Delaware Business Litigation Report

Licensor's Action to Recover Royalties Overcomes Motion to Dismiss in Superior Court

Boyce Thompson Institute For Plant Research v. MedImmune, Inc., C.A. No. 07C-11-217 JRS (Del. Super. May 19, 2009) (applying New York law per choice of law provision)

This opinion discusses some interesting contractual interpretation and jurisdictional issues arising out of a licensing agreement.  The dispute arose because the licensees denied any obligation to pay royalties to the licensor for products they are manufacturing in a country where, they claim, the licensor does not hold a patent.

The Superior Court found that the contract was ambiguous on whether “covered” products included those that were protected by the licensor anywhere or only those that were protected by a patent in the locations where they were manufactured.  In any case, the Court denied the licensees’ motion to dismiss on the basis that there was no evidence presented to rule out the possibility that the licensees are, in fact, infringing on the patent by their acts in this other country.

The Court also raised the issue of whether it had subject matter jurisdiction to decide the case.  While the Court deferred resolution of the issue, it noted that, if the contract claim requires the Court to determine whether the patent was infringed, then it would likely follow that patent law is a “necessary element” of the breach of contract claim and the federal courts have exclusive subject matter jurisdiction.

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