University of Colorado Found. v. American Cyanamid

• Decision Date: 03 April 1995
• Docket Number: Civ. A. No. 93-K-1657.
• Parties: The UNIVERSITY OF COLORADO FOUNDATION, INC., a Colorado not-for-profit corporation, The University of Colorado, an institution of the State of Colorado, The Board of Regents of the University of Colorado, a body corporate of the State of Colorado, Robert H. Allen, an individual, and Paul A. Seligman, an individual, Plaintiffs, v. AMERICAN CYANAMID, a Maine corporation, Defendant.
• Court: U.S. District Court — District of Colorado

880 F. Supp. 1387

The UNIVERSITY OF COLORADO FOUNDATION, INC., a Colorado not-for-profit corporation, The University of Colorado, an institution of the State of Colorado, The Board of Regents of the University of Colorado, a body corporate of the State of Colorado, Robert H. Allen, an individual, and Paul A. Seligman, an individual, Plaintiffs, v. AMERICAN CYANAMID, a Maine corporation, Defendant.

Civ. A. No. 93-K-1657.

United States District Court, D. Colorado.

April 3, 1995.

COPYRIGHT MATERIAL OMITTED

Glenn K. Beaton, Beaton & Swanson, Robert N. Miller, LeBoeuf, Lamb, Greene & MacRae, Denver, CO, for plaintiffs.

Roger P. Thomasch, Mark A. Wielga, Ballard Spahr Andrews & Ingersoll, Denver, CO, Daniel J. Thomasch, Donovan, Leisure, Newton & Irvine, New York City, for defendant.

MEMORANDUM OPINION AND ORDER

KANE, Senior District Judge.

This action commenced in August 1993. On September 30, 1994, The University of Colorado Foundation, Inc. ("Foundation"), The University of Colorado ("University"), The Regents of the University of Colorado ("Regents"), Robert H. Allen and Paul A. Seligman (collectively "Plaintiffs") filed a Second Amended Complaint alleging that Defendant American Cyanamid Company ("Cyanamid") wrongfully filed and obtained a patent on a reformulated prescription prenatal vitamin called "Materna." Plaintiffs claims for relief are for (1) conversion, (2) fraud, (3) wrongful naming of inventor, (4) copyright infringement, (5) misappropriation, (6) patent infringement, (7) breach of confidentiality obligation, and (8) unjust enrichment.

Before me are (1) Plaintiffs' motion for partial summary judgment on their causes of action for conversion, fraud, and copyright infringement, (2) Cyanamid's motion for partial summary judgment on the copyright infringement claim, and (3) Cyanamid's motion for summary judgment on all causes of action. I grant Plaintiffs' motion in part and deny it in part; deny Cyanamid's partial summary judgment motion and grant Cyanamid's motion for summary judgment in part and deny it in part.

Jurisdiction obtains under 28 U.S.C. §§ 1331 and 1338(a) because Plaintiffs seek relief under the Patent Act, 35 U.S.C. § 256 and the Copyright Act, 17 U.S.C. §§ 101-810. Jurisdiction is also founded on 28 U.S.C. § 1332 in that this action is between citizens of different states and the matter in controversy exceeds $50,000.00, exclusive of interest and costs.

I. Background.

Cyanamid began marketing its Materna multivitamin in the mid-1970's. In the late 1970's, a competitor of Cyanamid asserted that iron was not being sufficiently absorbed from Materna, due to interference from calcium carbonate which was present in Materna.

In late 1978 or early 1979, Dr. Leon Ellenbogen, a Cyanamid employee, agreed with Plaintiff Dr. Robert Allen, Director of Hematology and Professor of Biochemistry at the University of Colorado Health Sciences Center that Dr. Allen and Plaintiff Dr. Paul A. Seligman, a Professor of Medicine in the same division of hematology, would perform a study on patient volunteers to compare iron absorption from Materna with that from the competitor's product. Drs. Ellenbogen and Allen had known each other since the early 1970s and considered themselves trusted friends.

Although Dr. Ellenbogen had indicated he considered the existence of an iron absorption problem unlikely, he wanted to prove the competitor wrong. Drs. Allen and Seligman believed there might indeed be a problem. The fee for the study agreed upon between Dr. Ellenbogen on behalf of Cyanamid and Dr. Allen on behalf of the University was $5,000.00 for each of the compositions (Materna and the competitive product) for a total of $10,000.00.

In August 1979, the results of this study (Study I and Study IA) showed there was reduced absorption of iron from both Materna and the competitor's product.

On Dr. Allen's recommendation, Cyanamid engaged him to perform a further study to determine the extent of iron absorption from a composition containing only iron in the form of ferrous fumarate for the purpose of establishing a baseline for comparison with the results of the study on Materna and the competitive product. Cyanamid paid $5000.00 for that study. Drs. Allen and Seligman performed the study, the results of which validated the conclusions of the earlier study that iron absorption from both Materna and the competitive product was probably insufficient to meet the needs of pregnant women.

Drs. Allen and Seligman then conducted research, allegedly independent of Cyanamid, to establish the reason for the poor iron absorption from Materna and the competitive product. In particular, they devised and performed two new studies (Study II and Study IIA) in which they tested whether various combinations of calcium carbonate, calcium sulfate and magnesium oxide interfered with iron absorption. Study II pinpointed the reasons for the poor iron absorption and Study IIA confirmed how Materna could be reformulated to improve iron absorption. Plaintiffs maintain Dr. Allen sent Dr. Ellenbogen letters as a courtesy, explaining the results of these studies and including the new formulation.

Thereafter, Dr. Ellenbogen asked Drs. Allen and Seligman to conduct two further studies (Study III and Study IV) to measure the iron absorption from several competing products and that from two new formulated versions of Materna, including the Study IIA suggested reformulation. Cyanamid paid $5000.00 per composition for these studies which were performed in late 1980 and early 1981. The studies established Dr. Allen's suggested reformulation, having reduced calcium carbonate and magnesium oxide, showed improved iron absorption.

Cyanamid maintains Dr. Ellenbogen designed the protocol to be followed in the initial study and this was the standard upon which a series of subsequent studies, including Studies II and IIA, were based. Cyanamid contests Plaintiffs' claim that Cyanamid did not pay for Study IIA and states it paid $7,500 for the study, the first of two conducted in 1980.

Contrary to Plaintiffs' position, Cyanamid contends Dr. Ellenbogen conceived of the revised Materna product. Cyanamid cites the deposition testimony of Dr. Ellenbogen to the effect that a March 4, 1980 letter from Dr. Allen to Dr. Ellenbogen concerning a proposed reformulation was a confirmation of what Drs. Ellenbogen and Allen had previously discussed. Dr. Ellenbogen testified he believes the decision to reduce magnesium and calcium originated with him.

Cyanamid also relies on the testimony of Dr. Robert P. Raymond, counsel who prepared the patent application. Dr. Raymond testified that, in preparing the application in 1981, he relied on a memorandum prepared some time earlier by Dr. Ellenbogen. In Dr. Raymond's view the memorandum showed Dr. Ellenbogen conceived of the reformulation before the alleged March 1980 conception of Drs. Allen and Seligman. Neither Dr. Raymond nor Cyanamid can locate this memorandum. Dr. Raymond identifies it as one of the documents discarded in July 1993, before this action commenced, when Cyanamid's patent law department transferred from Connecticut to New Jersey. Plaintiffs dispute the existence of the memorandum.

In July, 1981, Drs. Allen and Seligman submitted a manuscript, authored by themselves and four of their assistants, entitled "Inadequate Iron Absorption From Many Prenatal Multivitamin-Mineral Supplements" to the New England Journal of Medicine. Dr. Allen sent Dr. Ellenbogen a courtesy copy of the manuscript in confidence. The Article described Studies I, IA, II, III and IV, the reformulated version of Materna having reduced levels of calcium carbonate and magnesium oxide, and the improved iron absorption. The New England Journal of Medicine rejected the manuscript.

In December 1981, Drs. Allen and Seligman resubmitted the manuscript, with certain changes, to a medical journal called Obstetrics and Gynecology. Again, Dr. Allen sent Dr. Ellenbogen a courtesy copy of the revised manuscript in confidence. The manuscript, while acknowledging Cyanamid had paid for certain studies, did not name Dr. Ellenbogen as a co-author. Dr. Ellenbogen did not object to this. The manuscript was published in the March 1983 volume of Obstetrics and Gynecology (the "Article").

In 1981 and 1982, after Cyanamid had adopted a reformulated version of Materna containing reduced amounts of calcium and magnesium oxide, Cyanamid issued various press releases and held a press conference with Dr. Allen describing the studies and the enhanced iron absorption from the reformulated version. Plaintiffs state at the press conference, in each of the press releases, in correspondence with the U.S. Food and Drug Administration, and in numerous internal memoranda, Cyanamid credited Dr. Allen with the discovery that the reason for poor absorption before the reformulation was interference by calcium carbonate and magnesium oxide.

Drs. Allen and Seligman, as employees of the University, were subject to its patent policy. Under this policy, inventions made by University employees using University facilities were to be assigned by the inventors to the University, subject to a royalty interest payable to the inventors personally. Any other assignment of such inventions could be made only by the University. The Foundation had a contractual relationship with the University for exploiting inventions of the University.

Plaintiffs claim the reformulation was invented by Drs. Allen and Seligman using University time and facilities and, therefore, under the University policy, Drs. Allen and Seligman were and are the equitable owners of the invention. Under the patent policy, Drs. Allen and Seligman were required to take certain measures to protect any claimed invention. Drs. Allen and Seligman did not take such measures in relation to the reformulation of the Materna multivitamin, allegedly because they did not realize they had discovered a patentable invention.

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