Free Letter - District Court of Delaware - Delaware


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Date: May 27, 2008
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Case 1 :06-cv—00023-SLR-LPS Document 305 Filed 05/27/2008 Page 1 of 3
MORRIS, NICHOLS, ARSHT gl TUNNELL LLP
NORTH MARKET STREET
P.O. Box 1347
Wrrmrncron, Dzmwnu 19899-1347
302 658 9200
302 658 3989 Fax
JULIA Hmmny
202 351 9221
202 425 3004 FAX
_][email protected] May 27,
The Honorable Leonard P. Stark BY E—F[LING
United States District Court
for the District of Delaware
844 N. King Street
Wilmington, DE 19801
Re: Mcr’esson Autornution, Inc. v. Swisslog Italia S.P.A. et ul.,
C.A. No. 06-28 gSLR—LPS)
Dear Magistrate Judge Stark:
Defendants Translogic Corp. and Swisslog Italia S.p.A. ("Defendants") submit
this letter in response to the letter submitted to Your Honor by Plaintiff McKesson Automation,
Inc. ("McKesson") on May 22, 2008 letter to the Court and in accordance with Your Honor’s
direction at the May 23, 2008 teleconference.
McKesson’s letter cites several Pennsylvania cases that it contends justify
considering the promissory notes and other documents together with the June 1990 assignment
document which was unambiguous on its face. The cases cited by Plaintiff are inapposite and do
not change the fundamental principle of Pennsylvania contract law that a contract, unambiguous
on its face, is to be interpreted solely in accordance with the natural meaning of its terms and
without reference to extrinsic documents. See, ag., Bohler-Uddcholm Am., Inc. v. Ellwoocl
Group, Inc., 247 F.3d 79, 96 (3d Cir. 2001) ("a contract that is unambiguous on its face must be
interpreted according to the natural meaning of its terms, unless the contract contains a latent
ambiguity?).
In each of the cases cited by Plaintiff the Court looked to other writings to cure
an ambiguity in the contract or because the contract itself referenced the other writings. For
example, in Huegel v. Myjilin Construction Co., 796 A.2d 350 (Pa. Super. Ct. 2002), the contract
being construed by the Court made "several references" to an earlier writing, which the Court
held justified reading the documents together. Id. at 356. Likewise, in Von Lange v. Morrison-
Knudsen Co., Inc., 460 F. Supp. 643 (M.D. Penn. 1978), the contract "speciiica1ly referred to and
was made contingent upon the execution of the [earlier agreement]? Id. at 647. In Neville v.
Scott, 127 A.2d 755 (Pa. Super. Ct. 1956), the case relied on in Huegel, the Court looked to an

Case 1:06-cv—00028-SLR-LPS Document 305 Filed 05/27/2008 Page 2 of 3
The Honorable Leonard P. Stark
May 27, 2008
Page 2
j earlier writing because the contract was incomplete and ambiguous. Id. at 757. According to the
Court in Neville:
The later agreement . . . expressly refers to the fact that a dwelling
was being erected on the lot to be reconveyed. Consequently,
reference must be had to the earlier contract to determine the plans,
specifications and materials contemplated. In no other way can the
intention of the parties as to the particular kind and quality of the
dwelling be determined. Without the information supplied by the
earlier contract, the later agreement is incomplete.
Id.
There is no such cross-reference or ambiguity here. The assignment document is
clear on its face, does not refer to any other document or transaction, and unambiguously
assigned to the Pittsburgh Seed Fund and Dr. Stephen Hellman (collectively "the lnvestors") all
right and interest in the patents—in-suit. Since the assignment document is unambiguous, it
should be construed in accordance with its plain language and without reference to other
documents.
McKesson’s attempt to have this Court consider evidence outside of the
assignment itself fails for another reason. McKesson asks this Court to consider the affidavit of
Mr. McDonald — the former president of AHI and McKesson — and other parol evidence to
determine the intent of the parties, yet it argues that the Investors’ presence and testimony is not
necessary to determine such intent. McKesson cannot have it both ways. If this Court considers
evidence outside of the assignment document itself, the Investors must be present to settle the
ownership question and to avoid significant prejudice to the Defendants (e. g., inconsistent
results, incomplete relief] and duplicative litigation) of a decision of this issue in their absence.
In Applied Companies v. US., 144 F.3d 1470 (Ped. Cir. 1998), a case cited by
McKesson in its opposition to the motion and addressed by Your Honor during the May 20
hearing, both parties to the assignment at issue (i.e., Applied Companies and the United States)
were parties to the litigation. There was, thus, no issue of indispensable parties and no danger of
inconsistent results and severe prejudice to third parties. There was also no dispute in Applied
Companies as to whether the underlying debt had been repaid. Here, not only are there genuine
issues of fact as to whether the loan was fully repaid and whether a security interest was
intended, but the Investors are not before this Court. To resolve the ownership question in their
absence would directly affect their rights and subject Defendants to the very real potential of
duplicative lawsuits, inconsistent results, and incomplete relief These are precisely the types of
prejudice that Rule 19 was intended to avoid.
The ownership issue now before the Court is the direct result of McKesson’s and
AI-II’s failure to seek reassignment of the patents-in-suit, as the investment documents expressly
required, before initiating this suit against Defendants and of McKesson’s efforts to obtain
affidavits from the Investors disclaiming any interest in the patents. Defendants should not now
be forced to suffer the severe prejudices and uncertainty attendant to this failure if this case were

Case 1:06-cv—0002(i3-SLR-{EPS Document 305 Filed 05/27/2008 Page 3 of 3
The Honorable Leonar P. Star
May 27, 2008
Page 3
permitted to continue in the Investors’ absence. Only after McKesson cures the defects in its
patent ownership should McKesson be free to maintain this action.
Respectfully,
gulia Hean
JH:ncf
cc: Dr. Peter Dalleo, Clerk (By hand delivery)
Dale R. Dubé (By e—rnail)
Blair M. Jacobs (By e-mail)
2342777