Luitpold Pharmaceuticals, Inc. v. Ed. Geistlich Söhne A.G. Für Chemische Industrie
784 F.3d 78
2d Cir.2015Background
- Luitpold (U.S. distributor) and Geistlich/Osteomedical (Swiss/Irish manufacturer) entered interdependent Commercial (1994) and License (1994, 1998) Agreements giving Luitpold exclusive rights to market Bio-Oss and Bio-Gide products in the U.S./Canada territory in exchange for upfront fees and royalties.
- Letter agreements tied the Commercial and License Agreements so termination of one would terminate the others.
- In Sept. 2010 Geistlich issued a "Termination Notice" declaring the parties’ arrangements terminable as a matter of New York law after a ‘‘reasonable’’ time and set a termination date in 2011; Geistlich did not allege breach.
- Luitpold sued for declaratory relief, specific performance, damages, and prejudgment attachment, alleging invalid termination, supply failures, repudiation, and trademark breaches; Defendants counterclaimed for unpaid purchase-price and breach of a "best efforts" clause.
- The District Court dismissed Luitpold’s trademark claims (Counts IV & VI) on 12(b)(6) and granted summary judgment to Defendants on Luitpold’s remaining counts (I, II, V, VII), while granting Luitpold summary judgment on Geistlich’s two remaining counterclaims (Counts II & III).
- The Second Circuit vacated and remanded: it reinstated trademark claims as plausibly alleging exclusivity, held the Commercial and License Agreements were not terminable at will as a matter of law, and found genuine fact disputes on the purchase-price true-up and best-efforts counterclaims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether license grants Luitpold exclusive trademark rights (Counts IV & VI) | License language (¶6.03) carves out rights and supports an interpretation that Luitpold had an exclusive right to use trademarks in the territory | Licensor retained title (¶6.01); hence license cannot be exclusive as to licensor | Reversed dismissal: agreements ambiguous; Luitpold plausibly alleged trademark breach and damages (nominal damages available) |
| Whether Commercial/License Agreements were terminable at will | Termination clauses (esp. ¶9.03) could be read to make unilateral termination a breach, not an allowed at-will termination; extrinsic evidence supports that parties did not intend at-will termination | ¶9.03 and related language permit termination "for any reason whatsoever"; testimony supports unilateral termination right | Reversed summary judgment: court held ¶9.03 is unambiguous and does not create an at-will termination right; termination governed by ¶5.02, ¶9.01, ¶9.02; remanded for further proceedings on related issues (e.g., indefinite term, lost profits) |
| Whether the parties’ purchase-order/confirmation forms modified the Contract’s purchase-price term (Counterclaim Count II) | Parties intended or at least created a genuine dispute whether a later true-up to the contract purchase-price was required; longstanding practice and communications show expectation of reconciliation | The forms constituted written modifications; no contract provision for true-up; Geistlich waived claims by acquiescing for years | Reversed Luitpold summary judgment on this count: genuine issues of material fact exist on whether the forms modified the price term or whether Geistlich waived its rights; remanded |
| Whether Luitpold breached "best efforts" obligation by marketing a competing product GEM21S (Counterclaim Count III) | Timing and performance evidence create dispute whether best-efforts breach occurred before limitations barred suit; Geistlich did not necessarily know or suffer actionable harm until later (e.g., launch and sales decline) | Luitpold’s early marketing plans and communications show breach and preclude recovery due to election of remedies/timeliness | Reversed Luitpold summary judgment: election-of-remedies does not bar suit where claimant continued to accept performance; factual disputes about accrual/timeliness and whether breach occurred preclude summary judgment |
Key Cases Cited
- County of Erie v. Colgan Air, Inc., 711 F.3d 147 (2d Cir. 2013) (Rule 12(b)(6) standard on appeal)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleadings)
- Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d 119 (2d Cir. 2005) (ambiguities in contract construed for plaintiff on motion to dismiss)
- Compagnie Financiere de CIC et de L’Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153 (2d Cir. 2000) (summary judgment inappropriate where contract ambiguity requires extrinsic evidence)
- Westinghouse Credit Corp. v. D’Urso, 278 F.3d 138 (2d Cir. 2002) (standard of review on summary judgment)
- Davis v. Blige, 505 F.3d 90 (2d Cir. 2007) (exclusive licenses can be superior to owner rights)
- Ely-Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399 (N.Y. 1993) (nominal damages in contract breaches)