Kwang Dong Pharmaceutical Co. v. Myun Ki Han

205 F. Supp. 2d 489, 2002 U.S. Dist. LEXIS 10649, 2002 WL 1300033
CourtDistrict Court, D. Maryland
DecidedJune 12, 2002
DocketCIV.A.DKC2001-2453
StatusPublished
Cited by29 cases

This text of 205 F. Supp. 2d 489 (Kwang Dong Pharmaceutical Co. v. Myun Ki Han) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Kwang Dong Pharmaceutical Co. v. Myun Ki Han, 205 F. Supp. 2d 489, 2002 U.S. Dist. LEXIS 10649, 2002 WL 1300033 (D. Md. 2002).

Opinion

MEMORANDUM OPINION

CHASANOW, District Judge.

Presently pending and ready for resolution in this breach of contract case is the motion of Counter-Defendant, Kwang Dong Pharmaceutical Co. (“Kwang Dong” or “KD”), to dismiss Counts I, II, III, IV, and VII of the counterclaim of Counter-Plaintiff, Dr. Myun Han (“Han”), pursuant to Fed.R.Civ.P. 12(b)(6). The issues are fully briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the motion will be granted in part and denied in part.

I. Background

The following facts are alleged in Defendant’s counterclaim. 1 Dr. Myun Ki Han was employed as an Assistant Professor of Biochemistry at Georgetown University (“Georgetown”) beginning in August, 1992. Prior to his employment with Georgetown, Han was a staff fellow at the National Institutes of Health (“NIH”) and held a Visiting Assistant Professorship in The Johns Hopkins University Department of Biology. Han also pursued scientific research in Biochemistry and Molecular Biology during this period. Han published his work in distinguished scientific journals, successfully competed for research grants, and made research advances in his field.

In 1996, Han was introduced to Kwang Dong by a KD business consultant. Shortly thereafter, Mr. Soo Boo Choi (“Choi”), Chairman of KD, began discussions with Han and Georgetown officials, including Jack Hartman, Director of the Office of the Dean of Research and Graduate Education; Dr. Eugene Davidson, Chairman of the Department of Biochemistry; and Carol Tracy Carr, Director of the Office of Technology Transfer, regarding a collaborative project to research and develop drugs for the treatment of liver diseases and AIDS. KD agreed to fund the *492 research Han was going to conduct at Georgetown. In November 1996, an agreement between the parties was imminent and, as a good faith gesture, KD placed $100,000 in an account at its Korean bank under Han’s name, but controlled by KD. Between late 1996 and early 1997, John Burris, Associate Dean for Research Operations at Georgetown, and Choi signed a ten-year Research Agreement. Han signed the agreement as well, serving as the Principal Investigator on the contract and as a third-party beneficiary of the agreement. KD agreed to make $4,200,000 in quarterly payments over ten years to support the research specified in the Agreement, while Georgetown and KD concurrently entered into an Exclusive License Agreement permitting KD to market and sell the products of Han’s research. KD knew that Han depended on its funding as the principal financial support for his position at Georgetown. Han asserts that KD had no intention of fulfilling its obligations under either Agreement.

In February 1997, KD made its first payment under the Research Agreement. To compensate Han for his expenses, KD deposited the advance of $55,000 into Han’s Korean account that contained the commitment fee. In April 1998, KD directed Han to use the money in the KD Korean account to purchase KD stock in order to boost its stock price. However, KD wanted Han’s sister, a prominent Korean physician, to purchase the stock in order to attract and influence other investors. KD transferred the funds for the stock purchase to Han’s sister.

To ensure that Han would continue with the research project, even if he left Georgetown, KD proposed, and Han agreed to, a Supplemental Agreement on April 4,1997. In the Supplemental Agreement, Han agreed to take the necessary steps to establish a research and licensing agreement between KD and any new institution he might join under the same terms as the Agreements with Georgetown. In addition, Han agreed to file patent applications for any products relating to the Research Agreement, to which KD retained global licensing rights, and obligated Han to pursue patent applications in China and Korea relating to research products. As consideration, KD promised Han a 2% royalty upon the commercialization of any drugs or dietary supplements related to his research and agreed to reimburse Han for any expenses incurred from negotiating licensing rights with China. Han again asserts that KD had no intention of honoring this agreement at the time it entered into it.

Shortly thereafter, KD began to pressure Han to speed up his research and it asked Han to agree to a research schedule more compressed than that set forth in the Research Agreement. In exchange, KD would accelerate its support payments. However, KD never accelerated the payments and actually fell behind on its preexisting payment obligations. In an effort to inflate the value of its stock, KD issued several Korean press releases in August 1997, reporting that KD had actually developed an AIDS drug, in collaboration with Georgetown, further claiming that the drug was in pre-clinical trials and would be subject to clinical trials in 1998. KD knew these statements were untrue and the press releases directly violated KD’s Research Agreement with Georgetown, which required prior written permission to use Georgetown’s name in any publicity connected with the research project.

After the press releases were issued, KD increased pressure on Han to accelerate his work in order to conduct the preclinical and clinical trials as it had predicted. On January 24, 1998, KD convinced Han to enter into an “Acceleration Agree *493 ment” where Han agreed to use his best efforts to continue his research towards drug development and shorten the time for the commercialization of any products arising from the research. As consideration, KD agreed to convey to Han 5,000 shares of stock by the end of June 1998 and an additional 5,000 shares by the end of June 1999. Again, Han asserts that KD had no intention of fulfilling its obligations under this agreement. Han fulfilled his obligations under the Agreement, but received none of the consideration promised.

KD entered into separate agreements with individual researchers and provided additional funding outside of the Research Agreement to keep Han’s laboratory operating virtually around the clock, although it had fallen in arrears in its obligations to Georgetown and never accelerated its payments to the University. As a result of this schedule, Han received several patents based on his work and KD gained valuable licenses to use the patent material Han developed. On June 20, 1998, Han entered into a third agreement with KD relating to his work on a “Fluorometric Assay for Detecting Nucleic Acid Cleavage” where Han would receive 50% of the royalties collected from sublicensees or successful patent litigation in exchange for his patent achievement. KD also agreed to pay Han $25,000 by December 31, 1998, for his continued assistance regarding the use of this new technology. Once again, Han asserts KD had no intention of fulfilling its obligations under this agreement and, although Han met all of his obligations, KD failed to provide any of the consideration it agreed to provide. In addition, KD attempted to persuade Han to help it escape its financial obligations to Georgetown under the Research Agreement, but maintain its rights under the Exclusive License Agreement. Han refused to cooperate with KD in this endeav- or.

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205 F. Supp. 2d 489, 2002 U.S. Dist. LEXIS 10649, 2002 WL 1300033, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kwang-dong-pharmaceutical-co-v-myun-ki-han-mdd-2002.