The 7th U.S. Circuit Court of Appeals ruled Tuesday in favor of the Wisconsin Alumni Research Foundation, which claimed that the drug company Xenon breached their agreement to share licensing fees for a patent covering a cholesterol-lowering enzyme. The 28-page ruling affirms the district court’s award of $300,000 to WARF. But the bigger story is the 7th Circuit’s finding that the contract between WARF and Xenon trumped Xenon’s patent law rights.
In an eloquent discussion of the ruling, Dennis Crouch of Patently-O explains that Xenon’s Sidley Austin attorneys had tried to invoke the law of concurrent patent ownership, which generally holds that joint patent owners don’t have to share licensing revenue. But both the district court and the 7th Circuit found that the rule doesn’t apply when the parties have reached an agreement to the contrary. Even if that agreement does not explicitly revoke the law of concurrent patent ownership, the 7th Circuit concluded, the contract holds.
“Xenon argues that nothing in the exclusive license agreement explicitly revokes its statutory right to license its interest freely,” wrote Judge Diane Schwerm Sykes for the court. “True, but the agreement’s provision requiring that Xenon pay the [WARF] a share of the fees derived from any sublicense plainly undermines Xenon’s claim that it retained an unfettered right … to transfer its interest in the technology to third parties.”
Russell Johnson of Sidley Austin, an attorney for Xenon, was not available for comment. WARF’s attorney, Anthony Tomaselli of Quarles & Brady, did not return a call for comment.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
