Cambridge Display Technology Ltd v EI Dupont de Nemours & Company

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Patten
Judgment Date18 Jun 2004
Neutral Citation[2004] EWHC 1415 (Ch)
Docket NumberCase No: HC04 C00159

[2004] EWHC 1415 (Ch)

IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr Justice Patten

Case No: HC04 C00159

Between:
Cambridge Display Technology Limited
Claimant
and
E.I. Dupont de Nemours and Company
(A Company Incorporated in Delaware USA)
Defendant

Robert Englehart QC (instructed by Osborne Clarke) for the Claimant

Geraldine Andrews QC (instructed by Eversheds) for the Defendant

Approved Judgment

Hearing date: 27 th May 2004

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Patten Mr Justice Patten
1

This claim raises for decision a short point of construction on the meaning of clause 3.5 of a licence agreement entered into on 16 th October 200Under the terms of that agreement ("the Agreement") the Claimant, Cambridge Display Technology Limited ("CDT") granted to the Defendant, E I Dupont de Nemours and Company ("Dupont") a licence to manufacture display equipment incorporating CDT's patented electroluminescent polymer technology, which can be used to create flat panel displays.

2

The commercial background to the Agreement is that in March 2000 Dupont acquired a small Californian research and development company called Uniax Corporation, which then changed its name to Dupont Displays Inc. The business of Uniax consisted of the development of what is described as organic light-emitting display technology, which can be used to produce plastic and glass displays for a variety of purposes, including cellular telephones and portable computers. The development of these products required the use of CDT's invention, although it is said by the Defendants that this was to be combined with Uniax's own technology in order to create a commercially exploitable end product. The incorporation of the patented polymer materials necessitated, however, a licence from CDT as patentee.

3

I am told that the agreement entered into on 16 th October 2001 was based on CDT's standard form licence agreement, but that document is not in evidence and would not in any event be likely to assist in the interpretation of a revised agreement. There is also evidence from a number of individuals who were involved on both sides in the negotiations leading up to the execution of the Agreement. Much of their evidence (which includes references to the travelling draft and their own reminiscences as to what was intended) is clearly inadmissible, even when judged by the standards of a more permissive age: see Investors Compensation Scheme v. West Bromwich Building Society [1998] 1 WLR 896 at page 913B.

4

However, the exclusion of that evidence leaves the Court with very little by way of background or factual matrix that is particularly relevant or illuminating for the construction of the provisions in dispute, beyond what is evident from the terms of the Agreement itself.

5

The dispute centres on what are described in the Agreement as the Financial Provisions and in particular upon clause 3.5, which deals with the payment of a minimum royalty of US $1m per annum. Clause 3.5 provides that:

"Within sixty (60) days of the end of (a) the first two Years under this Agreement and (b) each Year thereafter, the Licensee shall, in the manner provided in Clause 3.6 below, pay to CDT the shortfall (if any) between the royalties paid in accordance with Clause 3.1 above and the Minimum Royalty payable with respect to the period in question."

The point of dispute is when the minimum royalty begins to be payable. CDT contends that the first minimum royalty became payable within 60 days of 16 th October 2003: i.e. by 16 th December 2003. Dupont's case is that the first payment is due within 60 days of 16 th October 2004. The key to the resolution of this dispute (and indeed the cause of it) appears to be the definition of "Minimum Royalty" in clause 1.1 of the Agreement. This states as follows:

"" Minimum Royalty" means in relation to each Year after January 1, 2003, US 1 million."

6

Dupont contends that the first relevant Year after 1 st January 2003 was the year commencing on 16 th October 2003. "Year" is a defined term meaning:

"the period of twelve months from the Effective Date and each subsequent consecutive period of twelve months during the period of this Agreement."

The "Effective Date" is defined as the date of the last signature to the Agreement, which in any event was 16 th October 2001. The word "after" must be read, they say, as meaning "commencing after". CDT's contention is that the definition of "Minimum Royalty" has to be read as if it included the word "ending" between the words "Year" and "after". This interpretation is the only one, they say, which properly gives effect to the opening words of clause 3.5, which clearly contemplate a starting date for payment of 16 th December 2003.

7

The structure of the Agreement can be summarised quite shortly. By clause 2.1 CDT granted to Dupont a non-exclusive licence to exploit the Patents as defined. Clause 3.1 provides by way of consideration for the...

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