Kaken Pharmaceutical Co. v. Eli Lilly and Co.

737 F. Supp. 510, 1989 WL 206237
CourtDistrict Court, S.D. Indiana
DecidedNovember 15, 1989
DocketIP 86-1241-C
StatusPublished
Cited by7 cases

This text of 737 F. Supp. 510 (Kaken Pharmaceutical Co. v. Eli Lilly and Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kaken Pharmaceutical Co. v. Eli Lilly and Co., 737 F. Supp. 510, 1989 WL 206237 (S.D. Ind. 1989).

Opinion

ORDER ON MOTION FOR JUDGMENT ON THE PLEADINGS OR FOR SUMMARY JUDGMENT

McKINNEY, District Judge.

This cause comes before the Court on defendant’s motion for judgment on the pleadings or, in the alternative, for summary judgment. The issues raised herein have been fully briefed and are ready for resolution. For the reasons set forth below, the Court GRANTS the defendant’s motion for summary judgment as to Counts I, II, IV, V, VI and VII and DENIES the defendant’s motion for summary judgment as to Count III.

I. FACTUAL AND PROCEDURAL BACKGROUND

The plaintiff, Kaken Pharmaceutical Company, Limited (“Kaken”) filed its suit October 20,1986, against the defendant, Eli Lilly and Company (“Lilly”). 1 This legal confrontation concerns a lOmg sample Sali-nomycin (“SAL”), a feed additive for ruminant animals, sent to Lilly by Kaken. Like the story of the princess and the pea, it is wonderous that so small a source could produce so great a rub.

In October of 1972, after reading a report about the substance in the Japan Medical Gazette, Lilly wrote to Kaken requesting a sample of SAL. Kaken responded by sending a lOmg sample, and requested samples of related substances from Lilly. Lilly complied with Kaken’s request, and thus began a series of exchanges of substances between the parties lasting a number of years. Of particular importance in the instant case was a lOOmg SAL sample sent by Kaken to Lilly pursuant to a February 15, 1973, request. For reasons not entirely clear, Kaken followed up that sample with a letter that stated Kaken hoped “emphatically” that the SAL sample would be used for identification purposes only. Lilly appeared to acquiesce to this concern in an April 30, 1973, letter giving assurances that the sample would be used only for identification purposes.

At the heart of this dispute is Kaken’s allegation that Lilly used the samples to run a rumen screen test in violation of the alleged agreement between the parties to use the samples only for identification purposes. A rumen screen test uses a culture of microorganisms found in a cow’s stomach, and measures changes in the organisms’ metabolic products following the addition of an unknown compound to the culture. Kaken claims it was improper for Lilly to run such tests, and that only tests for identification purposes were to be conducted.

*514 Kaken anticipated tests, such as a paper chromatographic test. A paper chromatographic test is a procedure whereby a compound being analyzed produces spots on absorbent paper. Scientists then attempt to determine the nature of the compound by the location of the spots showing antibiotic activity. Kaken anticipated that the testing would be for identification purposes only.

On June 10, 1974, Lilly filed a United States patent application claiming a method of using SAL to increase feed utilization efficiency in ruminant animals. A related application was filed on September 2, 1976, and on April 18, 1978, Lilly’s patent was granted as U.S. Patent No. 4,084,224 (“224 patent”). Kaken claims this patent was made possible through the unlawful use of the SAL samples sent to Lilly by Kaken. Kaken charges that Lilly’s patent prohibits Kaken from obtaining royalties from A.H. Robins (“Robins”), the exclusive Kaken licensee of SAL in the United States. Essentially, Kaken claims Lilly plans to use its patent to prohibit SAL from competing in the United States market with Monensin, a polyether antibiotic developed by Lilly. Lilly brought a successful patent infringement suit against Robins that resulted in an August 1985 judgment prohibiting Robins from selling SAL for cattle in the United States.

Kaken’s lawsuit is comprised of seven counts. The allegations include breach of express trust, constructive trust, breach of express contract, fraud, constructive fraud, interference with contract, and interference with prospective business relationships. Kaken asks for both legal and equitable relief, including an order that Lilly assign the 224 patent to Kaken, or in the alternative, prevent Lilly from enforcing the patent against Kaken. Aside from denying many of the material allegations in Kaken’s complaint, Lilly asserts the defense of statute of limitations, laches, failure to state a claim, waiver and estoppel, res judi-cata and collateral estoppel, and the statute of frauds. 2

II. APPLICABLE STANDARDS OF REVIEW

The defendant in this case has filed a motion for judgment on the pleadings, or in the alternative, for summary judgment. A motion for judgment on the pleadings is governed by Rule 12(c) of the Federal Rules of Civil Procedure. Rule 12(c) provides in pertinent part:

After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56

Numerous affidavits have been filed in this cause by both sides. Ample opportunity to respond to those affidavits has passed. Accordingly, the Court rules the defendant’s motion will be treated as a motion for summary judgment. 3

Rule 56(c) provides in pertinent part: The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

It can no longer be disputed that when the standard embraced in Rule 56(c) is met summary judgment is mandatory. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). As stated in Celotex, summary judgment is not a disfavored procedural shortcut, but rather is an integral part of the Federal *515 Rules as a whole, which are designed to secure the just, speedy and inexpensive determination of every action. Id. at 477 U.S. at 327, 106 S.Ct. at 2555. Decisions of the Seventh Circuit are in conformity with this view. See Spellman v. Commissioner, 845 F.2d 148 (7th Cir.1988).

Moreover, the mere existence of a factual dispute is not by itself sufficient to bar summary judgment. A factual dispute does not preclude summary judgment unless the disputed fact is outcome determinative. Hossman v. Spradlin,

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Cite This Page — Counsel Stack

Bluebook (online)
737 F. Supp. 510, 1989 WL 206237, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kaken-pharmaceutical-co-v-eli-lilly-and-co-insd-1989.