Squire Sanders successfully represented Trident Enterprises, Ltd. in intellectual property litigation that again demonstrates the importance of carefully drafted and structured license agreements.
The legal dispute centered on a 2007 license agreement between Trident and Airtronic USA, Inc. Trident had developed a historical replica of a grenade launcher used by Navy SEALs during the Vietnam War. Airtronic, a weapons manufacturer, planned to develop a modern version of the weapon for law enforcement organizations and the military. Trident thus licensed its intellectual property to enable Airtronic to do so.
Airtronic spent about US$1 million on the modernized weapon – and then terminated the license agreement while refusing to deliver the development work performed under the agreement to Trident. Trident sued Airtronic for damages in the US District Court for the Eastern Division of Virginia. Airtronic asserted counterclaims for breach of contract, fraud and claims for individual liability of Trident shareholders. Jurors found for Trident on February 2, awarding almost US$1 million in damages to compensate for the development work that Airtronic wrongfully maintained.
“This case highlights a common business challenge in intellectual property license agreements – the need for precision in drafting ‘improvements’ clauses,” said Squire Sanders litigation partner Alan L. Briggs. In particular, he said, license agreements should clearly identify which party – the owner of the intellectual property or the licensee – owns any improvements or the fruits of any development work created by the licensee in the event of breach or termination of the license agreement. Doing so can ensure certainty for both parties and help avoid unintended consequences.
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