Bristol-Myers Squibb Co. v. Matrix Laboratories Ltd.
586 F. App'x 747
2d Cir.2014Background
- BMS (patent owner of atazanavir) granted Matrix an Immunity From Suit Agreement (IFSA) allowing Matrix to manufacture/sell atazanavir within a defined "Territory" without IP suit.
- Section 3.1(d) of the IFSA prohibits Matrix from selling, distributing, or otherwise transferring product to any third party it reasonably believes may export the product outside the Territory where patents exist.
- Shortly after the IFSA, Matrix sold atazanavir to the Pan American Health Organization (PAHO) and shipped it to Venezuela, a country outside the Territory where BMS has patents and sales.
- BMS sued in the S.D.N.Y. for breach of contract; the district court dismissed under Rule 12(b)(6), interpreting Section 3.1(d) to reach only transfers to third parties "present in the Territory."
- The Second Circuit reviewed de novo, found the district court’s reading permissibly narrow but not the only plausible interpretation, held Section 3.1(d) ambiguous, and vacated and remanded for further proceedings and possible amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of §3.1(d): whether it forbids transfers to third parties located outside the Territory that take title while product is in the Territory | §3.1(d) prohibits any sale/distribution/transfer that Matrix reasonably believes will result in export outside the Territory (broad, includes indirect facilitation) | §3.1(d) only bars transfers to third parties who themselves are present in the Territory and thus can export | Court: §3.1(d) ambiguous; district court’s narrow reading is plausible but not the only reasonable interpretation; remand for further fact-finding/extrinsic evidence |
| Whether "export" in §3.1(d) requires the exporter to be physically present in the Territory | N/A (BMS advances broader reading emphasizing results) | Export requires moving product out of Territory; does not require exporter be present | Court: "Export" requires movement of goods out of Territory, but does not force the third party to be physically present there; ambiguity remains |
| Whether complaint adequately pleads breach (did PAHO take title in the Territory or otherwise trigger §3.1(d)) | Alleged sale to PAHO and shipment to Venezuela implies breach; contends PAHO took title in the Territory (shipping arrangement/ucc) | Complaint lacks factual allegations that PAHO took title in Territory or that Matrix transferred title there; allegations insufficient | Court: Complaint fails to plead breach under either permissible reading; facts insufficient to infer prohibited transfer/taking of title in Territory |
| Whether leave to amend should be allowed | Requests leave to amend to plead additional facts | N/A (district court denied dismissal) | Court: Remands so BMS may seek leave to amend; decision on leave to amend left to district court |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (standards for plausibility pleading)
- Legnani v. Alitalia Linee Aeree, 274 F.3d 683 (de novo review of Rule 12(b)(6))
- Int’l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76 (use of extrinsic evidence when contract ambiguous)
- Swan & Finch Co. v. United States, 190 U.S. 143 (definition of "export")
- LaSalle Bank Nat’l Ass’n v. Nomura Asset Capital Corp., 424 F.3d 195 (avoid reading that renders contract clauses superfluous)