m e nt d o es n ot m e et e v e n t h e l o w est v oti n g t hr es h ol d i n t h e A A L wit h o ut c o u nti n g sil e nt
Li c e ns ors as affir m ati v e v ot es . T h e u n a m bi g u o us c o ntr a cts, u n dis p ut e d f a cts, a n d g o v er ni n g N e w
Y or k l a w all s h o w t h at t h e a m e n d m e nt c o ul d n ot a n d di d n ot p ass, a n d n ot hi n g i n t h e c o ntr a cts
all o ws M P E G L A t o a ct as if it di d. S u m m ar y j u d g m e nt i n S a ms u n g’s f a v or o n t h e c o ntr a ct cl ai m
is t h us w arr a nt e d.
S a ms u n g’s cl ai m f or br e a c h of t h e i m pli e d c o v e n a nt of g o o d f ait h a n d f air d e ali n g ,
h o w e v er, c a n n ot b e r es ol v e d o n s u m m ar y j u d g m e nt . M P E G L A a d dr ess es t h e i m pli e d c o v e n a nt
cl ai m o nl y at t h e t ail e n d of its bri ef, disr e g ar di n g t h e m a n y f a ct u al q uesti o n s
M P E G L A i nst e a d off ers t e n u o us i nt er pr etati o ns of t h e L A A ’s pr o visi o ns
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B ut it is n o d ef e ns e t o p oi nt t o a c o ntr a ct u al pr o visi o n t h at all o ws, f or e x a m pl e,
M P E G L A t o c o ns ult o n a m e n d m e nts, b e c a us e a n i m pli e d c o v e n a nt cl ai m m a y r est o n a n
i m pr o p er e x er cis e of c o ntr a ct ri g hts i n a w a y t h at d ef e ats t h e ess e nti al p ur p os e of t h e c o ntr a ct.
M P E G L A t h us f ails t o a d dr ess t h e c or e of t h e i m pli e d c o v e n a nt cl ai m: w h et h er S a ms u n g w as
i m pr o p erl y d e pri v e d of t h e e x p e ct e d b e n efit of its b ar g ai n. It w as, as a j ur y pr es e nt e d t h es e f a cts
c o ul d r e a dil y c o n cl u d e .
F or t h es e r e as o ns, S a ms u n g’s m oti o n s h o ul d b e gr a nt e d a n d M P E G L A’s cr oss -m oti o n
s h o ul d b e d e ni e d.
A R G U ME NT
I. M P E G L A F AI L S T O C R E A T E A N Y T RI A B L E I S S U E O V E R I T S O W N
F AI L U R E T O P A Y S A M S U N G T H E R O Y A L TI E S M A N D A T E D B Y T H E L A A
M P E G L A d o es n ot dis p ut e t h at it h as f ail e d t o p a y t h e r o y alti es d u e t o S a ms u n g u n d er
t h e A A L a n d L A A as t h e y e xist e d w h e n S a ms u n g l eft t h e p at e nt p o ol. M P E G L A i nst e a d ass erts ,
pri m aril y, t h at it w as all o w e d t o c ut S a ms u n g’s r o y alt y s h ar e r e g ar dl ess of w h et h er t h e A A L w as
pr o p erl y a m e n d e d ( O p p. 1 3 -1 9 ) a n d, s e c o n d aril y, t h at t h e a m e n d m e nt w as i n f a ct pr o p er (O p p.
1 9 -2 2 ). B ot h ar g u m e nts f ail as a m att er of l a w , as d o es M P E G L A’s eff ort t o a v oi d p a yi n g
S a ms u n g t h e f ull a m o u nt of r o y alti es it is o w e d ( O p p. 2 3 -2 4 ).
A. M P E G L A’s I nt e r p r et ati o n C o nt r a di cts T h e L A A ’s T e xt, St r u ct u r e, A n d
P u r p os e
I n M P E G L A’s vi e w, t h e p arti es n e g oti at e d a d et ail e d s et of r ul es f or h o w r o y alti es will
b e distri b ut e d, b ut t h e n , t hr o u g h o n e cl a us e i n L A A § 6. 3. 2 a n d t w o s e nt e n c es i n L A A § 5. 2 ,
all o w e d all of t h os e r ul es t o b e dis c ar d e d if M P E G L A c o ul d cl ai m t h at s o m e ot h er st at e m e nt —
e v e n a n a m e n d m e nt t h at w as n e v er pr o p erl y a d o pt e d — “s p e cifi c all y pr o vi d e d ot h e r wis e. ” T o
pr e v ail, M P E G m ust s h o w b ot h ( 1) t h at L A A § 6. 3. 2 u n a m bi g u o usl y all o ws f or e x c e pti o ns t o t h e
ro y alt y f or m ul a s p e cifi e d i n L A A § 6. 3. 1 a n d A A L § 5. 1 , a n d ( 2) t h at L A A § 5. 2 u n a m bi g u o usl y
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p er mits M P E G L A t o tr e at t h e s u p p os e d a m e n d m e nt t o t h e A A L , w h et h er v ali dl y a d o pt e d or n ot,
as tri g g eri n g a n e x c e pti o n u n d er L A A § 6. 3. 2 . It c a n n ot d o eit h er, as its i nt er pr et ati o n cr e at es a
g a pi n g h ol e i n L A A § 6. 3 , th e c or e pr o visi o n t h at r e q uir e s M P E G L A t o a ct u all y p a y S a ms u n g
a n d ot h er Li c e ns ors t h e m o n e y M P E G L A bri n gs i n b y s u bli c e nsi n g t h eir i nt ell e ct u al pr o p ert y.
T h e C o urt s h o ul d r ej e ct M P E G L A’s str ai n e d a n d c o m m er ci all y u nr e as o n a bl e i nt er pr et ati o n a n d
i nst e a d s h o ul d f oll o w t h e pl ai n t er ms t h at r e q uir e M P E G L A t o p a y S a ms u n g its f ull s h ar e of
r o y alti es.
1. L A A § 6. 3 D o es N ot All o w M P E G L A T o Dis r e g a r d T h e M a n d at o r y
F o r m ul a I n A A L § 5. 1
As S a ms u n g e x pl ai n e d ( Br. 3 -4, 9 -1 1, 1 7 -1 8 ), L A A § § 6. 3. 1 a n d 6. 3. 2 r e q uir e M P E G L A
t o “ p a y t o e a c h Li c e ns or t h e a m o u nts a p p orti o n e d t o s u c h Li c e ns or ” “ as s et f ort h i n S e cti o n 5. 1
of t h e [ A A L ], ” a n d L A A § 1 1. 5. 2 pr o vi d es t his “ri g ht t o r e c ei v e r o y alt y distri b uti o ns … p urs u a nt
t o S e cti o n[] 6. 3 ” s ur vi v es t er mi n ati o n. F a c e d wit h t his pl ai n l a n g u a g e, M P E G L A’s c e ntr al
d ef e ns e ( O p p. 1 3 -1 8 ) is t h at t h e i ntr o d u ct or y
cl a us e “[ u] nl ess s p e cifi c all y pr o vi d e d ot h er wis e ” i n L A A § 6. 3. 2 p er mits it t o disr e g ar d t h e
f or m ul a f or r o y alt y a p p orti o n m e nt i n A A L § 5. 1 w h e n distri b uti n g r o y alti es t o t h e Li c e ns ors.
T h at i nt er pr et ati o n c a n n ot b e s q u ar e d wit h t h e t e xt of L A A § 6. 3 , wr o n gl y f ails t o “ a v oi d []
i n c o nsist e n ci es a n d r e as o n a bl y h ar m o ni z e[] [ all c o ntr a ct u al] t er ms,” G essi n El e c. C o ntr a ct ors,
I n c. v. 9 5 W all Ass o cs., L L C, 7 4 A. D. 3 d 5 1 6, 5 1 8 ( 1st D e p’t 2 0 1 0), a n d is c o m m er ci all y
u nr e as o n a bl e, s e e, e. g., M a dis o n A v e. L e as e h ol d, L L C v. M a dis o n B e ntl e y Ass o cs. L L C , 3 0
A. D. 3 d 1, 8 ( 1st D e p’t 2 0 0 6) ( c o ntr a ct i nt er pr et ati o n m ust c o nsi d er “t h e r e as o n a bl e e x p e ct ati o ns
of t h e p arti es a n d t h e b usi n ess p ur p os e t o b e s er v e d b y t h eir c o ntr a ct ”).
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First , L A A § 6. 3 , w hi c h is e ntitl e d “ P a y m e nt t o Li c e ns ors ,” m a k es cl e ar t h at t h e “ [u ]nl ess
s p e cifi c all y pr o vi d e d ot h er wis e ” cl a us e o nl y m o dif i es w h e n p a y m e nt m ust b e m a d e, n ot w h at
p a y m e nt m ust b e m a d e:
6. 3. 1 A n y Gr oss C oll e cti o ns r e c ei v e d b y t h e Li c e nsi n g A d mi nistr at or u n d er t h e
H E V C P at e nt P ortf oli o Li c e ns es w hi c h ar e p a y a bl e t o t h e Li c e ns ors s h all
b e a p p orti o n e d a m o n g t h e Li c e ns ors as s et f ort h i n S e cti o n 5. 1 of t h e
A gr e e m e nt A m o n g Li c e ns ors, Li c e ns ors b ei n g t h e eff e cti v e b e n efi ci al
o w n ers of all r o y alti es c oll e ct e d b y t h e Li c e nsi n g A d mi nistr at or.
6. 3. 2 U nl ess s p e cifi c all y pr o vi d e d ot h er wis e , t h e Li c e nsi n g A d mi nistr at or s h all
p a y t o e a c h Li c e ns or t h e a m o u nts a p p orti o n e d t o s u c h Li c e ns or p urs u a nt
t o S e cti o n 6. 3. 1 a b o v e, aft er d e d u cti n g a m o u nts d u e t o t h e Li c e nsi n g
A d mi nistr at or p urs u a nt t o t his Arti cl e 6, wit hi n si xt y ( 6 0) d a ys aft er t h e
e n d of e a c h c al e n d ar q u art er .
L A A § § 6. 3. 1 , 6. 3.2 .1 A pl ai n r e a di n g of L A A § 6. 3. 2 t h us r e q uir es p a y m e nt wit hi n 6 0 d a ys
“ u nl ess s p e cifi c all y pr o vi d e d ot h er wis e. ” If t h e p arti es h a d i nt e n d e d t h e “ u nl ess s p e cifi c all y
pr o vi d e d ot h er wis e ” cl a us e t o all o w f or a c h a n g e t o t h e a m o u nt e a c h Li c e ns or r e c ei v es, t h e y
w o ul d h a v e pl a c e d it i n § 6. 3. 1 , w hi c h d efi n es h o w r o y alti es “s h all b e a p p orti o n e d a m o n g t h e
Li c e ns ors .” B e c a us e t h e y di d n ot, t his cl a us e d o es n ot all o w a c h a n g e t o a p p orti o n m e nt.
S e c o n d , M P E G L A’s i nt er pr et ati o n of L A A § 6. 3. 2 cr e at es a c o nfli ct wit h at l e ast t w o
ot h er pr o visi o ns of t h e L A A: § 6. 3. 1 a n d § 3. 5 , b ot h of w hi c h pr o mis e S a ms u n g its f ull n e g oti at e d
s h ar e. S e cti o n 6. 3. 1 r e q uir es wit h o ut e x c e pti o n t h at t h e r o y alti es “s h all b e a p p orti o n e d a m o n g
t h e Li c e ns ors as s et f ort h i n S e cti o n 5. 1 of t h e [A A L ], ” w h er e as M P E G L A cl ai ms t h at § 6. 3. 2
all o ws f or a diff er e nt a p p orti o n m e nt. L A A § 3. 5 als o est a blis h es t h at S a ms u n g h as a ri g ht t o its
r o y alti es u n d er A A L § 5. 1 , wit h o ut a n y c a v e ats:
1
All e m p h asis i n t his bri ef h as b e e n a d d e d.
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S u bj e ct t o S e cti o ns 2. 1 2 a n d 5. 2. 1 of t h e A gr e e m e nt A m o n g Li c e ns ors, t h e
Li c e nsi n g A d mi nistr at or a gr e es t o r e mit t o e a c h Li c e ns or t h e p orti o n of t h e
H E V C P at e nt P ortf oli o Li c e ns e r o y alti es p a y a bl e t o s u c h Li c e ns or as s et f ort h
i n Arti cl e 5 of t h e A gr e e m e nt A m o n g Li c e ns ors, Li c e ns ors b ei n g t h e eff e cti v e
b e n efi ci al o w n ers of all r o y alti es c oll e ct e d b y t h e Li c e nsi n g A d mi nistr at or. T h e
Li c e ns ors a c k n o wl e d g e a n d a gr e e t h at t h e Li c e nsi n g A d mi nistr at or is n ot a
g u ar a nt or of r o y alti es p a y a bl e u n d er H E V C P at e nt P ortf oli o Li c e ns es b ut is
r es p o nsi bl e t o r e mit r o y alti es d ul y r e c ei v e d (s u bj e ct t o wit h h ol di n g t a x as
r e q uir e d b y a p pli c a bl e l a w or r e g ul ati o ns) p urs u a nt t o t h e H E V C P at e nt
P ortf oli o Li c e ns e as s et f ort h i n S e cti o n 5 of t h e A gr e e m e nt A m o n g Li c e ns ors .
M P E G L A’s i nt er pr et ati o n of L A A § 6. 3. 2 i m pr o p erl y c o nfli cts wit h L A A § 6. 3. 1 a n d L A A § 3. 5
a n d r e n d ers t h e m s u p erfl u o us . S e e, e. g. , M att er of B o m b a y R e alt y C or p. v M a g n a C art a , 1 0 0
N. Y. 2 d 1 2 4, 1 2 7 ( 2 0 0 3) ( “ O n e p orti o n of t h e [ c o ntr a ct] s h o ul d n ot b e r e a d s o as t o n e g at e an ot h er
p orti o n. ”). I n c o ntr ast, S a ms u n g’s i nt er pr et ati o n cr e at es n o c o nfli ct a n d gi v es e v er y pr o visi o n
m e a ni n g.
M P E G L A wr o n gl y ass ert s (O p p. 1 4 -1 6 ) t h at L A A § 6. 3 alr e a d y e x c e pts A A L § 5. 1
b e c a us e M P E G L A p a ys t er mi n at e d Li c e ns ors t h eir s h ar e of r o y alti es o nl y fr o m pr e-t er mi n ati o n
s u bli c e ns es. T h at mis u n d erst a n ds h o w t h e c o ntr a ctu al f or m ul a w or ks. A A L § 5. 1 di ct at es h o w
t o a p p orti o n t h e “[r] o y alti es c oll e ct e d b y t h e Li c e nsi n g A d mi nistr at or fr o m e a c h s u bli c e ns e e” —
it is a f or m ul a a p pli e d s u bli c e ns e e-b y -s u bli c e ns e e. S e e E x. 9 ,
A n d t h at is w h at t er mi n at e d Li c e ns ors r e c ei v e: t h e a p p orti o n m e nt fr o m
A A L § 5. 1 , fr o m e a c h s u bli c e ns e e wit h ri g hts t o t h e t er mi n at e d Li c e ns or’s p at e nts. A A L § 7. 2. 2
m a k es t his e x pli cit :
A P art y w hi c h t er mi n at es i n a c c or d a n c e wit h S e cti o n 7. 2 s h all b e e ntitl e d t o
c o nti n u e t o r e c ei v e its a p p orti o n e d s h ar e of r e v e n u es i n a c c or d a n c e wit h S e cti o n
5. 1 f or r o y alti es r e c ei v e d u n d er H E V C P at e nt P ortf oli o Li c e ns es w hi c h i n cl u d e
P at e nts o w n e d b y t h e t er mi n ati n g P art y ; pr o vi d e d, h o w e v er, f or e a c h distri b uti o n
of r e v e n u es m a d e b y t h e Li c e nsi n g A d mi nistr at or aft er t er mi n ati o n b e c o mi n g
eff e cti v e, t h e t er mi n ati n g P art y’s a p p orti o n e d s h ar e s h all b e b as e d s ol el y o n t h e
t ot al r e v e n u es d eri v e d u n d er all H E V C P at e nt P ortf oli o Li c e ns es ( a n d all
s u bs e q u e nt r e n e w als t h er e of) t h at w er e gr a nt e d b y t h e Li c e nsi n g A d mi nistr at or
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b ef or e t h e eff e cti v e d at e of t er mi n ati o n of t h e Li c e nsi n g A d mi nistr at or’s ri g ht t o
gr a nt a d diti o n al s u bli c e ns es u n d er t h e t er mi n ati n g P art y’s H E V C P at e nt P ortf oli o
P at e nts.
M P E G L A’s r eli a n c e o n A A L § 7. 2. 2 as a b asis f or n ot f oll o wi n g A A L § 5. 1 is ir o ni c: T h at
s e cti o n e x pr essl y r e q uir es t h e f or m ul a b e f oll o w e d . I n all c as es, A A L § 5. 1 d efi n es h o w t o
distri b ut e t h e r o y alti es c oll e ct e d “fr o m e a c h s u bli c e ns e e ” t h at p a ys M P E G L A f or t h e ri g ht t o
pr a cti c e S a ms u n g’s p at e nts . M P E G L A h as br e a c h e d t h e L A A b y f aili n g t o f oll o w t h at m a n d at or y
f or m ul a.
T hir d , M P E G L A’s i nt er pr et ati o n of L A A § 6. 3. 2 als o l a c ks a n y b asis i n c o m m er ci al
r e alit y. It is i n c o n c ei v a bl e t h at M P E G L A, S a ms u n g, a n d t h e n u m er o us ot h er s o p histi c at e d
t e c h n ol o g y c o m p a ni es t h at ar e p o ol m e m b ers w o ul d cr e at e a d et ail e d, bi n di n g str u ct ur e f or h o w
t o a p p orti o n a n d distri b ut e r o y alti es, b ut t h e n u n d er c ut it all wit h o n e pr ef at or y cl a us e. If t h at w as
t h e g o al, w h y n ot si m pl y r e pla c e t h e distri b uti o n r ul es wit h a pr o visi o n t h at s a ys “ M P E G L A s h all
distri b ut e t h e r o y alti es h o w e v er t h e Li c e ns ors t ell it t o ” ? W h y er e ct t h e d e m a n di n g, t w o -p art
s u p er-m aj orit y r e q uir e m e nts f or “ a m e n d m e nts t o … all o c ati o ns a m o n g P arti es p urs u a nt t o Arti c l e
5 ” ( A A L § 6. 1( 1) ) if t h os e all o c ati o ns c o ul d b e c h a n g e d vi a str a y a m e n d m e nts t o ot h er pr o visi o ns ?
A n d w h y w o ul d t h e p arti es p ut all of t his p o w er i nt o a cl a us e t h at d o es n ot e v e n cl arif y w h o c a n
“s p e cifi c all y pr o vi d e ot h er wis e ” or h o w t h e y c a n d o s o or w h er e s u c h a pr o visi o n m ust e xist ?
M P E G L A’s i nt er pr et ati o n t h at it c a n d o w h at e v er it w a nts wit h S a ms u n g’s r o y alti es as l o n g as it
c a n cl ai m t h at s o m e o n e, s o m e w h er e, s o m e h o w ‘s p e cifi c all y pr o vi d e d ot h er wis e’ d efi es
c o m m er ci al s e ns e, a n d s h o ul d b e r ej e ct e d f or t h at r e as o n as w ell.
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2. L A A § 5. 2 D o es N ot All o w M P E G L A T o A p pl y A P u r p o rt e d
A m e n d m e nt T h at C o ul d Di mi nis h S a ms u n g’s Ri g hts
M P E G L A f ar es n o b ett er i n s e e ki n g (O p p. 6, 1 6, 1 8 -1 9 ) t o tr a nsf or m L A A § 5. 2 , e ntit l e d
“ R eli a n c e o n A d mi nistr ati v e C o m mitt e e a n d C h air m a n ,” i nt o a bl a n k et a ut h ori z ati o n t o disr e g ar d
t h e r est of its c o ntr a ct u al o bli g ati o ns. T h at pr o visi o n st at es i n r el e v a nt p art:
I n p erf or mi n g its o bli g ati o ns h er e u n d er, t h e Li c e nsi n g A d mi nistr at or m a y a ct i n
r e as o n a bl e r eli a n c e u p o n a n y i nstr u m e nt or si g n at ur e r e as o n a bl y b eli e v e d b y it t o
b e g e n ui n e a n d t h e Li c e nsi n g A d mi nistr at or m a y ass u m e t h at a n y b o n a fi d e
r e pr es e nt ati v e of a Li c e ns or p ur p orti n g t o gi v e a n oti c e, r e q u est, c o ns e nt or
i nstr u cti o n or to a c k n o wl e d g e r e c ei pt i n c o n n e cti o n wit h t h e pr o visi o ns h er e of h as
b e e n d ul y a ut h ori z e d t o d o s o a n d t h at t h e s a m e is pr o p erl y m a d e or gi v e n. I n
r el yi n g u p o n a n y n otifi c ati o n, c o ns e nt or a p pr o v al fr o m t h e A d mi nistr ati v e
C o m mitt e e, it s h all n ot b e n e c ess ar y f or t h e Li c e nsi n g A d mi nistr at or t o
i n d e p e n d e ntl y v erif y t h e e xist e n c e or n o n-e xist e n c e of a q u or u m or ot h er
r e q uir e m e nt r el ati n g t o a cti o ns of t h e A d mi nistr ati v e C o m mitt e e.
L A A § 5. 2 . It t h us a d dr ess es h o w M P E G L A c a n, f or e x a m pl e, a ct o n n oti c es a n d r e q u ests fr o m
Li c e ns ors wit h o ut t a ki n g i n d e p e n d e nt st e ps t o c o nfir m t h at t h e e m pl o y e e w h o s e n ds t h e n oti c e or
r e q u est h as a ut h orit y t o d o s o a n d t h at a si g n at ur e is a ut h e nti c2 a n d, si mil arl y, c a n r el y o n
n otifi c ati o ns, c o ns e nts, a n d a p pr o v al fr o m t h e A d mi nistr ati v e C o m mitt e e wit h o ut i n q uir y i nt o its
i nt er n al pr o c ess es. T his c as e, h o w e v er, h as n ot hi n g t o d o wit h w h et h er M P E G L A a c ci d e nt all y
cr e dit e d a f or g e d d o c u m e nt
A ll o wi n g M P E G L A t o “ a ct i n r e as o n a bl e r eli a n c e u p o n a n y i nstr u m e nt or si g n at ur e
r e as o n a bl y b eli e v e d b y it t o b e g e n ui n e ” c a n n ot b e r e as o n a bl y r e a d t o m e a n t h at M P E G L A c a n
f oll o w a s e e mi n gl y “ g e n ui n e ” i nstr u m e nt t h at c o ntr a di cts M P E G L A’s c o ntr a ct u al o bli g ati o ns.
B y t h at l o gi c, if a n A p pl e e m pl o y e e s e nt M P E G L A a n e m ail st ati n g “T h e A A L h as b e e n a m e n d e d
2
S e e , e. g., G e n ui n e , Bl a c k’s L a w Di cti o n ar y ( 1 1t h e d. 2 0 1 9) ( “1. ( Of a t hi n g) a ut h e nti c
or r e al; h a vi n g t h e q u alit y of w h at a gi v e n t hi n g p ur p orts t o b e or t o h a v e … 2. ( Of a n i nstr u m e nt)
fr e e of f or g er y or c o u nt erf eiti n g”).
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a n d y o u s h o ul d n o w p a y all p o ol r o y alti es t o A p pl e, ” M P E G L A c o ul d d o s o — aft er all, it is
e ntitl e d t o “ a ct i n r e as o n a bl e r eli a n c e ” o n t his “ g e n ui n e ” “i nstr u m e nt. ” T h at is a bs ur d, n ot t o
m e nti o n c o m m er ci all y u nr e as o n a bl e, a n d it is e q u all y a bs ur d f or M P E G L A t o s u g g est t h at L A A
§ 5. 2 i m m u ni z e d its d e p art ur e fr o m t h e c o ntr a ct ri g hts t h at
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FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 S UP RE ME C O U RT OF T HE ST ATE OF NE W Y O R K C O U NT Y OF NE W Y O R K S A M S U N G E L E C T R O NI C S C O., L T D. , I n d e x N o. 6 5 6 3 1 2 / 2 02 2 Pl ai ntiff , I A S P art 6 0 v. H o n. M eliss a A. Cr a n e , J. S. C. M P E G L A, L. L. C. , O R A L A R G U M E N T R E Q U ES T E D D ef e n d a nt. M oti o n S e q u e n c e N o. 8 M E M O R A N D U M O F L A W I N F U R T H E R S U P P O R T O F S A M S U N G’ S M O TI O N F O R S U M M A R Y J U D G M E N T O N I T S B R E A C H O F C O N T R A C T C L AI M A N D I N O P P O SI TI O N T O M P E G L A’ S C R O S S -M O TI O N F O R S U M M A R Y J U D G M E N T Q UI N N E M A N UEL U R Q U H ART & S U L LI V A N ,L L P Mi c h a el B. C arli ns k y Willi a m B. A d a ms O w e n F. R o b erts 5 1 M a dis o n A v e n u e, 2 2 n d Fl o or N e w Y or k, N e w Y or k 1 0 0 1 0 ( 2 1 2) 8 4 9-7 0 0 0 mi c h a el c arli ns k y @ q ui n n e m a n u el. c o m w illi a m a d a ms @ q ui n n e m a n u el. c o m o w e nr o b erts @ q ui n n e m a n u el. c o m K e vi n H ar d y ( a d mitt e d pr o h a c vi c e ) 1 3 0 0 I Str e et, N. W., S uit e 9 0 0 W as hi n gt o n, D C 2 0 0 0 5 ( 2 0 2) 5 3 8-8 0 0 0 k e vi n h ar d y @ q ui n n e m a n u el. c o m Att or n e ys f or Pl ai ntiff S a ms u n g El e ctr o ni cs C o., Lt d. 1 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 T A B L E OF C O N T E N TS P a ge T A B L E O F A U T H O RI TI E S ......................................................................................................... iii P R E LI MI N A R Y S T A T E M E N T .....................................................................................................1 A R G U M E N T ...................................................................................................................................3 I. M P E G L A F AI L S T O C R E A T E A N Y T RI A B L E I S S U E O V E R I T S O W N F AI L U R E T O P A Y S A M S U N G T H E R O Y A L TI E S M A N D A T E D B Y T H E L A A .....................................................................................................................................3 A. M P E G L A’s I nt er pr et ati o n C o ntr a di cts T h e L A A’s T e xt, Str u ct ur e, A n d P ur p os e .....................................................................................................................3 1. L A A § 6. 3 D o es N ot All o w M P E G L A T o Disr e g ar d T h e M a n d at or y F or m ul a I n A A L § 5. 1 ...............................................................4 2. L A A § 5. 2 D o es N ot All o w M P E G L A T o A p pl y A P ur p ort e d A m e n d m e nt T h at C o ul d Di mi nis h S a ms u n g’s Ri g hts .................................8 3. M P E G L A Is T h e O nl y N e c ess ar y D ef e n d a nt F or T h e Cl ai m e d Br e a c h Of Its P a y m e nt O bli g ati o ns U n d er T h e L A A ................................1 0 B. M P E G L A’s Ar g u m e nts T h at T h e A A L W as A m e n d e d All F ail As A M att er Of L a w ........................................................................................................1 2 1. T h e P ur p ort e d A m e n d m e nt Is Pr o hi bit e d B y N e w Y or k L a w T h at M P E G L A L ar g el y I g n or es ........................................................................1 2 2. T h e P ur p ort e d A m e n d m e nt Di d N ot C o m pl y Wit h T h e A A L’s A m e n d m e nt R e q uir e m e nts .........................................................................1 5 3. T h e P ur p ort e d A m e n d m e nt W as Dr aft e d Aft er It W as P ur p ort e dl y A d o pt e d, I n Vi ol ati o n Of F u n d a m e nt al C o ntr a ct Pri n ci pl es .....................1 6 4. T h e P ur p ort e d A m e n d m e nt D o es N ot C h a n g e M P E G L A’s O bli g ati o n T o A p pl y A A L § 5. 1 ................................................................1 7 C. M P E G L A Wr o n gl y S e e ks T o H ol d O n O we d T o S a ms u n g .................................................................................................................1 8 II. S A M S U N G’ S I M P LI E D C O V E N A N T C L AI M C A N N O T B E R E S O L V E D WI T H O U T A T RI A L ........................................................................................................2 0 A. S a ms u n g R e as o n a bl y E x p e ct e d M P E G L A N ot T o I nt erf er e Wit h S a ms u n g’s Ess e nti al P ur p os e I n L i c e nsi n g Its P at e nts F or A F air R at e ................2 1 i 2 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 B. M P E G L A I m pr o p erl y As ks T h e C o urt T o R es ol v e N u m er o us Dis p ut e d F a cts I n Its F a v or O n S u m m ar y J u d g m e nt ............................................................2 4 C. M P E G L A’s Fl a w e d I nt er pr et ati o n Of T h e L A A D o es N ot P er mit It T o A v oi d Tri al Of T h e I m pli e d C o v e n a nt Cl ai m ........................................................2 7 1. L A A § 5. 1 D o es N ot P er mit M P E G L A T o Or c h estr at e A m e n d m e nts T o P u nis h Li c e ns ors F or E x er cisi n g T h eir Ri g hts ...............2 7 2. A A L § 6. 1 D o es N ot P er mit M P E G L A T o Di ct at e T h e A m e n d m e nt V oti n g R ul es ..........................................................................2 9 C O N C L U SI O N ..............................................................................................................................3 0 ii 3 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 T A B L E O F A U T H O RI TI E S P a g e (s) C as es 2 1st C e nt ur y Di a m o n d, L L C v. Allfi el d Tr a di n g, L L C , 1 1 0 A. D. 3 d 6 1 5 ( 1st D e p’t 2 0 1 3) ............................................................................................2 4 Al v ar ez v. Pr os p e ct H os p. , 6 8 N. Y. 2 d 3 2 0 ( 1 9 8 6 ) ..............................................................................................................1 0 Ar g e nti n a v. Ost e g o M ut. Fir e I ns. C o. , 8 6 N. Y. 2 d 7 4 8 ( 1 9 9 5) ................................................................................................................9 A y ers v. Gr a n d L o d g e of A n ci e nt Or d er of U nit e d W or k m e n of St at e of N. Y. , 1 8 8 N. Y. 2 8 0 ( 1 9 0 7) ..........................................................................................................1 4 , 1 5 A yr es v. N e w Y or k St at e C o m m’r of T a x ati o n & Fi n. , 2 5 2 A. D. 2 d 8 0 8 ( 3 d D e p’t 1 9 9 8) .............................................................................................1 1 B a n c o N a ci o n al Ultr a m ari n o, S. A. v. C h a n , 6 4 1 N. Y. S. 2 d 1 0 0 6 ( S u p. Ct. N. Y. Ct y. 1 9 9 6) ........................................................................1 1 C el a ur o v. 4 C F o o ds C or p. , 1 8 7 A. D. 3 d 8 3 6 ( 2 d D e p’t 2 0 2 0) .............................................................................................2 6 C or d er o v. Tr a ns a m eri c a A n n uit y S er v. C or p. , 3 9 N. Y. 3 d 3 9 9 ( 2 0 2 3) ........................................................................................................2 0 , 2 4 D alt o n v. E d u. T esti n g S er v. , 8 7 N. Y. 2 d 3 8 4 ( 1 9 9 5) ........................................................................................................2 1 , 2 8 D a nzi g v. Di k m a n , 7 8 A. D. 2 d 3 0 3 ( 1st D e p’t 1 9 8 0) ....................................................................................2 , 1 3 , 1 4 D el e o n v. N. Y. C. S a nit ati o n D e p’t , 2 5 N. Y. 3 d 1 1 0 2 ( 2 0 1 5) ............................................................................................................1 0 G essi n El e c. C o ntr a ct ors, I n c. v. 9 5 W all Ass o cs., L L C , 7 4 A. D. 3 d 5 1 6 ( 1st D e p’t 2 0 1 0) ................................................................................................4 Gl e as o n v. Gl e as o n , 2 6 N. Y. 2 d 2 8 ( 1 9 7 0) ................................................................................................................1 3 Gr oss v. E m pir e H e alt h c h oi c e Ass ur., I n c. , 8 1 9 N. Y. S. 2 d 2 1 0 ( S u p. Ct. N. Y. Ct y. 2 0 0 6) ..........................................................................2 1 iii 4 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 H a n o v er I ns. C o. v. U nit e d St at es , 2 7 9 F. S u p p . 8 5 1 ( S. D. N. Y. 1 9 6 7) ..........................................................................................1 1 Kir k e L a S h ell e C o. v. P a ul Ar mstr o n g C o. , 2 6 3 N. Y. 7 9 ( 1 9 3 3) ..................................................................................................................2 1 K ol b e v. Ti b b ets , 2 2 N. Y. 3 d 3 4 4 ( 2 0 1 3) ..............................................................................................2 , 1 2 , 1 3 , 1 4 M a dis o n A v e. L e as e h ol d, L L C v. M a dis o n B e ntl e y Ass o cs. L L C , 3 0 A. D. 3 d 1 ( 1st D e p’t 2 0 0 6) ..............................................................................................4 , 15 M att er of B o m b a y R e alt y C or p. v M a g n a C art a , 1 0 0 N. Y. 2 d 1 2 4 ( 2 0 0 3) ..............................................................................................................6 M c Cl e m e nt v. S u p. Ct. of I n d. Or d er of F or est ers , 2 2 2 N. Y. 4 7 0 ( 1 9 1 8) ..........................................................................................................1 4 , 1 5 P e ars all v. Gr e at N. R y. , 1 6 1 U. S. 6 4 6 ( 1 8 9 6) .................................................................................................................1 3 P er n et v. P e a b o d y E n g’ g C or p. , 2 0 A. D. 2 d 7 8 1 ( 1st D e p’t 1 9 6 4) ..............................................................................................2 1 P o k oi k v . P o k oi k, 1 1 5 A. D. 3 d 4 2 8 ( 1st D e p’t 2 0 1 4) ............................................................................................1 0 R e b e c c a Br o a d w a y L. P. v. H ott o n , 1 4 3 A. D. 3 d 7 1 ( 1st D e p’t 2 0 1 6) ........................................................................................2 1 , 3 0 Ri c h b ell I nf o. S er vs., I n c. v J u pit er P art n ers, L. P. , 3 0 9 A. D. 2 d 2 8 8 ( 1st D e p’t 2 0 0 3) ................................................................................2 1 , 2 6 , 2 8 R o dri g u ez P ast or v. D e G a et a n o , 1 2 8 A. D. 3 d 2 1 8 ( 1st D e p’t 2 0 1 5) ............................................................................................2 1 S a c as a v. D a vi d Tr. , 1 9 7 A. D. 3 d 7 5 0 ( 2 d D e p’t 2 0 2 1) .............................................................................................1 2 S al er n o v. C o a c h, I n c. , 1 4 4 A. D. 3 d 4 4 9 ( 1st D e p’t 2 0 1 6) ............................................................................................1 6 Si g n at ur e B a n k v. F ai bis h , 1 4 2 A. D. 3 d 1 0 6 9 ( 2 d D e p’t 2 0 1 6) ...........................................................................................1 0 Si n g h v. P G A T o ur, I n c. , 1 6 2 A. D. 3 d 5 5 6 ( 1st D e p’t 2 0 1 8) ............................................................................................2 1 iv 5 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 St a nl e y v. A m alit h o n e R e alt y, I n c. , 9 2 1 N. Y. S. 2 d 4 9 1 ( S u p. Ct. N. Y. Ct y. 2 0 1 1) ..........................................................................1 1 T h o e ns v. J. A. K e n n e d y R e alt y C or p. , 2 7 9 A. D. 2 1 6 ( 1st D e p’t 1 9 5 1) ................................................................................................1 7 Tirs c h w ell v. T C W Gr p., I n c. , 1 9 4 A. D. 3 d 6 6 5 ( 1st D e p’t 2 0 2 1) ............................................................................................2 1 W o o d v. L u c y, L a d y D uff -G or d o n , 2 2 2 N. Y. 8 8 ( 1 9 1 7) ..................................................................................................................2 1 St at ut es a n d R ul es 2 2 N Y C R R 2 0 2. 7 0( g) ....................................................................................................................3 2 C P L R 1 0 0 1( b) ................................................................................................................................1 2 Ot h e r A ut h o riti es Bl a c k’s L a w D i cti o n ar y ( 1 1t h e d. 2 0 1 9)..........................................................................................8 v 6 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 P R E LI MI N A R Y S T A T E M E N T T o h e ar M P E G L A t ell t h e st or y of t his c as e, o n c e S a ms u n g e x er cis e d its ri g ht t o l e a v e M P E G L A’s p at e nt p o ol, M P E G L A h a d n o c h oi c e b ut t o f oll o w ot h er L i c e ns ors’ dir e cti v es t o p u nis h S a ms u n g b y wit h h ol di n g t h e r o y alti es S a ms u n g e ar n e d, i . T his “ j ust f oll o wi n g or d ers” d ef e ns e f ails b ot h as a m att er of u n dis p ut e d f a ct a n d g o v er ni n g N e w Y or k l a w a n d t h us pr o vi d es M P E G L A wit h n o b asis t o a v oi d li a bilit y f or br e a c hi n g its c o ntr a ct wit h S a ms u n g. S a ms u n g g r a nt e d M P E G L A a ri g ht t o s u bli c e ns e S a ms u n g’s p at e nts, e v e n aft er S a ms u n g’s t er mi n ati o n . In e x c h a n g e , M P E G L A c o m mitt e d t o p a y S a ms u n g its f ull s h ar e of r o y alti es, e v e n aft er S a ms u n g’s t er mi n ati o n. N ot hi n g i n t h e g o v er ni n g c o ntr a cts or N e w Y or k l a w p er mits M P E G L A t o d o ot h er wis e. A n d e v e n if t h e C o urt w er e t o a c c e pt M P E G L A’s d ef e ns e t o t h e br e a c h of c o ntr a ct cl ai m , d oi n g s o w o ul d o nl y r ei nf or c e t h e n e e d f or a tri al t o r es ol v e M P E G L A’s li a bilit y o n t h e cl ai m f or br e a c h of t h e i m pli e d c o v e n a nt. O n t h e c o ntr a ct cl ai m, M P E G L A b ol dl y m ai nt ai ns t h at t h e L A A p er mit s it t o wit h h ol d S a ms u n g’s r o y alti es r e g ar dl ess w h et h er t h e p ur p ort e d a m e n d m e nt t o t h e A A L t h at M P E G L A c o n c ei v e d a n d c h a m pi o n e d is v ali d u n d er N e w Y or k l a w a n d w as d ul y a d o pt e d b y t h e Li c e ns ors . U n d er M P E G L A’s vi e w, it n e e d o nl y h a v e “ b eli e v e d ” t h e s u p p os e d a m e n d m e nt “t o b e g e n ui n e ” i n or d er t o r e d u c e S a ms u n g’s r o y alti es. B ut w er e t h at s o, it w o ul d m e a n t h at M P E G L A c o ul d a b a n d o n all of t h e g o v er ni n g d o c u m e nts of t h e p at e nt p o ol a n y ti m e it w as f a c e d wit h a c o nfli cti n g d o c u m e nt t h at it “ b eli e v e d t o b e g e n ui n e.” T his a bs ur d a n d c o m m er ci all y u nr e as o n a bl e i nt er pr et ati o n is pr o hi bit e d b y t h e L A A ’s t e xt ( n eit h er of t w o pr o visi o ns o n w hi c h M P E G L A r eli es, L A A § § 5. 2 & 6. 3. 2 , r eli e v es it of its c o ntr a ct u al o bli g ati o ns), t h e L A A ’s str u ct ur e (w hi c h r e p e at e dl y r eit er at es S a ms u n g’s e ntitl e m e nt t o t h e s h ar e m a n d at e d b y A A L § 5. 1 ), a n d t h e L A A ’s p ur p os e ( w hi c h is t o di ct at e h o w Li c e ns ors g et p ai d, n ot l e a v e a g a pi n g 1 7 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 h ol e i n t h at o bli g ati o n). M P E G L A’s i nt er pr et ati o n a d diti o n all y cr e at es c o nfli ct wit h i n t h e c o ntr a ct a n d r e n d ers i m p ort a nt pr ot e cti o ns s u p erfl u o us . T h e C o urt s h o ul d r ej e ct it. B e c a us e M P E G L A m ai nt ai ns t h at it w as fr e e t o tr e at t h e a m e n d m e nt e v e n if it n e v er a ct u all y p ass e d , it f ails t o off er e v e n a c ol or a bl e ar g u m e nt t h at t h e A A L w as pr o p erl y a m e n d e d . T h e c o ntr a ct t h at S a ms u n g a n d M P E G L A a ct u all y si g n e d u n dis p ut e dl y r e q uir e d M P E G L A t o p a y S a ms u n g its f ull s h ar e of r o y alti es , b ot h b ef or e a n d aft er t er min ati o n, a n d t h at ri g ht c o ul d n ot b e c h a n g e d wit h o ut S a ms u n g’s c o ns e nt . M P E G L A d o es n ot pr o vi d e a n y a n al ysis of D a nzi g v. Di k m a n , 7 8 A. D. 2 d 3 0 3 ( 1st D e p’t 1 9 8 0), a n d d o es n ot e v e n cit e K ol b e v. Ti b b ets , 2 2 N. Y. 3 d 3 4 4 ( 2 0 1 3), t h e bi n di n g pr e c e d e nt t h at pr o hi bit s c h a n gi n g a t er mi n at e d p art y’s ri g hts. N or d o es M P E G L A dir e ct t h e C o urt t o a n y c o ntr a ct u al pr o visi o n all o w i n g it t o di ct at e t h at a Li c e ns or’s sil e n c e c o nstit ut es ass e nt t o a n a m e n d m e nt, or dis p ut e t h at t h e a m e n d m e nt d o es n ot m e et e v e n t h e l o w est v oti n g t hr es h ol d i n t h e A A L wit h o ut c o u nti n g sil e nt Li c e ns ors as affir m ati v e v ot es . T h e u n a m bi g u o us c o ntr a cts, u n dis p ut e d f a cts, a n d g o v er ni n g N e w Y or k l a w all s h o w t h at t h e a m e n d m e nt c o ul d n ot a n d di d n ot p ass, a n d n ot hi n g i n t h e c o ntr a cts all o ws M P E G L A t o a ct as if it di d. S u m m ar y j u d g m e nt i n S a ms u n g’s f a v or o n t h e c o ntr a ct cl ai m is t h us w arr a nt e d. S a ms u n g’s cl ai m f or br e a c h of t h e i m pli e d c o v e n a nt of g o o d f ait h a n d f air d e ali n g , h o w e v er, c a n n ot b e r es ol v e d o n s u m m ar y j u d g m e nt . M P E G L A a d dr ess es t h e i m pli e d c o v e n a nt cl ai m o nl y at t h e t ail e n d of its bri ef, disr e g ar di n g t h e m a n y f a ct u al q uesti o n s M P E G L A i nst e a d off ers t e n u o us i nt er pr etati o ns of t h e L A A ’s pr o visi o ns 2 8 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 B ut it is n o d ef e ns e t o p oi nt t o a c o ntr a ct u al pr o visi o n t h at all o ws, f or e x a m pl e, M P E G L A t o c o ns ult o n a m e n d m e nts, b e c a us e a n i m pli e d c o v e n a nt cl ai m m a y r est o n a n i m pr o p er e x er cis e of c o ntr a ct ri g hts i n a w a y t h at d ef e ats t h e ess e nti al p ur p os e of t h e c o ntr a ct. M P E G L A t h us f ails t o a d dr ess t h e c or e of t h e i m pli e d c o v e n a nt cl ai m: w h et h er S a ms u n g w as i m pr o p erl y d e pri v e d of t h e e x p e ct e d b e n efit of its b ar g ai n. It w as, as a j ur y pr es e nt e d t h es e f a cts c o ul d r e a dil y c o n cl u d e . F or t h es e r e as o ns, S a ms u n g’s m oti o n s h o ul d b e gr a nt e d a n d M P E G L A’s cr oss -m oti o n s h o ul d b e d e ni e d. A R G U ME NT I. M P E G L A F AI L S T O C R E A T E A N Y T RI A B L E I S S U E O V E R I T S O W N F AI L U R E T O P A Y S A M S U N G T H E R O Y A L TI E S M A N D A T E D B Y T H E L A A M P E G L A d o es n ot dis p ut e t h at it h as f ail e d t o p a y t h e r o y alti es d u e t o S a ms u n g u n d er t h e A A L a n d L A A as t h e y e xist e d w h e n S a ms u n g l eft t h e p at e nt p o ol. M P E G L A i nst e a d ass erts , pri m aril y, t h at it w as all o w e d t o c ut S a ms u n g’s r o y alt y s h ar e r e g ar dl ess of w h et h er t h e A A L w as pr o p erl y a m e n d e d ( O p p. 1 3 -1 9 ) a n d, s e c o n d aril y, t h at t h e a m e n d m e nt w as i n f a ct pr o p er (O p p. 1 9 -2 2 ). B ot h ar g u m e nts f ail as a m att er of l a w , as d o es M P E G L A’s eff ort t o a v oi d p a yi n g S a ms u n g t h e f ull a m o u nt of r o y alti es it is o w e d ( O p p. 2 3 -2 4 ). A. M P E G L A’s I nt e r p r et ati o n C o nt r a di cts T h e L A A ’s T e xt, St r u ct u r e, A n d P u r p os e I n M P E G L A’s vi e w, t h e p arti es n e g oti at e d a d et ail e d s et of r ul es f or h o w r o y alti es will b e distri b ut e d, b ut t h e n , t hr o u g h o n e cl a us e i n L A A § 6. 3. 2 a n d t w o s e nt e n c es i n L A A § 5. 2 , all o w e d all of t h os e r ul es t o b e dis c ar d e d if M P E G L A c o ul d cl ai m t h at s o m e ot h er st at e m e nt — e v e n a n a m e n d m e nt t h at w as n e v er pr o p erl y a d o pt e d — “s p e cifi c all y pr o vi d e d ot h e r wis e. ” T o pr e v ail, M P E G m ust s h o w b ot h ( 1) t h at L A A § 6. 3. 2 u n a m bi g u o usl y all o ws f or e x c e pti o ns t o t h e ro y alt y f or m ul a s p e cifi e d i n L A A § 6. 3. 1 a n d A A L § 5. 1 , a n d ( 2) t h at L A A § 5. 2 u n a m bi g u o usl y 9 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 p er mits M P E G L A t o tr e at t h e s u p p os e d a m e n d m e nt t o t h e A A L , w h et h er v ali dl y a d o pt e d or n ot, as tri g g eri n g a n e x c e pti o n u n d er L A A § 6. 3. 2 . It c a n n ot d o eit h er, as its i nt er pr et ati o n cr e at es a g a pi n g h ol e i n L A A § 6. 3 , th e c or e pr o visi o n t h at r e q uir e s M P E G L A t o a ct u all y p a y S a ms u n g a n d ot h er Li c e ns ors t h e m o n e y M P E G L A bri n gs i n b y s u bli c e nsi n g t h eir i nt ell e ct u al pr o p ert y. T h e C o urt s h o ul d r ej e ct M P E G L A’s str ai n e d a n d c o m m er ci all y u nr e as o n a bl e i nt er pr et ati o n a n d i nst e a d s h o ul d f oll o w t h e pl ai n t er ms t h at r e q uir e M P E G L A t o p a y S a ms u n g its f ull s h ar e of r o y alti es. 1. L A A § 6. 3 D o es N ot All o w M P E G L A T o Dis r e g a r d T h e M a n d at o r y F o r m ul a I n A A L § 5. 1 As S a ms u n g e x pl ai n e d ( Br. 3 -4, 9 -1 1, 1 7 -1 8 ), L A A § § 6. 3. 1 a n d 6. 3. 2 r e q uir e M P E G L A t o “ p a y t o e a c h Li c e ns or t h e a m o u nts a p p orti o n e d t o s u c h Li c e ns or ” “ as s et f ort h i n S e cti o n 5. 1 of t h e [ A A L ], ” a n d L A A § 1 1. 5. 2 pr o vi d es t his “ri g ht t o r e c ei v e r o y alt y distri b uti o ns … p urs u a nt t o S e cti o n[] 6. 3 ” s ur vi v es t er mi n ati o n. F a c e d wit h t his pl ai n l a n g u a g e, M P E G L A’s c e ntr al d ef e ns e ( O p p. 1 3 -1 8 ) is t h at t h e i ntr o d u ct or y cl a us e “[ u] nl ess s p e cifi c all y pr o vi d e d ot h er wis e ” i n L A A § 6. 3. 2 p er mits it t o disr e g ar d t h e f or m ul a f or r o y alt y a p p orti o n m e nt i n A A L § 5. 1 w h e n distri b uti n g r o y alti es t o t h e Li c e ns ors. T h at i nt er pr et ati o n c a n n ot b e s q u ar e d wit h t h e t e xt of L A A § 6. 3 , wr o n gl y f ails t o “ a v oi d [] i n c o nsist e n ci es a n d r e as o n a bl y h ar m o ni z e[] [ all c o ntr a ct u al] t er ms,” G essi n El e c. C o ntr a ct ors, I n c. v. 9 5 W all Ass o cs., L L C, 7 4 A. D. 3 d 5 1 6, 5 1 8 ( 1st D e p’t 2 0 1 0), a n d is c o m m er ci all y u nr e as o n a bl e, s e e, e. g., M a dis o n A v e. L e as e h ol d, L L C v. M a dis o n B e ntl e y Ass o cs. L L C , 3 0 A. D. 3 d 1, 8 ( 1st D e p’t 2 0 0 6) ( c o ntr a ct i nt er pr et ati o n m ust c o nsi d er “t h e r e as o n a bl e e x p e ct ati o ns of t h e p arti es a n d t h e b usi n ess p ur p os e t o b e s er v e d b y t h eir c o ntr a ct ”). 4 10 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 First , L A A § 6. 3 , w hi c h is e ntitl e d “ P a y m e nt t o Li c e ns ors ,” m a k es cl e ar t h at t h e “ [u ]nl ess s p e cifi c all y pr o vi d e d ot h er wis e ” cl a us e o nl y m o dif i es w h e n p a y m e nt m ust b e m a d e, n ot w h at p a y m e nt m ust b e m a d e: 6. 3. 1 A n y Gr oss C oll e cti o ns r e c ei v e d b y t h e Li c e nsi n g A d mi nistr at or u n d er t h e H E V C P at e nt P ortf oli o Li c e ns es w hi c h ar e p a y a bl e t o t h e Li c e ns ors s h all b e a p p orti o n e d a m o n g t h e Li c e ns ors as s et f ort h i n S e cti o n 5. 1 of t h e A gr e e m e nt A m o n g Li c e ns ors, Li c e ns ors b ei n g t h e eff e cti v e b e n efi ci al o w n ers of all r o y alti es c oll e ct e d b y t h e Li c e nsi n g A d mi nistr at or. 6. 3. 2 U nl ess s p e cifi c all y pr o vi d e d ot h er wis e , t h e Li c e nsi n g A d mi nistr at or s h all p a y t o e a c h Li c e ns or t h e a m o u nts a p p orti o n e d t o s u c h Li c e ns or p urs u a nt t o S e cti o n 6. 3. 1 a b o v e, aft er d e d u cti n g a m o u nts d u e t o t h e Li c e nsi n g A d mi nistr at or p urs u a nt t o t his Arti cl e 6, wit hi n si xt y ( 6 0) d a ys aft er t h e e n d of e a c h c al e n d ar q u art er . L A A § § 6. 3. 1 , 6. 3.2 .1 A pl ai n r e a di n g of L A A § 6. 3. 2 t h us r e q uir es p a y m e nt wit hi n 6 0 d a ys “ u nl ess s p e cifi c all y pr o vi d e d ot h er wis e. ” If t h e p arti es h a d i nt e n d e d t h e “ u nl ess s p e cifi c all y pr o vi d e d ot h er wis e ” cl a us e t o all o w f or a c h a n g e t o t h e a m o u nt e a c h Li c e ns or r e c ei v es, t h e y w o ul d h a v e pl a c e d it i n § 6. 3. 1 , w hi c h d efi n es h o w r o y alti es “s h all b e a p p orti o n e d a m o n g t h e Li c e ns ors .” B e c a us e t h e y di d n ot, t his cl a us e d o es n ot all o w a c h a n g e t o a p p orti o n m e nt. S e c o n d , M P E G L A’s i nt er pr et ati o n of L A A § 6. 3. 2 cr e at es a c o nfli ct wit h at l e ast t w o ot h er pr o visi o ns of t h e L A A: § 6. 3. 1 a n d § 3. 5 , b ot h of w hi c h pr o mis e S a ms u n g its f ull n e g oti at e d s h ar e. S e cti o n 6. 3. 1 r e q uir es wit h o ut e x c e pti o n t h at t h e r o y alti es “s h all b e a p p orti o n e d a m o n g t h e Li c e ns ors as s et f ort h i n S e cti o n 5. 1 of t h e [A A L ], ” w h er e as M P E G L A cl ai ms t h at § 6. 3. 2 all o ws f or a diff er e nt a p p orti o n m e nt. L A A § 3. 5 als o est a blis h es t h at S a ms u n g h as a ri g ht t o its r o y alti es u n d er A A L § 5. 1 , wit h o ut a n y c a v e ats: 1 All e m p h asis i n t his bri ef h as b e e n a d d e d. 5 11 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 S u bj e ct t o S e cti o ns 2. 1 2 a n d 5. 2. 1 of t h e A gr e e m e nt A m o n g Li c e ns ors, t h e Li c e nsi n g A d mi nistr at or a gr e es t o r e mit t o e a c h Li c e ns or t h e p orti o n of t h e H E V C P at e nt P ortf oli o Li c e ns e r o y alti es p a y a bl e t o s u c h Li c e ns or as s et f ort h i n Arti cl e 5 of t h e A gr e e m e nt A m o n g Li c e ns ors, Li c e ns ors b ei n g t h e eff e cti v e b e n efi ci al o w n ers of all r o y alti es c oll e ct e d b y t h e Li c e nsi n g A d mi nistr at or. T h e Li c e ns ors a c k n o wl e d g e a n d a gr e e t h at t h e Li c e nsi n g A d mi nistr at or is n ot a g u ar a nt or of r o y alti es p a y a bl e u n d er H E V C P at e nt P ortf oli o Li c e ns es b ut is r es p o nsi bl e t o r e mit r o y alti es d ul y r e c ei v e d (s u bj e ct t o wit h h ol di n g t a x as r e q uir e d b y a p pli c a bl e l a w or r e g ul ati o ns) p urs u a nt t o t h e H E V C P at e nt P ortf oli o Li c e ns e as s et f ort h i n S e cti o n 5 of t h e A gr e e m e nt A m o n g Li c e ns ors . M P E G L A’s i nt er pr et ati o n of L A A § 6. 3. 2 i m pr o p erl y c o nfli cts wit h L A A § 6. 3. 1 a n d L A A § 3. 5 a n d r e n d ers t h e m s u p erfl u o us . S e e, e. g. , M att er of B o m b a y R e alt y C or p. v M a g n a C art a , 1 0 0 N. Y. 2 d 1 2 4, 1 2 7 ( 2 0 0 3) ( “ O n e p orti o n of t h e [ c o ntr a ct] s h o ul d n ot b e r e a d s o as t o n e g at e an ot h er p orti o n. ”). I n c o ntr ast, S a ms u n g’s i nt er pr et ati o n cr e at es n o c o nfli ct a n d gi v es e v er y pr o visi o n m e a ni n g. M P E G L A wr o n gl y ass ert s (O p p. 1 4 -1 6 ) t h at L A A § 6. 3 alr e a d y e x c e pts A A L § 5. 1 b e c a us e M P E G L A p a ys t er mi n at e d Li c e ns ors t h eir s h ar e of r o y alti es o nl y fr o m pr e-t er mi n ati o n s u bli c e ns es. T h at mis u n d erst a n ds h o w t h e c o ntr a ctu al f or m ul a w or ks. A A L § 5. 1 di ct at es h o w t o a p p orti o n t h e “[r] o y alti es c oll e ct e d b y t h e Li c e nsi n g A d mi nistr at or fr o m e a c h s u bli c e ns e e” — it is a f or m ul a a p pli e d s u bli c e ns e e-b y -s u bli c e ns e e. S e e E x. 9 , A n d t h at is w h at t er mi n at e d Li c e ns ors r e c ei v e: t h e a p p orti o n m e nt fr o m A A L § 5. 1 , fr o m e a c h s u bli c e ns e e wit h ri g hts t o t h e t er mi n at e d Li c e ns or’s p at e nts. A A L § 7. 2. 2 m a k es t his e x pli cit : A P art y w hi c h t er mi n at es i n a c c or d a n c e wit h S e cti o n 7. 2 s h all b e e ntitl e d t o c o nti n u e t o r e c ei v e its a p p orti o n e d s h ar e of r e v e n u es i n a c c or d a n c e wit h S e cti o n 5. 1 f or r o y alti es r e c ei v e d u n d er H E V C P at e nt P ortf oli o Li c e ns es w hi c h i n cl u d e P at e nts o w n e d b y t h e t er mi n ati n g P art y ; pr o vi d e d, h o w e v er, f or e a c h distri b uti o n of r e v e n u es m a d e b y t h e Li c e nsi n g A d mi nistr at or aft er t er mi n ati o n b e c o mi n g eff e cti v e, t h e t er mi n ati n g P art y’s a p p orti o n e d s h ar e s h all b e b as e d s ol el y o n t h e t ot al r e v e n u es d eri v e d u n d er all H E V C P at e nt P ortf oli o Li c e ns es ( a n d all s u bs e q u e nt r e n e w als t h er e of) t h at w er e gr a nt e d b y t h e Li c e nsi n g A d mi nistr at or 6 12 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 b ef or e t h e eff e cti v e d at e of t er mi n ati o n of t h e Li c e nsi n g A d mi nistr at or’s ri g ht t o gr a nt a d diti o n al s u bli c e ns es u n d er t h e t er mi n ati n g P art y’s H E V C P at e nt P ortf oli o P at e nts. M P E G L A’s r eli a n c e o n A A L § 7. 2. 2 as a b asis f or n ot f oll o wi n g A A L § 5. 1 is ir o ni c: T h at s e cti o n e x pr essl y r e q uir es t h e f or m ul a b e f oll o w e d . I n all c as es, A A L § 5. 1 d efi n es h o w t o distri b ut e t h e r o y alti es c oll e ct e d “fr o m e a c h s u bli c e ns e e ” t h at p a ys M P E G L A f or t h e ri g ht t o pr a cti c e S a ms u n g’s p at e nts . M P E G L A h as br e a c h e d t h e L A A b y f aili n g t o f oll o w t h at m a n d at or y f or m ul a. T hir d , M P E G L A’s i nt er pr et ati o n of L A A § 6. 3. 2 als o l a c ks a n y b asis i n c o m m er ci al r e alit y. It is i n c o n c ei v a bl e t h at M P E G L A, S a ms u n g, a n d t h e n u m er o us ot h er s o p histi c at e d t e c h n ol o g y c o m p a ni es t h at ar e p o ol m e m b ers w o ul d cr e at e a d et ail e d, bi n di n g str u ct ur e f or h o w t o a p p orti o n a n d distri b ut e r o y alti es, b ut t h e n u n d er c ut it all wit h o n e pr ef at or y cl a us e. If t h at w as t h e g o al, w h y n ot si m pl y r e pla c e t h e distri b uti o n r ul es wit h a pr o visi o n t h at s a ys “ M P E G L A s h all distri b ut e t h e r o y alti es h o w e v er t h e Li c e ns ors t ell it t o ” ? W h y er e ct t h e d e m a n di n g, t w o -p art s u p er-m aj orit y r e q uir e m e nts f or “ a m e n d m e nts t o … all o c ati o ns a m o n g P arti es p urs u a nt t o Arti c l e 5 ” ( A A L § 6. 1( 1) ) if t h os e all o c ati o ns c o ul d b e c h a n g e d vi a str a y a m e n d m e nts t o ot h er pr o visi o ns ? A n d w h y w o ul d t h e p arti es p ut all of t his p o w er i nt o a cl a us e t h at d o es n ot e v e n cl arif y w h o c a n “s p e cifi c all y pr o vi d e ot h er wis e ” or h o w t h e y c a n d o s o or w h er e s u c h a pr o visi o n m ust e xist ? M P E G L A’s i nt er pr et ati o n t h at it c a n d o w h at e v er it w a nts wit h S a ms u n g’s r o y alti es as l o n g as it c a n cl ai m t h at s o m e o n e, s o m e w h er e, s o m e h o w ‘s p e cifi c all y pr o vi d e d ot h er wis e’ d efi es c o m m er ci al s e ns e, a n d s h o ul d b e r ej e ct e d f or t h at r e as o n as w ell. 7 13 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 2. L A A § 5. 2 D o es N ot All o w M P E G L A T o A p pl y A P u r p o rt e d A m e n d m e nt T h at C o ul d Di mi nis h S a ms u n g’s Ri g hts M P E G L A f ar es n o b ett er i n s e e ki n g (O p p. 6, 1 6, 1 8 -1 9 ) t o tr a nsf or m L A A § 5. 2 , e ntit l e d “ R eli a n c e o n A d mi nistr ati v e C o m mitt e e a n d C h air m a n ,” i nt o a bl a n k et a ut h ori z ati o n t o disr e g ar d t h e r est of its c o ntr a ct u al o bli g ati o ns. T h at pr o visi o n st at es i n r el e v a nt p art: I n p erf or mi n g its o bli g ati o ns h er e u n d er, t h e Li c e nsi n g A d mi nistr at or m a y a ct i n r e as o n a bl e r eli a n c e u p o n a n y i nstr u m e nt or si g n at ur e r e as o n a bl y b eli e v e d b y it t o b e g e n ui n e a n d t h e Li c e nsi n g A d mi nistr at or m a y ass u m e t h at a n y b o n a fi d e r e pr es e nt ati v e of a Li c e ns or p ur p orti n g t o gi v e a n oti c e, r e q u est, c o ns e nt or i nstr u cti o n or to a c k n o wl e d g e r e c ei pt i n c o n n e cti o n wit h t h e pr o visi o ns h er e of h as b e e n d ul y a ut h ori z e d t o d o s o a n d t h at t h e s a m e is pr o p erl y m a d e or gi v e n. I n r el yi n g u p o n a n y n otifi c ati o n, c o ns e nt or a p pr o v al fr o m t h e A d mi nistr ati v e C o m mitt e e, it s h all n ot b e n e c ess ar y f or t h e Li c e nsi n g A d mi nistr at or t o i n d e p e n d e ntl y v erif y t h e e xist e n c e or n o n-e xist e n c e of a q u or u m or ot h er r e q uir e m e nt r el ati n g t o a cti o ns of t h e A d mi nistr ati v e C o m mitt e e. L A A § 5. 2 . It t h us a d dr ess es h o w M P E G L A c a n, f or e x a m pl e, a ct o n n oti c es a n d r e q u ests fr o m Li c e ns ors wit h o ut t a ki n g i n d e p e n d e nt st e ps t o c o nfir m t h at t h e e m pl o y e e w h o s e n ds t h e n oti c e or r e q u est h as a ut h orit y t o d o s o a n d t h at a si g n at ur e is a ut h e nti c2 a n d, si mil arl y, c a n r el y o n n otifi c ati o ns, c o ns e nts, a n d a p pr o v al fr o m t h e A d mi nistr ati v e C o m mitt e e wit h o ut i n q uir y i nt o its i nt er n al pr o c ess es. T his c as e, h o w e v er, h as n ot hi n g t o d o wit h w h et h er M P E G L A a c ci d e nt all y cr e dit e d a f or g e d d o c u m e nt A ll o wi n g M P E G L A t o “ a ct i n r e as o n a bl e r eli a n c e u p o n a n y i nstr u m e nt or si g n at ur e r e as o n a bl y b eli e v e d b y it t o b e g e n ui n e ” c a n n ot b e r e as o n a bl y r e a d t o m e a n t h at M P E G L A c a n f oll o w a s e e mi n gl y “ g e n ui n e ” i nstr u m e nt t h at c o ntr a di cts M P E G L A’s c o ntr a ct u al o bli g ati o ns. B y t h at l o gi c, if a n A p pl e e m pl o y e e s e nt M P E G L A a n e m ail st ati n g “T h e A A L h as b e e n a m e n d e d 2 S e e , e. g., G e n ui n e , Bl a c k’s L a w Di cti o n ar y ( 1 1t h e d. 2 0 1 9) ( “1. ( Of a t hi n g) a ut h e nti c or r e al; h a vi n g t h e q u alit y of w h at a gi v e n t hi n g p ur p orts t o b e or t o h a v e … 2. ( Of a n i nstr u m e nt) fr e e of f or g er y or c o u nt erf eiti n g”). 8 14 of 38 FILED: NEW YORK COUNTY CLERK 10/27/2023 09:55 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 10/27/2023 a n d y o u s h o ul d n o w p a y all p o ol r o y alti es t o A p pl e, ” M P E G L A c o ul d d o s o — aft er all, it is e ntitl e d t o “ a ct i n r e as o n a bl e r eli a n c e ” o n t his “ g e n ui n e ” “i nstr u m e nt. ” T h at is a bs ur d, n ot t o m e nti o n c o m m er ci all y u nr e as o n a bl e, a n d it is e q u all y a bs ur d f or M P E G L A t o s u g g est t h at L A A § 5. 2 i m m u ni z e d its d e p art ur e fr o m t h e c o ntr a ct ri g hts t h at