176 F. Supp. 3d 305
S.D.N.Y.2016Background
- IBD (Innovative Biodefense) purchased assets and sublicense rights to antimicrobial formulas (originally licensed from Columbia University to VSP) from BDS under a June 1, 2011 Asset Purchase Agreement; dispute centers on whether IBD assumed BDS’s past-due royalty obligations.
- VSP granted three nearly identical Sublicense Agreements to BDS (2009) obligating VSP to “make available” Know-How useful or necessary to utilize the patented technology; BDS was responsible for development, manufacturing, and regulatory compliance.
- Disagreement over scope and sufficiency of “know-how”: IBD says VSP withheld critical manufacturing/quality documents and that provided materials were insufficient to produce FDA-compliant products; VSP/BDS contend VSP provided formulas and technical materials.
- After the Asset Purchase, IBD paid some funds but stopped paying ongoing royalties; VSP and Micceri (VSP president) counterclaimed for breach and related relief; Micceri also sued individually.
- IBD moved for summary judgment to dismiss many counterclaims; defendants cross-moved for summary judgment on some counterclaims. The court granted in part and denied in part: dismissed unjust enrichment and several abandoned counterclaims and all individual claims against Micceri; denied summary judgment on breach of contract and fee claims and denied defendants’ cross-motion in its entirety.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether VSP breached the Sublicense Agreements by failing to make required know‑how available | VSP had broad duty to provide all information "useful or necessary" (including manufacturing/quality docs); it withheld key materials so IBD could not make compliant products, excusing IBD’s performance | VSP provided formulas and technical materials in its control; BDS/IBD were responsible for product development and regulatory compliance | Genuine disputes of material fact exist as to scope/sufficiency of know‑how and materiality of any breach; summary judgment denied on breach counterclaim |
| Whether IBD assumed BDS’s past‑due royalty obligations under the Asset Purchase Agreement | IBD contends it assumed limited liabilities; payment of $250k was conditional on a negotiated settlement that never occurred, so no obligation to pay past royalties | Defendants say IBD assumed BDS’s liabilities including past royalties | Material factual disputes about the APA’s terms and the Memorandum of Understanding preclude summary judgment for defendants |
| Unjust enrichment claim by VSP against IBD | N/A (defendants alleged unjust enrichment because IBD continued using technology without paying royalties) | VSP claims IBD has been enriched at VSP’s expense and should pay continuing royalties | Court: unjust enrichment barred where a valid contract governs the subject matter; IBD’s motion granted to dismiss unjust enrichment claim |
| Individual liability of Micceri for corporate obligations and torts | IBD contends Micceri personally interfered with access to know‑how and can be liable (including under alter‑ego and direct tort theories) | Defendants argue Micceri isn’t a party to sublicenses and cannot be personally liable absent veil piercing | Court denied summary judgment for defendants: factual disputes exist on whether Micceri dominated VSP (alter ego) and whether he personally interfered; however, all claims asserted solely in Micceri’s individual capacity (as pleaded by defendants) were dismissed for lack of standing/real party in interest |
| Fraud/negligent misrepresentation re: $48,000 payment to Micceri | IBD says payment was for know‑how and was conditioned on a signed letter; defendants say it paid outstanding consulting fees | Defendants attribute most misrepresentations to Berkowitz, not Micceri; dispute over who directed payment and representations given | Court found disputed facts (contradictory testimony) sufficient to deny summary judgment on these claims against Micceri |
Key Cases Cited
- Senno v. Elmsford Union Free Sch. Dist., 812 F. Supp. 2d 454 (S.D.N.Y. 2011) (summary judgment standard and genuine issue of material fact explained)
- Reeves v. Sanderson Plumbing Prods., 530 U.S. 133 (U.S. 2000) (credibility determinations and weighing evidence are for the jury)
- Merrill Lynch & Co., Inc. v. Allegheny Energy, Inc., 500 F.3d 171 (2d Cir. 2007) (material breach and substantial performance principles)
- Galli v. Metz, 973 F.2d 145 (2d Cir. 1992) (contract interpretation avoids rendering clauses superfluous)
- Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296 (2d Cir. 2004) (elements of unjust enrichment under New York law)
- Carte Blanche PTE., Ltd. v. Diners Club Int’l, Inc., 758 F. Supp. 908 (S.D.N.Y. 1991) (veil‑piercing is fact intensive and usually for the jury)
- In re Parmalat Sec. Litig., 375 F. Supp. 2d 278 (S.D.N.Y. 2005) (alter‑ego/veil‑piercing factors and standards)
- American Protein Corp. v. AB Volvo, 844 F.2d 56 (2d Cir. 1988) (veil‑piercing generally a fact question)
- Redd v. New York Div. of Parole, 678 F.3d 166 (2d Cir. 2012) (credibility determinations belong to the jury)