The Haviltex-criterion once again defines how a license agreement should be interpreted
Every agreement is essentially made up of a selection of words which define and regulate an intention between parties. Some of these words are often used out of automatism without careful consideration of the exact meaning and effect of the selected words. However, the importance of carefully considering the underlying meaning of each of these words was once again confirmed by the court in Rotterdam in the matter against Harbour Antibodies c.s. (“Harbour”) and Erasmus MC (“Erasmus”). The claimant is unknown and hereinafter referred to as “Claimant”.
Background
The Claimant and Erasmus have jointly developed a platform for production of antibodies for medical applications. The antibodies are intended to be derived from non-human mammals and, in particular, from mice. This platform has been patented in the United States through a number of method patents, which were at the time filed in the names of Erasmus and/or Claimant.
Erasmus and Claimant have granted an exclusive license to Harbour, later acquired by HBM Holdings Ltd. (“HBM”) to further develop, exploit and use the patented method. The license, in particular, indicated that the method is to be used in terms of deriving transgenic genes from mice.
The dispute
Firstly, the parties were in dispute regarding whether or not the term “mice”, as used in the license, is limited to only mice or whether it also includes other rodents such as rats. The Claimant argued that the term “mice” is limited to only mice and sought confirmation from the court on this interpretation of “mice”. Opposingly, Harbour argued that “mice” should also included rats, and that the license would accordingly grant them the right to derive transgenic genes from rats in addition to from mice.
Secondly, it was in dispute whether or not Harbour was allowed to enforce the patents licensed against a third-party who is allegedly infringing on the patents by using rats. Thus, even if the license agreement would be limited to use of mice, would Harbour be allowed to enforce the patent according to the uses covered in the patents or only that provided for in the license.
Interpretation of the term “mice”
In interpreting the term “mice”, the court used the Haviltex-criterion. This criterion entails that when interpreting an agreement, one should not only look at the linguistic meaning of the text, but at the meaning that the parties were entitled to attach to that text, given the given circumstances of the case and based on what they were entitled to expect from each other. In the present case the parties are professional parties who were assisted by lawyers. Furthermore, before concluding the agreement various draft agreements were exchanged. And lastly, great financial consequences were attached to the agreement. Therefore, the court held that the linguistic meaning attached to the chosen word in the agreement carries great weight.
The court noted that even though the patents extent to the use of non-human mammal, in particular, rodents and, more particularly, mice, the license agreement exclusively mentions “mice”. Therefore, the wording used in the license agreement can solely be interpreted as that the license is intended for the use of transgenic mice, and not any other rodents, including rats.
Additionally, Erasmus stated that at the time of conclusion of the license, mice were the most feasible and profitable mammal to use in using the method. However, even though the license agreement state “mice”, the license is intended for the full scope of the patents, which also include other rodents and thus rats. Hereto the court held that if mice were the most profitable and feasible mammal to use at time of conclusion of the license, it is logical that the license is limited to the use of mice.
Enforcement of the patents
The license agreement provides that Harbour is allowed to enforce the patents against third parties who infringe on the licensed patents. However, even though the license agreement is limited to the use of mice, the enforcement provision in the agreement did not include a limitation of infringing uses. Accordingly, it can be understood that the patents in their entirety may be enforced by the Harbour. This includes enforcing the patents against parties who derive antibodies from rats.
The decision
The court held that it is clear from the intention between the parties and the words used in the license agreement that the license agreement was granted merely for the use of mice. Harbour would thus not be allowed to use the patented method for rats. However, since the license agreement did not limit the enforcement capacity of Harbour to infringing uses of mice, Harbour is allowed to enforce the licensed patents against third parties using rats or other non-human mammals.
Conclusion
This decision once again confirms that the court honors not only the linguistic meaning of a license agreement, but also the meaning that the parties were entitled to attach to that text, given the given circumstances of the case and based on what they were entitled to expect from each other. If you have any questions regarding patents, please contact one of our specialists.
