M.D. Mark, Inc. licensed seismic data to Oryx Energy, which later merged with Kerr-McGee. Mark sought additional licensing fees, claiming the merger constituted a transfer of the license to a third party, and Kerr-McGee defended, arguing that a merger does not constitute a transfer under normal law and the Model Business Corporation Act. In the ensuing lawsuit, a jury awarded more than $25 million to Mark.
Kerr-McGee appealed, and the NAM supported their position on two critical points: (1) manufacturers must be able to rely on existing contractual rights and obligations when they are involved in mergers, and under standard law a license held by a merging entity automatically vests with the survivor of that merger, and (2) a jury should not reject merger law based on the opinions of witnesses.
Thirty-eight states, including Colorado, where this case arose, have adopted model statutory language that keeps contracts intact during mergers. Parties are free to write contracts to include provisions relating to mergers, but in the absence of such language, standard law should apply. In addition, judges are authorized to decide questions of law, and juries should not be allowed to rewrite the law in a way that poses grave questions for future mergers.
On June 26, 2009, the court dismissed the appeal since the parties reached a settlement.