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New York University v. Galderma Laboratories, Inc.

United States District Court, S.D. New York

July 31, 2015

NEW YORK UNIVERSITY, Plaintiff,
v.
GALDERMA LABORATORIES, INC., Defendant.

ORDER AND OPINION GRANTING MOTION BY NYU FOR PARTIAL SUMMARY JUDGMENT AND PROVIDING FOR PARTIAL FINAL JUDGMENT

ALVIN K. HELLERSTEIN, District Judge.

Plaintiff New York University ("NYU") sues Defendant Galderma Laboratories, Inc. ("Galderma") for breach of a Research, License, and Option Agreement ("Agreement"), executed on December 28, 1999 by their respective predecessors in interest. On October 31, 2013, resolving NYU's motion for summary judgment, I held that Galderma, as licensee of patents assigned to and owned by NYU, had to pay royalties to NYU under the Agreement for sales of Licensed Products, and that the drug Oracea was such a Licensed Product. I entered partial judgment against Galderma in the amount of $1, 544, 273.59 plus interest until paid of 7.282% (the contract rate, two percent over the prime rate). The judgment reflected unpaid royalties through November 20, 2013 in the amount of $1, 365, 545.18, and attorneys' fees authorized by their agreement through October 31, 2013 in the amount of $178, 728.41. (Doc. No. 123, Dec. 3, 2013). I deferred execution until final judgment. The judgment remains unpaid.

On June 2, 2015, NYU moved for partial summary judgment to update its damage recoveries against Galderma through December 31, 2014, and to compel production of Galderma's royalty reports for sales of Oracea between November 27, 2013 and December 31, 2014. NYU's motion asked also for a finding that Galderma repudiated the contract, and for a finding of anticipatory breach. For the reasons stated below, NYU is entitled to judgment for accrued money damages, and an entry of partial final judgment pursuant to Fed.R.Civ.P. 54(b).

ROYALTY REPORTS FOR SALES OF ORACEA

The Research, License, and Option Agreement (the "Agreement") to which NYU and Galderma have become parties grants Galdmera an exclusive worldwide license to use and practice certain NYU patents "for the development, improvement, marketing, manufacture, use and sale of Licensed Products." (Agreement at §l(g).) A "Licensed Product" under the Agreement is any product within the field covered by a claim of any unexpired NYU patents which have not been disclaimed "or held invalid by a court of competent jurisdiction from which no appeal can be taken." (Agreement at §l(h).)

At issue are the "Amin Patents, " two patents licensed to Galderma by NYU pursuant to the Agreement. (Dkt. No. 1 at ¶ 24.) Appendix I of the Agreement, which lists patent applications that were pending at the time of the Agreement's execution and which were to be licensed pursuant to the Agreement, includes: "Method of Using Tetracycline Compounds for Inhibition of Nitric Oxide Production." (Agreement at § 1(e), App'x 1.) The resulting Amin Patents concern two methods of inhibiting nitric oxide production using tetracycline compounds. (U.S. Patent No. 5, 789, 395; U.S. Patent No. 5, 919, 775.) The Amin Patents support Galderma's brand drug, Oracea, which is approved by the FDA for the treatment of inflammatory lesions of rosacea in adults. ( Id. at ¶ 25.)

Pursuant to the Agreement, Galderma is obligated to pay royalties to NYU with respect to each Licensed Product. ( See Agreement at § 7.) Under the Agreement, the year is divided into two periods, ending on June 30 and December 31, and Galderma is obligated to "submit to [NYU] a full and detailed report of royalties... due" to NYU "not later than ninety (90) days after" the end of each period. (Agreement at § 7(b).) Payment for each half-year period is to accompany each royalty report. ( Id. ).

Thus, Galderma owed royalty reports for sales of Oracea 90 days after December 31, 2013, June 30, 2014, and December 31, 2014; or on March 31, 2014, September 28, 2014, and March 31, 2015, respectively. Galderma has not complied, with either the reports or the amounts due as stated by the reports. Galderma's failures constitute breaches of the Agreement.

Galderma shall cure its default within 30 days of the issuance of this order. If Galderma fails to produce the reports for the periods ended December 31, 2013, June 30, 2014, and December 31, 2014, providing the information according to the requirements provided by Section 7 of the Agreement, NYU may move for appropriate relief, including appropriate sanctions which may include the appointment of a receiver authorized and empowered to perform the inspection of Galderma's books, records, and documentation as provided by Section 7 of the Agreement.

The Agreement also requires Galderma to remit royalties due at each reporting period, to accompany each royalty report. (Agreement at §7(b).) As I held, "royalties are due from May 16, 2012 until either the License Agreement expires or a time comes, if ever, that there is a holding that the Amin patents held by NYU are invalid from which no appeal could be taken." (Dkt. No. 120 at 1; Agreement at §l(h).) Galderma has not complied with this requirement. Galderma's failures constitute breaches of the Agreement.

Galderma explains its failure to provide royalty reports, and to remit royalties due according to such reports, by the same arguments as those held invalid in my orders of April 17, 2013, and October 31, 2013. I hold them invalid again, and for the same reasons.

On April 17, 2013, I granted NYU's motion for partial summary judgment as to Galderma's liability on Count I, holding that Oracea is a "Licensed Product within the unambiguous definition provided by" the Agreement. ( See Dkt. No. 44.) In the April, 2013 Order, I further held that the extent of royalties to be paid was a question of fact. ( Id. ) On October 31, 2013, I again rejected Galderma's repetition of its contentions and held that unpaid royalties through November 20, 2013 amounted to $1, 365, 545.16, and that interest was to run at the contract rate of 7.282 percent. (Dkt. No. 120; Dkt. No. 123.)

ATTORNEYS' FEES

NYU seeks to recover the attorneys' fees it incurred after my October 31, 2013 Order in connection with the Amin patent's litigation in the United States District court for the District of Delaware and in the U.S. Court of Appeals for the Federal Circuit. Galderma does not dispute the amount ...


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