Summary
This Appellate Division, First Department decision affirms a lower court's grant of summary judgment in favor of Samsung Electronics Co., Ltd. against MPEG LA, L.L.C. regarding a breach of contract claim over royalty distributions under a licensing administrator agreement. The court held that the defendant's proposed amendment to reduce terminating licensors' royalties failed because the contract required an affirmative vote rather than consent by silence. Additionally, the court determined that other licensors were not necessary parties to the action as they would not be inequitably affected by the outcome.
Topics
Practice areas
Questions Presented
- Whether the amendment to the AAL satisfied the voting requirements of section 6.1.
- Whether other licensors were necessary parties under CPLR 1001.
- Whether MPEG LA breached the LAA by paying reduced royalties after termination.
Holdings
- The amendment did not obtain the three‑fourths vote required by section 6.1 and therefore was ineffective.
- The other licensors were not "inequitably affected" and therefore were not necessary parties.
- MPEG LA breached the LAA because the amendment reducing royalties was invalid.
Key quotations
“Accordingly, the court correctly determined that the amendment did not have the number of votes required to pass.”
“We reject defendant's argument that the other licensors at the time of the June 2020 amendment are necessary parties to this action as they are not "inequitably affected" within the meaning of CPLR 1001.”
Factual background
Samsung Electronics and 22 other licensors entered into a licensing agreement (AAL) granting MPEG LA a non‑exclusive license to HEVC patents and a licensing‑administrator agreement (LAA) to collect royalties. Samsung terminated the agreements in February 2020. In June 2020 MPEG LA approved an amendment to the AAL that reduced the royalties payable to terminating parties. Samsung received only 50 % of the royalties it claimed it was owed.
Procedural history
The Supreme Court, New York County denied MPEG LA's motion to dismiss plaintiff's breach of contract claim and granted plaintiff summary judgment on that claim. The judgment was entered April 11, 2024 and appealed to the Appellate Division, First Department.