Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc.

552 F.3d 47, 2009 U.S. App. LEXIS 560, 2009 WL 78064
CourtCourt of Appeals for the First Circuit
DecidedJanuary 12, 2009
Docket07-2615, 07-2616
StatusPublished
Cited by153 cases

This text of 552 F.3d 47 (Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 2009 U.S. App. LEXIS 560, 2009 WL 78064 (1st Cir. 2009).

Opinion

HOWARD, Circuit Judge.

These appeals require us to grapple with the metes and bounds of Massachusetts unjust enrichment and restitution law. Like many such cases, the present case involves one party’s conferral of a valuable benefit during ongoing contract negotiations, followed by an irreparable breach in the bargaining process. What makes this case unusual is that its subject matter— the development of a blockbuster pharmaceutical — poses challenges in valuing the benefit conferred, and potentially implicates federal patent law. Defendant QLT Phototherapeutics, Inc. (“QLT”) appeals a jury finding that it was unjustly enriched because plaintiff Massachusetts Eye and Ear Infirmary (“MEEI”) conferred on QLT several benefits during the course of the development of Visudyne, a successful (and highly profitable) treatment for age-related macular degeneration (“AMD”), a leading cause of adult blindness.

In a prior opinion, we concluded that MEEI was entitled to a trial on two theories supporting its unjust enrichment claim, as well as a misappropriation of trade secrets claim and claims arising under the Massachusetts Unfair Trade Practices statute, Mass. General Laws ch. 93A §§ 2, 11 (“Chapter 93A”). Mass. Eye & Ear Infirm, v. QLT Phototh., Inc., 412 F.3d 215 (1st Cir.2005) (“MEET-II”). After trial, a jury found that QLT was unjustly enriched, and that it had committed unfair trade practices in violation of Chapter 93A. The jury awarded MEEI a running royalty of 3.01% of global net Visu-dyne sales as damages. QLT prosecutes its ensuing appeal with great vigor. For the sake of simplicity, we group QLT’s assignments of error into five clusters relating to (1) the imposition of unjust enrichment liability, (2) the measure of unjust enrichment damages, (3) the unfair trade practices claim, (4) the conduct of the trial, and (5) the post-trial attorneys’ fee award. MEEI has cross-appealed. This cross-appeal is largely protective; in all events, with two exceptions, we need not discuss the cross-appeal.

As to most of the grounds of MEEI’s cross-appeal and QLT’s appeal, including MEEI’s claim that it is entitled to exemplary damages under Chapter 93A, we detect no error or infirmity in the proceedings below. The other issue raised in both the cross-appeal and QLT’s appeal that bears discussion is the parties’ query about the size of MEEI’s attorneys’ fee award. We are unable meaningfully to evaluate this claim of error, because the record is incomplete. We therefore affirm the district court judgment except for the fee award, which we vacate and remand to give the district court an opportunity to construct a more complete record.

I. Background

The proceedings in this dispute over the rights to the income stream of Visudyne have spanned nearly a decade. Although our prior decision described the background of the dispute, QLT argues that the jury verdict is not supported by sufficient evidence. Consequently, we adumbrate the conflict between the parties and some of the evidence developed at trial. 1 We augment this discussion as necessary to complete our analysis. 2

*51 Visudyne traces its ancestry to a field of cow parsley located on a remote island north of Vancouver, Canada. Dr. Julia Levy, 3 an immunologist at the University of British Columbia, learned by happenstance that her children’s burn-like lesions resulted from contact with a photosensitizer chemical found in cow parsley that, when activated by light, literally burned them. This led Dr. Levy to orient her research to photodynamic therapy (“PDT”), which uses light to activate pho-tosensitizer compounds. Photodynamic therapy works by shining light on the pho-tosensitizer, which energizes the photosen-sitizer and transforms it into a toxic chemical.

Successful exploitation of this light-induced toxicity for therapeutic purposes requires “targeting” the photosensitizer so that it kills only unwanted cells. Dr. Levy eventually helped develop a proprietary photosensitizer called benzoporphyrin derivative monoacid (“BPD”), which had a unique ability to deliver itself to new blood vessels immediately upon injection. BPD proved to be a compound with several other attributes that made it a promising candidate for photodynamic therapy: BPD could absorb light at a wavelength that penetrates animal tissue, and in a liposo-mal formulation, it could be absorbed by certain blood cells, allowing for the possibility of destroying such unwanted blood cells. QLT eventually acquired the sole right to license BPD from the University of British Columbia. In exchange for this patent right, QLT agreed to pay a royalty of 2% of net sales.

Although BPD held promise, it was, for a time, a drug in search of a disease. Dr. Levy initially hoped to develop the drug as a cancer treatment. This was the state of affairs when Dr. Levy first made contact with researchers at Massachusetts General Hospital (“MGH”), and later, MEEI.

Dr. Levy’s contacts at MGH, Drs. Tay-yaba Hassan, Reginald Birngruber and Ursula Schmidt-Erfurth, collaborated on using photodynamic therapy to close blood vessels initially in chick embryos, and later, in rabbit eyes. In due course, this group experimented with a variety of compounds for this purpose, including BPD, which was obtained from QLT.

Eventually, Dr. Schmidt-Erfurth brought the BPD compound to the attention of MEEI. Dr. Schmidt-Erfurth proposed studying the use of BPD to treat intraocular tumors and, at the suggestion of Dr. Evangelos Gragoudas, to close normal choroidal blood vessels without damaging the retina.

Independently, Dr. Gragoudas hired Dr. Joan Miller, a former MEEI fellow, to investigate whether BPD could be used to treat AMD — an ocular disease that is the predominant cause of blindness in individuals over age fifty. The condition takes two forms: “dry” and “wet.” Although the wet form accounts for only 10% of all occurrences of AMD, it leads to the condition known as either choroidal neovascula-ture (“CNV”) or neovasculature, which causes 90% of AMD-related vision loss. CNV is the result of the proliferation of unwanted blood vessels in the choroid. Thus, closing such vessels would effectively palliate AMD.

Dr. Miller conducted her experiments using primate eyes, which, like human eyes, have retinas and retinal vessels. The rabbit eyes that Dr. Schmidt-Erfurth used to conduct her experiments lacked *52 retinal vessels. This was a consequential distinction: in the early 1990s, the prevailing view held that the most cogent way to prove that PDT could be used to treat AMD was to show that PDT could close the abnormal choroidal vessels that cause CNV without damaging the underlying, healthy retinal vessels. This demonstration was important because damage to normal retinal vessels would lead to a loss of vision. Consequently, Dr. Schmidb-Er-furth’s experiments on rabbit eyes, which lack such normal vessels, could not predict PDT’s suitability for use in treating AMD.

Dr. Miller obtained access to BPD pursuant to material transfer agreements with QLT. QLT did not provide any funding for Dr. Miller’s initial research. Dr. Miller’s BPD-based experiments proved successful. She showed that BPD was a promising photodynamic agent for the treatment of age-related macular degeneration.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
552 F.3d 47, 2009 U.S. App. LEXIS 560, 2009 WL 78064, Counsel Stack Legal Research, https://law.counselstack.com/opinion/massachusetts-eye-ear-infirmary-v-qlt-phototherapeutics-inc-ca1-2009.