The opinion of the court was delivered by: JOHN S. MARTIN, JR.
JOHN S. MARTIN, JR., District Judge:
Doctors Erich Platzer, Karl Welte and Roland Mertelsmann commenced this action to recover a share of the royalties stemming from a discovery they made while in the employment of Sloan-Kettering Institute for Cancer Research ("Sloan-Kettering"). Sloan-Kettering now moves to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). For the reasons contained herein, the motion to dismiss is granted in its entirety.
Sloan-Kettering is a not-for-profit corporation engaged in scientific research largely funded by the federal government.
The three plaintiffs are former employees of Sloan Kettering. While employed by Sloan Kettering, the plaintiffs were part of a team of five research physicians responsible for conducting research in the area of colony stimulating factors. This research resulted in a discovery: the purification of granulocyte colony stimulating factor ("G-CSF"), a natural substance which stimulates the production of white blood cells. White blood cells are vital to the body's immune system, and are often destroyed during the course of chemotherapy, resulting in life-threatening infections. By bolstering the body's production of white blood cells, G-CSF enables cancer patients to tolerate higher dosages of chemotherapeutic drugs. It may also play a role in the treatment of AIDS.
What is disputed is whether and to what extent Sloan-Kettering is required to share royalties with the Plaintiffs.
Two agreements are relevant here. Under Sloan-Kettering's Patent Policy, Sloan-Kettering is obligated to share royalties with inventors of patented discoveries on a sliding scale basis.
The Patent Policy expressly disclaims any obligation to share royalties with employees where the Patent office has denied a patent application.
However, the Patent Policy does allow for discretionary awards to inventors of unpatented inventions.
The second relevant agreement is the funding agreement entered into between Sloan-Kettering and the federal government. This Institutional Patent Agreement Governing Grants and Awards between Sloan-Kettering and the Department of Health, Education, and Welfare (the "IPA") applies to inventions arising out of government-funded research which are or may be patentable. The IPA as originally drafted allowed for the sharing of royalties with inventors up to a maximum of 15% of gross royalties. However, the terms of the IPA were modified by the 1980 Bayh-Dole Act. (Act of Dec. 12, 1980, Pub. L. 96-517, § 6(a), 94 Stat. 3019, codified at 35 U.S.C. § 200 et seq.). The Bayh-Dole Act grants non-profit organizations exclusive title to inventions developed through federal funding, and allows them to freely license such inventions for profit so long as such profit is used to fund additional scientific research. The statute at issue provides in relevant part:
Each funding agreement with a . . . nonprofit organization shall contain appropriate provisions to effectuate the following:
(b) a requirement that the contractor share royalties with the inventor.
35 U.S.C. § 202(c)(7)(B).
Even though its patent application for G-CSF was denied, Sloan-Kettering exercised its discretion to share the royalties from the discovery with the team of researchers responsible for the discovery. In accordance with the sliding scale of payments called for under the Patent Policy, Sloan-Kettering distributed a 5% share of the gross royalties
to the five scientists on the granucolyte team. Accordingly, each plaintiff received $ 505,490. Sloan-Kettering also notified the researchers that they would receive additional payments, based on the same formula, from any future royalties from domestic and foreign sales.
The plaintiffs allege that Sloan-Kettering's obligation to share royalties with inventors is non-discretionary by virtue of 35 U.S.C. § 202(c)(7)(B). Furthermore, they argue that even though § 202(c)(7)(B) does not designate any particular percentage or royalties which an institution is required to pay to inventors, the legislative history makes it clear that Congress intended the share to be reasonable and greater than 15%.
The Complaint sets forth five causes of action, the first three of which are based on the statute.
(i) Plaintiffs assert an implied private right of action under the Statute, alleging that Sloan-Kettering has breached its statutorily imposed obligation to share ...