Monday, October 12, 2020

French Court Considers Royalty Base

The case is Marcel M. v. Fadepro SA et al., Cour d'appel de Paris, Nov. 26, 2019.  I found a one-paragraph discussion of it in the February 15, 2020 issue of PIBD, No. 1132-III-104, with a link to the full opinion here.  If I'm understanding correctly,  the inventor obtained a French patent on a locking device that connects a tool, such as a bucket, to the arm of an excavator or other construction machine.  The inventor and his son had entered into a protocole d'accord (memorandum of understanding) to sell the assets of their company, KLAC, to a holding company, ADOP, with the understanding that the inventor would grant an exclusive license to the purchaser.  As it turned out, the parties never finalized that license agreement, and thus the court is called upon to determine its terms.  On that issue, the inventor invokes the theory of tout commercial for determining the royalty base.  Yet, in accordance with the language of the memorandum of understanding, under which the royalty base was to be the turnover from the exploitation of the patent, and in view of the scope of the patent's claims, the court concludes that the parties intended to adopt as the royalty base the turnover realized only on the attaching device, to the exclusion of the tool or the heavy equipment.  The latter could, in fact, be sold separately and do not constitute accessories of the patented device.  The defendant, moreover, had not defaulted on its contractual obligations.

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