Intercept Pharmaceuticals Inc. v. Fiorucci

Filing 59

MEMORANDUM ORDER Denying 38 MOTION for Temporary Restraining Order. Signed by Judge Richard G. Andrews on 1/28/2016. (nms)

IN THE UNITED STATES DISTRICT COURT
. FOR THE DISTRICT OF DELAWARE

INTERCEPT PHARMACEUTICALS, INC.,
Plaintiff,
Civil Action No. 14-1313-RGA

v.
STEFANO FIORUCCI,
Defendant.

MEMORANDUM ORDER
I

I

On October 15, 2014, Plaintiff Intercept Pharmaceuticals, Inc. filed a three-count
Complaint against Defendant Stefano Fiorucci. (D.I. 1). Plaintiffs Complaint seeks a
declaratory judgment that Defendant is not an inventor of a specific subset of Plaintiffs patents
("the Intercept-Pellicari patents"). (Id. at 12-13). Plaintiff also seeks equitable relief, alleging
that Defendant breached various patent assignment clauses-in the Sponsored Research
Agreements ("SRAs"), Consulting Agreements ("CAs"), and the Termination Agreement
between the parties-by failing to formalize-the assignment of various other patents for which he
is indisputably a named inventor. (Id. at 13-14). On December 15, 2015, Defendant informed
Plaintiff of his intent to "auction his interest in [the various disputed patents] to third parties,
.
.
whatever his interest may be," despite acknowledging that "title to these patents may not be
clear .... " (D.L 40-1at112-13). Presently before the Court is Plaintiffs Motion for a
Temporary Restraining Order ("TRO"). (D.I. 38). The motion is fully briefed. (D.I. 39, 42, 53).
For the reasons that follow, the Court will deny Plaintiffs motion for injunctive relief.
Pursuant to 35 U.S.C. § 283, a court in a patent case "may grant injunctions in
accordance with the principles of equity to prevent the violation of any right secured by patent,

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on such terms as the court deems reasonable." 35 U.S.C. § 283. The Federal Circuit has
"cautioned, however, that a preliminary injunction is a drastic and extraordinary remedy that is
not to be routinely granted." Intel Corp. v. ULSI Sys. Tech., Inc., 995 F.2d 1566, 1568 (Fed. Cir.
1993). The Federal Circuit has held that "[a]lthough state law governs the interpretation of
contracts generally, the question of whether a patent assignment clause creates an automatic
assignment or merely an obligation to assign is intimately bound up with the question of standing
in patent cases." DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1290 (Fed.
Cir. 2008) (citation omitted). Accordingly, it has treated the interpretation of patent assignment
clauses "as a matter of federal law." Id.
"A request for a TRO is governed by the same general standards that govern the issuance
of a preliminary injunction." Takeda Pharm. USA, Inc. v. West-Ward Pharm. Corp., 2014 WL
5088690, at *1 (D. Del. Oct. 9, 2014). To demonstrate entitlement to injunctive relief, a movant
must establish: "(1) a reasonable likelihood of success on the merits; (2) irreparable harm if an
injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction's
favorable impact on the public interest." Amazon.com, Inc., v. Barnesandnoble.com, Inc., 239
F.3d 1343, 1350 (Fed. Cir. 2001). "[T]he decision whether to grant or deny injunctive relief
rests within the equitable discretion of the district courts .... " eBay Inc. v. MercExchange, .
.
.

L.L.C., 547 U.S. 388, 394 (2006). The Federal Circuit, however, has placed particular emphasis
on the first two factors: "a movant cannot be granted a preliminary injunction unless it
establishes both of the first two factors, i.e., likelihood of success on the merits and irreparable
harm." Amazon.com, 239 F.3d at 1350 (emphasis in original). Accordingly, "[w]hile granting a
preliminary injunction requires analysis of all four factors, a trial court may ... deny a motion
based on a patentee's failure to show any one of the four factors-especially either of the first

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two-without analyzingthe others." Jack Gilttman, Inc. v. Kopykake Enters., Inc., 302 F.3d
1352, 1356 (Fed. Cir. 2002) (citation omitted); see also Chrysler Motors Corp. v. Auto Body
Panels of Ohio, Inc., 908 F.2d 951, 953 (Fed. Cir. 1990) ("If the injunction is denied, the absence
of an adequate showing with regard to any one factor may be sufficient, given the weight or lack
of it assigned the other factors, to justify the denial.").
· Regarding the first factor, likelihood of success on the merits, Plaintiff argues that it is
likely to succeed on the issue of assignment rights because the plain language of the SRAs and
CAs grants all patent rights to Plaintiff and requires Defendant to cooperate in executing any
documentation necessary to perfect assignment. (D.I. 39 at pp. 11-12). Moreover, Plaintiff
argues that Defendant cannot meet the high burden of demonstrating that he was an inventor of
the Intercept-Pellicari Patents. (Id. at pp. 13-14). Defendant argues that the CA only created an
obligation to assign patents, rather than an automatic assignment oflegal title to future patents,
and that his obligations under the CA ceased in 2007 when Plaintiff wrongfully terminated him. 1
(D.1. 42 at pp. 8-12). Alternatively, Defendant argues that Plaintiff is barred from enforcing its
contractual rights by Delaware's three-year statute of limitations for breach. of contract claims.
(Id. at pp. 12-14). Defendant also asserts that, by the end of fact discovery, he will be able to
better corroborate his claim that he was an inventor of the disputed patents. (Id. at pp. 14-15).
It appears to the Court that Plaintiff has a good case on the merits, at least with respect to

the plain language of the assignment clauses in the CAs and SRAs, which would render
Defendant's inventorship arguments irrelevant. Federal Circuit case law currently holds that:
If an assignment of rights in an invention is made prior to the existence of the
invention, this may be viewed as an assignment of an expectant interest. . . . Once
the invention is made and an application for patent is filed, however, legal title to
the rights accruing thereunder would be in the assignee .....
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Defendant also argues that he is not bound by the SRAs in his individual capacity, because he only signed them
in his capacity as Principal Investigator on behalf of the University of Perugia. (D.I. 42 at pp. 11-12).

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Filmtec Corp. v. Allied-Signal, Inc., 939F.2d1568, 1572 (Fed. Cir. 1991). 2 The contract

language here appears to do exactly what is described in Filmtec: it assigns rights to inventions
not yet conceived. (2006 CA, D.I. 44-1at30, § 4.1 ("Consultant hereby assigns to the Company
all Inventions and any and all related patents .... "); 2006 SRA, D.I. 40-1. at 34, § 4.2 ("[T]he
Research Parties hereby assign to Sponsor all rights title and interest in and to all Research
Project Patent Rights and Research Project Technology upon creation, each such assignment to
be effective as of the date of creation.")). Because I find, however, that Plaintiff has not shown
that it will suffer irreparable harm if a TRO is not granted, a fuller assessment of Plaintiffs
likelihood of success on the merits is not necessary in order to decide Plaintiffs motion. 3 See
Jack Guttman, 302 F.3d at 1356; see also Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 974

(Fed. Cir. 1996) (explaining that "a trial court need not make a finding on a movant's likelihood
of success on the merits" if it finds in the non-movant' s favor as to the irreparable harm prong).
Plaintiffs sole argument that it will suffer irreparable harm is that Defendant's public
auction will suggest to shareholders and potential investors that there is a cloud over Plaintiff's
title to its most important patents, causing its stock price to drop. (D.I. 39 at pp. 15-16).
Plaintiff cannot point to any case law, however, suggesting that a.potential drop in stock price

2

Three Supreme Court Justices have recently suggested that the Federal Circuit's Filmtec decision should be
revisited. See Bd. of Trustees ofLeland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 131 S. Ct. 2188, 220203 (2011) (Breyer, J., dissenting) ("It is unclear to me why, where the Bayh-Dole Act is at issue, we should prefer the
Federal Circuit's Filmtec rule to the rule, of apparently much longer vintage, that would treat both agreements in this
case as creating merely equitable rights."); id. at 2199 (Sotomayor, J., concurring) ("I share Justice Breyer's concerns
as to the principles adopted by the Court of Appeals for the Federal Circuit in [Filmtec] ...."). This argument,
however, was not squarely before the Court. More recently, the Federal Circuit held that it is "bound by Filmtec;
[and] cannot overrule that holding without en bane action." Shukh v. Seagate Tech., LLC, 803 F.3d 659, 663 (Fed.
Cir. 2015). Moreover, the Federal Circuit subsequently denied a petition for rehearing en bane challenging theFilmtec
rule in that case. Shukh v. Seagate Tech., LLC, No. 2014-1406, D.I. 118 (Fed. Cir. Dec. 17, 2015). Accordingly, until
the issue is squarely addressed by the Supreme Court or an en bane panel of the Federal Circuit, this Court would still
be bound to apply Filmtec in any merits determination.
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I recognize that the above merits discussion does not probe each and every one of the defenses raised by
Defendant. I only intend the above discussion to be my initial observations of Plaintiffs case, rather than a complete
merits analysis.

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alone can meet the irreparable harm prong for injunctive relief. Plaintiffs present dispute with
· Defendant concerning these patents-this litigation-is public record and Plaintiff claims that its
"SEC filings noted that [Defendant] has refused to execute assignment documents .... " (D.I. 53
at p. 9). I cannot conceive how the possibility that a company's stock price will drop due to an
opposing litigant's public reassertion of his already-public litigation position creates a likelihood
of irreparable harm justifying the "drastic and extraordinary remedy" of injunctive relief. Intel
Corp., 995 F.2d at 1568.

In effect, Defendant is seeking to sell his interest in a lawsuit by quitclaim deed, whatever
the merits of that interest may be. Plaintiffs motion for a TRO effectively seeks to ensure that
the lawsuit remains against this individual Defendant, rather than against a third-party purchaser
of Defendant's purported rights. I do not think that having to enforce its patent rights against a
third-party purchaser of Defendant's interest in these patents, rather than Defendant himself,
would cause irreparable harm to Plaintiff. Plaintiff must make the same showing with regard to
the assignment and inventorship of the patents, regardless of the identity of the Defendant.
With regard to the third and fourth factors in the injunctive relief calculus, the balance of
hardships and the public interest, "a trial court need not make findings concerning the third and
fourth factors if the moving party fails.to establish either of the first two factors." Polymer
Techs~, 103 F.3d at 973-74. Because Plaintiff has failed to meet its burden of showing

irreparable harm, an analysis of the third and fourth factors is not necessary.
Plaintiffs Motion for a Temporary Restraining Order (D.I. 38) is DENIED.
It is SO ORDERED this

2$

day of January, 2016.

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