The Salk Institute for Biological Studies v. Acceleron Pharma, Inc.

Filing 148

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER: " In accordance with the foregoing, Salk's objection to Magistrate Judge Collings' order (Docket No. 114 ) is OVERRULED.So ordered."(Moore, Kellyann)

United States District Court
District of Massachusetts

SALK INSTITUTE,
Plaintiff,
v.
ACCELERON PHARMA, INC.,
Defendant.

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Civil Action No.
13-10708-NMG

MEMORANDUM & ORDER
GORTON, J.
This case involves a dispute between the Salk Institute for
Biological Studies (“Salk”), a non-profit research institute,
and Acceleron Pharma, Inc. (“Acceleron”), a technology company,
with respect to the scope of a licensing agreement (“the SalkAcceleron Agreement”).

The facts of this case can be summarized

briefly for resolution of the subject discovery dispute.
In 2004, Salk licensed its activin receptor patents, used
as the basis for several medical treatments involving hormone
regulation and immune response, to Acceleron in exchange for a
percentage of Acceleron’s profits from any sublicenses.
Acceleron subsequently negotiated drug manufacturing and
distribution agreements with two companies, Shire AG (“Shire”)
and Celgene Corporation (“Celgene”).

In 2010, Acceleron entered

into a collaboration agreement with Shire (“the Shire

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Agreement”) in which Shire paid Acceleron $45 million (“M”) for
a variety of rights related to production of ACE-031, a drug
developed to treat muscular dystrophy.

Acceleron calculated

that $2.25M of that amount was “Sublicensing Revenue” under the
Salk-Acceleron Agreement and, accordingly, paid Salk 10% of that
amount ($225,000).

In 2011, Acceleron entered into a similar

agreement with Celgene (“the Celgene Agreement”) in which
Celgene paid Acceleron $32.5M for patent rights related to
production and distribution of ACE-536, a drug developed to
treat anemia.

Acceleron considered the agreement unrelated to

any of Salk’s technology and, therefore, paid Salk nothing.
Salk alleges that the Shire and Celgene Agreements are
sublicenses of Salk’s technology under the Salk-Acceleron
Agreement and that Salk is entitled to a percentage of each of
the subject license fees.

In October, 2012, Salk sued Acceleron

for breach of contract and related claims in state court seeking
a total of $9.15M in damages.
the case to this Court.

Acceleron subsequently removed

Acceleron disputes Salk’s calculation

of Sublicensing Revenue under the Shire Agreement and denies
that it transfered any Salk technology to Celgene.
Despite admonitions from both this Court and Magistrate
Judge Robert B. Collings to resolve discovery disputes in a
reasonable manner, the parties have failed to do so.

This

memorandum and order necessarily addresses Salk’s motion of July
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12, 2013, to compel Acceleron to produce “technical and
scientific documents” related to 24 separate outstanding
discovery requests (Docket No. 79).

After extensive briefing on

the issue and a lengthy hearing, Magistrate Judge Collings
denied Salk’s motion on October 15, 2013, in the following
order:
After a close reading of the Complaint, the Court does
not find the requested discovery “relevant” to the
issues between the parties.
However, even if
relevant, the Court finds that the requests are far
too broad.
Pending before the Court are Salk’s objections to Magistrate
Judge Collings’ order on the grounds that the subject discovery
is relevant to (1) Salk’s claim that Acceleron sublicensed
Salk’s technology to Celgene and (2) Salk’s requested method of
apportionment of Sublicensing Revenue.
Because Magistrate Judge Collings’ order concerned a
nondispositive matter, the Court reviews it under a “clearly
erroneous” or “contrary to law” standard. See Fed. R. Civ. P.
72(a).

The order is concise but clearly spells out the

rationale for denying Salk’s motion, namely that the discovery
sought is not relevant to Salk’s desired remedy.

The order will

therefore be set aside only if the determination of irrelevancy
involved clear error.
After reviewing the parties’ briefs and the transcript of
the subject hearing, this Court finds no such error in
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Magistrate Judge Collings’ order.

This Court agrees with the

Magistrate Judge that the appropriate lens through which to
examine this dispute is the Complaint.

The material issues

raised therein are (1) the proportion of the $45M paid under the
Shire Agreement that is Sublicensing Revenue and (2) whether the
Celgene Agreement is a sublicense under the Salk-Acceleron
Agreement.

Both issues can be decided without the exhaustive

production of Acceleron’s technical and scientific materials.
Moreover, the Court is not convinced that 1) the SalkAcceleron Agreement included what Salk describes as “know-how”
related to Salk’s non-patent rights or 2) the subject discovery
is relevant to any purported, undisclosed transfer of technology
related to Salk’s “know-how.”
Accordingly, the Court finds no clear error in Magistrate
Judge Collings’ conclusion that the discovery of “technical and
scientific documents” is irrelevant to Salk’s claims.

The Court

need not reach the alternative ground that the request is overly
broad.
ORDER
In accordance with the foregoing, Salk’s objection to
Magistrate Judge Collings’ order (Docket No. 114) is OVERRULED.
So ordered.
/s/ Nathaniel M. Gorton
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Nathaniel M. Gorton
United States District Judge
Dated December 12, 2013
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