Supreme Court

22-0844 - Bd. of Regents of Univ. of Tex. Sys. v. IDEXX Lab’ys, Inc.

Bd. of Regents of Univ. of Tex. Sys. v. IDEXX Lab’ys, Inc.

Case number: 22-0844
Legal category: Contracts
Subtype: Interpretation
Set for oral argument: January 10, 2024

Case Summary

The issue in this case is whether a contract is ambiguous.

IDEXX Laboratories, a private company, sold tests to detect heartworms in dogs. Seeking to expand its product line, IDEXX contracted with the Board of Regents of the University of Texas System to license the Board’s patented technology relating to Lyme Disease. Royalties owed to the Board were set out under three subparts of the agreement. Subpart (ii) set a royalty of 1% (or 0.05% if other royalties were due) on products “[s]old to detect Lyme disease in combination with one other veterinary diagnostic test or service (for example, but not limited to, a canine heartworm diagnostic test or service).” Subpart (iii) set a royalty of 2.5% on products “[s]old as a product or service to detect Lyme disease in combination with one or more veterinary diagnostic products or services to detect tick-borne disease(s).” IDEXX sold products that tested for Lyme disease, heartworm (which is not tick-borne), and one or more additional tick-borne diseases.

IDEXX paid royalties to the Board under subpart (ii). The Board sued, claiming that royalties were due under the higher rate set out in subpart (iii). The trial court granted summary judgment in favor of the Board and rendered a final judgment awarding contract damages, interest, and attorney’s fees. The trial court concluded that subpart (iii) unambiguously applied to the products at issue. The court of appeals reversed and remanded, concluding that the contract was ambiguous.

The Board filed a petition for review that contends the court of appeals erred and the trial court’s decision was correct. The Supreme Court granted the petition for review.

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