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PerkinElmer, Agilent Reach Resolution in Mass Spec Patent Suit

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NEW YORK (GenomeWeb) — PerkinElmer and Agilent Technologies have reached a resolution in their mass spec patent dispute by agreeing to a dismissal of their claims and counterclaims.

The dismissal was with prejudice, meaning that the companies cannot bring any further suits based on the claims. What, if any, settlement, the two parties reached regarding the lawsuit was not disclosed.

The stipulation for dismissal was filed Nov. 10 in the US District Court for the District of Massachusetts. It followed a Sept. 24 order issued by US District Judge Nathaniel Gorton in which he dismissed four of Agilent's counterclaims while also denying the company's request for summary judgment on its claim that PerkinElmer had breached a' contract between the firms and that it was entitled to compensation for overpayment of license fees.

In the order, the court also allowed PerkinElmer's motion for summary judgment on its claim that Agilent had failed to pay royalties required under the companies' agreement on sales of triple quadrupole instruments. It denied PerkinElmer's motion for summary judgment regarding Agilent's non-payment of royalties on its other mass spec instruments and software.

The lawsuit began in April 2012 when PerkinElmer filed a complaint alleging that Agilent mass spectrometry systems — including the company's 6100 series quadrupole, 6200 series TOF, 6300 series ion trap, 6400 series triple quadrupole, and 6500 series Q-TOF instruments — infringed two of its US patents, Nos. 5,686,726 and 5,581,080, entitled "Composition of Matter of a Population of Multiply Charged Ions Derived from Polyatomic Parent Molecular Species" and "A Method for Determining Molecular Weight Using Multiply Charged Ions," respectively.

However, in May 2013, the US Patent and Trademark Office issued actions for both patents in which it rejected all but two of the '080 patent claims and all of the '726 patent claims for double patenting. This led the companies to agree to narrow the proceedings' scope to limit the litigation to a breach of contract count PerkinElmer added to its initial patent infringement complaint — perhaps in anticipation of the USPTO's ruling — in an Oct. 2, 2012 filing.

Agilent, meanwhile, filed counterclaims asserting that it had overpaid royalties on sales of certain mass spectrometers that were not used in a manner covered by patents that it had licensed from PerkinElmer, and, as such, that it was owed repayment by PerkinElmer of any money the latter received via this overpayment.

This claim was among those taken up and dismissed by the court in its Sept. 24 order. At the center of the dispute was the question of the meaning of a passage in the companies' license agreement that said Agilent was required to pay royalties on sales of any instrument "which is used for" activities infringing PerkinElmer's patents.

Agilent argued that the phrase "which is used for" meant that the instruments sold had to, in actual practice be used for an infringing activity, while PerkinElmer asserted that the phrase meant merely that the instruments sold must be capable of being used for such an activity.

The court ruled in PerkinElmer's favor on this point, dismissing Agilent's counterclaims that it should receive repayment for overpayment of royalties on sales of triple quadrupole machines and allowing PerkinElmer's motion for summary judgment against Agilent for its failure to pay royalties on these machines.

The court did not allow motions for summary judgments regarding other mass instruments and software products in dispute, noting that the arguments on these issues were not yet developed enough to allow for such judgment.

The court also ruled against Agilent's claim that PerkinElmer committed breaches of contract by offering licenses to Agilent's competitors on more favorable terms.

The license agreement contained a "most favored nation" provision that established that if PerkinElmer provided the patent to another firm it must notify Agilent, and that if both Agilent and PerkinElmer agreed that the terms of the third party license were more favorable, Agilent would have the right to substitute those more favorable terms.

Under their license agreement, Agilent was required to pay PerkinElmer $1,500 for each licensed product and $5,000 for each software product sold in the US. Agilent was also required to make a minimum payment based on historical sales if its sales of software in any three-year period fell below an established minimum number.

The court noted that following its 2010 license agreement with Agilent, PerkinElmer made at least three license agreements with outside parties without providing notice to Agilent, two of which agreements with Shimadzu and JEOL — provided a "paid-up" license under which no additional royalties were owed, for an initial payment of $50,000.

However, although the court determined that PerkinElmer breached the contract by not notifying Agilent of these third-party licenses, it agreed with PerkinElmer's interpretation that the "MFN" clause was enforceable only if both parties agreed that the third-party licenses were more favorable.

"While Agilent protests that PerkinElmer's interpretation is an absurd result that the Court should avoid lest it render the clause inoperative, the Court sees no ambiguity, only poor draftsmanship," it noted in its Sept. 24 order. 

Accordingly, the court denied Agilent's motion for summary judgment on PerkinElmer's violation of the "MFN" clause and dismissed the related counterclaim.

In all, the court denied Agilent's claims for summary judgment regarding PerkinElmer's breach of contact on the "MFN" issue and royalty overpayment while dismissing its four counterclaims. The court also ruled that Agilent did, in fact, owe royalties on all sales of triple quadrupole instruments under the license.

This left as live issues the matters of what, if any, royalties were owed on other mass spec instruments and software packages covered by the license. The resolution of these issues was not disclosed.

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