Eragen Biosciences, Inc. v. Nucleic Acids Licensing, LLC

447 F. Supp. 2d 930, 65 Fed. R. Serv. 3d 1156, 2006 U.S. Dist. LEXIS 55711, 2006 WL 2280208
CourtDistrict Court, W.D. Wisconsin
DecidedAugust 8, 2006
Docket06-C-305-C
StatusPublished
Cited by3 cases

This text of 447 F. Supp. 2d 930 (Eragen Biosciences, Inc. v. Nucleic Acids Licensing, LLC) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eragen Biosciences, Inc. v. Nucleic Acids Licensing, LLC, 447 F. Supp. 2d 930, 65 Fed. R. Serv. 3d 1156, 2006 U.S. Dist. LEXIS 55711, 2006 WL 2280208 (W.D. Wis. 2006).

Opinion

OPINION and ORDER

CRABB, District Judge.

On May 18, 2006, defendants Nucleic Acids Licensing, LLC and Steven Benner filed a diversity suit in the United States District Court for the Northern District of Florida seeking a declaration that their AEGIS patent licensing agreement with plaintiff EraGen Biosciences, Inc. is invalid. Plaintiff learned of the suit on May 31, 2006, and three days later filed this lawsuit, contending that the licensing agreement is valid and that defendants have breached it. Jurisdiction is present under 28 U.S.C. § 1332.

Now before the court is defendants’ motion to dismiss plaintiffs case for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2) or, in the alternative, to dismiss or stay the case on the ground that plaintiffs claims are substantially similar to claims brought against plaintiff in the action currently pending in the Northern District of Florida. Because I conclude that this court can exercise personal jurisdiction over defendants and that, under the circumstances present here, the “first to file” rule does not bar plaintiff from trying its claims in this court, the motion will be denied. (If defendants are concerned that this court’s rulings may conflict with rulings made by the Florida district court, they may move for a transfer of the Florida case to this court, where the two cases may be consolidated and the claims tried in one suit.)

From the facts alleged in the complaint, the exhibits attached to defendants’ brief in support of their motion to dismiss, the complaint filed by defendant in the Northern District of Florida and the facts averred in the affidavits submitted by the parties, I find for the sole purpose of deciding this motion that the following facts are undisputed and material. Purdue Research Foundation v. Sanofi-Syn *934 thelabo, S.A., 338 F.3d 773, 782 (7th Cir.2003) (court accepts all well-pleaded allegations in complaint as true, unless controverted by challenging party’s affidavits; any conflicts concerning relevant facts are to be decided in favor of party asserting jurisdiction).

JURISDICTIONAL FACTS

A. Parties

Plaintiff EraGen Biosciences, Inc. is a Delaware corporation with its principal place of business in Madison, Wisconsin. Plaintiff is a biotechnology company that employs 38 people.

Defendant Nucleic Acids Licensing, LLC, is a Florida limited liability company. Its sole member and manager is defendant Steven Benner, who is a citizen of Florida.

B. Relationship Between Plaintiff and Defendants

In 1994, defendant Benner formed Sul-fonics, Inc. to develop and market nucleotide technologies he has patented. In 1999, Sulfonics merged with plaintiff Era-Gen Biosciences, Inc, a merger that resulted in the dissolution of Sulfonics, Inc. Plaintiff entered into four patent licensing agreements with defendant Benner.

In 2001, plaintiff changed its principal place of business from Florida to Wisconsin. Defendant Benner served on plaintiffs board of directors from 1999 until 2003, when he resigned from the board. Prior to his resignation, defendant Benner attended meetings in Wisconsin with members of plaintiffs staff and board on seven occasions.

Over time, a number of disagreements arose between the parties regarding the 1999 licensing agreements. In 2004, after defendant Benner resigned from plaintiffs board of directors, he requested a meeting with the board. The meeting was held in Wisconsin on November 30, 2004. At the meeting, defendant argued that the board should replace its management and restructure its company. The board declined defendant’s invitation to restructure its company and instead began discussing with defendant Benner how to handle the disputes that had arisen regarding the 1999 licensing agreements. Ultimately, plaintiff and defendant Benner agreed to replace the 1999 licensing agreements with new ones.

In April 2005, plaintiff and defendants entered into three new licensing agreements, including the AEGIS licensing agreement at issue in this case. Under the terms of the AEGIS agreement, plaintiff was obligated to pay defendant Benner royalties, “diligently prosecute all patent applications with the licensed patents” and “pay all maintenance fees for issued patents.” In addition, plaintiff was given the discretionary authority to bring suit against alleged infringers of the licensed patents.

Sometime between September 2005 and February 2006 (the parties do not say when), defendant Benner assigned the AEGIS licensing agreement and related patents to defendant Nucleic Acids Licensing LLC. Section 9.7 of the AEGIS licensing agreement states:

This Agreement may be freely assigned by either party, provided that the protections and agreements provided by the Releases shall continue to apply to and bind the original parties upon assignment of this Agreement. Change of control of either party shall not affect the validity of this Agreement or either party’s rights under this Agreement.

Dkt. # 2, Exh. A, at 14.

Ninety-five percent of plaintiffs business revenue is. derived from technologies licensed under the AEGIS agreement.

*935 C. Royalty Dispute

In September 2005, the parties became engaged in a dispute regarding the amount of royalties due to defendant Benner under the AEGIS licensing agreement. Plaintiff alleged that it had overpaid defendant Benner and demanded a refund. Defendant Benner alleged that plaintiff had underpaid him. As a result of the disagreement, on September 7, 2005, defendant Benner notified plaintiff that he considered it to be in breach of the AEGIS agreement and would revoke the agreement effective November 1, 2005, if he did not receive the royalty payment he believed was due.

From September 2005 through the spring of 2006, the parties engaged in negotiations to resolve the dispute. On March 27, 2006, defendants’ counsel asked plaintiff for certain documents, indicating that if the requested documents were provided, defendants “believe[d] that th[e] matter c[ould] be resolved.” Dkt. # 9, Exh. G, at 1. In a letter dated April 6, 2006, plaintiff forwarded the requested documents to defendants. In a second letter to defendants dated the same day, plaintiffs counsel asserted that defendant Benner was misinterpreting the license agreement and had violated his duty of good faith and fair dealing by attempting to terminate the agreement. The second letter ended with the following paragraph:

In conclusion, the AEGIS license agreement remains in full force and effect, and Dr. Benner’s alleged termination is without basis in law or fact. If Dr. Benner persists in making unfounded and legally unsupportable claims regarding the status of the AEGIS license agreement—statements that obviously have a disruptive and potentially destabilizing influence on EraGen and its business relationships—these issues will regrettably need to be sorted out in litigation.

Dkt. # 2, Exh. J, at 2.

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Bluebook (online)
447 F. Supp. 2d 930, 65 Fed. R. Serv. 3d 1156, 2006 U.S. Dist. LEXIS 55711, 2006 WL 2280208, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eragen-biosciences-inc-v-nucleic-acids-licensing-llc-wiwd-2006.