OPINION AND ORDER Plaintiff 3DT Holdings LLC (“Plaintiff” or “3DT”) and Defendant Bard Access Systems Inc. (“Defendant” or “Bard”) each cross-move for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the following reasons, 3DT’s motion for summary judgment is denied, and Bard’s motion for summary judgment is granted in part and denied in part. BACKGROUND This case involves the sale and development of a technology for use in navigating, tracking, and confirming the location of the tip of a catheter during heart surgery. On the parties’ cross-motions for summary judgment, the Court draws all reasonable inferences against the moving party. It grants summary judgment only if the facts that are not genuinely in dispute demonstrate the absence of a material issue and support entry of judgment as a matter of law. Plaintiff 3DT is a limited liability company organized under the laws of the state of Delaware, with its principal place of business in San Diego, California. Dkt. No. 73 1.1 3DT created an technology” intended to id. 3 (citing Dkt. No. 73-1 at 2); this technology is referred to as the “Precisive Navigation Technology,” id. Defendant Bard is a corporation organized under the laws of the state of Utah, with its principal place of business in Salt Lake City, Utah. Id. 2. I. The Sale of the Precisive Navigation Technology from 3DT to Bard In 2013, 3DT entered into a sale transaction pursuant to which it sold its Precisive Navigation Technology to Bard for further development, regulatory approval, and sale. Dkt. No. 73
4, 6-7. 3DT primarily vetted a total of four potential buyers, including Bard, that were interested in acquiring the Precisive Navigation Technology. Id. 5. The transaction was documented in three agreements executed by Bard and 3DT on August 29, 2013: An Asset Purchase Agreement (the “Purchase Agreement”), Dkt. No. 73-1, a Design, Development and Services Agreement (the “Development Agreement”), Dkt. No. 73-2, and a Statement of Work (“SOW”), Dkt. No. 73-3. Dkt. No. 73 7. The Purchase Agreement, Development Agreement, and SOW are referred to collectively as the “Purchase Documents.” The language of the Purchase Documents is critical to the disposition of this contract dispute. A. The Purchase Agreement The Purchase Agreement provided for 3DT to “sell, convey, assign, transfer and deliver” to Bard “all right, title and interest” of 3DT, free and clear of all encumbrances, to “the product incorporating the Precisive Navigation Technology…and all (x) prototypes thereof, (y) line extensions, modifications, improvements, additions, successors thereto, and (z) replacements therefor.” Dkt. No. 73-1 §2.01. The purchase price was to be paid in two installments. Id. §2.04. was be tendered to 3DT at the time of closing. Id. §2.04(a). The remaining was due to “be paid by Buyer [Bard] directly to Seller [3DT] (the “Full Milestone Payment”), either (1) upon receipt by [Bard] or its designee, assignee or transferee of its first 510(k) clearance from the FDA2 to market and sell a medical device that incorporates the Precisive Navigation Technology in the Buyer Field,” id. §2.04(b); or (2) under some circumstances where it has ceased to provide commercially reasonable support to the development of the product. Bard has not paid any of the Full Milestone Payment. It also has not received FDA clearance to market and sell a medical device incorporating the Precisive Navigation Technology. Whether Bard’s obligation to pay the Full Milestone Payment was triggered is at the heart of this lawsuit. Dkt. No. 1. 3DT claims that its right to the Full Milestone Payment was triggered, and it is entitled to the payment, while Bard claims that it has not breached the Purchase Agreement and that the condition precedent for the Full Milestone Payment has not occurred. Section 2.04(b) of the Purchase Agreement defines Bard’s obligations to support the development of the Precisive Navigation Technology and sets forth the circumstances under which, in the absence of FDA clearance, Bard is obligated to make the Full Milestone Payment. It states: [Bard] shall be obligated to support the development of the Precisive Navigation Technology as and to the extent contemplated by the Development Agreement; provided that [Bard] may elect, at any time and for any reason, to not continue to support the development of the Precisive Navigation Technology as and to the extent contemplated under the Development Agreement, without violation of the Development Agreement, if it provides at least thirty (30) days prior written notice thereof to [3DT] (“Notice of Discontinued Support”) and pays to [3DT], not later than forth-five [sic] (45) days following the date of such Notice of Discontinued Support, the Full Milestone Payment. Dkt. No. 73-1 §2.04(b). In short, Bard has the right at any time and for any reason to stop or suspend work on the project but, if it does so, it ordinarily must pay 3DT the remaining. Section 4.05 of the Purchase Agreement states, in pertinent part, “Buyer will be the lawful owner of, and have good, valid and marketable title to, the Acquired Assets, free and clear of all Encumbrances.” Id. §4.05. B. The Development Agreement The Development Agreement, to which the Purchase Agreement refers, defines Bard’s obligation to support the development of the Precisive Navigation Technology. It sets forth the agreement of the parties with respect to “the design, development validation and testing of one or more new Bard products in the Buyer Field that utilizes, incorporates, and/or employs the Precisive Navigation Technology.” Dkt. No. 73 13 (citing Dkt. No. 73-2 at 1). The term of the Development Agreement runs from “the Effective Date and, unless earlier terminated as expressly provided herein, shall continue until the completion, expiration or termination (pursuant to Section 9.2 below) of the Statement of Work.” Id. 16 (citing Dkt. No. 73-2 §9.1). The language of Section 2.1 of the Development Agreement is critical to the resolution of this dispute. It provides: Bard has interest in designing, developing, validating, testing and commercializing a possible Bard Product using the Precisive Navigation Technology, and, through this Agreement, wishes to engage 3DT to perform Services (as defined herein) in support of that endeavor. Bard shall provide commercially reasonable personnel, financial and other support (as determined by Bard, in good faith, based upon its reasonable business judgment) with regard to the development of a Bard Product incorporating the Precisive Navigation Technology. Notwithstanding the foregoing, following the third (3rd) anniversary of the Effective Date, if Bard determines, in good faith, based upon its reasonable business judgment, that the Exploitation of a Bard Product incorporating the Precisive Navigation Technology is no longer commercially practicable due to (i) technological failure(s) of the Bard Product to perform to Bard-required specifications (ii) clinical failures, (iii) ineligibility for a 510(k) premarket notification application, or (iv) the creation, development and/or commercial availability of superior technology, then Bard shall have no obligation to continue to support the development of a Bard Product incorporating the Precisive Navigation Technology or seek the 510(k) clearance or CE Mark, as contemplated by Section 2.04(b) of the Purchase Agreement. For clarity, the Parties understand and agree that, following any such discontinuance of support by Bard, Bard shall have no obligation to pay the Full Milestone Payment (or any one-half portion thereof), unless, notwithstanding such discontinuance, Bard subsequently obtains the 510(k) clearance and/or the CE Mark trigging [sic] either the Full Milestone Payment (or any one-half portion thereof), as contemplated by Section 2.04(b) of the Purchase Agreement. Id. 14 (emphasis added) (citing Dkt. No. 73-2 §2.1). The third anniversary of the “Effective Date” occurred on August 29, 2016. Id. 15. C. The Statement of Work The Statement of Work (“SOW”) — to which the Development Agreement refers — was executed on the date of the acquisition and prior to Bard’s development of the technology. Id. 18. It: sets forth the tasks, responsibilities, budget and schedule for the fabrication and testing of a prototype, for use with the Precisive Navigation Technology to allow for the This SOW also includes the deliverables which shall be provided by 3DT to Bard (“3DT Deliverables”), including data and final report showing in vivo (animal study) performance compared to design specifications. It is the intention of the Parties that the completion of the tasks and deliverables described in this SOW will be a collaborative effort that appropriately leverages the relative strengths and capabilities of the Parties. Id. (citing Dkt. No. 73-3 §1). The Statement of Work contemplated “[t]he major tasks to be completed” as: (1) “[d]esign and fabricate (2) “[d]esign and fabricate Id. 19 (citing Dkt. No. 73-3 §2.1). II. The Development of a Bard Product Incorporating the Precisive Navigation Technology Upon purchasing the Precisive Navigation Technology, Bard took action to develop that technology for use in a Bard Product. Bard established a project — internally referred to as “Penske” — to develop a product incorporating the technology. Dkt. No. 73 20. Bard also assembled a cross-functional team, which contained at least five members, including two full-time engineers — Zach Davis and Brian Cieselwicz, both of whom were hired in 2013 — and designated a leader for the project. Id.
