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St. John's University, New York v. Sanford M. Bolton

December 10, 2010

ST. JOHN'S UNIVERSITY, NEW YORK, PLAINTIFF,
v.
SANFORD M. BOLTON, HYGROSOL PHARMACEUTICAL CORP., AND SPIRIDON SPIREAS, DEFENDANTS.



The opinion of the court was delivered by: Nicholas G. Garaufis, United States District Judge.

MEMORANDUM & ORDER

St. John's University ("Plaintiff" or "St. John's" or "the University") brings this action alleging that Sanford Bolton ("Bolton") and Spiridon Spireas ("Spireas") deliberately concealed, for nearly thirteen years, the fact that research they had conducted at the University had yielded patentable inventions to which the University was legally entitled. Bolton, Spireas, and Hygrosol Pharmaceutical Corp. ("Hygrosol") (collectively, "Defendants") move to dismiss the claims raised in the Complaint under Federal Rules of Civil Procedure 12(b)(6) and 9(b) for failure to state a claim for which relief may be granted and failure to plead fraud with particularity.

For the reasons set forth below, Defendants' motions are denied.

I.FACTUAL ALLEGATIONS*fn1

A.The Parties

Bolton was a professor at St. John's from 1980 through his retirement in June 1994.

(Compl. (Docket Entry # 13) ¶¶ 28, 43.) From 1985 through 1991, Bolton was the chairman of the Department of Pharmacology and Administrative Sciences in the St. John's College of Pharmacy and Allied Health Professions. (Id. ¶¶ 43-44.) As part of his responsibilities as an employee and faculty member at St. John's, Bolton conducted research of his own and directed the research of graduate students. (Id. ¶¶ 23-26, 46-47.)

One such graduate student was Spireas, who completed a master's degree at St. John's College of Pharmacy and Allied Health Professions in September 1988, and a doctoral degree at St. John's in February 1993. (Id. ¶¶ 20, 22.) In his capacity as a faculty member, Dr. Bolton advised and directed Spireas in his doctoral dissertation research. (Id. ¶¶ 22-27.)

B.Research into Liquisolid Systems and the Patents at Issue

Spireas's doctoral dissertation research at St. John's involved "liquisolid compacts," also known as "liquisolid systems," which are terms used to describe the powdered forms of liquid medications. (McElroy Decl. (Docket Entry # 37-1) Ex. H at i-ii.)*fn2 Liquid lipophilic and water-insoluble solid drugs can be converted to powdered form "by a simple admixture with selected powder excipients referred to as the carrier (e.g., cellulose) and coating (e.g., silica) materials." (Id. at ii.) This admixture, the "liquisolid system," enhances the drug's "release profile" because "the wetting properties and/or surface of the drug available for dissolution are increased." (Id.) But practical application of this principle had been hampered by "erratic flow and compression properties of the final admixtures." (Id.)

Spireas theorized that "carrier and coating materials can retain only certain amounts of liquid while at the same time maintaining acceptable flow and compression properties." (Id.)

Spireas confirmed this hypothesis through testing, and created a mathematical model to describe the amount of liquid that a particular liquisolid system could retain while maintaining acceptable flow and compression properties. (Id.) In demonstrating the validity of his model, Spireas produced liquisolid tablets of commercially available drugs, which in some cases exhibited "significantly higher drug release rates than those of their commercial counterparts." (Id. at iiiii.)

Beginning in approximately January 1991 Spireas conducted at least some of this research off-campus at facilities owned by a third party, Ciba-Geigy Corporation ("Ciba-Geigy"). (Compl. ¶¶ 78-86.) While St. John's policies generally prohibited graduate students from conducting research off-campus, (McElroy Decl. Ex. F), Bolton helped Spireas obtain special permission from St. John's allowing him to use Ciba-Geigy's facilities for his dissertation research (Compl. ¶¶ 78-89). In a February 1991 letter to St. John's confirming that Ciba-Geigy had given Spireas permission to use its facilities, Ciba-Geigy stated that Spireas had confirmed that "the project will be directed by Dr. Sanford Bolton." (McElroy Decl. Ex. E.) Bolton likewise represented to St. John's in a March 1991 memorandum that he would be directing Spireas's research at Ciba-Geigy. (Compl. ¶ 82.) In the acknowledgments section of his dissertation, Spireas thanked his "major advisor, Dr. Sanford Bolton for his invaluable guidance, unlimited encouragement and support during the course of this project," and Ciba-Geigy, "for offering [him] the unique opportunity to conduct most of this research in their laboratories" and allowing him to use its "'state of the art' equipment." (McElroy Decl. Ex. H at v.) Spireas submitted his doctoral dissertation in December 1992 (id. at i), and it was approved by Bolton in January 1993 (id.). Spireas received his doctorate from St. John's in February 1993 (Compl. ¶ 27). In June 1993, Bolton submitted his notice of retirement to St. John's, and his teaching duties at the University ended in June 1994. (Id. ¶ 24.)

Bolton and Spireas filed their first patent application in June 1996 as joint inventors,*fn3 and their research at the University allegedly resulted in inventions which are the subjects of at least four patents. *fn4 (Id. ¶¶ 29-38; McElroy Decl. Exs. A-D.) Each of the four patent applications was entitled "Liquisolid systems and methods of preparing same," and Bolton and Spireas were both listed as inventors for all but one of the resulting patents (collectively, the "Liquisolid Patents"). (Compl. ¶¶ 29-32.)

C.Hygrosol and Defendants' Efforts to License the Liquisolid Patents

Bolton and Spireas formed Hygrosol in January 1997 and have been its only shareholders from its inception. (Id. ¶¶ 156, 161-62, 313.) Bolton and Spireas assigned all four Liquisolid Patents to Hygrosol, allegedly without fair consideration. (Id. ¶¶ 156-57, 162, 313, 316.) Hygrosol then entered into agreements to license one or more of the Liquisolid Patents to a third party not named as a party in this action. (Id. ¶ 158.) Hygrosol has received at least $100 million in revenue from the licensing agreements, which has been transferred to Bolton and Spireas, and most of which Defendants received after January 2006. (Id. ¶¶ 159-60, 162.)

D.The Agreements

St. John's was a party to four agreements with Bolton and Spireas (collectively, the "Agreements") which determined the rights and interests of the parties in intellectual property created using St. John's facilities and other resources. These Agreements were: (1) the Patent Policy; (2) the Bolton Research Agreement; (3) the Spireas Fellowship Agreements; and (4) the Ciba-Geigy Agreement.

1. The Patent Policy

The St. John's College of Pharmacy and Allied Health Professions had a Patent Policy (the "Patent Policy") that governed "the ownership of inventions resulting from research conducted by St. John's faculty and students." (Id. ¶ 13.) The Patent Policy "was applicable to all faculty members, research/teaching fellows, graduate students, and doctoral students, at the St. John's College of Pharmacy and Allied Health Professions" from before 1984 to 1994. (Id. ¶ 15.) The Patent Policy applied to both Bolton and Spireas, both had notice of the Patent Policy, Spireas agreed to the Patent Policy as a condition of his enrollment as a graduate student, and both Bolton and Spireas agreed to it as a condition of their employment by St. John's.*fn5 (Id. ¶¶ 16-19, 45, 71-74.)

Under the Patent Policy, Bolton and Spireas were contractually obligated to assign to St. John's all patentable inventions, discoveries, processes, uses, products, or combinations resulting, in whole or in part, from any of (a) the use of the laboratories or other facilities of [St. John's], (b) services rendered by faculty to [St. John's], (c) research conducted by graduate students or doctoral candidates under the direction of [St. John's] faculty, or (d) any related or predicate research . . . . (Id. ¶¶ 14, 46, 51, 75.)

2. The Bolton Research Agreement

In addition to the Patent Policy, Bolton signed an agreement with St. John's in June 1984 that governed the financial relationship between St. John's and Bolton regarding his research activities at St. John's (the "Bolton Research Agreement"). (Id. ¶ 47; Lundin Decl. (Docket Entry ## 36-1 and 36-2) Ex. 3.)*fn6 The Agreement restated Bolton's obligation under the Patent Policy to assign to St. John's all patentable inventions "resulting from research and research related services performed by Bolton at [St. John's]." (Compl. ¶¶ 47-48; Lundin Decl. Ex. 3.) However, the Agreement contained an additional clause in which the parties agreed that Bolton and St. John's would split the revenues "derived from the sale or licensing of such inventions, patent applications and patents . . . with (a) 30% for St. John's University and (b) 70% for Dr. Bolton and any student or other person whom Dr. Bolton determines has an interest herein." (Lundin Decl. Ex. 3.) The Bolton Research Agreement further obligated Bolton to "endeavor with reasonable diligence to secure the necessary patents and use his efforts to introduce such inventions, patent applications, and patents into public use and secure a reasonable revenue therefrom by issuing licenses thereunder or otherwise." (Lundin Decl. Ex. 3.)

3. The Spireas Fellowship Agreements

Spireas also executed an agreement with St. John's in April 1988, under which Spireas was granted a paid doctoral fellowship with St. John's in exchange for agreeing to assign to St. John's all patentable inventions resulting from his research. (Compl. ¶¶ 76-77.) Spireas signed a second such agreement in April 1989, which continued his doctoral fellowship (collectively the "Spireas Fellowship Agreements"). (Id.)

4. The Ciba-Geigy Agreement

In 1991, Bolton and Spireas facilitated an agreement between Ciba-Geigy and St. John's (the "Ciba-Geigy Agreement") that permitted Spireas to conduct some of his dissertation research using Ciba-Geigy's facilities while working under Bolton's supervision. (Id. ¶¶ 78-86.) At Bolton's and Spireas's request, Ciba-Geigy sent a letter to St. John's, including language that reiterated the terms of the Patent Policy. (Id.; McElroy Decl. Ex. E.) St. John's consented to the arrangement on the condition that Ciba-Geigy acknowledge and not interfere with St. John's rights to any fruits of the research under applicable St. John's policies and agreements. (Compl. ¶¶ 78-86.)

E.Defendants' Allegedly Fraudulent Scheme

To summarize, Plaintiff claims that it entrusted Bolton and Spireas with the resources they needed to make the scientific discoveries from which the Liquisolid Patents are derived. Moreover, St. John's support was expressly conditioned on Bolton's and Spireas's assent to this bargain: resources for intellectual property rights. But neither Bolton nor Spireas ever informed St. John's that their research had resulted in patentable inventions, the issuance of the Liquisolid Patents, or royalties derived from licensing the Liquisolid Patents. (Id. ¶¶ 115-54, 163-65.) In fact, shortly after Spireas graduated from St. John's, and shortly before Bolton and Spireas filed their first patent application, Bolton resigned from the University. (Id. ¶ 155.) Plaintiff alleges that Bolton left the University because he believed it would be easier to conceal the success of his research from St. John's if he was no longer an employee. (Id.) Plaintiff further alleges that Bolton's and Spireas's purpose in forming Hygrosol and assigning the Liquisolid Patents to it was to prevent Plaintiff from later asserting its contractual rights to the ownership of the Liquisolid Patents and its share of the royalties derived from licensing them. (Id. ¶¶ 157-62, 314-316.)

II.DISCUSSION

A.Legal Standard Applicable to the Motions to Dismiss

1. General Standard under Rule 12(b)(6)

The purpose of a motion to dismiss for failure to state a claim under Rule 12(b)(6) is to test the legal sufficiency of a plaintiff's claims for relief. Patane v. Clark, 508 F.3d 106, 112 (2d Cir. 2007). In reviewing the complaint, the court accepts as true all allegations of fact, and draws all reasonable inferences from these allegations in favor of the plaintiff. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). A complaint is legally sufficient to survive a motion to dismiss if it contains "sufficient factual matter, accepted as true, 'to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949. "[M]ere 'labels and conclusions' or 'formulaic recitation[s] of the elements of a cause of action will not do'; rather, the complaint's '[f]actual allegations must be enough to raise a right to relief above the speculative level.'" Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 555).

In deciding a motion to dismiss under Rule 12(b)(6), the court may, at its discretion, consider matters of which judicial notice may be taken, as well as documents extrinsic to the complaint where a plaintiff "relies heavily upon [the documents] terms and effect, [thus] render[ing] the document integral to the complaint." Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002) (internal quotations omitted); see also Republic of Colombia v. Diageo N. Am. Inc., 531 F. Supp. 2d 365, 450-51 (E.D.N.Y. 2007).

2. Standard for Assessing Statute of Limitations Defense under Rule 12(b)(6) Under New York law, the statute of limitations is an affirmative defense, and the defendant bears the burden of proving that the plaintiff's claim is untimely. Bano v. Union Carbide Corp., 361 F.3d 696, 710 (2d Cir. 2004). "The defendant's normal burden includes showing when the cause of action accrued." Id. Because the burden is on the defendants to prove their affirmative defense, "[t]he pleading requirements in the Federal Rules of Civil Procedure . . . do not compel a litigant to anticipate potential affirmative defenses, such as the statute of limitations, and to affirmatively plead facts in avoidance of such defenses." Abbas v. Dixon, 480 F.3d 636, 640 (2d Cir. 2007).

Therefore, on a motion to dismiss under Rule 12(b)(6), a claim may be dismissed as time-barred under the statute of limitations only if the factual allegations in the complaint clearly show that the claim is untimely. Harris v. City of New York, 186 F.3d 243, 250 (2d Cir. 1999); see also Davis v. Indiana State Police, 541 F.3d 760, 763 (7th Cir. 2008) (concluding that the Supreme Court's opinion in Twombly "did not revise the allocation of burdens concerning affirmative defenses," and restating the rule that "complaints need not anticipate, and attempt to plead around, potential affirmative defenses"). Dismissal is proper only when, drawing all reasonable inferences in favor of the plaintiff, the court concludes that the plaintiff's own factual allegations prove the defendant's statute of limitations defense. For a defendant's statute of limitations arguments to succeed, the plaintiff must "plead[] itself out of court." In re marchFIRST Inc., 589 F.3d 901, 904-05 (7th Cir. 2009).

B.Plaintiff's Claims and the Motions to Dismiss

Plaintiff's 61 page Complaint states 15 overlapping causes of action in its 318 numbered paragraphs. Those causes of action can be grouped into nine categories: (1) Bolton and Spireas violated their contractual obligations under the Agreements by failing to assign the Liquisolid Patents to the University; and, (2) in the case of Bolton, by failing to share with the University revenues he received from licensing the Liquisolid Patents (id. ¶¶ 198-250); (3) Bolton and Spireas tortiously breached their fiduciary duties to the University (id. ¶¶ 251-59, 268-75); (4) Bolton and Spireas fraudulently failed to disclose the value and patentability of their research at St. John's (id. ¶¶ 178-97); (5) Spireas aided and abetted Bolton's breaches of his fiduciary duty to St. John's (id. ¶¶ 260-67); (6) Spireas tortiously interfered with Bolton's contractual obligations to St. John's (id. ¶¶ 276-82); (7) Bolton's and Spireas's assignments of the Liquisolid Patents to Hygrosol were fraudulent conveyances intended to prevent St. John's from asserting its rights to the Liquisolid Patents under the Agreements (id. ¶¶ 312-18); (8) Defendants have been unjustly enriched at the expense of St. John's (id. ¶¶ 283-94); and (9) Defendants have converted property to which St. John's has superior rights of possession (id. ¶¶ 295-305). Plaintiff seeks equitable relief in the form of an order of specific performance for Defendants to assign the Liquisolid Patents to St. John's, and an order directing an equitable accounting of the Defendants' books and assets to determine the revenues obtained from the Liquisolid Patents. Plaintiff also seeks compensatory and punitive monetary damages.

In their two motions to dismiss, Defendants generally assert two types of defenses:

(1) Plaintiff's allegations of fact are insufficient to state a claim for relief under Federal Rule of Civil Procedure 12(b)(6) and, in some cases, Rule 9(b); and (2) Plaintiff's claims are untimely under the relevant statutes of limitations. Plaintiff responds that its allegations of fact entitle it to equitable tolling of the statutes of limitations. (Opp. at 41-43.)

Jurisdiction in this case is premised on diversity of citizenship, and the parties all rely on New York law, the law of the forum state, in their submissions. See Merrill Lynch Interfunding, Inc. v. Argenti, 155 F.3d 113, at 121 n.5 (2d Cir. 1998). Furthermore, it appears from the Complaint that much of the conduct relevant to this action-e.g., the execution of the Agreements at issue-occurred in New York. Thus, the court applies New York law to Plaintiff's claims and Defendants' defenses. Konikoff v. Prudential Ins. Co. of America, 234 F.3d 92, 98 (2d Cir. 2000).

C.Breach of Contract

Plaintiff alleges that Bolton and Spireas breached two independent contractual obligations: (1) Bolton's and Spireas's obligation to assign the Liquisolid Patents to St. John's; and (2) their obligation to share the Liquisolid Patents' licensing royalties with St. John's. Under New York law, "[t]o make out a viable claim for breach of contract a complaint need only allege

(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages." Eternity Global Master Fund Ltd. v. Morgan Guaranty Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (quotation omitted). "The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent. . . . [A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms." Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). The parties have submitted only one of the Agreements to the court, the Bolton Research Agreement. (See Lundin Decl. Ex. 3.) Plaintiff has also submitted a letter to St. John's from Ciba-Geigy which apparently memorializes the Ciba-Geigy Agreement. (See McElroy Decl. Ex. E.) Therefore the court cannot interpret the Patent Policy, Ciba-Geigy Agreement, or Spireas Fellowship Agreements and must rely on Plaintiff's allegations of fact to determine whether Plaintiff has alleged Defendants breached those Agreements.*fn7

1. Breach of the Assignment Obligations

Defendants argue that Plaintiff has failed to sufficiently allege that Bolton and Spireas breached an agreement to assign patentable inventions to St. John's. (See Spireas's and Hygrosol's Mem. ("Spireas Mem.") (Docket Entry # 41) at 5-7.) St. John's has pleaded the existence of Bolton's and Spireas's contractual duty to assign patentable inventions derived "in whole or in part" from research conducted at St. John's under the Patent Policy and the other Agreements. St. John's has also pleaded that it performed its obligations under the Agreements by employing Bolton and Spireas, enrolling Spireas as a graduate student, and giving both Bolton and Spireas the benefit of its resources. St. John's has further pleaded that the Liquisolid Patents are based on inventions derived "in whole or in part" from research performed at St. John's and subject to the Agreements, and that Bolton and Spireas have not assigned the Liquisolid Patents to St. John's. Finally, St. John's has pleaded that it has been damaged because it has not received the Liquisolid Patents and the accompanying royalty revenues from licensing the Liquisolid Patents. Under New York law, St. John's has sufficiently alleged that Bolton and Spireas breached their contractual obligations to assign patentable inventions to it.

Bolton argues that "the Complaint does not contain any plausible allegation that Dr. Bolton conducted research at [St. John's] relating to the patented invention; he did not."

(Bolton's Reply Mem. ("Bolton Reply") (Docket Entry # 38) at 6; Bolton's Mem. ("Bolton Mem.") (Docket Entry # 36-3) at 17-18.) This argument is without merit. In its brief and in side-by-side comparisons of portions of the initial '834 Patent with sections of the dissertation (McElroy Decl. Ex. G), St. John's points out that significant material in the '834 Patent is literally copied from Spireas's dissertation (Opp. at 3-4). Furthermore, Spireas was a graduate student working under Bolton's direction when Spireas conducted the research presented in the dissertation, and Bolton assisted Spireas in obtaining St. John's permission to do some of the research off campus at Ciba-Geigy with the express understanding that such off-campus work would not impair St. John's rights to the fruits of that research.

Spireas argues in the alternative, and for the first time in his Reply, that even if he was obligated to assign the '834 and '550 Patents, the '337 and '339 Patents are unrelated to them and the "contractual duty to assign or fiduciary duty to disclose . . . the invention claimed in the '834 and '550 patents . . . could not, as a matter of law, extend to the '337 and '339 Patents." (Spireas's and Hygrosol's Reply Mem. ("Spireas Reply") (Docket Entry # 42) at 8-9.) Spireas contends that the '337 and '339 Patents, which are continuations-in-part ("CIPs") of the '834 and '550 Patents, are legally unrelated to the '834 and '550 Patents, simply because they include "additional subject matter not present in earlier filed patents." (Spireas Reply at 9-10 (emphasis in original).)

Spireas's argument fails for two reasons. First, St. John's has alleged that the '337 and '339 Patents were derived in whole or in part from research conducted at St. John's. Spireas's argument that the '337 and '339 Patents are unrelated to the '834 and '550 Patents simply does not respond to this allegation. Second, Spireas's claim that they CIPs are legally unrelated to the '834 and '550 Patents misstates the law. While a CIP must include subject matter not contained in the earlier patent, it must also contain subject matter contained in the earlier patent. By definition, a CIP "is an application filed during the lifetime of an earlier nonprovisional application, repeating some substantial portion or all of the earlier nonprovisional application and adding matter not disclosed in the said earlier nonprovisional application." Manual of Patent Examining Procedure ("MPEP") § 201.08 (8th ed., Rev. 8, July 2010) (emphasis added). The relevant question for purposes of St. John's claims is whether the subject matter of the '337 and '339 Patents include research derived in whole or in part from research conducted at St. John's. If St. John's is entitled to assignment of the '834 and '550 patents because their subject matter discloses an invention that is the product, in whole or in part, of research conducted at St. John's, it is possible that the "substantial portion" of the '834 and '550 Patents contained in the '337 and '339 Patents is also derivative of research performed at St. John's. Drawing all reasonable inferences in favor of St. John's, the possibility that the '337 and '339 Patents are unrelated to the '834 and '550 Patents is plainly insufficient for the court to conclude on a motion to dismiss that the '337 and '339 Patents are not derived from research conducted at St. John's.*fn8

Bolton also argues that because he was not listed as an inventor of the '339 Patent St. John's has no breach of contract or fiduciary duty claim against him for his actions in relation to that patent.*fn9 (Bolton Mem. at 1.) St. John's alleged contract rights relate to patentable inventions or discoveries derived in whole or in part from research conducted at St. John's-not just patents. Therefore, it is irrelevant whether Bolton was listed as an inventor on the face of the '339 Patent. HIF Bio, Inc. v. Yung Shin Pharmaceuticals Indus. Co., Ltd., 600 F.3d 1347, 1354-57 (Fed. Cir. 2010) (determination of inventorship not essential to resolution of state law claims for conversion, tortious interference with contract, fraud, unjust enrichment, or breach of implied contract where plaintiff alleges non-patent facts entitling it to relief).

2. Breach of the Revenue-Sharing Obligation

Defendants also argue that Plaintiff has failed to sufficiently allege that Bolton and Spireas breached an agreement to share licensing royalties with St. John's. The terms of the Bolton Research Agreement impose express contractual duties on St. John's and Bolton to share the revenues derived from the sale or licensing of inventions or patents resulting in whole or in part from his research related services at St. John's. (Lundin Decl. Ex. 3.) St. John's has pleaded that it performed its obligations under the Bolton Research Agreement by employing Bolton and giving Bolton the benefit of its resources. St. John's has further pleaded: that the Liquisolid Patents are based on inventions derived in whole or in part from Bolton's research related services at St. John's; that Bolton has obtained royalties from licensing the Liquisolid Patents; and that Bolton has not shared any of those licensing revenues with St. John's. Finally, St. John's has pleaded that it has been damaged because it has not received its share of royalty revenues. Under New York law, St. John's has sufficiently alleged that Bolton breached his contractual obligation under the Bolton Research Agreement to share patent-licensing royalties with it.

Bolton argues that St. John's rights to revenue sharing can only be derivative of St. John's right to assignment of the Liquisolid Patents, and are thus dependent on St. John's ability to establish its claims for breach of the patent-assignment obligation. (Bolton Mem. at 8-9.) Similarly, Bolton argues that the revenue-sharing provision of the Bolton Research Agreement must be read in conjunction with the assignment provision as a residual protection of only Bolton's interest in the royalty revenues. (Bolton Reply at 1-3.) Bolton contends that because St. John's was entitled to full ownership of the patent, including the right to all licensing royalties, the parties contemplated only that St. John's would share revenues with Bolton, not that Bolton would share royalties with St. John's. (Id.)

The revenue-sharing term in the Bolton Research Agreement was a separate contractual duty that applied independent of Bolton's performance of the assignment obligation. Because the court interprets the assignment obligation under the Agreements to impose a duty of future performance on Bolton and Spireas, rather than effect an automatic assignment, (see infra Part II.C.4.a), it is reasonable to infer that St. John's and Bolton anticipated there might be a gap between the issuance of a patent to Bolton and the subsequent assignment of the patent to St. John's. Drawing all reasonable inferences in favor of Plaintiff, the court interprets the revenue-sharing provision to protect both St. John's and Bolton's interests in receiving the stated revenues-St. John's share prior to assignment, and Bolton's share following assignment. Indeed, the revenue-sharing term does not specifically state which party is obligated to make the royalty payments, it states: "It is further understood and agreed that a percentage of the revenue derived from the sale or licensing of such inventions, patent application and patents, shall be shared with (a) 30% for St. John's University and (b) 70% for Dr. Bolton, and any student or other person whom Dr. Bolton determines has an interest herein, their heirs, assigns and personal representatives." (Lundin Decl. Ex. 3.) Bolton's obligation to share licensing royalties with St. John's is not dependent on St. John's right to have Bolton assign the Liquisolid Patents to it.

While the Bolton Research Agreement clearly obligates Bolton to share royalty payments with St. John's, Plaintiff has not pleaded the existence of a similar contract term independently obligating Spireas to share royalty revenues with St. John's. Furthermore, St. John's does not allege facts sufficient to infer that Spireas had an independent contractual duty under the Patent Policy, Spireas Fellowship Agreements, or Ciba-Geigy Agreement to share royalty revenues with St. John's. To the extent Spireas is under an obligation to share ...


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