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Saudi Basic Industries Corp. v. Mobil Yanbu Petrochemical Co.1/14/2005
ight.
And, Article 6.3 of the Kemya joint venture agreement, which was to the same effect, provided that:
Patents, processes, and other licensing rights of third parties which require the payment of royalties, rentals and other remuneration to such third parties shall be paid by the Partnership against appropriate invoices. To the extent either Partner or any Affiliate thereof procure such rights and sublicenses for the Partnership, it shall not receive any remuneration other than actual cost disbursed in acquiring such license.
2. SABIC Secretly Overcharges The Yanpet And Kemya Joint Ventures
In order to manufacture polyethylene, Yanpet (the SABIC/Mobil joint venture partnership) needed technology that it did not own. Initially, the parties intended that Yanpet would license Unipol(r) PE technology directly from Union Carbide Corporation ("UCC"). After a Spring 1980 meeting in Riyadh, Saudi Arabia, however, SABIC informed its partner, Mobil, that SABIC itself would license the technology directly from UCC and then sublicense it to Yanpet. Consistent with Article 6.3, SABIC assured Mobil that SABIC would pass through to Yanpet at its cost, "dollar for dollar," the amounts SABIC paid to UCC for Yanpet's use of the Unipol(r) PE technology. In fact, however, SABIC intended to furnish the technology to Yanpet at a mark-up above SABIC's cost.
In September 1980, SABIC and UCC executed an agreement granting SABIC an exclusive license to the Unipol(r) PE technology within the Kingdom of Saudi Arabia (the "SABIC/UCC License Agreement"). Neither Mobil nor Yanpet was permitted to attend any of the meetings between SABIC and UCC at which the financial terms of the SABIC/UCC License Agreement were discussed. That did not concern Mobil, because having been assured that SABIC would be providing Yanpet the same terms that SABIC itself had procured from UCC, Mobil and Yanpet did not negotiate, or even comment upon, the financial terms of the sublicense. Ultimately, SABIC and Yanpet executed the SABIC-Yanpet Unipol(r) PE Technology License Agreement, which was dated effective October 15, 1980.
Over the following two decades, SABIC charged Yanpet sublicense fees and royalties that were substantially higher than what SABIC was paying to UCC under the SABIC/UCC License Agreement. Because SABIC never told Mobil that it had marked up the sublicense fees and royalties, Mobil believed, during that entire time, that SABIC's license royalties were being passed through to Yanpet at cost.
The negotiation of and performance under the sublicense agreement between SABIC and Kemya (the SABIC-Exxon joint venture partnership) mirrored the Mobil/Yanpet fact pattern. Originally, SABIC and Exxon planned for Kemya to use Exxon's own proprietary technology to manufacture polyethylene. Later, they understood that instead, Exxon would acquire the right to use UCC's Unipol(r) PE technology, and would then grant a Unipol(r) PE license to Kemya, as sublicensee. Ultimately, however, as with Yanpet, SABIC informed Exxon, in a March 1980 meeting in Riyadh, that it (SABIC) would license that technology directly from UCC, and then sublicense the technology to Kemya. Like Mobil, Exxon was excluded from the negotiations over the financial terms of the SABIC/UCC license. That did not concern Exxon because Mr. Ibrahim Bin Salamah, SABIC's chief negotiator for the Kemya and Yanpet Joint Venture Agreements and also for the Kemya and Yanpet Unipol(r) PE/UCC technology sublicenses, assured Exxon's representative that SABIC was "not interested in profiting on the technology passed on to its [joint ventures]."
In fact, however, SABIC never intended to limit its royalty ch
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