Medimmune, LLC v. Bd. of Trs. of the Univ. of Mass.

• Decision Date: 03 June 2015
• Docket Number: No. 0008,0008
• Parties: MEDIMMUNE, LLC v. BOARD OF TRUSTEES OF THE UNIVERSITY OF MASSACHUSETTS d/b/a UNIVERSITY OF MASSACHUSETTS BIOLOGIC LABORATORIES, ET AL.
• Court: Court of Special Appeals of Maryland

MEDIMMUNE, LLC v. BOARD OF TRUSTEES OF THE UNIVERSITY OF MASSACHUSETTS d/b/aUNIVERSITY OF MASSACHUSETTS BIOLOGIC LABORATORIES, ET AL.

No. 0008

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2013

June 3, 2015

UNREPORTED

Meredith, Zarnoch, Salmon, James P. (Retired, Specially Assigned), JJ.

Opinion by Meredith, J.

* This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

This case concerns disputes between parties to an agreement that was entered into for the purpose of collaborating to discover new products for the treatment of a viral disease known as RSV — an acronym for respiratory syncytial virus — a disease that is particularly serious for premature infants. As will be described more fully below, during the collaboration, MedImmune, LLC ("MedImmune"), appellant/cross-appellee, developed a highly effective treatment for which MedImmune received a patent. MedImmune marketed the product as Synagis®. Pursuant to the provisions of the collaboration agreement, MedImmune shared its financial success with other members of the consortium, including the Board of Trustees of the University of Massachusetts ("UMass"), appellee/cross-appellant.

On August 19, 2011, MedImmune filed suit in the Circuit Court for Montgomery County asserting three causes of action against the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. ("Henry Jackson Foundation"); Third Sector New England, Inc. ("Third Sector"); and UMass. Prior to trial, MedImmune settled with Henry Jackson Foundation and Third Sector, leaving UMass as the only defendant in the case. MedImmune's complaint sought: a declaratory judgment that UMass had breached the RSV collaboration agreement ("count 1"); damages for the breach of that agreement ("count 2"); and a declaratory judgment that the agreement had expired or was terminable ("count 3"). MedImmune prayed a jury trial.

After MedImmune had filed an amended complaint — which asserted the same causes of action against the same parties as the original complaint — UMass filed a motion for summary judgment. On September 25, 2012, the motion was heard by the HonorableMichael D. Mason. Judge Mason granted UMass's motion as to counts 1 and 2, but denied the motion as to count 3. Additionally, Judge Mason granted UMass's motion to strike MedImmune's demand for a jury trial.

On October 1-5, 8-10, and 17, 2012, the court conducted a bench trial (with Judge Mason presiding) on MedImmune's claim for declaratory judgment. On February 7, 2013, the court issued an oral ruling. Applying Massachusetts law relative to the termination of contracts, the court determined that, although the contract between MedImmune and UMass had no fixed date of termination, MedImmune's obligation to pay royalties under the agreement would continue for a reasonable period of time, which the court stated would be for as long as MedImmune manufactured and sold a product contemplated by the collaboration agreement. On February 15, 2013, the court filed its written judgment memorializing the February 7 ruling. This order was docketed on February 26, 2013. On March 1, 2013, MedImmune noted an appeal, and on March 28, 2013, UMass filed a notice of cross-appeal.

QUESTIONS PRESENTED

MedImmune presents three questions for our review:

1. Did the trial court err in declining to apply the U.S. Supreme Court's per se rule [see Brulotte v. Thys Co., 379 U.S. 29, 32, 85 S.Ct. 176 (1964)] that royalties under a license of both patents and know-how, without provision for reduction upon patent expiration, must end when the patents expire?

2. Did the trial court deny the right to jury trial guaranteed by the Maryland Declaration of Rights and Rule 2-511(a) when it struck the jury demand and decided without a jury what constituted a "reasonable" contract duration?

3. Did the trial court also deny the right to jury trial and violate Rule 2-501(f) by improperly deciding disputed issues of material fact on summary judgment?

For the reasons stated below, we are not persuaded that the court impermissibly decided genuine disputes of material fact in granting UMass's motion for summary judgment as to counts 1 and 2. Additionally, MedImmune has failed to persuade us that the per se federal rule regarding payment of royalties to licensors of patented technology — as announced in Brulotte v. Thys Co., 379 U.S. 29 (1964), and developed in subsequent cases — applies to the collaboration agreement that is the focus of this case. Furthermore, we perceive no error on the part of the circuit court in striking MedImmune's jury demand with respect to the trial on count 3.

In the cross-appeal, UMass presents one issue:

Did the circuit court commit legal error under governing Massachusetts contract law by overriding the duration that the parties negotiated and defined in their written agreement?

We conclude that the circuit court did not commit a legal error in its finding concerning the duration of the contract.

Accordingly, we will affirm the judgments of the circuit court.

FACTS AND PROCEDURAL HISTORY

In the late 1980s, a group of retired United States Army physicians formed two companies — Molecular Vaccines, Inc. ("Molecular Vaccines"); and Pediatric Pharmaceuticals, Inc. ("Pediatric Pharmaceuticals") — devoted to researching and developing cures for infectious diseases.¹ Three diseases were of particular interest toMolecular Vaccines and Pediatric Pharmaceuticals: respiratory synctial virus ("RSV"), influenza, and parainfluenza.²

In 1989, doctors at Molecular Vaccines became aware of late-stage development clinical trials — at Henry Jackson Foundation and the Massachusetts Health Research Institute, Inc. ("Massachusetts Health") — for a polyclonal antibody product to treat RSV.³ Polyclonal antibody products — a "shotgun approach" as described by the circuit court — are made by pooling the blood plasma of several donors and separating out the antibodies.⁴ Dr. Jeanne Leszczynski, an employee of the Massachusetts Biologic Laboratory (sometimes referred to by the parties as "MBL"), explained that, in order to make a potent polyclonal antibody product, researchers seek to produce lots — called titers — containing higher levelsof antibodies for the targeted disease.⁵ Ideally, researchers will produce titers with the desired antibodies in a sufficient amount to be able to treat the condition. In less scientific terms, a polyclonal antibody product is a synthesis of naturally occurring antibodies designed to target a particular disease. Molecular Vaccines was interested in collaborating with Henry Jackson Foundation and Massachusetts Health toward the goal of putting such a product on the market to treat RSV.

Accordingly, Molecular Vaccines, Henry Jackson Foundation, and Massachusetts Health entered into agreements creating an RSV collaborative consortium whereby the parties agreed to cooperate in developing treatments for RSV.⁶ In broad terms, Molecular Vaccines agreed to underwrite the research and development of any potential product, as well as pay any manufacturing costs. In exchange, Henry Jackson Foundation and Massachusetts Health would share equally in any royalty payments resulting from the commercialization of any products produced as a result of the RSV consortium. The parties also agreed to share any research findings, data, and "know-how" in the field, as defined by the contracts. Additionally, the agreements contained non-competition provisions whereby MassachusettsHealth and Henry Jackson Foundation agreed not to assist a competitor of Molecular Vaccines in putting a similar product on the market.

Furthermore, the parties orally agreed that each entity would take a different approach to create and develop products for treating RSV. Massachusetts Health would pursue the development of a polyclonal antibody product which, at the time of the agreement, was set for a clinical trial. Researchers at Henry Jackson Foundation would attempt to develop a vaccine. Molecular Vaccines, meanwhile, hoped to genetically engineer an antibody for the treatment of RSV, and Molecular Vaccines's goal was the development of a monoclonal antibody product. In contrast to the polyclonal antibody approach, a monoclonal antibody product is a genetically engineered antibody designed to treat a specific condition. In 1989, that technology had never before been attempted for the treatment of RSV. The circuit court commented on the uncertainties and difficulties the consortium faced:

While the science of polyclonal antibody therapy was understood, there was currently no . . . such treatment for RSV. Even if such product could be found, significant problems in the manufacturing process and in delivering it to the target population, infants, would have to be overcome.⁷

Similarly, while the principle of vaccines was well understood, none then existed for RSV.

While the monoclonal antibody approach held the prospect of being the most effective method of treatment, the challenges involved in engineering an effective monoclonal antibody for the treatment of RSV made project three the most speculative of the approaches being taken.

Shortly after the formation of the RSV consortium, Molecular Vaccines changed its name to MedImmune and absorbed Pediatric Pharmaceuticals.⁸

Massachusetts Health's project initially suffered a setback, but, with the assistance of MedImmune, in 1995 and 1996, Massachusetts Health obtained patents for a polyclonal antibody product that became known as Respigam®. The Food and Drug Administration ("FDA") approved Respigam®, and, in 1996, sales of Respigam® began. MedImmune handled all sales and paid to Massachusetts Health and Henry Jackson Foundation the contractually agreed royalties with respect to MedImmune's sales of this product.

In August 1996, the Massachusetts legis...