Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH
62 A.3d 62
Del. Ch.2013Background
- MSD and MST are Delaware LLCs owning disputed springing rights to a patented ECL technology.
- Roche group comprises Roche Holding, Roche Diagnostics GmbH, Roche Diagnostics Corp., IGEN, BioVeris, and related entities through 2007 restructurings.
- The 1992 License granted to BMG (later Roche) covered limited field uses; MSD/MST joint venture held broader MSD License.
- In 2003, Roche, IGEN, MSD, and MST executed a series of agreements to reallocate rights, creating BioVeris and Newco; IGEN transferred assets into a separate entity before a reverse triangular merger.
- A 2007 BioVeris reverse triangular merger transferred BioVeris into Roche via Lili Acquisition, after which Roche purportedly sold ECL products outside the defined Field.
- Meso Scale Diagnostics (MSD, MST) filed suit in 2010 alleging (Count I) an assignment by operation of law under Section 5.08 of the Global Consent and (Count II) breach of the Roche License; the court granted summary judgment for Count I but denied it for Count II.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Count I is barred by laches. | Meso argues accrual did not occur until BioVeris merger closed (June 26, 2007). | Roche argues accrual was April 4, 2007 with an April 2007 merger agreement; thus timely execution failed. | Count I denied on laches; triable accrual issues remain. |
| Whether BioVeris merger constitutes an assignment by operation of law under Section 5.08. | Roche's merger effected an assignment by operation of law; Section 5.08 covers such transfers. | Reverse triangular mergers generally do not constitute assignments by operation of law; Section 5.08 not intended to cover them. | Roche entitled to summary judgment on Count I; merger not an assignment by operation of law. |
| Whether MSD and MST are enforceable parties to the Roche License. | MSD/MST joined in the licenses granted and thus may enforce Article 2 (Grant and Scope). | Plain language shows MSD/MST not parties; joining only in licenses does not make them parties to agreement. | Count II survives; extrinsic evidence creates triable issues as to enforceability. |
| Whether the Arbitration Panel’s findings bind this action on Count II. | Panel found MSD/MST not arbitrable; collateral estoppel may apply in this action. | Panel’s finding on arbitrability is limited; not binding as to merits or standing. | Panel’s arbitrability ruling has limited collateral estoppel effect; trial may address MSD/MST enforceability. |
Key Cases Cited
- Star Cellular Telephone Co. v. Baton Rouge CGSA, Inc., 647 A.2d 382 (Del. 1994) (ambiguity in anti-transfer clauses; mergers may or may not violate contracts depending on harm)
- Tenneco Automotive Inc. v. El Paso Corp., 2002 WL 453930 (Del.Ch. 2002) (ambiguous anti-assignment clause; merger effects evaluated under Star Cellular framework)
- Baxter Pharmaceutical Prods., Inc. v. ESI Lederle Inc., 264 A.2d 526 (Del.Ch. 1970) (stock acquisitions do not by themselves constitute an assignment by operation of law)
- DeAscanis v. Brosius-Eliason Co., 533 A.2d 1254 (Del.1987) (Section 259 mergers can transfer rights by operation of law to surviving entity)