OmegaGenesis Corp. v. Mayo Foundation for Medical Education & Research
2017 U.S. App. LEXIS 4862
| 8th Cir. | 2017Background
- OmegaGenesis (Omega), a start-up, entered an Exclusive Patent License Agreement with Mayo in Sept. 2008 granting Omega an exclusive license to products described by a pending Mayo patent application and agreeing Omega would pursue prosecution; Mayo would receive stock and royalties.
- The Agreement contained integration and disclaimer clauses: Omega warranted it independently evaluated patent rights (§9.01(b)); Mayo provided Know-How and patent rights "as is" and disclaimed implied warranties about patent scope, validity, or issuance (§9.03); entire-agreement clause (§11.08) and Minnesota choice-of-law (§11.03).
- Omega alleged Mayo represented it had developed the technology (angiogenesis-related europium hydroxide nanorod work), withheld inventors’ notebooks and test data, and knew of prior art (Bar Ilan Univ. work) making the invention unpatentable.
- After the Agreement, Omega raised investor funds, prosecuted the patent application, elected a narrow set of claims (methods of making lanthanide hydroxide nanoparticles), and the PTO rejected those claims as anticipated by a 2002 publication (synthesis of europium oxide nanorods); Omega later abandoned the application.
- Omega sued for fraud and negligent misrepresentation, alleging it reasonably relied on Mayo’s pre-Agreement representations. The district court dismissed these claims for failure to plead justifiable reliance with particularity; Omega appealed.
Issues
| Issue | Plaintiff's Argument (Omega) | Defendant's Argument (Mayo) | Held |
|---|---|---|---|
| Whether Omega pleaded justifiable reliance for fraud/negligent misrep. | Omega claims it reasonably relied on Mayo’s representations that Mayo developed the technology and concealed prior art; general disclaimers in the Agreement do not negate reliance because they are not expressly antithetical to the alleged misrepresentations. | Mayo argues the Agreement’s express disclaimers and Omega’s warranty that it independently evaluated patent rights make reliance unreasonable as a matter of law. | Court affirmed dismissal: Omega failed to plead justifiable reliance with Rule 9(b) particularity; Agreement and patent record undermine plausible reliance. |
| Whether Rule 9(b) pleading requirements were met for fraud | Omega argues its complaint sufficiently alleged who, what, when, where, and how, including emails and presentations. | Mayo contends allegations are generalized and lack required specifics (who relied on which statement, when, precise content). | Court held Rule 9(b) not satisfied: allegations were conclusory and lacked the required "who, what, when, where, and how." |
| Whether the PTO rejection supports allegation Mayo did no original R&D | Omega contends abandonment and rejection show underlying tech was unpatentable and Mayo had no real development. | Mayo notes the rejected claims concerned nanoparticle synthesis, not angiogenesis claims Omega valued; PTO prior art did not show Mayo did no angiogenesis research. | Court held PTO rejection did not plausibly support the sweeping allegation Mayo performed no original work on angiogenesis-related claims. |
| Whether knowledge of prior art makes unpatentability obvious | Omega implies Mayo knew of Bar Ilan prior art and thus knew invention was unpatentable. | Mayo notes knowledge of prior art for nanoparticle synthesis does not necessarily mean claims on angiogenesis were unpatentable; many inventions build on prior art. | Court held even inferred knowledge of some prior art did not make unreasonable the allegation Mayo knew the invention was unpatentable. |
Key Cases Cited
- Quintero Cmty. Ass’n Inc. v. F.D.I.C., 792 F.3d 1002 (8th Cir. 2015) (pleading plausibility standard discussion)
- Enervations, Inc. v. Minn. Min. & Mfg. Co., 380 F.3d 1066 (8th Cir. 2004) (consideration of documents referenced in complaint on Rule 12)
- Vitek Sys., Inc. v. Abbott Labs., 675 F.2d 190 (8th Cir. 1982) (same)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for Rule 8)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible)
- Streambend Props. II, LLC v. Ivy Tower Mpls., LLC, 781 F.3d 1003 (8th Cir. 2015) (Rule 9(b) particularity requirements)
- Syverson v. Firepond, Inc., 383 F.3d 745 (8th Cir. 2004) (contract disclaimers can bar reliance when contrary to alleged misrepresentations)
- Commercial Prop. Invs., Inc. v. Quality Inns Int’l, Inc., 938 F.2d 870 (8th Cir. 1991) (general disclaimers ineffective only when not explicitly antithetical to alleged misrepresentations)
- Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009) (many inventions build on prior art; prior art does not necessarily render invention unpatentable)