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Max-Planck-Gesellschaft Zur Foerderung der Wissen-Schaften E.V. v. Whitehead Institute for Biomedical Research
Citations: 850 F. Supp. 2d 317; 2011 U.S. Dist. LEXIS 11469; 2011 WL 487828Docket: Civil Action No. 09-CV-11116-PBS
Court: District Court, D. Massachusetts; February 6, 2011; Federal District Court
Plaintiffs Max-Planck-Gesellschaft Zur Forderung der Wissenschaften E.V. and Alnylam Pharmaceuticals, Inc. have initiated a lawsuit against defendants Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology, and the Board of Trustees of the University of Massachusetts regarding intellectual property rights associated with inventions related to RNA interference. The plaintiffs seek a legal ruling to declare that the priority claim in U.S. Utility Patent Application No. 09/821,832 (the ‘832 application) to European Patent Application No. 00126325.0 (the ‘325 application) is improper. They also aim for the dismissal of the defendants’ counterclaims linked to the plaintiffs’ Goldstein petitions and claims of tortious interference. Meanwhile, UMass seeks summary judgment on Counts VII and XVII of the plaintiffs’ First Amended Complaint concerning violations of Chapter 93A, Count XV for unjust enrichment, and Count XVIII for a declaratory judgment. The Court has denied the plaintiffs’ motion and allowed the defendants’ motion. The case focuses on two patent applications concerning RNA interference, with prior related opinions from the Court presumed known. Summary judgment is deemed appropriate when evidence shows no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. The moving party must demonstrate an absence of evidence supporting the nonmoving party’s position, after which the burden shifts to the nonmoving party to present specific facts indicating a genuine issue for trial. The Court must view the facts favorably for the nonmoving party, considering each motion for summary judgment separately. Max Planck's motion for summary judgment addresses the priority claim linked to the Tuschl I '832 application, filed in March 2001, and its connection to the abandoned Tuschl II '325 application from 2001. Plaintiffs argue that Tuschl I cannot claim priority from the '325 application, contending that Dr. Tuschl’s initial agreement to the priority is now invalid due to his withdrawal of consent. They assert that since none of the Tuschl I inventors pursuing the priority claim are also inventors on Tuschl II, Tuschl I lacks a valid basis for claiming the priority date of the '325 application. The validity of the priority claim hinges on the interpretation of 35 U.S.C. 119(a), which outlines the conditions for priority claims to foreign patent applications. Plaintiffs maintain that Tuschl I's claim is improper under this statute. In contrast, defendants argue that the validity of the priority claim is not an issue for the court because it was not included in the First Amended Complaint. They emphasize that the critical question is whether Whitehead acted in bad faith by refusing to remove the priority claim from Tuschl I at Max Planck's request in 2004. Defendants assert that Whitehead's refusal was justified as Dr. Tuschl had partially assigned his rights to the Tuschl I invention to Whitehead, who was responsible for managing the Tuschl I prosecution under the 2001 and 2003 Agreements. They argue that Whitehead did not act in bad faith, as UMass had licensed its rights in Tuschl I to Sirna Therapeutics, which relied on the existence of the priority claim. Plaintiffs argue that the priority claim under 35 U.S.C. § 119(a) is invalid, citing the case Boston Scientific Scimed, Inc. v. Medtronic Vascular, Inc., where the Federal Circuit ruled that a foreign application can only support a priority claim if it was filed by the U.S. applicant or someone acting on their behalf at the time of filing. They assert that Max Planck filed the '325 application before its agreement with the Tuschl I inventors, thus lacking representation for those inventors. Conversely, defendants argue that the necessary nexus existed since Max Planck filed on Dr. Tuschl’s behalf, who is an inventor of Tuschl I. The document raises the question of whether § 119(a) requires the European applicant to represent all inventors seeking priority or just one. The case Reitz v. Inoue is cited by both parties: it concluded that an inventor could claim priority to a foreign application even if not all inventors listed were the same in both applications, suggesting no strict requirement for matching inventive entities due to the liberalization of joint inventor requirements by the 1984 amendment to 35 U.S.C. § 116. Defendants maintain a stronger position based on this interpretation. Additionally, there is contention over whether Dr. Tuschl's withdrawal of his priority claim negates the required nexus. This raises factual questions regarding his co-assignment of rights and prior agreements, particularly his 2006 withdrawal due to concerns of inequitable conduct linked to the differences in inventive entities between the Tuschl I and '325 applications. The lack of supporting case law regarding inventive entities raises concerns that recent changes in priority claims may be a pretext. The established facts indicate that Whitehead and Max Planck negotiated to manage the Tuschl I and Tuschl II applications separately while claiming priority to each other's applications, as documented in a written agreement. Dr. Tuschl's unilateral withdrawal of the priority claim could breach this agreement and potentially violate the Joint Invention Agreements from 2001 and 2003, which assigned the prosecution of Tuschl I to Whitehead. The legitimacy of this withdrawal involves factual questions related to contractual obligations and potential breaches by either party. Additionally, the parties question whether Tuschl I and Tuschl II qualify as the "same invention" under 35 U.S.C. § 119(a), despite previously asserting to the PTO that they represent different inventions. This creates complications since both applications claim priority to the same European application. The Federal Circuit clarifies that under § 119, U.S. applications can claim priority only if the foreign application supports claims as required by § 112. Notably, Tuschl II is viewed as a "species" claim derived from the "genus" claim of Tuschl I, which encompasses a broader category of RNA interference processes. The Tuschl I claim includes isolated RNA mediating RNA interference, while Tuschl II claims specific isolated double-stranded RNA molecules with defined characteristics. In patent law, it is a general principle that a species can anticipate a genus, but not vice versa. The parties are attempting to assert that their invention is identical for Section 119(a) purposes while claiming it is different to avoid double patenting. Without a Markman hearing and additional briefing, the Court refrains from determining if any claimed inventions in Tuschl I and Tuschl II are 'the same' under Section 119(a), noting that the PTO’s ruling is not contestable in this case. Whitehead has filed counterclaims against Max Planck and Alnylam regarding alleged breaches of the 2001 Research Use Agreement and the 2003 Therapeutic Use Agreement, specifically accusing Max Planck of breaching contract and the covenant of good faith, and Alnylam of interfering with business relations, all linked to Max Planck’s Goldstein petition to revoke its power of attorney from Wolf Greenfield, Whitehead's legal representatives for Tuschl I. Max Planck seeks summary judgment on these counterclaims. Complicating the matter is a recent opinion from a related case where Max Planck sued Wolf Greenfield for legal malpractice, claiming an improper conflict of interest due to divergent interests. The Court recognized an attorney-client relationship but ruled Max Planck was time-barred from recovery. Max Planck argues this finding should grant it summary judgment concerning the counterclaims, while defendants contend that due process prevents the Wolf Greenfield findings from being binding since they were not parties to that case. However, this due process argument is deemed irrelevant as the Wolf Greenfield opinion only addressed the existence of an attorney-client relationship and did not evaluate the legality of the Goldstein petition under the Agreements or waiver of conflict of interest. The waiver issue was not addressed in the prior case. Max Planck’s references to Massachusetts Rule of Professional Conduct 1.7 are also considered irrelevant, as those ethical considerations do not affect its contractual obligations to Whitehead and UMass. The core legal questions involve whether a party can waive the right to non-conflicted representation, if Max Planck did so in the 2001 and 2003 Agreements, and whether the Goldstein petition violated those Agreements. It is noted that sophisticated parties often waive conflicts of interest through contractual agreements. In Acushnet Co. v. Coaters, Inc., the court emphasized that parties in a CERCLA action can prioritize a unified position over their conflicting interests. The central issue involves whether Max Planck’s agreement allowing Whitehead to prosecute the Tuschl I patent, while retaining a limited advisory role, implicitly waived any conflict of interest. For implied consent to exist, the client must be informed, and a court may recognize consent only if the client was clearly aware of the conflict. Max Planck acknowledged potential conflicts when entering into the 2001 and 2003 Agreements, particularly when it exercised its Power of Attorney for Wolf Greenfield in 2004 amidst existing disagreements regarding the Tuschl I specification and UMass's licensing actions. By late 2003, the defendants shared a common legal interest that conflicted with Max Planck’s interests. Evidence indicates Max Planck was aware of the conflict when consenting to Wolf Greenfield's representation, which may also suggest a waiver of some conflict claims. However, disputed facts regarding Whitehead's representations about prosecuting claims with 3' overhangs complicate the waiver issue, making it an unresolved question of fact. Additionally, it remains unclear whether Max Planck’s filing of the Goldstein petition constitutes a breach of the good faith covenant in the 2001 and 2003 Agreements. Defendants have presented evidence suggesting that legal ethics complaints were pretextual, raising a genuine issue of material fact regarding compliance with those agreements, thus precluding summary judgment on the counterclaims related to the Goldstein petition. Max Planck also seeks summary judgment on defendants’ tortious interference claims, arguing that defendants have not demonstrated actual or measurable damages, a necessary element for such claims according to established case law. In Ayash v. Dana-Farber Cancer Institute, the Massachusetts Supreme Judicial Court identified that an element of an intentional interference claim is the plaintiff's economic harm resulting from the defendant's actions. However, the case raises the issue of whether anticipated economic harm can constitute a valid claim. The court finds that the proposed second amended complaint presents specific allegations of future economic injury sufficient for Article III standing, distinguishing it from cases where no economic harm was claimed, such as Tech Plus, Inc. v. Ansel and Valdez v. Domeniconi, where plaintiffs failed to demonstrate pecuniary loss necessary for tortious interference claims. The precedent set in Beekman v. Marsters suggests that if unlawful interference threatens a plaintiff's business, and damages are inadequate, equity can grant an injunction. The defendants argue that delays in Tuschl I applications have postponed payments under a licensing agreement with Sirna Therapeutics, which supports claims for equitable relief. UMass' motion for summary judgment addresses claims from Max Planck regarding UMass’ licensing of Tuschl I rights, specifically alleging wrongful licensing and unjust enrichment in violation of Massachusetts consumer protection law (M.G.L. c. 93A). Max Planck alleges that UMass and Whitehead violated Chapter 93A by improperly harming the Tuschl II applications through the prosecution of the Tuschl I applications. UMass seeks summary judgment, claiming it is not subject to suit under Chapter 93A due to the absence of an explicit waiver of sovereign immunity in the statute, and that the License Agreement does not grant rights in the '325 patent application to Sirna. UMass contends that the issue of sovereign immunity is jurisdictional and must be addressed first, citing that a state's consent to be sued defines the jurisdiction of courts. The Eleventh Amendment limits judicial power under Article III, and while sovereign immunity can be waived, such waivers must be expressed clearly or implied overwhelmingly from statutory text. Massachusetts law maintains that the state and its subdivisions are generally immune from lawsuits unless there is a legislative waiver. Since the enactment of the Massachusetts Tort Claims Act in 1978, the Supreme Judicial Court (SJC) has ruled that immunity remains unless explicitly waived by statute or impliedly evident from its terms. The question of whether governmental entities can be sued under Chapter 93A is unresolved in Massachusetts law, as the statute's definition of "person" does not typically include the state or its subdivisions. Despite this, governmental entities may have standing to bring suits under Chapter 93A. UMass also argues that the SJC has not clarified this uncertainty, highlighting a distinction made in a previous case that while public entities can act as plaintiffs under Chapter 93A, they may not necessarily be deemed engaged in trade or commerce themselves in the same context. The analysis focuses on whether a government entity, specifically UMass, is engaged in trade or commerce under Massachusetts General Laws Chapter 93A, which governs unfair business practices. The Massachusetts Supreme Judicial Court has clarified that municipalities are not liable under Chapter 93A if they are not acting in a business context. The determination of "trade or commerce" involves examining the nature of the transaction, the character of the parties, their activities, and whether business motives drive the transaction. Actions taken due to a legislative mandate do not constitute "trade or commerce." UMass contends it acted under legislative authority, citing Mass. Gen. Laws ch. 75, § 14A, which allows trustees to regulate contracts concerning intellectual property. However, the statutory language suggests that entering contracts is permissive, implying that such actions do not inherently qualify as governmental activity. The distinction between governmental functions and trade or commerce is critical; if profit-driven contracts were deemed governmental activities, the distinction would become irrelevant, undermining the applicability of Chapter 93A. Cases cited by UMass highlight instances where government entities engaged in contracts to provide specific services, reinforcing the idea that accumulating wealth for public purposes does not equate to engaging in trade or commerce. Sovereign immunity regarding UMass under Chapter 93A remains uncertain despite its involvement in trade or commerce. A federal court ruled Chapter 93A applicable to governmental entities acting in a business context, but did not find the City liable under the statute due to other factors. No cases have established liability for the state or its subdivisions under Chapter 93A, which only specifies non-application when governmental entities are not engaged in trade or commerce. Key considerations include whether UMass qualifies as a 'person' under Chapter 93A and if Massachusetts’ sovereign immunity protects it from federal suits in cases of trade or commerce engagement. A waiver of sovereign immunity must be explicit or implied clearly in legislation, and Chapter 93A does not provide an explicit waiver. While 'person' under the statute could theoretically encompass the Commonwealth, a clear implied waiver is required, and generally, 'person' does not include governmental entities in Massachusetts law. Some statutes have explicitly defined 'person' to include the Commonwealth, but this is not the case for Chapter 93A. The definition of "person" in Chapter 93A of the Massachusetts General Laws encompasses individuals, partnerships, corporations, legal representatives, and governmental entities. Despite the Legislature's broader definition, the phrase "any other legal entity" creates ambiguity regarding whether it includes the Commonwealth. The Legislature's intention to expand the definition suggests a potential waiver of sovereign immunity, but the absence of explicit inclusion of the Commonwealth weighs against that interpretation. Waivers of sovereign immunity must be found through "necessary implication," as established in Bain and further clarified in Todino, where the court recognized an implied waiver for government employers regarding timely payments to employees. In contrast, Chapter 93A does not inherently require governmental liability for its effectiveness, as its primary aim is consumer protection without the obligation for governmental payments. Consequently, the court concludes that the phrase "any other legal entity" does not imply a waiver of sovereign immunity in Chapter 93A. The court also notes that while judicial abrogation of sovereign immunity is possible, it is preferable for the Legislature to address such changes directly. Words used in different parts of a statute are to be interpreted consistently, as established in Lantner v. Carson. However, cases addressing the standing of governmental entities under Chapter 93A have largely overlooked the issue of sovereign immunity, focusing instead on municipalities' standing in a cursory manner, as seen in City of Boston v. Aetna Life Ins. Co. For a plaintiff to have standing under Chapter 93A, they must be a “person who engages in the conduct of any trade or commerce,” which the City qualifies for, despite concerns about the term "person" having dual meanings within the statute. Waiving sovereign immunity requires explicit language within the statute itself, which Chapter 93A lacks, leading to the conclusion that Max Planck’s claims under this chapter cannot succeed, as UMass is not amenable to suit under it. Regarding the unjust enrichment claim, UMass seeks summary judgment, asserting it was not unjustly enriched and that Max Planck did not incur any unjust detriment from the 2003 License Agreement with Sirna Therapeutics. This dispute hinges on whether the License Agreement effectively licensed rights to Tuschl II. The Agreement allows Sirna to use and practice specified Patent Rights, defined as the U.S. patent applications listed in an exhibit. While Exhibit A does not explicitly list the '325 Application, it does reference the Tuschl I Patent Cooperation Treaty International Patent Application, which cites the priority documents for Tuschl I. The critical question is whether “priority” under 35 U.S.C. § 119(a) implies ownership of the invention or simply permits the use of the filing date of the foreign application for prior art assessments, as explained in a 1972 Senate Report on Section 119(a). The right of priority allows a party that first files a patent application in any convention country to subsequently file in other convention countries within one year, treating the later applications as if they were filed on the same date as the first. This right does not confer substantive rights but permits the applicant to claim the earlier filing date for the same invention. An applicant can benefit from this priority in a U.S. application as long as it is submitted within one year of the initial foreign application. This means the U.S. Patent and Trademark Office (USPTO) will evaluate the application as if it were filed on the foreign priority date when examining prior art. In the case of the Tusehl applications, claims in Tusehl I can claim priority from the earlier application, but this does not extend substantive rights to different claims in Tusehl II. The 2003 License Agreement only licensed the priority date for the same claimed inventions, not rights to the Tusehl II invention. Max Planck alleges that Sirna’s claimed ownership of Tusehl II and its sublicensing to Protiva and Allergan caused harm through lost business opportunities. Sirna may be liable if its claims of ownership are false, but there is no evidence that UMass transferred Tusehl II ownership to Sirna or was involved in any misrepresentations. An unjust enrichment claim under Massachusetts law does not require showing wrongdoing by the defendant. The elements of unjust enrichment include a benefit conferred to the defendant, a detriment to the plaintiff, and circumstances making the retention of that benefit unjust. UMass is not deemed to have licensed rights in the Tusehl II patent estate to Sirna, raising the issue of whether retaining license fees from Sirna would be unjust. The 2003 License Agreement itself is not found to be improper; however, potential injustice arises from Sirna's alleged sublicensing of the Tusehl II estate to Protiva and Allergan without rights to do so. UMass could face injustice from retaining income derived from those sublicenses, but there is no evidence of such income. Regarding Max Planck’s request for declaratory judgment on the ownership of the Tusehl II '325 application, UMass acknowledges it does not own this application, thus making a declaratory judgment unnecessary. The court denies Plaintiffs’ Motion for Partial Summary Judgment against Whitehead and UMass, while allowing UMass’ motion for summary judgment. Max Planck's summary judgment requests involve several counterclaims related to breach of contract and tortious interference against both UMass and Alnylam. The 1984 amendment to patent law allows joint applications for patents under specified conditions. The requirements for patent specifications are outlined under 35 U.S.C. 112, emphasizing clarity and completeness. The court notes that claims related to unjust enrichment, if based on breach of contract, are not time-barred, but conversion-based claims against Whitehead are barred by a three-year statute of limitations. All claims against UMass are similarly subject to this limitation, and while the agreement dates back to 2003, any claims may still be viable if UMass continues to collect royalties under the License Agreement.