University Of Colorado Foundation, Inc. v. American Cyanamid Co.

Facts

A Dr. Ellenbogen from D asked his friend and long-time professional colleague, Dr. Allen, a professor of medicine, professor of biochemistry, and Director of hematology at the University of Colorado Health Sciences Center, if he would be interested in performing a study to compare the iron absorption in women of two different vitamin supplements for pregnant women. Dr. Allen together with his colleague Dr. Seligman, a hematologist and professor of medicine at the University of Colorado Health Sciences Center, conducted the comparison study. All the studies were paid for by Ps. They eventually discovered that there was no significant inhibition of iron absorption by either 350 mg of calcium in the form of calcium sulfate or 200 mg of calcium in the form of calcium carbonate. They recommended that D reformulate their Materna preparation such that it contains 200 mg of calcium in the form of calcium carbonate and 25 mg of magnesium in the form of magnesium sulfate or magnesium oxide. Once this is done, we will test this preparation versus iron alone, and I would expect that the absorption of iron from the new Materna should be similar to that of iron alone. The Doctors communicated with Dr. Ellenbogen throughout this process, and designed their studies, in part, around D's marketing interests with respect to Stuartnatal, the idea for reformulating Materna, and the research concepts and ideas for reformulating Materna with the appropriate combinations of calcium carbonate and magnesium oxide were entirely Ps'. A new study was conducted using two reformulations of Materna suggested by Ps' work. The reduction in calcium carbonate in the reformulation improved iron absorption to 5.0 mg, which was greater than the 3.5 mg recommended for pregnant women. Another study confirmed that reformulated Materna provided the highest iron absorption of the four prenatal multivitamin/mineral supplements tested. Ps wrote up the results of their studies in an article entitled, 'Inadequate Iron Absorption from Many Prenatal Multivitamin-Mineral Supplements.' Ps submitted a manuscript of the article to the New England Journal of Medicine and sent a confidential copy to Dr. Ellenbogen. Ps claimed credit for the design and conduct of the studies, and the discovery and testing of a range of reformulations to increase iron absorption from prenatal multivitamin/mineral supplements. Dr. Ellenbogen voiced no complaint or objection to this, nor to the fact that he was never mentioned or credited in the manuscript with any of the studies' designs or results. Nevertheless, and within days of receiving the confidential manuscript, Dr. Ellenbogen filled out a D form claiming inventorship of the reformulated Materna, and D began the first steps toward patenting it. Shortly before announcing the reformulation, and without informing the Doctors or the University, D filed a patent application in December of 1981, claiming exclusive rights to the reformulation and naming Dr. Ellenbogen as its sole inventor. D copied significant portions of the confidential manuscript, including Table I and its supporting Figures 1-4 in their entirety, into a patent application. The '634 patent issued from this application in 1984. D enforced its patent rights six times to exclude generic competitors from using the reformulations contemplated by the results and data in Table I and Figures 1-4 of the confidential manuscript. Ps were kept completely out of the loop. When Ps finally obtained a copy of the '634 patent and saw the copied data table and the content based almost entirely on their confidential manuscript, they filed an action against D asserting claims for fraudulent nondisclosure, unjust enrichment, and equitable remedy under the federal patent laws. In a July 7, 1997 verdict, D was found liable for fraud and unjust enrichment and Ps were awarded approximately $45 million in damages. After D appealed the judgment, the court remanded the case for a determination of inventorship under 'federal patent law principles,' stating that if the district court found that the doctors were the inventors under federal law, it should redetermine damages in accordance with this court's opinion. The district court on remand concluded that Ps were the inventors and that Ellenbogen had no role in conceiving the invention. The court granted D a new trial on damages and separately addressed Ps' alternative claims for fraudulent nondisclosure, unjust enrichment, and equitable remedy under federal patent law. n the fraudulent nondisclosure claim, the district court based its compensatory damages award on the 'payment that D would have made to secure Ps' cooperation in filing the required documents with the PTO [Patent and Trademark Office], an assignment of ownership rights and/or an exclusive license from the University.' The district court found D liable to Ps for $22,546,000 in fraud damages (royalties at 6% from issuance of the '634 patent in 1984 until Cyanamid ceased enforcing the '634 patent due to this pending litigation in 1994). To determine the equitable remedy for unjust enrichment, the district court calculated the 'incremental profits' from the sale of Materna attributable to the right to exclude generic competition that D gained from the '634 patent. The district court found that D was unjustly enriched by $23,243,228 at Ps' expense. Finding that the plaintiffs are not entitled to double recovery for their fraud and unjust enrichment claims, the district court only awarded an equitable remedy for unjust enrichment and struck the award of fraud damages. the district court found that Ps' status as equitable titleholders of the '634 patent constituted a separate and independent ground mandating that D disgorge its incremental profits. The district court awarded $500,000 in exemplary damages to each of the Doctors because D's conduct was attended by circumstances of fraud, malice, and willful and wanton conduct. D appealed the liability judgments on the claims for fraudulent nondisclosure, unjust enrichment, equitable remedy under federal patent law, the associated monetary awards, and the district court's award of exemplary damages.

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.