Continuing in its bid to extract itself from the breach-of-contract and patent-infringement dispute between subsidiary Dharmacon and the Massachusetts Institute of Technology, Fisher Scientific has filed with the US District Court for the District of Massachusetts a memorandum in support of its earlier motion seeking a dismissal of charges against it.
In the filing, dated July 1, Fisher states that it is not a party to any contract between MIT and Dharmacon and therefore has no obligations to the institute. Further, Fisher offers evidence designed to support its defense against MIT's claims that the company sells Dharmacon products that infringe upon an MIT patent.
Finally, Fisher claims that the presence of its representatives at negotiations last year between MIT and Dharmacon to resolve the dispute does not provide a "basis to pierce the corporate veil between Dharmacon and Fisher."
In January, MIT sued Dharmacon for allegedly failing to meet its royalty obligations under a December 2001 licensing deal for a portfolio of siRNA-related intellectual property (see RNAi News, 2/11/2005). The suit also named Fisher Scientific as a defendant.
That IP — which has been co-exclusively licensed to Dharmacon, Ambion, Qiagen, and Proligo — relates to the use of short pieces of double-stranded RNA to mediate RNAi. It includes US patent application no. 09/821,832; US patent application no. 10/255,568; and PCT application no. US01/10188. The IP estate is jointly owned by MIT, the Whitehead Institute, the Max-Planck Institute, and the University of Massachusetts, but MIT is authorized to act as licensing agent on behalf of all the institutes.
A few months later, MIT amended its suit against Dharmacon and Fisher to include infringement of an MIT-controlled patent covering reverse transfection technology (see RNAi News, 4/15/2005).
MIT's amended complaint "provides no discernable factual basis for direct liability on the part of Fisher." The suit also "fails utterly to allege any basis … to disregard the separate corporate entities of Dharmacon and Fisher."
The US patent — number 6,544,790, and entitled "Reverse Transfection Method" — covers "a reverse transfection method of introducing DNA of interest into cells and arrays, including microarrays, of reverse transfected cells." It had been exclusively licensed to microarray developer Akceli, which formed a collaboration with Dharmacon in late 2003 to develop the technology for RNAi applications but went out of business shortly thereafter (see RNAi News, 3/19/2004).
In late May, Fisher Scientific petitioned the court to dismiss the portion of MIT's lawsuit in which it was named a defendant because it said the Institute allegedly failed to show a link between Fisher Scientific and the breach-of-contract and patent-infringement charges against its subsidiary (see RNAi News, 6/3/2005).
Responding to the motion to dismiss, MIT said in a June 10 court filing that Fisher should remain a party to the suit because it both directly infringes on the patent in question through the sale of certain Dharmacon products, and plays an active and significant role in Dharmacon's business dealings, including the negotiations with MIT to settle the legal dispute (see RNAi News, 6/24/2005).
In last week's memo to the court, however, Fisher stated that MIT's amended complaint "provides no discernable factual basis for direct liability on the part of Fisher. Moreover, to the extent that the amended complaint asserts liability to Fisher as the parent of Dharmacon … it fails utterly to allege any basis — other than the alleged parent-subsidiary relationship — to disregard the separate corporate entities of Dharmacon and Fisher."
Fisher added that MIT's pursuit of claims against Fisher "is simply a part of a continued effort to harass and intimidate Dharmacon and to try to obtain a degree of bargaining leverage."
In its June 10 response to Fisher's motion to dismiss, MIT provided an excerpt from Fisher's website, along with a list of Dharmacon products sold through that website, as evidence of Fisher's infringement of MIT IP.
But in its July 10 memo to the court, Fisher states the institute incorrectly assumed that the excerpt and products pertained to the reverse-transfection technology in question.
In support of its case, Fisher included an affidavit from Bill Marshall, executive vice president of research and operations and Dharmacon site manager, which states in part that "Fisher does not sell any products that use the accused Dharmacon reverse-transfection technology — including but not limited to Dharmacon's siArray RTF siRNA library." Marshall adds in the affidavit that "none of the items listed on the exhibit to MIT's opposition to Fisher Scientific's motion to dismiss … are products that use the accused … technology."
Breach of Contract
In the memorandum, Fisher states that despite MIT's assertions that the company "has sold (and still sells) the technology" covered under MIT and Dharmacon's licensing agreement, and that "Fisher qualifies as an 'affiliate' under the terms of the licensing agreement [with Dharmacon]," a 1985 Massachusetts court ruling indicates that "only a party to a contact may breach [a] contract."
Since "the license agreement clearly states that … 'Dharmacon shall pay to MIT a running royalty of seven percent of net sales by the company and affiliates … even if Fisher can exercise rights under the license agreement as an affiliate, Fisher cannot be liable for breach of contract because it has no obligations to pay any royalties or otherwise," Fisher stated in its memorandum.
Marshall's affidavit indicates that "Fisher has never directly paid any royalties to MIT pursuant to the siRNA distributor license agreement between Dharmacon and MIT, nor is it obligated to make any royalty payments."
In its June 10 opposition to Fisher's motion to dismiss, MIT had claimed that Dharmacon and its corporate parent are not separate and distinct entities given the "significant role" Fisher has played in "the proceedings between the parties over the past year — with its group and in-house counsel taking leading positions in discussions with MIT and attending mediation."
However, in its July memorandum, Fisher alleges that "MIT's suggestion that mere participation by Fisher representatives in several discussions concerning the royalty dispute provides a basis to pierce the corporate veil between Dharmacon and Fisher has no basis in the law. … Massachusetts courts consider a variety of factors in determining whether to pierce the corporate veil between a parent and subsidiary [and] non of these factors concerns whether the parent and subsidiary share legal representation or whether representatives from the parent … participate in disputes concerning the subsidiary."
While MIT stated in its opposition that "one can speculate that Fisher's role is not limited to the publicly available information," and that "Fisher has a significant behind-the-scenes role in [Dharmacon's] activities," Fisher said in the memorandum that "if pure speculation that more information about a parent-subsidiary relationship exists than is publicly available warrants full discovery as to a claim against a parent corporation, a plaintiff could simply join the parent corporations of defendants in any case and thereby be entitled to full discovery as to the … relationship.
"Notice pleading notwithstanding, MIT is required to provide more than just hope and speculation that it has a viable claim in order to survive a motion to dismiss," Fisher added.
— Doug Macron ([email protected])