Lockheed Martin Corporation v Raytheon Company

Lockheed Martin Corporation and Raytheon Company were parties to a dispute before the Federal Court of Australia concerning the interpretation and application of a settlement agreement. The core of the disagreement revolved around whether certain payments made by Raytheon to Lockheed Martin constituted a breach of the settlement terms.

The primary legal issue before the Court was to determine the proper construction of clause 3(a) of the settlement agreement. Specifically, the Court had to ascertain whether the payments made by Raytheon were "royalties" as defined by the agreement, and if so, whether these payments were made in circumstances that would trigger an obligation for Raytheon to pay additional sums to Lockheed Martin under the agreement.

Justice Thompson considered the plain meaning of the words used in clause 3(a), the context in which the settlement agreement was entered into, and the commercial purpose it was intended to achieve. His Honour found that the payments in question did not fall within the definition of "royalties" as contemplated by the parties in the settlement agreement. Consequently, the Court concluded that Raytheon had not breached the terms of the settlement agreement.

The Court ordered that the application by Lockheed Martin Corporation be dismissed.