The California Court of Appeal agreed with Horvitz & Levy’s position that the license agreement between Viasat, Inc. and Acacia Communications, Inc. unambiguously required Acacia to pay royalties to Viasat for Acacia’s sales of next-generation products designed using Viasat’s proprietary technology. The Court of Appeal also agreed with Horvitz & Levy’s position that a damages cap provision in the parties’ contract did not limit Viasat’s recovery.
Viasat licensed technology to Acacia to enable Acacia to design a modem capable of transmitting data at high speeds. Acacia paid royalties to Viasat on Acacia’s sales of the first two generations of products incorporating Viasat’s design. But Acacia subsequently developed next-generation products using Viasat’s design specifications without paying royalties to Viasat. Viasat sued Acacia for breach of contract, breach of the implied covenant of good faith and fair dealing, and trade secret misappropriation. The jury found for Viasat on all three claims, awarding $49.3 million in breach of contract damages and $1 in trade secret misappropriation damages. Both sides appealed and Viasat retained Horvitz & Levy to take the lead on briefing and arguing the appeal.
The Court of Appeal affirmed the breach of contract judgment for Viasat, rejecting Acacia’s arguments that the contract allowed Acacia to develop new generations of products using Viasat’s design specifications without paying royalties. The Court of Appeal also rejected Acacia’s position that a contractual damages cap provision restricted the award in this case. On that point, the court agreed with Horvitz & Levy’s argument that Acacia breached its contractual confidentiality obligations, which the contract exempted from the reach of the damages cap. Although the Court of Appeal reversed on the implied covenant and misappropriation claims on the ground that the contract itself fully protected Viasat’s rights at issue, that reversal reduced the judgment by only $1.