In Silver Management Group, Inc. v. AdvisorEngine Inc., a licensor sued a licensee for license fee under licensing agreements. Under the agreements, the licensee was entitled to sub-license the licensed product. A Particular provision required the licensee to share with the licensor a portion of the fees the licensee charged the customers for the licensed product “and related technology and business operations services of [the licensee] and its wholly-owned subsidiary, NestEgg Wealth, Inc.” The licensee acquired a new subsidiary and started to sell the new subsidiary’s software together with the licensed product. The licensor argued that the new subsidiary’s software was a “related technology” of the licensee and therefore the licensee was entitled to a portion of the fees the licensee charged for the new subsidiary’s new software.
The Court rejected this argument because the provision’s mention of a particular wholly owned subsidiary following the name of the licensee meant the use of the licensee’s name in the provision did not include any of its subsidiaries. The provision did not cover the new subsidiary’s software.
BOTTOM LINE: The following is a provision which the Court found to be unambiguous and leave no room for the implied covenant:
“The Monthly license fees for the Licensed Software shall be twelve percent (12%) of the gross fees . . . charged by [the licensee] to its customers for [the licensed product] and related technology and business operations services of [the licensee] and its wholly-owned subsidiary, [name of the subsidiary]….”