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IFM Therapeutics, Inc. v. Lycera Corp.

United States District Court, D. Delaware

August 31, 2018

IFM THERAPEUTICS, INC., FIRST WAVE BIO, INC., GARY D. GLICK, and LUIGI FRANCHI Plaintiff,
v.
LYCERA CORPORATION, Defendant.

          David A. Jenkins, Neal C. Belgam, and Eve H. Ormerod, SMITH, KATZENSTEIN & JENKINS LLP, Wilmington, DE, Robert P. Haney, Jr. and Douglas S. Curran, COVINGTON & BURLING LLP, New York, NY Attorneys for Plaintiff.

          Garrett B. Moritz and Benjamin J. Schladweiler, ROSS ARONSTAM & MORITZ LLP, Wilmington, DE, Michael K. Ng and Daniel A. Zaheer, KOBRE & KIM LLP, San Francisco, CA Angela Colt, KOBRE & KIM LLP, New York, NY Attorneys for Defendant.

          MEMORANDUM OPINION

          STARK, U.S. DISTRICT JUDGE.

         Pending before the Court are Plaintiffs IFM Therapeutics, Inc. ("IFM"), First Wave Bio, Inc. ("First Wave"), Gary D. Glick ("Glick"), and Luigi Franchi's ("Franchi") (collectively, "Plaintiffs") Motion for Partial Summary Judgment (D.I. 200) and Defendant Lycera Corporation's ("Defendant" or "Lycera") Motion for Summary Judgment (D.I. 194).

         For the reasons discussed below, the Court will grant in part Plaintiffs' partial motion (D.I. 200) and deny Lycera's motion (D.I. 194).

         I. BACKGROUND

         In 2006, Glick, a biopharmaceutical scientist, founded Lycera, a biopharmaceutical research company that develops treatments for diseases like cancer and autoimmune disorders. (See D.I. 2 ¶¶ 17-18; D.I. 20 ¶ 2)[1] Franchi, also a biopharmaceutical scientist, joined Lycera as a research scientist in 2012. (See D.I. 25 ¶ 5) Both Glick and Franchi are professors at the University of Michigan ("UM") and were throughout their tenure at Lycera. (D.I. 2 ¶ 17; D.I. 25 ¶2)

         In the spring of 2015, after nine years with the company, Glick decided to resign from Lycera. (See D.I. 2 ¶ 19) Leading up to his departure, Glick entered into a Confidential Information and Invention Assignment Agreement with Lycera, which was to be retroactively effective as of April 7, 2009. (See D.I. 196 Ex. D) ("Glick CIIAA") Pursuant to that agreement, Glick undertook numerous obligations to Lycera, including "to hold [Lycera's confidential information] in the strictest confidence" and to promptly disclose and assign his interest in "all inventions ... developments, concepts, [or] know-how" resulting from his work at the company to Lycera. (Id. ¶¶ 4(a), 5(b)) Franchi had previously executed a similar agreement with Lycera. (See D.I. 20 Ex. 7) ("Franchi PIIA")

         Glick and Lycera also executed a separation agreement and release with an effective date of June 12, 2015. (See D.I. 20 Ex. 5) ("2015 Glick Agreement") In that agreement, Lycera granted Glick and his assigns a broad release of all claims against them "occurr[ing] up until and including [June 12, 2015]." (Id. ¶ 7) Glick and Lycera also entered into a consulting agreement, which set forth four categories of research Glick agreed not to pursue upon leaving Lycera. (See D.I. 32 Ex. 8 ¶ 3) None of the four categories included niclosamide, an off-patent drug that Glick informed Lycera he intended to study after leaving the company. (See id.; see also D.I. 11 Ex. A)

         On July 27, 2015, shortly after Glick left Lycera, Franchi followed. (See D.I. 196 ¶¶ 17-18) By the end of the summer, Glick and Franchi's research had progressed such that on September 1, 2015, Glick and Franchi filed a provisional patent application related to a new use for niclosamide to treat gastrointestinal autoimmune diseases. (See D.I. 2 ¶ 53) Glick and Franchi assigned their rights to this intellectual property to IFM and First Wave, companies Glick and Franchi had founded shortly after leaving Lycera. (See Id. ¶ 54)

         Meanwhile, Lycera and UM, where Glick and Franchi remained faculty members, had completed after substantial negotiations and executed a renewed licensing agreement for certain Glick-invented, UM-owned patents. (See Id. Ex. 1) ("2016 Agreement") As part of the 2016 Agreement, Lycera granted an extremely broad release to Glick, Franchi, and their assigns[2]:

[Lycera] hereby fully, finally and forever release[s] ... (in reliance upon the certifications set forth as Exhibit A made by Luigi Franchi [and] Gary D. Glick ...) [Franchi and Glick], and their . .. assigns . . . from, and agree[s] not to sue concerning, any and all claims, demands ... causes of action, damages . .. losses, interest, . . . and liabilities of any kind or nature whatsoever arising from or relating to any matters of any kind . . . presently known or unknown, suspected or unsuspected, reasonably discoverable or not, present, fixed or contingent that... [Lycera] ever had, now has or could have had against [Franchi and Glick and their assigns] from the beginning of the world to [September 7, 2016], regardless of when such claim, demand . . . cause of action, ... damage . .. loss, [or] interest... accrues or ripens.

(Id. ¶ 2(b)) In return, Lycera was granted the same broad release from UM, Glick, and Franchi. (See Id. at ¶ 2(a), 9-10 of 61)

         Notably, as shown above, Lycera granted the release "in reliance" upon certain "certifications" from Glick and Franchi. (Id. ¶ 2(b)) These certifications included a representation and warranty from both Glick and Franchi that neither had breached his confidentiality and invention assignment agreements with Lycera[3] (See Id. at 9-10 of 61) In turn, Lycera warranted that it had no knowledge of any such breach:

To its actual and constructive knowledge, [Lycera] represents and warrants that as of [September 7, 2016], none of Luigi Franchi, Gary D. Glick, or [Glick and Franchi's business partner] Anthony W. Opipari, Jr. has breached any of the agreements referred to in Exhibit A.

(Id. ¶4)[4]

         In March and May of 2017, after Glick and Franchi's niclosamide patent application was published, Lycera sent Glick and Franchi a series of letters requesting information about the patent application and demanding that Glick and Franchi assign their patent rights in the niclosamide invention to Lycera. (See D.I. 2 Exs. 2-3, 7-8)[5] Lycera threatened to sue if its demands were not met. (See Id. Ex. 2 at 4, Ex. 3 at 5)

         On May 25, 2017, Plaintiffs sued Lycera for (among other things) breach of contract, a declaratory judgment, and indemnification, contending Lycera's demand letters and threatened litigation amount to an actionable repudiation of the 2016 Agreement. (See generally D.I. 2) Plaintiffs sought a temporary restraining order, which the Court denied, and a preliminary injunction, which Plaintiffs later withdrew. (See D.I. 4, 37, 5, 40)

         On June 16, 2017, Lycera filed its answer and asserted counterclaims against Plaintiffs (D.I. 51), which Plaintiffs answered on July 10, 2017 (D.I. 93). Thereafter, the parties filed the pending cross-motions for summary judgment. (D.I. 194, 200) The Court heard oral argument on January 17, 2018. (See D.I. 254 ("Tr."))

         II. LEGAL STANDARDS

         Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986). An assertion that a fact cannot be - or, alternatively, is - genuinely disputed must be supported either by citing to "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials," or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1)(A)-(B). If the moving party has carried its burden, the nonmovant must then "come forward with specific facts showing that there is a genuine issue for trial." Matsushita, 475 U.S. at 587 (internal quotation marks omitted). The Court will "draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

         To defeat a motion for summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586; see also Podobnik v. U.S. Postal Serv., 409 F.3d 584, 594 (3d Cir. 2005) (stating that party opposing summary judgment "must present more than just bare assertions, conclusory allegations or suspicions to show the existence of a genuine issue") (internal quotation marks omitted). The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment;" a factual dispute is genuine only where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50 (internal citations omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (stating entry of summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial"). Thus, the "mere existence of a scintilla of evidence" in support of the nonmoving party's position is insufficient to defeat a motion for summary judgment; there must be "evidence on which the jury could reasonably find" for the nonmoving party. Anderson, 477 U.S. at 252.

         III. DISCUSSION

         A. The 2016 Agreement

         Plaintiffs contend the entire dispute among the parties can be disposed of based on the 2016 Agreement. (See generally D.I. 201) It is undisputed that Michigan law governs the 2016 Agreement. (See D.I. 201 at 12 n.9; D.I. 195 at 18 (applying Michigan law); see also Rubin v. Gallagher, 292 N.W. 584, 586 (1940) ("The validity and construction of a contract are controlled and to be determined by the laws of the situs, or place where the contract was entered into."))

         Under Michigan law, the Court's principal duty in interpreting a contract is to give effect to the parties' intentions. See Quality Prods. Concepts Co. v. Nagel Precision, Inc.,666 N.W.2d 251, 259 (Mich. 2003). "The scope of a release is governed by the intent of the parties as it is expressed in the release. If the text in the release is unambiguous, the parties' intentions must be ascertained from the plain, ordinary meaning of the language of the release." Cole v. LadbrokeRacing Mich., Inc.,614 N.W.2d 169, 176 (Mich. Ct. App. 2000). If a contract is ambiguous, a court may a court rely on extrinsic evidence to determine a provision's meaning. See Shay v. Aldrich,7 ...


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