Jang v. Boston Scientific Scimed, Inc.
817 F. Supp. 2d 409
D. Del.2011Background
- Plaintiff Jang, a California physician and inventor of the '021 patent, assigned Jang stent patents to Scimed under an Agreement with earnout provisions.
- Defendants Scimed and BSC entered into a part-time employment arrangement with Jang to develop and commercialize the stent technology.
- The Agreement contemplated a $50 million closing payment and up to $110 million in contingent payments based on future events, including third-party settlements and sales milestones.
- Cordis sued defendants for patent infringement related to the '021 patent; a jury found in defendants' favor and Cordis’ infringement claim proceeded to appeal/damages posture.
- Defendants settled the Cordis litigation in February 2010, granting Cordis and J&J licenses and paying $1.75 billion, while Cordis and J&J released related claims; plaintiffs then asserted a lien and damages claims under the Agreement.
- Plaintiff sought (i) damages from Cordis settlement, (ii) damages from licenses granted to Cordis, (iii) damages for breach of the implied covenant, (iv) breach of fiduciary duty, and (v) enforcement of an equitable lien on rights to recover from Cordis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 7.3(c) creates a monetary fund for plaintiff from recovery | Jang argues § 7.3(c) creates a fund for damages from any recovery. | BSC argues there was no cash recovery to create a balance or fund under § 7.3(c). | No fund created; no monetary recovery occurred. |
| Whether § 3.1(d) obligates payment based on Contingent Payment Product sales | Jang contends Cordis-related sales could trigger $50 million. | BSC asserts no Cordis-related cash sales linked to Jang patents sufficed to trigger §3.1(d). | Not triggered; Cordis settlement did not produce Contingent Payment Product Net Sales. |
| Whether the conduct surrounding the Cordis settlement breaches the implied covenant of good faith and fair dealing | Jang claims the settlement deprived him of contract fruits. | No breach of contract occurred, so no breach of the covenant. | No breach of the implied covenant; contract not breached. |
| Whether there was a breach of fiduciary duty in structuring the Cordis settlement | Defendants breached fiduciary duties by settlement structure. | Agreement disclaims fiduciary duties; independent contracting language controls. | No fiduciary duty breached; independent contractor provision governs. |
| Whether plaintiff is entitled to enforcement of an equitable lien on rights to recover from Cordis | § 7.3(c) creates a fund/entitles lien rights to damages. | There is no express or implied fund; lien cannot attach absent a fund. | Equitable lien denied; no fund created; judgment for defendants. |
Key Cases Cited
- AccuSoft Corp. v. Palo, 237 F.3d 31 (1st Cir. 2001) (contract interpretation and good-faith performance limits)
- Federal Deposit Ins. Corp. v. Singh, 977 F.2d 18 (1st Cir. 1992) (doctrines for contract interpretation and contract-unambiguous terms)
- Mathewson Corp. v. Allied Marine Industries, Inc., 827 F.2d 850 (1st Cir. 1987) (limits on rewriting contracts between sophisticated parties)
- Hazen Paper Co. v. United States Fidelity & Guaranty Co., 407 Mass. 689 (Mass. 1990) (damages understood in rational common sense context when language ambiguous)
- U.S. v. Friedman, 143 F.3d 18 (1st Cir. 1998) (standard for contract interpretation and implied covenants)
- Check v. Kaplan, 280 Mass. 170 (Mass. 1932) (fundamental treatise on established lien principles under Massachusetts law)