Israel Bio-Engineering Project v. Amgen, Inc.
| Decision Date | 29 January 2007 |
| Docket Number | No. 06-1218.,06-1218. |
| Citation | 475 F.3d 1256 |
| Parties | ISRAEL BIO-ENGINEERING PROJECT, Plaintiff-Appellant, v. AMGEN INC., Immunex Corporation, Wyeth, and Wyeth Pharmaceuticals, Inc., Defendants-Appellees, and Yeda Research and Development Co., Ltd., Defendant-Appellee, and Inter-Lab Ltd. and Serono International S.A., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Federal Circuit |
Barbara R. Rudolph, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P, of Washington, D.C., argued for defendants-appellees Amgen Inc., et al. With her on the brief were Gerald F. Ivey and William L. Strauss. Of counsel on the brief were Stuart L. Watt, Monique L. Cordray, Karen L. Nicastro, Kathleen Fowler, and Gail Katz, Amgen Inc., of Thousand Oaks, CA; Vicki G. Norton, Wilson Sonsini Goodrich & Rosati, P.C., of San Diego, CA; and Nicole W. Stafford, Wilson Sonsini Goodrich & Rosati, P.C., of Austin, TX.
Nicholas Groombridge, Weil, Gotshal & Manges LLP, of New York, N.Y. argued for defendant-appellee Yeda Research and Development Co., Ltd. With him on the brief were Michael Eisenberg, Daniel J. Melman, and Peter Sandel. Of counsel was John D. Garretson, Fish & Richardson, P.C. of New York, NY.
Wayne M. Barsky, Gibson, Dunn & Crutcher LLP, for defendants-appellees Inter-Lab Ltd., et al of Los Angeles, CA.
Before BRYSON, PROST, Circuit Judges, and SARIS, District Judge.*
This appeal involves a complex dispute over the ownership of a patent. Plaintiff-Appellant Israel Bio-Engineering Project ("IBEP") appeals from a judgment in a patent infringement action granting Defendant-Appellee Yeda Research and Development Company, Ltd.'s ("Yeda") motion for summary judgment on the ground that IBEP lacked standing to bring the suit because it did not have sole ownership of the patent. This court affirms.
This dispute over ownership of the patent involves four inter-related contracts. Yeda is an Israeli corporation that markets and commercializes inventions resulting from research conducted at the Weizmann Institute of Science, a multi-disciplinary research institute. Yeda entered into negotiations with Inter-Yeda Ltd., a joint venture formed in Israel in 1979 between Yeda and Inter-Pharm, an Israeli company wholly owned by Serono International S.A., to finance various Weizmann research projects and to commercialize the results of the research. On September 14, 1981, Yeda and Inter-Yeda executed a handwritten agreement, which provided that Inter-Yeda would finance four specified research projects during a five year project term, including the one at issue here. This initial agreement was later amended, as will be explained later. That same day, Yeda sent a side letter to Inter-Yeda offering to cooperate with Inter-Yeda in revising the contract if it found outside funding.
Shortly afterwards in 1982, Inter-Yeda began negotiating with IBEP, a New York limited partnership, to secure funding for the four research projects. These negotiations generated three agreements. First, on December 27, 1982, IBEP entered into a contract with the State of Israel ("the R & D Contract") whereby IBEP committed to spend between $7 million and $10 million on four research programs. Paragraph 5 of the R & D Contract provides: "[IBEP] will be entitled, [subject to two paragraphs which are not applicable], to exploit all the Research results, including any Patents, in any manner, including the manufacture of Products, granting of licenses, transfer and/or sale of any rights in any matter resulting from the Research." The Israeli government consented to the terms of the two contracts which IBEP and Inter-Yeda were about to enter. Three days later, IBEP signed a pair of contracts with Inter-Yeda on December 30, 1982. All three contracts were set to expire on December 27, 1987, and were to be construed in accordance with the laws of the State of Israel.1
The first contract between IBEP and Inter-Yeda, called the Sub-Research and Development Contract ("Sub-R & D Contract"), provided that IBEP would fund the research operations conducted by Inter-Yeda in cooperation with Yeda. Of particular significance to this dispute, Paragraph IX(A) of this contract specified:
On behalf of the Partnership [IBEP], Developer [Inter-Yeda] shall apply for and obtain patents in Developer's and/or Yeda's name(s) on all inventions resulting from the R & D Programs which Developer, in its sole discretion, considers advisable to apply for and obtain; provided, however, that the beneficial ownership of all rights, title and interest in and to such patents and patent applications that form a part of the Proprietary Information shall be and hereby are assigned to the Partnership from the date the Partnership shall have made the first payment to the Developer pursuant to this Agreement in perpetuity, unless and until the Developer shall have purchased the Proprietary Information in respect thereof according to the provisions of the TOS Agreement.
(Emphasis added). Paragraph X(A), entitled "Property Rights," then provides:
Subject to the provisions of the TOS Agreement, any and all of the Proprietary Information shall become the sole property of the Partnership [IBEP]. Subject to the provisions of Paragraph IX above regarding the registration of patents in Developer's [Inter-Yeda's] and/or Yeda's name(s), Developer shall assign to [IBEP] all its rights, title and interest in and to the Proprietary Information and shall require all persons employed by it, presently or in the future, to do the same unless and until Developer shall become the owner of all of the Partnership's rights, title and interest in and to the Proprietary Information in accordance with the TOS Agreement. Nothing contained herein shall prevent Developer from including in any patent registration the name(s) of the individual inventor(s) as required by law, provided that no proprietary rights are vested in such individuals.
For purposes of this contractual provision, the term "Proprietary Information" was defined, in relevant part, to mean:
any and all inventions, patent applications and patents (wherever applied for or granted), trade secrets, technical information (including all blueprints, plans, workbooks, drawings, specifications, formulas and processes) and other technology or knowhow developed in the R & D programs.
(Emphasis added). The R & D Programs referenced by this agreement were designed to "be effective for a period co-terminous with . . . the Execution Period defined in the R & D Agreement" with Israel, that is until December 27, 1987.
The other contract between IBEP and Inter-Yeda is the Technology Option and Sale Agreement ("The TOS Contract"), which was executed on December 30, 1982. In the paragraph entitled "Property Rights," the contract repeats, "Any and all of the Proprietary Information developed during the term of the Sub-R & D Agreement shall become the sole property of the Partnership [IBEP] subject to the right of Inter-Yeda to exercise the Option with respect thereto, as provided in paragraph 5 hereof." (Emphasis added). In Paragraph 5, entitled "Options to Purchase Proprietary Information," the TOS Contract granted InterYeda the sole and exclusive option to "purchase all of [IBEP's] rights, title and interest in and to the Proprietary Information relating to each Product that has been Reduced to Practice or in respect to which a patent application has been filed prior to the expiration or termination of the Sub-R & D Agreement [December 27, 1987]." If Inter-Yeda timely exercised the option, it had to make certain payments to IBEP. Inter-Yeda never exercised that option.
Moreover, the TOS agreement expressly discusses research and development after the term of the Sub-R & D Contract. It gives IBEP the right to finance additional research and development if, after the term of the Sub-R & D agreement and during the term of the TOS Contract, Inter-Yeda "desires to conduct further research and development with respect to the Proprietary Information."2 It then provides: "If after the termination of the Sub-R & D Agreement and during the term hereof, any Product is Reduced to Practice or if a patent application is filed with respect thereto, [IBEP] shall be entitled to payments. . . ." IBEP's right to royalties would be proportionately reduced if "more money is spent to conduct additional research and development . . . than has been spent by [IBEP]."
Finally, one day after IBEP and Inter-Yeda signed these contracts, Inter-Yeda and Yeda amended their original 1981 hand-scrawled agreements. This amended agreement distinguishes between "unrelated results," "pre-existing results," "new results," and "any other results." It provides: "The title in and to any New Result which will be discovered or developed during the Project Term other than an Unrelated Result shall belong to [IBEP] immediately upon its discovery or development." The parties agreed that title to any "pre-existing results" stemming from Yeda's research between September 14, 1981 and December 30, 1982 would still vest in Yeda. Moreover, it provides that title to "any other results which shall not belong to [IBEP]" would belong to Yeda. The "project term" of the 1981 contract was defined to be the five-year period of the contract effective September 14, 1981.
By April 1987—after the expiration of the original 1981 contract, but prior to the termination of the 1982 contracts—three scientists, who worked in the R & D program directed at identifying novel anti-cellular factors, discovered and partially purified the Tumor Necrosis Factor Binding Protein ("TBP") in human urine. This protein, when bound to a substance in the body...
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