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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.

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Licensor's Action to Recover Royalties Overcomes Motion to Dismiss in Superior Court

Boyce Thompson Institute For Plant Research v. MedImmune, Inc., C.A. No. 07C-11-217 JRS (Del. Super. May 19, 2009) (applying New York law per choice of law provision)

This opinion discusses some interesting contractual interpretation and jurisdictional issues arising out of a licensing agreement.  The dispute arose because the licensees denied any obligation to pay royalties to the licensor for products they are manufacturing in a country where, they claim, the licensor does not hold a patent.

The Superior Court found that the contract was ambiguous on whether “covered” products included those that were protected by the licensor anywhere or only those that were protected by a patent in the locations where they were manufactured.  In any case, the Court denied the licensees’ motion to dismiss on the basis that there was no evidence presented to rule out the possibility that the licensees are, in fact, infringing on the patent by their acts in this other country.

The Court also raised the issue of whether it had subject matter jurisdiction to decide the case.  While the Court deferred resolution of the issue, it noted that, if the contract claim requires the Court to determine whether the patent was infringed, then it would likely follow that patent law is a “necessary element” of the breach of contract claim and the federal courts have exclusive subject matter jurisdiction.

Superior Court: A Secured Loan Transaction Only Conveys A Security Interest, Not Legal Title

Segovia v. Equities First Holdings, LLC, 2008 WL 2251218 (Del. Super. Ct. May 30, 2008).

This decision offers predictability to parties entering into straightforward secured loan transactions under Delaware law. It assures that a security interest will not be treated as a conveyance of legal title. And, it prescribes that if a party intends for a transaction to result in the conveyance of rights to the secured lender greater than a security interest, then that party must set forth crystal clear and unequivocal language in the parties’ contract.  More ›

Superior Court: Employer Owes No Duty to Employee's Spouse

Posted In Toxic Torts
In re: Asbestos Litig., 2007 WL 4571196 (Del. Super. Ct. Dec. 21, 2007).

In this negligence action, a wife alleged that she was exposed to asbestos while laundering her husband’s work clothes. The employer moved for summary judgment, claiming it owed no duty to an employee’s spouse who had never set foot on company property and had only been injured as a result of take-home exposure.  This argument presented an issue of first impression in Delaware. 

In addressing the core question of when a duty of care arises, the court conducted a review of the doctrinal approaches advanced throughout the history of tort law, from Cardozo’s foreseeability analysis to Learned Hand’s B<PL formula. The court observed that none of these approaches had been adopted in Delaware to the exclusion of the others. Instead, it was up to the court to consider the relationship of the parties in each particular case in light of its peculiar facts.
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