IN THE SUPREME COURT OF THE STATE OF DELAWARE
CLAUDE GENDREAU and THE §
CLAUDE GENDREAU INVESTMENT § No. 447, 2025
TRUST U/A/D MARCH 16, 2013, §
§ Court Below—Superior
Defendants/Counterclaim § Court of the State of
Plaintiffs Below, Appellants, § Delaware
§
v. § C.A. No. N23C-05-034 CCLD
§
MOVORA LLC (F/K/A OSSIUM §
NEWCO LLC), OSSIUM BIDCO, LLC, §
and VETERINARY ORTHOPEDIC §
IMPLANTS, LLC (F/K/A §
VETERINARY ORTHOPEDIC §
IMPLANTS, INC.), §
§
Plaintiffs/Counterclaim §
Defendants Below, Appellees. §
§
Submitted: June 3, 2026
Decided: September 24, 2026
Before SEITZ, Chief Justice; TRAYNOR and GRIFFITHS, Justices.
Upon appeal from the Superior Court of the State of Delaware. AFFIRMED IN
PART, REVERSED IN PART, AND REMANDED.
David E. Ross, Esq., S. Reiko Rogozen, Esq., Benjamin M. Whitney, Esq., ROSS
ARONSTAM & MORITZ LLP, Wilmington, Delaware; Adam Unikowsky, Esq.
(argued), In Kyu Chung, Esq., JENNER & BLOCK LLP, Washington, D.C.;
Andrew W. Vail, Esq., Benjamin J. Bradford, Esq., Yusuf Esat, Esq., JENNER &
BLOCK LLP, Chicago, Illinois, for Appellants.
Megan Ward Cascio, Esq., Phillip Reytan, Esq., MORRIS NICHOLS ARSHT &
TUNNELL LLP, Wilmington, Delaware; Kevin M. Downey, Esq., R. Kennon
Poteat III, Esq., Eden Schiffmann, Esq. (argued), Ilana B. Frier, Esq., WILLIAMS & CONNOLLY LLP, Washington, D.C., for Appellees.
GRIFFITHS, Justice:
This appeal turns on the meaning and scope of an indemnification provision
negotiated in a corporate acquisition. A Swedish private equity firm that invests in
companies specializing in veterinary products agreed to acquire a company that sells
orthopedic implants for domestic animals. During the negotiations, a third party
filed suit against the target company alleging patent infringement by some of its
products. The private equity firm valued the target company at about $100 million
but could not quantify the litigation exposure. To account for the litigation risk, the
company’s owners agreed to an indemnification provision that covered any losses
suffered “as a result of, or in connection with” the patent litigation.
Following the closing, the patent litigation plaintiff amended its complaint,
including a newly-issued patent and alleging infringement by more of the company’s
products. The company eventually agreed to settle the patent litigation for $70
million and a license for one of its products. The company financed the settlement
payment with a bank loan.
The new owners sued the former owners in the Superior Court when they
refused to indemnify the company for the settlement and patent litigation-related
expenses. All former owners settled, except the company’s founder. After crossmotions for summary judgment, the court granted the company’s summary judgment
2
motion directed to the owner’s implied covenant defense but otherwise denied the
motions. The case then proceeded to trial.
Following trial, the Superior Court held that the founder must indemnify the
buyers for damages arising from the patent litigation but not the cost of the patent
license. The court also awarded the buyers prejudgment interest on the loan-interest
expense to fund the settlement. But the court awarded the company only half of its
requested attorneys’ fees for expenses incurred in defending the patent litigation,
reasoning that allocating fees between the company and a jointly represented
co-defendant would be burdensome. The court also determined that the
indemnification provision did not cover attorneys’ fees incurred to enforce the
indemnification provision. These decisions left both sides dissatisfied. The founder
appealed, and the owners cross-appealed.
On appeal, the founder argues that the Superior Court erred by: (1) holding
that the indemnification provision covered damages arising from post-transaction
conduct; (2) concluding that public policy did not bar indemnity when the company
willfully infringed patents; (3) rejecting the implied covenant defense; and (4)
awarding the company prejudgment interest on the loan-interest expense.
In its cross-appeal, the new owners contend that the trial court erred by (1)
holding that the indemnification provision does not cover attorneys’ fees incurred to
3
enforce that provision, (2) excluding the license cost from the indemnification
award, and (3) reducing the award of patent litigation attorneys’ fees.
For the reasons explained below, we hold that the Superior Court correctly
concluded that the indemnification provision covers post-transaction product sales
and does not offend public policy and that the implied covenant did not apply. We
find, however, that the trial court’s prejudgment interest award on the loan-interest
expense erroneously allowed a double recovery.
Turning to the cross-appeal, we hold that the Superior Court correctly
concluded that the indemnification provision does not cover the new owner’s
attorneys’ fees incurred to enforce its indemnification rights. But the new owners
were entitled to the license cost and the full amount of the attorneys’ fees incurred
in the patent litigation. Thus, we affirm in part, reverse in part, and remand.
BACKGROUND
A. Claude and Veterinary Orthopedic Implants, LLC
Dr. Claude Gendreau started practicing veterinary medicine in 1967. Later,
he founded the Veterinary Specialty Center, an animal surgical practice. During his
time there, Claude identified a demand for low-cost fracture-repair implants for
animals. To pursue the opportunity, Claude formed Veterinary Orthopedic Implants,
LLC (“VOI”) in 1992 and, three years later, hired his nephew, Patrick Gendreau, as
4
VOI’s Chief Executive Officer.1 Brian Beale and Timothy Van Horssen later joined
Claude, Patrick, and the Claude Gendreau Investment Trust U/A/D March 16, 2013
(the “Trust”)2 as VOI owners.
In time, VOI became a global leader in veterinary surgical products. Its
offerings included implant bone plates for tibial plateau leveling osteotomy
(“TPLO”) procedures, a common operation for dogs with cranial cruciate ligament
injuries—the canine equivalent of an anterior cruciate ligament (ACL) tear. In
October 2013, however, DePuy Synthes Products, Inc. (“DePuy”) notified VOI that
VOI’s “Swiss Style” TPLO plates infringed DePuy’s U.S. Patent No. 8,523,921 (the
“’921 Patent”). VOI continued to sell the Swiss Style TPLO plates.
B. Claude Decides to Sell and DePuy Initiates Litigation
In early 2015, Claude decided to sell VOI and asked Patrick to find a buyer.
Around the same time, VOI began marketing plates for CORA-based tibial leveling
osteotomy (“CBLO”) procedures,3 which are also used to treat cranial cruciate
ligament injuries.
1
Because Claude and Patrick share the same last name, we will refer to them by their first names to avoid confusion.
2
Claude owned a percentage of VOI through Appellant Claude Gendreau Investment Trust U/A/D March 16, 2013. Because Claude’s interest and the Trust’s interest align in this case, references in this Opinion to “Claude” will also refer to the Trust, unless otherwise indicated. 3
“CORA” stands for the center of rotation of angulation.
5
In 2018, Patrick secured an offer from DW Healthcare Partners (“DWHP”) to
acquire VOI for $100 million. That same year, VOI introduced “New Elite TPLO”
plates to replace its Swiss Style TPLO plates. While negotiations with DWHP were
underway, DePuy sued VOI in the United States District Court for the Middle
District of Florida, alleging that VOI’s Swiss Style TPLO plates infringed the ’921
Patent (the “Patent Litigation”).4 Seven days after the suit was filed, Patrick directed
VOI employees to transition customers from the Swiss Style plates to the New Elite
TPLO plates. VOI continued to sell Swiss Style plates into 2019.
In July 2019, DePuy amended its complaint to add infringement claims based
on VOI’s Elite and CBLO plates. Around the same time, VOI launched its “NXT”
plate, which it designed to avoid infringing the ’921 Patent. The Patent Litigation
caused DWHP to abandon its plan to acquire VOI.
C. A New Buyer Emerges and Acquires VOI
In October 2019, Fidelio Capital II AB (“Fidelio”), a Swedish private equity
firm focused on the veterinary supply chain, approached Patrick about acquiring
VOI. Fidelio valued VOI at $100 million but was concerned about the Patent
Litigation. It viewed it as an unquantifiable risk. Fidelio therefore offered to
4
App. to Claude & the Trust’s Opening Br. at A938–54 [hereinafter A__] (JX08 – Compl. in DePuy Synthes Prods., Inc., et al. v. VOI, 3:18-cv-01242-HES-PDB, Dkt. No. 1, dated Nov. 12, 2018) [hereinafter M.D. Fla. Compl.].
6
purchase VOI for about $100 million but conditioned the transaction on VOI’s
owners indemnifying it for any losses tied to that litigation. The parties signed a
letter of intent reflecting the basic terms of the sale.
Fidelio formed two Delaware limited liability companies for the acquisition:
Ossium BidCo, LLC (“Ossium”) and Ossium NewCo, LLC, later renamed Movora,
LLC (“Movora,” together with Ossium, the “Buyers”). In June 2020, the Buyers
and VOI owners—Claude, Patrick, Brian, and Van Horssen (collectively, the
“Sellers”)—executed an Amended and Restated Membership Interest Purchase and
Exchange Agreement (the “MIPA”). Under the MIPA, the Sellers agreed to
indemnify the Buyers for the Patent Litigation.
Section 8.2(a) of the MIPA set forth the “Indemnification Provision.” It
required the Sellers to, severally and in proportion to their ownership percentages,
“indemnify, defend and hold harmless” the Buyers from “any Damages suffered by
the Company as a result of, or in connection with, the Patent Litigation[.]”5 The
MIPA defined “Patent Litigation” as the DePuy action pending in the United States
District Court for the Middle District of Florida, “together with any appeals
5
A1013 (JX32 – Am. & Restated Membership Interest Purchase & Exchange Agreement dated June 11, 2020, at 54) [hereinafter MIPA].
7
therefrom and any related or derivative [a]ctions.”6 The MIPA further defined
“Damages” as
any losses, liabilities, damages, awards, . . . payments (including
amounts paid in settlement), costs and expenses (including costs of
investigation, preparation and defense, and the fees and disbursements
of counsel), whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, together with interest
with respect to any of the foregoing . . . .7
The Sellers’ indemnity obligation was capped at $100 million, subject to specific
exceptions, including “the expenses of the Indemnified Party in enforcing its rights
under this Article 8[.]”8
Section 8.4 of the MIPA set forth procedures for seeking indemnification and
included a subsection addressing “Inter-Party Claims.”9 Section 8.4 otherwise
addressed indemnification claims generally and, in a few places, specified
procedures to deal with Third Party Claims.10 Section 8.5 of the MIPA described
the rights of the Indemnified and Indemnifying Parties in connection with any Third
6
A968 (MIPA at 9).
7
A963 (MIPA at 4).
8
A1014 (MIPA at 55).
9
A1015–16 (MIPA at 56–57). The term “Inter-Party Claims” is used as a header in MIPA § 8.4(a). A1015 (MIPA at 56).
10
See, e.g., A1015 (MIPA at 56) (stating that a party must deliver written notice “no later than twenty (20) Business Days after the Indemnified Party acquires knowledge of such claim (or potential claim, in the case of a Third Party Claim)”); id. (stating that the indemnitor can dispute “all or any portion of the claim (including any Third Party Claim)”). The MIPA defined “Third Party Claim” as “any actual or potential Action or claim made by another Person against the Indemnified Party that, if successful, would be indemnifiable hereunder[.]” Id.
8
Party Claims. For example, the Indemnifying Party could elect to assume the
defense of any Third Party Claim with counsel of its choice, and if this election was
made, the Indemnified Party could participate in the defense of the claim.11
The parties agreed that $20 million of the $100 million acquisition price would
be paid under a contingent closing note (the “Note”).12 Under the Note, the Buyers
withheld $20 million from the Sellers until the Patent Litigation concluded, less
settlement or damages the Buyers paid in that litigation. Section 5(g) of the Note
stated that, “[i]f the Seller commences a proceeding to enforce and collect upon this
Note and prevails in such proceeding, the Buyer shall pay all reasonable costs
incurred by the Seller in connection therewith, including attorneys’ fees and
disbursements.”13
The transaction closed in June 2020. After the acquisition, Patrick continued
to serve as VOI’s CEO.
11
A1016 (MIPA at 57).
12
The Note was an Ancillary Agreement under the MIPA. A961 (MIPA at 2 (defining “Ancillary Agreements”)). The MIPA and the Ancillary Agreements “constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings among the Parties with respect to the subject matter hereof and thereof.” A1020 (MIPA at 61). 13
A1042. Section 5(g) only shifts fees incurred in connection with a proceeding to enforce the Note and, consequently, does not apply to the collection of attorneys’ fees incurred in a proceeding to enforce the MIPA.
9
D. Post-Closing Patent Litigation
Six months after the acquisition, DePuy amended its complaint a second time
to add Fidelio as a defendant. The amended complaint alleged that Fidelio was
jointly and severally liable for VOI’s patent infringement. In June 2021, the United
States Patent and Trademark Office issued U.S. Patent No. 11,026,728 (the “’728
Patent”), a continuation of DePuy’s ’921 Patent. DePuy then amended its complaint
for a third time to allege that VOI and Fidelio infringed DePuy’s ’728 Patent by
selling NXT plates after the patent issued.
VOI continued selling Elite and NXT plates through October 2022. Later that
year, VOI began selling plates marketed as Compresiv and Versiv (the “C/V
plates”). VOI developed the C/V plates to fall outside the scope of DePuy’s patents
and to replace the Elite and NXT plates.14 Patrick resigned from VOI in November
2022.
E. The Patent Trial and Post-Trial Injunctions
The Patent Litigation proceeded to trial. A jury found VOI and Fidelio jointly
and severally liable for willful patent infringement and awarded DePuy more than
$59.4 million in damages. Six days after the verdict, DePuy moved to permanently
enjoin VOI and Fidelio from infringing the ’921 and ’728 Patents. It relied on the
14
VOI’s outside counsel conducted a freedom to operate analysis to determine whether the C/V plates would infringe on DePuy patents. B297–98. Outside counsel opined “that there would be no infringement.” B298.
10
jury’s finding that VOI willfully infringed the ’921 and ’728 Patents through sales
of Swiss Style, Elite, NXT, and CBLO plates (the “Infringing Plates”). DePuy also
sought to include the C/V plates in the injunction by asking the court to enjoin the
sale of a specific screw used in those plates.
A few days later, DePuy moved for a temporary restraining order and, in the
alternative, requested that the district court enter the permanent injunction on an
emergency basis. DePuy sought to enjoin VOI and Fidelio’s “fire sale to flood the
market” with C/V plates.15 DePuy supplemented the record with additional facts in
support of its stance that VOI “attempt[ed] to evade the impact of the requested
permanent injunction” by sending “unsolicited, large quantities of these products . . .
to current customers.”16 DePuy also moved for enhanced damages based on the
jury’s willfulness finding, increasing the potential exposure to nearly $180 million.17
The district court rejected DePuy’s proposed permanent injunction,
concluding that it was overbroad because it would include C/V plates. The court
15
A2014.
16
A1708–14 (DX503 – Notice of Suppl. Facts in Support of Pls.’ Mot. for a Temporary Restraining Order dated Jan. 23, 2023, at 1–5); A1634 (Decl. of Maria Cunningham in Support of Pls’ Emergency Mot. for Temporary Restraining Order dated Jan. 18, 2023, ¶¶ 2–3). 17
See 35 U.S.C. § 284 (“[T]he court may increase the damages up to three times the amount found or assessed.”); Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 110 (2016) (“Section 284 gives district courts the discretion to award enhanced damages against those guilty of patent infringement” for “egregious cases of misconduct beyond typical infringement.”).
11
instead entered a permanent injunction against the Sellers’ manufacturer limited to
the Infringing Plates.
DePuy then sought a permanent injunction against VOI and Fidelio as
designers and sellers of the Infringing Plates. In its motion, DePuy again asked the
court to include the C/V plates in the injunction. Ultimately, the district court
permanently enjoined VOI and Fidelio from marketing or selling the Infringing
Plates. The injunction did not address the C/V plates.
About a week later, DePuy moved for an order that would require VOI to
show cause why VOI’s sales of the C/V plates did not violate the court’s permanent
injunction. DePuy claimed that the C/V plates were “not colorably different” from
the Infringing Plates.18 The district court scheduled a two-day rule to show cause
hearing for early April 2023.
F. The Patent Litigation Settlement
Before the second day of the rule to show cause hearing, the parties settled.
Patrick, who acted as the Seller’s Representative and controlled VOI’s patent
litigation defense, approved the settlement. The settling parties executed a
settlement and license agreement under which VOI and Fidelio agreed to pay DePuy
$70 million in exchange for a release of all claims and a license covering the C/V
18
A2033–34 (DX610 – Pls.’ Mot. for Order to Show Cause & to Find Defs. in Contempt of the Ct.’s Permanent Inj., M.D. Fla. Dkt. No. 594 dated Mar. 2, 2023, at 1–2).
12
plates (the “C/V License”).19 The parties also stipulated to a consent judgment
stating that VOI and Fidelio willfully infringed the ’921 and ’728 Patents. As part
of the settlement, DePuy agreed “not to enforce any aspect of the Permanent
Injunctions as to VOI/Fidelio’s manufacture, sale, offer for sale, use or importation
of [the C/V plates]” (the “C/V Release”).20 VOI financed the $70 million settlement
with a bank loan.
G. The Owners Refuse to Indemnify and the Buyers Sue in Delaware
With the Patent Litigation resolved, the Buyers—Ossium and Movora—
asserted their rights under the Indemnification Provision against the Sellers—former
VOI owners Claude, Patrick, Brian and Van Horssen—for the $70 million, plus
attorneys’ fees and costs. The Sellers refused to pay, causing the Buyers to file suit
in the Delaware Superior Court. Patrick, Beale, and Van Horssen settled with the
Buyers, leaving Claude to defend the action. The Buyers’ complaint asserted a
single count for contractual indemnification under the MIPA and sought damages,
including pre- and post-judgment interest and attorneys’ fees and costs.
Claude answered, asserting six counterclaims and eight affirmative defenses.
In his sixth affirmative defense, Claude claimed that the Buyers breached the implied
covenant of good faith and fair dealing (the “implied covenant”), which, in his view,
19
A1116–18 (JX62 – Settlement & License Agreement dated Apr. 3, 2023, at 1–3) [hereinafter Settlement Agreement].
20
A1126–27 (JX62 – Ex. A to Settlement Agreement).
13
excused his performance under the MIPA. He alleged that the Buyers breached the
implied covenant by willfully infringing DePuy’s patents and, after the verdict,
shipping unsolicited quantities of the Infringing Plates and C/V plates to customers.
Claude alleged that the Buyers’ misconduct increased the indemnifiable settlement
amount. He also argued that indemnifying willful patent infringement violated
public policy because it encouraged intentional infringement. The parties filed
cross-motions for summary judgment.
In December 2024, the Superior Court addressed the parties’ cross-motions
for summary judgment. The court rejected Claude’s defense that the Buyers
breached the implied covenant.21 It explained that the implied covenant is a “gapfilling mechanism” that addresses issues “neither party anticipated,” and Claude
“[did] not identify any contractual gap[.]”22 The court also concluded that the
implied covenant cannot “impose a general obligation to avoid misconduct.”23 The
court left two issues for trial: whether the Buyers breached the MIPA, and therefore,
excused Claude’s performance under it; and whether the Buyers could prove
damages.
21
Movora LLC v. Claude, 2024 WL 5389423, at *10–11 (Del. Super. Dec. 2, 2024), as revised (Jan. 23, 2025) [hereinafter Summ. J. Op.].
22
Id. at *10 (quoting Nemec v. Shrader, 991 A.2d 1120, 1125 (Del. 2010)).
23
Id. (citation modified).
14
H. The Superior Court Post-Trial Decisions
The court held a five-day bench trial and heard two days of post-trial
argument. Claude conceded at post-trial argument that he breached the MIPA by
failing to indemnify the Buyers for DePuy’s ’921 Patent infringement claims against
VOI’s Swiss Style, Elite, and CBLO plates. He still contended, however, that the
Indemnification Provision did not cover the full settlement amount because it
included amounts attributable to the Buyers’ post-closing plate sales, including
damages tied to the sale of C/V plates. In Claude’s view, the MIPA limited
indemnification to damages attributable to pre-closing conduct.
The Superior Court rejected Claude’s interpretation of the MIPA. It held that
“[t]he plain text of [the Indemnification Provision] ties [the Buyers’] recoverable
indemnity to the Patent Litigation without referencing any point in time.”24 The
court also relied on the MIPA’s expansive definition of “Damages,” and on expert
testimony establishing that the provision “sets forth a broad, forward-looking,
indemnification obligation.”25 The court also rejected Claude’s public policy
argument—that damages stemming from willful infringement are not
indemnifiable—because Claude failed to identify any Delaware policy supporting
his argument.
24
Movora LLC v. Claude, 345 A.3d 997, 1014 (Del. Super. 2025), as revised (Oct. 1, 2025) [hereinafter Post-Trial Op.].
25
Id. at 1014–15.
15
On damages, the Superior Court held that amounts tied to the post-transaction
C/V Release were indemnifiable. The court found that VOI had injected the issue
into the Patent Litigation as a non-infringing alternative to mitigate damages and to
facilitate settlement. The court reasoned that VOI’s conduct prompted DePuy, after
the jury verdict, to seek an injunction against the C/V plates. The court therefore
concluded that the C/V Release caused damages “in connection with[] the Patent
Litigation”26 as the parties could not settle without addressing VOI’s sales of the C/V
plates.
The Superior Court reached a different conclusion as to the C/V License. It
held that the “MIPA’s definition of Damages does not include a ‘license’ or any
analogous term.”27 Based on DePuy’s valuation of the C/V License, the court set its
value at $9.8 million, reducing the damages award from $70 million to $60.2 million.
The Buyers also sought to recover about $8.6 million in attorneys’ fees and
costs incurred in the Patent Litigation. Claude conceded that the Indemnification
Provision required the Sellers to indemnify the Buyers for attorneys’ fees and costs,
but he argued that the requested amount overstated the recoverable fees because it
included work performed for Fidelio, which was jointly represented with VOI in the
26
Id. at 1021.
27
Id.
16
Patent Litigation. Relying on Valeant Pharmaceuticals International v. Jerney, 28 a
Court of Chancery decision, the Superior Court cut the requested attorneys’ fees in
half, holding the Sellers responsible for about $4.3 million because allocating fees
attributable to VOI and Fidelio would be unduly burdensome.
The Buyers also sought attorneys’ fees for enforcing the Indemnification
Provision under the MIPA’s “Damages” definition and § 8.3(a), which limited the
indemnity obligation to the acquisition price of $100 million. The court denied the
request, concluding that the MIPA lacked a “clear statement” that entitled the Buyers
to shift their fees to Claude.29
The court entered judgment for the Buyers in the amount of $40,172,084.49.30
In a separate order, the court awarded prejudgment interest on the principal amount
owed, calculated from the date Claude wrongfully refused the Buyers’
indemnification request.31 The prejudgment interest totaled $3,583,221.89, which
included prejudgment interest on the loan-interest expense.32 In all, the court
28
921 A.2d 732 (Del. Ch. 2007).
29
Post-Trial Op. at 1031–32.
30
Id. at 1037 n.366 (“The total liability figure equals the $70 million Settlement, reduced by $9.8 million, plus the $9,084,348 in loan interest—reduced by $1,271,808.72 to account for interest accruing from the excluded portion of the Settlement attributable to the C/V license ($9,084,348 * ($9,800,000 / $70,000,000))—plus $4,304,444.50, representing half the requested Patent Litigation attorneys’ fees.”).
31
Movora LLC v. Claude, 2025 WL 2795773, at *2 (Del. Super. Oct. 1, 2025) [hereinafter Order]. 32
Id. at *2 & n.22, *3 (calculation based on 10% of the principal damages of $35,832,218.92). The trial court reasoned that, “[w]hile Plaintiffs received interest on the loan principal, that award
17
awarded the Buyers $43,755,306.38. Claude appealed, and the Buyers crossappealed.
Claude makes four arguments on appeal: (1) the MIPA did not require him to
indemnify the Buyers for post-transaction damages arising from their posttransaction business decisions; (2) even if post-transaction damages are covered
under the MIPA, the Buyer’s willful infringement rendered the provision
unenforceable as against public policy; (3) the Superior Court erred by dismissing
his implied covenant claim prior to trial; and (4) the Superior Court awarded
plaintiffs a duplicate recovery by awarding prejudgment interest on interest
recovered for the settlement loan.
On cross-appeal, the Buyers contend that the Superior Court erred by (1)
declining to shift fees for the enforcement action; (2) excluding the C/V License cost
from the indemnity amount; and (3) reducing the attorneys’ fees and costs award in
the Patent Litigation.
STANDARD OF REVIEW
“Our review of a grant of summary judgment is de novo. Additionally, this
Court reviews both the trial court’s interpretation of the contract language and its
is unrelated to prejudgment interest, which is ‘conceptually separate and distinct’ from other types of damages, including interest expenses incurred due to borrowing.” Id. at *2 (citation omitted).
18
legal conclusions de novo.”33 The trial court’s factual findings after trial will not be
disturbed unless clearly erroneous.34 We review a decision to award attorneys’ fees
to determine whether the trial court abused its discretion; however, “we review the
trial court’s interpretation of a contractual fee-shifting provision de novo.”35
ANALYSIS
A. Claude’s Breach of Contract Appeal
1. The Indemnification Provision covers damages for post-transaction
plate sales
As noted earlier, Claude admitted that he breached the MIPA by not
indemnifying the Buyers for pre-closing patent infringement damages for devices
being sold at closing and the post-closing reasonable and expected continuation of
those sales. Thus, the only open issue for the breach of contract claim was whether
Claude’s indemnity obligation covered devices that Claude attributes to the Buyer’s
“business decisions”—meaning the sale of NXT and C/V plates post-closing.36
According to Claude, there must be a “meaningful linkage” between the Seller’s pre33
Seaford Golf & Country Club v. E.I. duPont de Nemours & Co., 925 A.2d 1255, 1261 (Del. 2007) (footnote omitted).
34
In re Columbia Pipeline Merger Litig., 342 A.3d 324, 353 (Del. 2025).
35
See Bako Pathology LP v. Bakotic, 288 A.3d 252, 266–67 (Del. 2022) (citation modified). 36
Opening Br. at 17–29. As to the NXT plates, Claude contends that he owed no indemnity because DePuy did not assert an infringement claim for those plates until after closing. As for the C/V plates, Claude argues that they did not exist at the time of the transaction and therefore fall outside his indemnity obligation.
19
and post-closing product sales to justify indemnification. 37 That linkage was broken,
Claude argues, when the Buyers decided, based on their own business decision, to
sell the NXT and C/V plates post-closing.
Claude’s pre- and post-closing product divide is inconsistent with the breadth
of the MIPA indemnification provision. “Patent Litigation” is defined broadly as the
Florida federal court litigation, not any of its specific claims or defenses. As litigants
(and contracting parties) know, it is not uncommon for plaintiffs to amend
complaints to raise new claims arising out of post-complaint events. And as patent
litigants know, it is not uncommon for multiple patents to issue at different times
that cover the same subject matter and then be incorporated in pending litigation.
The post-closing sales were meaningfully linked to the pre-closing
infringement claims.38 As the Superior Court found, the Sellers developed and sold
the NXT plate prior to the transaction. It was identified as an expected target for
DePuy’s infringement claims. For the C/V plate, the court found that it was used
strategically in the patent litigation—“VOI injected C/V into the Patent Litigation
both to facilitate settlement and as non-infringing alternatives to mitigate
damages.”39 The court also held that the Sellers’ Representative, Patrick, approved
37
Id. at 19.
38
B151(Trial Tr. Excerpts dated Feb. 10, 2025, at 154:3–8) (Theodor Bonnier); B324–26 (Trial Tr. Excerpts dated Feb. 13, 2025, at 66:2–68:7) (Colleen Flesher).
39
Post-Trial Op. at 1021 (footnote omitted).
20
these actions and “directed the post-Patent Litigation verdict C/V shipments under
VOI’s annual ordering program.”40 It was all part of the push and pull of the patent
litigation—the patent owner raises the stakes by adding new patents and
infringement allegations against new products, and the target stands on a noninfringement defense or designs around the patents with non-infringing products to
minimize liability.
The cases Claude relies on are inapt. In those cases, the indemnity language
differs in material ways from the provision here.41 And enforcing the indemnity
would not be commercially unreasonable or “produce an extreme moral-hazard
concern” by incentivizing buyers to sell infringing products with impunity.42 As the
40
Id.
41
Opening Br. 20–22 (citing Alcoa World Alumina LLC v. Glencore Ltd., 2016 WL 521193, at *7–8 (Del. Super. Feb. 8, 2016) (stating that a general indemnification provision did not permit fee shifting), aff’d sub nom., Glencore Ltd. v. St. Croix Alumina, LLC, 150 A.3d 1209, 2016 WL 6575167, at *1 (Del. 2016) (TABLE); State v. Interstate Amiesite Corp., 297 A.2d 41, 43–44 (Del. 1972) (holding that a provision that stated a contractor would indemnify costs “on account of the operations of the said contractor” did not cover liabilities arising out of the other party’s negligence); Rizzo v. John E. Healy & Sons, Inc., 1990 WL 18378, at *1–2 (Del. Super. Feb. 16, 1990) (stating that an indemnification provision that carved out costs arising out of “the sole negligence of Sky Climber, Inc.” permitted indemnification for certain things “not arising from the sole negligence of Sky Climber, Inc.”), aff’d sub nom. Joseph Rizzo & Sons Constr. Co. v. Sky Climber, Inc., 633 A.2d 370 (Del. 1993) (TABLE); RSUI Idem. Co. v. Sempris, LLC, 2014 WL 4407717, at *7 (Del. Super. Sept. 3, 2014) (determining that an insurance agreement covered claims made during a “Policy Period”); In re Fuqua Indus. Inc. S’holder Litig., 1997 WL 257460, at *5–7 (Del. Ch. May 13, 1997) (stating that a release covering claims arising out of “the acquisition of Georgia Federal” did not cover a claim asserting that defendants wrongfully refused to sell Georgia Federal)). Unlike the agreements in those cases, the MIPA indemnifies fees and expenses incurred “as a result of, or in connection with, the Patent Litigation[.]” A1013 (MIPA at 54). This language does not carveout post-closing sales; rather, this language broadly covers the fees and expenses incurred arising out of the defense of the Patent Litigation. 42
Opening Br. 23–25.
21
Buyers’ expert testified at trial, transactional planners have a way of dealing with
this hazard, called “my watch, your watch” language, where the “seller is on the
hook for preclosing liabilities, buyers[] [are] on the hook for post[-]closing
liabilities[.]”43 That approach normally appears in “standard language,” which was
not present in the MIPA.44 Instead, the MIPA allocated all of the post-closing
liability risk to the Sellers. Claude “cannot now obtain from the courts a right that
[he] failed to achieve at the bargaining table.”45 The indemnity covered the sale of
pre- and post-transaction devices.
2. The Indemnification Provision does not violate public policy
Claude argues in the alternative that, even if the Indemnification Provision
covers post-transaction sales of all products alleged to infringe, it is unenforceable
on public policy grounds because it would encourage what happened here—willful
patent infringement. Claude characterizes James v. Getty Oil Co., a Superior Court
decision, as the “leading Delaware case” supporting his argument.46 In James, the
43
B368 (Trial Tr. Excerpts dated Feb. 14, 2025, at 25:15–20) (Guhan Subramanian, Ph.D.). 44
B368–71 (Trial Tr. Excerpts dated Feb. 14, 2025, at 25:15–28:4) (Guhan Subramanian, Ph.D.) (defining the “classic temporal allocation” language as the “buyer assumes all liabilities . . . occurring after the closing, and then the seller retains all liabilities . . . based upon underlying facts and circumstances occurring prior to the closing”).
45
Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 391 (Del. 2012).
46
Opening Br. 31 (citing James v. Getty Oil Co. (E. Operations), 472 A.2d 33, 38 (Del. Super. 1983)).
22
court stated that a “contract to relieve a party from its intentional or willful acts is
invariably held to be unenforceable as being against clear public policy.”47
The trial court appropriately rejected Claude’s reliance on James, observing
that its public policy statement “has not gained traction in the Delaware courts since
[the case] was decided.”48 Our post-James decisions have not, in any specific
context, barred risk-shifting for willful conduct. In RSUI Indemnity Company v.
Murdock, for example, we declined to hold that insurance is unavailable as a matter
of public policy for losses tied to willful acts.49 We found support for this conclusion
in the Delaware General Assembly’s authorization for corporations to obtain broad
D&O policies under 8 Del. C. § 145(g).50 We held that two public policies reinforced
our conclusion that public policy does not bar coverage for losses arising from
fraudulent conduct: Delaware’s policy of compensating innocent victims and its
policy for enforcing freedom of contract.51 Moreover, we emphasized that
47
James, 472 A.2d at 38 (citing 15 Williston on Contracts § 1750A (3d ed.)).
48
Post-Trial Op. at 1025 (quoting CNX Res. Corp. v. CONSOL Energy Inc., 2024 WL 4929171, at *6 (Del. Super. Nov. 8, 2024)).
49
RSUI Indemnity Co. v. Murdock, 248 A.3d 887, 904–05 (Del. 2021); see also Whalen v. OnDeck, Inc., 514 A.2d 1072, 1073–74 (Del. 1986) (“The Superior Court found that the public policy of Delaware prohibits the issuance of insurance covering punitive damages [“for wanton conduct”]. In this Court’s view, however, there is no evidence of public policy in this State against such insurance.”).
50
RSUI, 248 A.3d at 903–04.
51
Id. at 904–05.
23
“deferring to the parties’ contractual choices and to the legislature’s prerogative in
matters of public policy” was a “wise” approach.52
In the absence of a clear statement of public policy from the General Assembly
related to willful conduct, we defer to Delaware’s public policy favoring freedom to
contract.53 Accordingly, enforcing the Indemnification Provision in this situation
does not violate public policy.
3. The implied covenant did not apply
The Superior Court granted the Buyers’ summary judgment motion
dismissing Claude’s implied covenant claim. It reasoned that Claude had not
identified a contractual gap that the implied covenant needed to fill, or that the Buyer
had improperly exercised its discretion to deprive Claude of the benefits of the
MIPA.
In Johnson & Johnson v. Fortis Advisors LLC, we recently summarized the
application and limitations of the implied covenant:
The implied covenant of good faith and fair dealing inheres in every
contract and ensures that neither party acts arbitrarily or unreasonably
to frustrate the fruits of their bargain. It authorizes a court to imply
terms only where obligations can be understood from the text of a
written agreement but have nevertheless been omitted in the literal
sense, and only to protect the reasonable expectations that the parties
shared at signing. The implied covenant is not, however, a license for
the court to rewrite the contract to appease a party who later wishes to
rewrite a contract [it] now believes to have been a bad deal. Rather, the
52
Id. at 904 (citing Whalen, 514 A.2d at 1074).
53
Id. at 904–05; Whalen, 514 A.2d at 1074.
24
covenant is a narrow gap-filling tool of last resort. Used properly, the
implied covenant functions like a scalpel, not a brush. A court should
apply the implied covenant surgically to vindicate the parties’ shared
expectations at the time of contracting and not to paint over contractual
provisions that one side later regrets.54
As we held in Johnson & Johnson, the implied covenant operates in two
primary ways: “when a contract allocates discretionary authority to one party over a
central aspect of the contract” and “to address unforeseen developments—
contingencies neither anticipated nor resolved by the contract—that threaten the
parties’ bargained-for economic expectations.”55 The second application recognizes
the reality that “‘[n]o contract, regardless of how tightly or precisely drafted it may
be, can wholly account for every possible contingency.’”56
On appeal, Claude does not identify any contractual gap that needed filling.
And he cannot point to any specific grant of discretionary authority that might be
subject to the implied covenant. Instead, he relies on Dieckman v. Regency GP LP,
where we held that the general partner could not invoke a conflicted-transaction safe
harbor through misleading actions because it was too obvious to require a
contracting party to state that the general partner cannot secure the safe harbor
54
352 A.3d 229, 253 (Del. 2026) (citations omitted); Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010) (“Parties have a right to enter into good and bad contracts, the law enforces both.”). 55
Johnson & Johnson, 352 A.3d at 253–54.
56
Id. at 254 (quoting Glaxo Gp. Ltd. v. DRIT LP, 248 A.3d 911, 919 (Del. 2021)).
25
through deceit.57 Dieckman, however, is a far cry from this case. The MIPA
contained a broad indemnity provision that defined Patent Litigation liberally. As
noted earlier, it was not unexpected that scope of the litigation would expand to
include new products and patents. And importantly, the parties gave the Seller’s
Representative, Patrick, a seat at the table for controlling the litigation and approving
the settlement.
Claude relies on Baldwin v. New Wood Resources LLC for the proposition that
an indemnitor must act in good faith when an indemnification provision confers
broad discretion.58 But Baldwin involved an LLC agreement that conditioned
indemnification on two requirements as determined by the indemnitor: that the
covered person “acted in good faith” and in the company’s “best interests.”59 We
held that the implied covenant required the indemnitor to make these determinations
in good faith; otherwise, the agreement’s express good faith condition “would be
rendered meaningless.”60 Here, the MIPA contains no such provision conditioning
indemnity on the Buyers’ subjective determinations. Nor does it confer post-closing
discretion in a way that would nullify any other MIPA provision. Under these
57
155 A.3d 358, 368 (Del. 2017).
58
Opening Br. 38–39 (citing Baldwin v. New Wood Resources LLC, 283 A.3d 1099, 1118 (Del. 2022)).
59
Baldwin, 283 A.3d at 1118 (citation omitted).
60
Id. at 1120.
26
circumstances, the parties got what they bargained for in the MIPA. This Court will
not rewrite the MIPA, which sophisticated parties negotiated with the assistance of
counsel, because Claude now regrets the bargain that he struck.61 The Superior
Court did not err in dismissing Claude’s implied-covenant defense.
4. The Buyers were not entitled to an award of prejudgment interest
Finally, Claude contends that the trial court erred in awarding the Buyers
prejudgment interest. Claude highlights that the Buyers paid the settlement with
borrowed money and that, by including the interest the Buyers incurred on the loan
used to pay the settlement as a component of its damages award, the court effectively
compensated the Buyers for the lost use of their funds.
The Buyers disagree. They first contend that they lost access to the funds used
to pay the loan interest and thus were entitled to prejudgment interest as
compensation for this loss. And second, the Buyers assert that they can recover both
the loan-interest expense and prejudgment interest under our decision in Brandywine
Smyrna, Inc. v. Millennium Builders, LLC.62
As a general rule, “[i]n Delaware, prejudgment interest is awarded as a matter
of right, not by judicial discretion.”63 Awarding prejudgment interest serves two
61
Nemec, 991 A.2d at 1126.
62
Answering Br. 57 (citing Brandywine Smyrna, Inc. v. Millennium Builders, LLC, 34 A.3d 482, 486 (Del. 2011)).
63
LG Elecs. Inc. v. Invention Inv. Fund I, L.P., — A.3d —, 2026 WL 935618, at *16 (Del. Apr. 7, 2026) (citation omitted).
27
salutary purposes: “First, it compensates the plaintiff for the loss of the use of his or
her money; and, second, it forces the defendant to relinquish any benefit that it has
received by retaining the plaintiff’s money in the interim.”64
Here, because the Buyers borrowed the $70 million required to fund the
settlement, they did not lose the use of their money to that extent. Of course, that
came at a cost—interest payments at 7-8%, over $9 million, accruing from April
2023 through December 2024 when the Superior Court issued its memorandum
opinion in the Buyers’ favor. To be sure, the Buyers are entitled to be compensated
for that loss. And they were: in accordance with the Buyers’ request,65 the trial court
treated the loan interest as damages and included it in its award. That award, in our
view, achieved both purposes that would otherwise be served by an award of
prejudgment interest. By borrowing the $70 million required to fund the settlement,
the Buyers did not lose the time value of their own money and were compensated
for the cost—the loan interest—of preserving their own capital. And the court’s
award of loan interest as damages forces Claude to relinquish any benefit—that is,
the time value of the settlement amount—he may have received by retaining the
Buyers’ money in the interim.
64
Brandywine Smyrna, 34 A.3d at 486.
65
See A698–702.
28
Viewed from a slightly different angle, the award of loan interest plus
prejudgment interest on the loan interest appears to compensate the buyers twice for
the time value of the settlement amount. Had the Buyers paid the settlement from
their own funds, they would not have incurred the loan-interest expense and would
have then been entitled to prejudgment interest on the loan-interest-free damages
award. Assuming—perhaps counterfactually66—that the loan-interest rate is similar
to the prejudgment-interest rate, the amount of prejudgment interest would be equal
to the amount of loan interest the Buyers, having borrowed to pay the settlement,
actually paid.
Brandywine Smyrna, the case upon which the Buyers principally rely, does
not present this interest overlap. In that case, a car dealer sued a roofing contractor
in tort and contract claiming that the contractor’s faulty work caused the dealership
to suffer significant rain damage resulting in a months-long closure of the dealership.
In addition to seeking a damages award for property damage and lost revenues
during the closure, the dealer claimed as damages the additional interest expenses it
had incurred because of the water damage. Unlike the loan interest in this case, the
interest expenses claimed by the dealer—floor plan interest because of the loss of a
66
According to Claude’s opening brief, the loan interest rate was “7-8%,” while the Superior Court set the prejudgment interest rate at 10%. Opening Br. 15. If Claude’s brief is accurate, it would appear that the Buyers, by pressing the court to award the loan interest as damages, settled for the lower interest rate. Id.
29
favorable borrowing rate and interest on a loan to restore capital that was impaired
by construction costs—was not tied directly to the other components of the dealer’s
damages. In upholding the trial court’s inclusion of the dealer’s interest expenses in
its damages award, this Court observed that the dealer’s interest expenses were
“conceptually separate and distinct from” prejudgment interest.67 The same cannot
be said here where the loan interest awarded to the Buyers corresponds with the time
value of the settlement amount had the Buyers paid it from their funds. Brandywine
Smyrna, therefore, does not control the result here.
Likewise, our decision in LG Electronics Inc. v. Invention Investment Fund I,
L.P.,68 issued after the completion of briefing in this case, is inapposite to the
situation presented here. LG, from which two of its customers had demanded
indemnification to recover litigation expenses, sought to recover the amount of those
expenses from the defendants under a breach-of-contract theory. LG prevailed at
trial, but the trial court denied its request for prejudgment interest because it had not
established that it had actually paid its customer the demanded indemnification
amounts. As we put it in our opinion, “the Superior Court, however, ‘decline[d] to
exercise its discretion to award LG prejudgment interest,’ reasoning that, because
67
Brandywine Smyrna, 34 A.3d at 486.
68
— A.3d —, 2026 WL 935618, at *16.
30
LG ‘functioned like a pass-through entity’ and was not deprived of any funds, an
award of prejudgment interest would inappropriately grant LG a windfall.”69
We reversed on this point and explained our reasons as follows:
IV cites no Delaware authority—and we are aware of none—that
prejudgment interest is contingent upon the prevailing party’s incurring
out-of-pocket losses. The judgment reflects LG’s damages as a result
of IV’s breach and those damages were suffered when IV’s breach
caused GM and Toyota to incur indemnifiable litigation expenses.70
The point was that LG’s indemnification obligation had been triggered and,
presumably, because that obligation had not been discharged, interest would have
accrued on the outstanding obligation. Thus, an award of prejudgment interest was
required to make LG whole. Like Brandywine Smyrna, LG did not address the issue
we decide here.
In this case, the Buyers had two paths to recovery of the time-value of the
amount they paid to settle the Patent Litigation—recover the loan interest as a
component of damages or seek an award of prejudgment interest on the amount paid
in settlement; it was error for the trial court to award both.
69
Id. (citations omitted)
70
Id.
31
B. Ossium & Movora’s Cross-Appeal
1. The MIPA does not contain a clear statement shifting attorneys’ fees
On cross-appeal, the Buyers first contend that the Superior Court erred in
declining to shift attorneys’ fees in this enforcement action. They assert that the
MIPA, when read as a whole, authorizes fee shifting in actions to enforce the
Indemnification Provision.
“[C]ontractual fee shifting provisions are an exception to the American Rule
that litigants are responsible for their own fees and expenses[.]”71 “The fee-shifting
provision must be a clear and unequivocal agreement in connection with a dispute
between parties involving a failure to fulfill obligations under the contract.”72
“There is no specific language that must be used in order for an indemnity provision
to provide for recovery in first-party actions.”73 But the parties must point to
contractual language that shifts fees; they cannot rely on a general indemnification
provision.74 When the parties use specific fee-shifting language elsewhere in the
agreement, the parties’ failure to include this language in the indemnification
71
Leistner v. Red Mud Enters. LLC, 2023 WL 11196881, at *1 (Del. Ch. Apr. 26, 2024). 72
Deere & Co. v. Exelon Generation Acqs., LLC, 2016 WL 6879525, at *1–2 (Del. Super. Nov. 22, 2016).
73
Id. at *2.
74
Id. at *1.
32
provision “indicates a lack of intent to create a clear and unequivocal agreement to
shift fees in first-party actions.”75
Here, the MIPA does not establish a clear intent to shift fees for three reasons:
(1) the parties drafted a fee-shifting provision in the Note, and they deviated from
that approach when drafting Article 8 of the MIPA; (2) the references to “expenses
of the Indemnified Party from enforcing its rights” and “expenses (including … the
fees and disbursements of counsel)” do not constitute clear and unequivocal
language to shift fees; and (3) §§ 8.4 and 8.5 of the MIPA do not create a distinct
procedure for indemnifying first- and third-party claims. We address each reason in
turn below.
i. The Indemnification Provision lacks the specific fee-shifting
language used in the Note
The Buyers contend that the Superior Court erred in concluding that the MIPA
does not shift fees because it uses different language than the Note’s fee-shifting
provision. Claude asserts that the MIPA lacks clear and unequivocal fee-shifting
language and that § 5(g) of the Note supports his interpretation. We agree with
Claude.
Section 5(g) of the Note, a form of which is attached to the MIPA as an exhibit,
provides that: “[i]f the Seller commences a proceeding to enforce and collect upon
75
Deere, 2016 WL 6879525, at *1–2.
33
this Note and prevails in such proceeding, the Buyer shall pay all reasonable costs
incurred by the Seller in connection therewith, including attorneys’ fees and
disbursements.”76 There is no such provision in the MIPA. The Note’s express feeshifting provision, coupled with the MIPA’s lack of clear and unequivocal feeshifting language, is evidence that the parties did not intend to shift fees in an action
to enforce the MIPA. 77
Nor does our analysis change simply because § 5(g) appears in the Note—an
ancillary agreement to the MIPA. The MIPA and the Note form a single contractual
scheme, and thus the trial court properly considered the Note’s fee-shifting
provision.78 The Superior Court correctly held that § 5(g) showed that the parties
knew how to draft an express fee-shifting provision, and that the MIPA’s omission
of a comparable language demonstrates that they did not intend to shift fees incurred
to enforce the Indemnification Provision.
76
A1042; see also Nasdi Hldgs., LLC v. N.A. Leasing, Inc., 2020 WL 1865747, at *6 (Del. Ch. Apr. 13, 2020) (stating that a reference to prevailing parties is “a hallmark term of fee-shifting provisions.” (citation omitted)).
77
See, e.g., Deere, 2016 WL 6879525, at *2 (stating that the failure to use fee shifting language, which was used elsewhere in the agreement, in the indemnification provision indicates an intent not to shift fees); Four Cents Hldgs., LLC v. M&E Printing, Inc., 2025 WL 2366460, at *8–9 (Del. Super. Aug. 12, 2025) (same).
78
Thompson Street Cap. P’rs IV, L.P. v. Sonova United States Hearing Instruments, 340 A.3d 1151, 1167 (Del. 2025).
34
ii. The definition of Damages and § 8.3 do not demonstrate a
clear and unequivocal intent to shift fees
The Buyers primarily rely on two provisions in the MIPA to support their
argument that the MIPA supports fee shifting in enforcement actions. The first is the
expansive “Damages” definition, which includes the “costs of investigation,
preparation and defense, and the fees and disbursements of counsel.”79 The second
is the MIPA’s $100-million indemnification cap in § 8.3(a), which excludes from the
cap “claim[s] for indemnification based on . . . the expenses of the Indemnified Party
in enforcing its rights under . . . Article 8.”80 Claude counters that neither of those
provisions contains language creating a right to shift attorneys’ fees in enforcement
actions. We agree with Claude.
Neither provision demonstrates a clear and unequivocal intent to shift fees.
First, the definition of “Damages” does not create a substantive right or obligation;81
rather, the definition describes how damages will be calculated.82 And § 8.3 neither
uses the term “Damages” nor creates a substantive right or obligation; instead, it
79
Answering Br. 62–63; A963 (MIPA at 4).
80
Answering Br. 62; A1014 (MIPA at 55).
81
Fortis Advisors LLC v. Boston Dynamics Inc., 2025 WL 1356521, at *6 (Del. Super. Apr. 29, 2025) (“the definition of ‘Losses’ in Schedule III ‘does not imply clearly and unequivocally that first-party claims are included’ because it ‘lacks explicit language applying to first-party claims.’” (citation omitted)).
82
See generally AB Stable VIII LLC v. Maps Hotel and Resorts One LLC, 2020 WL 7024929, at *20 n.200 (Del. Ch. Nov. 30, 2020) (“In a contract, a defined term simply serves as a convenient substitute for the definition, and only for that contract.” (citation omitted)).
35
caps the parties’ obligation to indemnify. These provisions do not show a clear intent
to shift fees. Second, Delaware courts have rejected arguments based on an
indemnification provision that, as here, refers only generally to enforcement
expenses.83 Accordingly, the MIPA’s mere reference to enforcement expenses in
§ 8.3 is not a clear and unequivocal statement that demonstrates an intent to shift
fees.
iii. The Buyers misinterpret §§ 8.4 and 8.5
The Buyers also cite to “other indications” in §§ 8.4 and 8.5 to argue that the
MIPA permits fee shifting.84 They contend that those sections created separate
procedures for indemnifying Damages resulting from “Inter-Party Claims” and
“Third Party Claims” and therefore allow recovery of “the fees and disbursements
of counsel” for “Inter-Party Claims.”85 Claude counters that § 8.4 sets out the
procedure for bringing indemnification claims and resolving related disputes, while
83
Four Cents, 2025 WL 2366460, at *7 (stating that the plaintiff was not entitled to shift fees where the definition of “Losses” included “reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder[.]”); see also S’holder Rep. Servs. LLC v. Sphera Solutions, Inc., 2026 WL 880894, at *12 (Del. Ch. Mar. 31, 2026).
84
Answering Br. 63–65.
85
A1015–16 (MIPA at 56–58). In support of this argument, the Buyers rely on Schneider Nat’l Carriers, Inc. v. Kuntz, 2022 WL 1222738, at *30 (Del. Super. Apr. 25, 2022). But the Buyers’ reliance on Schneider is misplaced. The Schneider court made it clear that the absence of a “feeshifting clause elsewhere in the contract . . . distinguishes the SPA from several of the precedents[.]” Id. at *31. Those precedents “concluded that the existence of a fee-shifting clause elsewhere in the contract, ‘further demonstrate[d] that the parties did not intend for Losses to encompass fee-shifting on first-party claims.’” Id. (citing Ashland LLC v. Samuel J. Heyman 1981 Continuing Tr. for Heyman, 2020 WL 6582958, at *7 (Del. Super. Nov. 10, 2020)).
36
§ 8.5 addresses the indemnitor’s rights and obligations in Third Party Claims. On
this point, we agree with Claude.
Sections 8.4 and 8.5 do not, as the Buyers suggest, create separate procedures
for indemnifying Inter-Party Claims and Third Party Claims. Section 8.4 governs
the procedure for notice and payment of an indemnification claim, including Third
Party Claims, and the process for resolving disputes over those claims. Section 8.5
governs the rights and obligations of the parties regarding Third Party Claims.
Accordingly, the Buyers’ interpretation of §§ 8.4 and 8.5 does not establish separate
notice and payment procedures for Inter-Party Claims and Third Party Claims, and
those provisions therefore do not reflect a clear and unequivocal intent to shift fees.
2. The Buyers were entitled to indemnity for damages related to
the C/V License
Next, the Buyers claim that the trial court erred in excluding the cost of the
C/V License from the total indemnity award. Although they concede that the term
“license” is not included in the definition of “Damages,” the Buyers contend that the
definition of “Damages” includes “‘any … payments’ related to the Patent
Litigation, ‘including amounts paid in settlement[,]’” and that the $9.8 million paid
37
for the license is both a “payment” and an “amount paid in settlement,” so the cost
of the license should be included.86 We agree with the Buyers.87
As explained above, the Indemnification Provision requires that the Sellers
indemnify the Buyers for damages suffered “as a result of, or in connection with, the
Patent Litigation.”88 The definition of “Patent Litigation” includes “any related or
derivative Actions,”89 and “Action” includes a “hearing” and “injunction.”90
Damages stemming from the C/V License were “in connection with” the Patent
Litigation because the Patent Litigation settled during a two-day hearing on DePuy’s
motion to show cause.91 In the motion, DePuy requested an order requiring VOI,
and the other defendants, to show cause why it should not be held in contempt of the
permanent injunction.
As we read the Indemnification Provision, the C/V License payment qualifies
as “Damages” under the Indemnification Provision. VOI paid for the license as part
of the settlement resolving the Patent Litigation and to avoid the risk that the district
86
Answering Br. 66–69.
87
The trial court did not address this argument, but it was fairly raised below. See Kroll v. City of Wilmington, 276 A.3d 476, 479 (Del. 2022) (“We also recognize that this Court may rule on an issue fairly presented to the trial court, even if it was not addressed by the trial court.” (citation omitted)).
88
A1013 (MIPA at 54).
89
A968 (MIPA at 9).
90
A961 (MIPA at 2).
91
A1013 (MIPA at 54).
38
court would extend injunctive relief to the C/V plates. The Superior Court
recognized that the C/V plates were an integral part of the settlement because
“settling the Patent Litigation without addressing VOI’s prior C/V sales was not
realistic.”92 VOI’s payment for the C/V License was an “amount[] paid in
settlement.”93 We therefore reverse the Superior Court’s exclusion of the $9.8
million that VOI paid for the C/V License in calculating the indemnity amount.
3. The Buyers were entitled to Claude’s share of the full $8.6 million
in attorneys’ fees
Finally, the Buyers contend that the Superior Court erred by reducing the
Patent Litigation attorneys’ fees and costs award from $8.6 million to $4.3 million.
The MIPA requires the Sellers to indemnify the Buyers for attorneys’ fees and costs
that VOI incurred in the Patent Litigation in proportion to the Sellers’ individual
ownership percentage.94 VOI proved at trial that $8.6 million in fees were incurred
as a result of the Patent Litigation and that these same fees were paid solely by VOI.95
Because VOI and Fidelio shared counsel in the Patent Litigation, the parties in this
92
Post-Trial Op. at 1021.
93
A1013 (MIPA at 54).
94
Post-Trial Op. at 1028 (“Claude concedes Plaintiffs can recover costs and fees for the Patent Litigation, but argues the amount requested includes non-recoverable items.”). Under the MIPA, the Sellers “severally” were obligated to indemnify the Buyers. A1013 (MIPA at 54). The Superior Court found that Claude’s percentage interest is 55.55%. Post-Trial Op. at 1033 n.333. 95
Post-Trial Op. at 1029; see also B342–45 (stating that the invoices for legal fees were only incurred by VOI in connection with the Patent Litigation and that these invoices were paid for by VOI); B1102–1762 (compiling the invoices that VOI’s counsel sent for work conducted in connection with the Patent Litigation).
39
matter dispute whether VOI should receive the full $8.6 million incurred in
connection with VOI and Fidelio’s joint representation. The Superior Court resolved
the dispute by splitting the fees in half. The court relied on Valeant Pharms. Intern.
v. Jerney96 for the proposition that it may divide an attorneys’ fees award evenly
when properly allocating the fees and costs would be “unduly burdensome.”97
In Valeant, the Court of Chancery held that a supplemental fee-allocation
proceeding would be unhelpful given the large scale of joint defense.98 This case,
however, does not present the same issue. The Superior Court recognized that it
could determine the fees incurred by VOI in connection with the Patent Litigation.
Specifically, the Superior Court found that “Claude did not rebut . . . testimony that
Plaintiffs’ request excludes defense costs solely tied to Fidelio” with the exception
of “one or two items which may be attributable to Fidelio[.]”99 Thus, Valeant’s
rationale does not apply here, and the Superior Court should have awarded VOI the
full fees that it requested consistent with the MIPA.100
96
921 A.2d 732 (Del. Ch. 2007).
97
Post-Trial Op. at 1029 (“The court [in Valeant] rejected a request for ‘a supplemental proceeding to allocate fees and expenses’ as unduly burdensome, because ‘there is no doubt their defense was, by and large, jointly conducted.’” (quoting Valeant, 921 A.2d at 755)).
98
Valeant, 921 A.2d at 755.
99
Post-Trial Op. at 1029.
100
Valeant, 921 A.2d at 755. The trial court’s finding that VOI’s request excluded Fidelio’s attorneys’ fees, except for potentially one or two items, shows that this case and Valeant involve two different sets of facts. In Valeant, the Court of Chancery found that, “[w]hile it might be possible to identify small items that related to discovery directed to one or the other of these two men, there is no doubt that their defense was, by and large, jointly conducted.” Id. The Court of
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CONCLUSION
For the foregoing reasons, the judgment of the Superior Court is AFFIRMED
in part and REVERSED in part, and the case is REMANDED for further
proceedings consistent with this opinion. Jurisdiction is not retained.
Chancery, for these reasons, “reject[ed] the idea of a supplemental proceeding to allocate fees and expenses[.]” Id.; see also Levy v. Hli Operating Co., Inc., 2007 WL 2801383, at *11 n.62 (Del. Ch. May 16, 2007) (stating that this approach “prevents the court from having to engage in a timeconsuming supplemental hearing to precisely allocate expenses amongst the individuals by examining attorneys’ time sheets.”). The reasons underlying the Valeant and Levy decisions are not present in this case, and the trial court erred in relying on this decision.
In the alternative, Buyers and VOI argue that even if half of the fees were Fidelio’s fees, Fidelio was entitled to indemnification as Buyer Movora’s “Affiliate” under the indemnification provision. Answering Br. 72–73. Based on our holding above that VOI is entitled to the Patent Litigation costs that it paid, we need not, and do not, reach this alternative argument.
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