Key Facts
- •Contractual dispute between Adaptive Spectrum and Signal Alignment Inc (ASSIA) and British Telecommunications Plc (BT) concerning the scope of a patent licence.
- •The dispute centers on whether BT's VULA service is covered by the licence granted by ASSIA.
- •VULA is a data connection service provided by BT to service providers, who then offer internet access to end-users.
- •ASSIA argues VULA is not licensed because the service is provided to end-users on behalf of the service provider, using materials supplied by the service provider (Customer Modem).
- •BT argues VULA is licensed because it provides a distinct service to service providers, not directly to end-users.
- •The relevant clause (10.1) in the Licence Agreement addresses ‘patent laundering’ and excludes services provided by a party on behalf of a third party using materials from that third party.
- •The lower court (Falk J) found that VULA was within the scope of the licence.
Legal Principles
Contractual interpretation involves a unitary exercise to ascertain the objective meaning of the language used, considering the background knowledge reasonably available to the parties.
Rainy Sky SA v Kookmin Bank [2011] UKSC 50; Arnold v Britton [2015] UKSC 36; Wood v Capita Insurance Services Ltd [2017] UKSC 24
Commercial common sense can be considered when there are rival constructions, but not to override clear language.
Wood v Capita at [11]; Britvic Plc v Britvic Pensions [2021] EWCA Civ 867
Outcomes
Appeal dismissed.
The court found that while multiple interpretations of clause 10.1 were possible, the commercial context (settlement of patent disputes, knowledge of VULA at the time of agreement) and business common sense favored BT's interpretation. The service provided by BT was to the Service Provider, not directly ‘on behalf of’ the Service Provider to the end-user, therefore the exclusion in clause 10.1 did not apply.