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McGraw-Hill Co. v. Vanguard Index Trust
Citation: 27 F. App'x 23Docket: Docket No. 01-7551
Court: Court of Appeals for the Second Circuit; October 31, 2001; Federal Appellate Court
The judgment of the district court is affirmed. Defendants-appellants Vanguard Index Trust and The Vanguard Group, Inc. appeal a May 4, 2001 ruling that denied their motion for judgment under Federal Rule of Civil Procedure 52(c) and granted plaintiff-appellee The McGraw-Hill Companies, Inc.’s motion for judgment. This case centers around a license agreement between McGraw Hill, parent of Standard & Poor’s, and Vanguard, which allowed Vanguard to use Standard & Poor’s 500 index data and trademarks solely for operating the Vanguard Index Trust as specified in an attached prospectus. In 1998, Vanguard sought to introduce a new class of shares, VIPERs (Vanguard Index Participation Equity Receipts), to the mutual funds of the Vanguard Index Trust. After McGraw-Hill unsuccessfully attempted to prevent this issuance, it filed a lawsuit, claiming that the VIPERs were unauthorized and breached the license agreement. The district court ruled that the proposed VIPER shares were not authorized by the license agreement and issued a permanent injunction against their issuance. On appeal, Vanguard argued that the district court misinterpreted the license agreement, asserting that the terms did not limit the types of shares they could issue as long as they continued to use the licensed index and trademarks. Vanguard also contended that parol evidence indicated new agreements were only necessary for new funds, not new shares. The appellate court affirmed the district court's decision, agreeing with its thorough reasoning.