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Cardiovascular Diagnostics Inc. v. Boehringer Mannheim Corp.

February 01, 1999

CARDIOVASCULAR DIAGNOSTICS, INC., PLAINTIFF/COUNTERCLAIM DEFENDANT-CROSS APPELLANT, AND DADE INTERNATIONAL, INC., COUNTERCLAIM DEFENDANT-APPELLEE,
v.
BOEHRINGER MANNHEIM CORPORATION, DEFENDANT/COUNTERCLAIMANT-APPELLANT.



Before Michel, Clevenger, and Bryson, Circuit Judges.

The opinion of the court was delivered by: Bryson, Circuit Judge.

NOTE: Pursuant to Fed. Cir. R. 47.6, this Disposition is not citable as precedent. It is a public record. The Disposition will appear in tables published periodically.

This appeal is taken from a final judgment of the United States District Court for the Eastern District of North Carolina in a declaratory judgment action brought by Cardiovascular Diagnostics, Inc., (CDI) against Boehringer Mannheim Corporation (BMC). With respect to CDI's request for a declaratory judgment of noninfringement, invalidity, and unenforceability, the court held that CDI has an implied license to practice the inventions of BMC's patents. With respect to CDI's state law claims, the court granted summary judgment to BMC. BMC has appealed from the court's judgment dismissing its infringement counterclaim on the basis of the implied license, while CDI has cross-appealed from the court's judgment on the state law claims. We affirm.

I.

CDI is a North Carolina company that develops medical technology to aid in diagnosing cardiovascular problems. CDI has developed assays that evaluate two measures of blood coagulation time -- prothrombin time (PT) and activated partial thromboplastin time (aPTT). BMC, an Indiana company that markets medical diagnostic products, expressed interest in CDI's testing technology, and the two companies entered licensing negotiations.

In 1989, the two companies executed a ten-year licensing agreement under which BMC was to serve as the exclusive licensee of PT and aPTT assay systems falling within the scope of, or produced in accordance with, CDI's technology. In addition, the agreement gave BMC certain rights with respect to new PT or aPTT assay systems falling within the subject matter of two CDI patent applications and any improvements developed or acquired by CDI. With respect to such tests, the agreement required CDI to give BMC a 90-day exclusive right to evaluate the new tests and 30 additional days to engage in negotiations to license any such new tests. The agreement further provided that if the new test was a thrombolytic assay that BMC declined to license, CDI would be entitled, upon paying BMC a $1000 fee, to use its technology "in connection with and as part of such thrombolytic assays." The agreement also contained a confidentiality provision mandating secrecy with regard to information and materials exchanged during the relationship.

After several years, a dispute arose over the scope of CDI's rights to use certain technology that was within the scope of the agreement. Following negotiations, the parties executed an amendment to the licensing agreement in September 1995. The amendment added new paragraph 6.2.2 to the agreement. That paragraph stated:

BMC acknowledges that it did not license the thrombolytic assays submitted to it by CDI; that it received the payment of $1,000; and that CDI has the right to use CDI Technology to make, use, sell and license others to make, use and sell products in the Technical Field only in connection with and as a part of such thrombolytic assays. BMC and CDI agree that "only in connection with and as part of such thrombolytic assays" means that CDI has no limitation on the manufacture, use, sale or rights of others to manufacture, use or sell PT and aPTT tests and systems as long as such tests and systems are sold to customers using analyzers which are capable of analyzing, among other things, each of (i) a PT or an aPTT test, and (ii) a thrombolytic test.

The amendment also contained a general release under which each party released the other "from any claims, demands, actions, suits, damages, liabilities, losses or expenses of whatever sort," relating to or in connection with the license agreement for acts or omissions by either party prior to the date of the amendment.

The effect of the amendment was to give BMC a right to use its license royalty-free until the termination of the agreement. In exchange, CDI was freed of its obligation to permit BMC to evaluate new CDI technology, and CDI was given the right, with "no limitation," to manufacture, use, sell, or license PT and aPTT testing systems as long as those systems were sold to customers using analyzers that were capable of analyzing both a PT or aPTT test and a thrombolytic assay.

In 1994, prior to the execution of the amendment, BMC acquired the rights to two United States patents relating to coagulation assays, which the parties refer to as the "Biotrack patents." After the amendment was executed, BMC informed CDI that it believed CDI's systems infringed both of those patents.

CDI subsequently filed this action seeking, in count 1, a declaration that CDI did not infringe the two Biotrack patents or, in the alternative, that those patents were invalid or unenforceable. In counts 2 through 6, CDI brought claims alleging a series of state law violations: breach of contract, breach of fiduciary duty, constructive fraud, misappropriation of trade secrets, and unfair and deceptive trade practices. CDI's state law claims were based on BMC's alleged misappropriation and disclosure of CDI's technology in violation of a prior secrecy agreement between the parties. BMC counterclaimed, charging CDI and its licensee, Dade International, Inc., with infringement of the two Biotrack patents.

BMC moved for judgment on the pleadings as to CDI's state law claims. The trial court converted BMC's motion into a motion for summary judgment and granted it. The court concluded that because the conduct that gave rise to CDI's state law claims occurred before the parties executed the 1995 amendment to their 1989 agreement, the release contained in the amendment absolved BMC from any liability for the violations alleged in those claims.

With respect to count 1 and BMC's counterclaim, both parties asked the trial court to determine whether the 1995 amendment had the effect of granting CDI an implied license to practice the subject matter of the two patents that BMC had previously acquired from Biotrack. The court held that CDI had an implied license, during the pendency of the agreement between CDI and BMC, to use the subject matter described and claimed in the two Biotrack patents and any improvements developed or acquired by CDI. Because the implied license foreclosed any claim of infringement by BMC against CDI and Dade International, Inc., the court dismissed BMC's counterclaim ...


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