Charest v. Presidents and Fellows of Harvard College et al

Filing 57

Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered granting in part and denying in part 39 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 11 Motion to Dismiss for Failure to State a Claim; denying [1 1] Motion to Dismiss for Lack of Jurisdiction; specifically dismissal is granted as to Claims II-VI, as to Claim I to the extent that those claims relate to the initial allocation of royalties among the inventors of the Pioneering Patents and as to Claim VII to the extent that those claims relate to the initial allocation of royalties among the inventors of the Pioneering Patents; denied as to Claim I, as it relates to Defendants failure to provide, procedurally, the appeals process promised an d as to Claim VII, as it relates to Defendants withholding of monies owed; because all of the claims against Dr. Myers have been granted he is dismissed from the case as a defendant. It is FURTHER ORDERED that that the parties shall file on or before March 4, 2016 a joint scheduling submission outlining a proposal for bringing this case to final judgment. (Woodlock, Douglas)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

MARK G. CHAREST,
Plaintiff,
v.
PRESIDENT AND FELLOWS OF HARVARD
COLLEGE and ANDREW G. MYERS,
Defendants.

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CIVIL ACTION NO.
13-11556-DPW

MEMORANDUM & ORDER
February 16, 2016
I. BACKGROUND
While a chemistry graduate student at Harvard University,
Dr. Mark Charest worked in a laboratory supervised by Dr. Andrew
Myers.

There, he, along with Dr. Myers and other scientists,

discovered a novel and valuable method for creating synthetic
tetracyclines, which have applications in the development of
commercial antibiotics.

Dr. Charest assigned his rights in the

patents for this invention to Harvard, as he was required to do
pursuant to the participation agreement that he signed with the
University.

Harvard, in turn, licensed these patents to

Tetraphase, a company founded for the purpose of commercializing
the patented invention.

Dr. Charest claims that Harvard has now

deprived him of the share of the royalty stream to which he is
entitled from this license.

He alleges, first, that Harvard and Dr. Myers coerced him
under threats and duress to enter an agreement which reduced his
share of the royalties from the patents and increased Dr. Myers’
share.

Second, he contends that Harvard amended the Tetraphase

License to include additional patented technology, and then
improperly allocated an outsize share of the Tetraphase License
royalties to this new patent on which Dr. Myers was, but Dr.
Charest was not, a listed inventor.
Dr. Charest contends that this conduct breached contractual
obligations to him assumed by Harvard and embodied in Harvard’s
intellectual property policy, and also constitutes a violation
of various common law and statutory prohibitions.

The

Defendants move to dismiss.
A.

Factual Background
The facts drawn from the Amended Complaint are as follows:
1.

Dr. Charest’s Enrollment at Harvard

Dr. Charest enrolled at Harvard University as a doctoral
student in the organic chemistry department in 1999.
¶ 10.

Am. Compl.

While a student, Dr. Charest was advised and mentored by

Dr. Myers, and focused his research on investigating the
synthetic creation of tetracycline antibiotics, a project
suggested by Dr. Myers.

Am. Compl. ¶¶ 15-16.

Prior to Dr.

Charest’s enrollment, Dr. Myers had been unable to create a
2

route for creating new synthetic tetracyclines and told Dr.
Charest that if he successfully worked out the problem “they
could make a [] billion dollars.”
2.

Am. Compl. ¶¶ 8-9.

The Discovery of a Synthetic Route for the Production
of Tetracycline Antibiotics

In 2004, in collaboration with others, Dr. Charest
discovered a method to synthetically create a new class of
tetracycline antibiotics.

Am. Compl. ¶ 11.

More specifically,

Dr. Charest discovered a method for taking an intermediary and
using that intermediary to make a new class of tetracycline
antibiotics in as little as three steps.

Id.

This invention

was particularly valuable because of its potential to treat
otherwise antibiotic-resistant bacteria.

Am. Compl. ¶ 12.

Prior to the publication of Dr. Charest’s doctoral thesis,
Harvard began work on patenting the discovery and Dr. Charest
worked with Harvard’s patent counsel, Dr. C. Hunter Baker, on
patent applications covering his research (the “Pioneering
Patents”).

Am. Compl. ¶¶ 13, 28.

After the patent applications were filed, Dr. Charest and
his collaborators published the results of their research in the
April 2005 issue of Science under the title “A Convergent
Enantioselective Route to Structurally Diverse 6Deoxytetracyline Antibiotics.”

Am. Compl. ¶ 14.
3

Because his

contributions to the research were greatest, Dr. Charest was the
first-listed author of the article.

Am. Compl. ¶ 15.

Based

upon the results of his research on routes for the creation of
synthetic tetracycline, Dr. Charest received his Ph.D. in
organic chemistry in 2004.
3.

Am. Compl. ¶ 10.

The Harvard Participation Agreement and the Harvard
Intellectual Property Policy

In 2003, while a student at Harvard, Dr. Charest signed the
Harvard University Participation Agreement.
Ex. A.

Am. Compl. ¶ 19,

That agreement confirms that Dr. Charest “ha[s] read and

[] understand[s] and agree[s] to be bound by the terms of the
‘Statement of Policy in Regard to Inventions, Patents and
Copyrights’” and “understand[s] and accept[s] the provision of
the University’s royalty income sharing policy . . . as amended
from time to time.”

Am. Compl. Ex. A.

The Harvard University Royalty Sharing Policy for
Intellectual Property (the “IP Policy”) in effect from 2001
until 2008 provided that patent inventors share 35% of the first
$50,000 of royalties and 25% of any amounts above $50,000.

MD

Ex. D at 1.1 The policy provided that, in the case of a single

1

Although an evaluation of a motion to dismiss is typically
limited to those facts alleged in the operative complaint, a
court may consider “documents the authenticity of which are not
disputed by the parties . . . documents central to plaintiffs’
claim [and] documents sufficiently referred to in the
4

invention, “[e]ach inventor receives equal shares of the
inventor(s)’ portion, unless all inventors agree otherwise.

A

deviation from the policy of equal sharing requires a written
agreement of all inventors.”

Id. at 3; Am. Compl. ¶¶ 23-24.

complaint.” Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).
The documents attached as Exhibits A-G to the Defendants’ Motion
to Dismiss, consisting of the patent covering Dr. Charest’s
invention and his assignment of that patent to Harvard,
Harvard’s intellectual property policies, and the National
Institute of Health’s Grants Policy Statement fit within these
categories. Accordingly, the Defendant’s request for judicial
notice of these documents, Dkt. No. 13, which has not been
opposed by Plaintiff, will be GRANTED. I will also grant
Defendant’s request for judicial notice of documents identified
as Exhibits E, and H-0 to the Defendant’s supplemental motion to
dismiss. Supplemental Exhibit D consists of the January 31,
2007 amendment to the license agreement between Harvard and
Tetraphase. This document is sufficiently referred to in the
complaint--and indeed central to Dr. Charest’s claims--to
warrant judicial notice, recognizing, however, that it does not
constitute the entirety of or the final amendment to the license
agreement between Harvard and Tetraphase. Plaintiff opposes
judicial notice of Supplemental Exhibits F, G, and P to
Defendant’s supplemental motion to dismiss, contending that
these documents are incomplete, misleading, incorrect, or
unverified. Supplemental Exhibits F and G are Dr. Myers’
conflict of interest disclosures to Harvard and his consulting
agreement with Tetraphase. These documents are not sufficiently
referenced in the complaint, not public documents, nor central
to Plaintiffs’ claim. Accordingly, I will not take judicial
notice of them. Similarly, I will not take judicial notice of
Supplemental Exhibit P, which consists of excerpts of Harvard’s
30(b)(6) deposition witness addressing facts disputed by the
parties. See Freeman v. Town of Hudson, 714 F.3d 29, 36 (1st
Cir. 2013) (refusing to consider documents which did not fit
into the categories of documents enumerated in Watterson when
considering motion to dismiss).
5

The IP Policy in effect from 2001 until February 2008
provided that, when more than one invention is included in a
license agreement:
1.

Ordinarily each invention/case included in a license
shall be considered of equal value. Absent any
objection from the inventors prior to distribution of
income, license income not specifically linked to an
invention/case will be equally divided among all
inventions/cases included in the license.

2.

If [Harvard’s Office of Technology Transfer and
Licensing] determines . . . that the inventions/cases
should have unequal value, they will notify those
individuals identified as inventors at that point in
time. Absent any objection from the inventors prior
to the distribution of income, license income not
specifically linked to an invention case will be
divided among the inventions/cases according to that
determination.

3.

If all the inventors of all the inventions/cases
included in the license agree upon the relative value
of those inventions/cases, income from that license
will be allocated according to that valuation.

4.

At such time as income is clearly attributable to
individual inventions/cases (e.g., when the product
actually being sold only uses one invention), income
shall be allocated to the inventions/cases actually
generating the income.

5.

If any of the inventors disagrees with the above,
he/she may appeal to the Committee on Patents and
Copyrights. Any such appeal shall only apply to
allocation of income received after the appeal unless
the appeal is made within thirty days of the inventors
being notified of the license agreement and the
planned valuation of the inventions/cases.

MD Ex. D at 4.

6

This policy was amended in February of 2008.

The post-2008

version provides that for a single invention, “Personal . . .
shares . . . will be allocated among Inventors . . . according
to a written agreement among them or, if there is no agreement,
in equal shares.”

MD Ex. E, § 5(E)(1).

For multiple patents

licensed as a package, the post-2008 policy provides that
royalties will be shared:
[a]s agreed in writing among all Inventors or, if no
agreement, in equal shares among Inventors. In the
alternative, upon request of any of the Inventors, OTD
will determine the relative value of each patent to
the package with the Inventor(s) of each patent
sharing equally in the value assigned by OTD. The
foregoing notwithstanding, where an executed license
agreement assigns different values to different
patents licensed as a package, that value shall be the
value assigned for purposes of royalty sharing among
Inventors.
MD Ex. E, § 5(E)(3).

The post-2008 agreement provides that

OTD’s determination of the relative value of the patents
licensed as a package “may be appealed by the persons affected
to the Committee on Intellectual Property for final
determination.”

MD Ex. E, § 5(F).

Section 6 of the post-2008

agreement provides that:
The University Committee on Intellectual Property,
appointed by the President, shall be responsible for
interpreting this policy and resolving questions and
disputes concerning it. From time to time the
Committee may suggest changes to this policy on its
own initiative or at the request of the President and
Fellows of Harvard College or its designee.
7

Other responsibilities of the Committee include the
hearing of appeals as provided under this policy and
other such duties as may be assigned from time to time
by the President and Fellows of Harvard College or its
designee.
In addition to the right to make changes specifically
provided elsewhere in this policy, the University
reserves the right to amend or modify any of the terms
of this policy as it may determine from time to time.
Any such modification or amendment shall become
effective upon adoption by the President and Fellows
of Harvard College or as of such other time as the
President and Fellows of Harvard College shall
specify.
MD Ex. E, § 6.
The policy was modified again effective October 4, 2010.
The post-2010 policy, like the 2008 version, provides that, for
a single patented invention, “Personal . . . shares . . . will
be allocated among Inventors . . . according to a written
agreement among them or, if there is no agreement, in equal
shares.”

MD Ex. F, § 5(E)(1).

The 2010 amendments altered the

language governing distribution of royalties from multiple
inventions licensed as a package, providing that:
First, Net Royalties will be allocated among the
licensed Creations as agreed in writing among all
Creators or, if no agreement, in equal shares among
such Creations. In the alternative, upon request of
any of the Creators, OTD will determine the relative
value to the package of each of the Creations. The
foregoing notwithstanding, where an executed license
agreement assigns different values to different
Creations licensed as a package, that value shall be
the value assigned for purposes of allocating Net
8

Royalties among such Creations. Second, the Creator
personal share . . . of Net Royalties so allocated to
each of the Creations in the package will be allocated
in accordance with Paragraph E.1.
MD Ex. F, § E(3).

As with the 2008 policy, the 2010 amendment

provides that determinations of relative value “may be appealed
by the persons affected to the Committee on Intellectual
Property for final determination.”

MD Ex. F, § V(F).

The 2010 Amendments alter the third paragraph of Section 6,
so that that paragraph reads:
In addition to the right to make changes specifically
provided elsewhere in this policy, the University
reserves the right to amend or modify any of the terms
of this policy as it may determine from time to time.
The President and the Fellows of Harvard College (the
“Corporation”), the President of the University, and
the Provost of the University each severally shall
have the power to make such amendments and
modifications. Any such modification or amendment
shall become effective upon adoption by the
Corporation, President or Provost, as the case may be,
or as of such other time as the Corporation, President
or Provost, as the case may be, shall specify.
MD Ex. F, § 6(C).
The Statement of Policy in Regard to Inventions, Patents
and Copyrights in effect prior to 2001 states that “a standing
University Committee on Patents and Copyrights was created in
1975.

This committee has representation from the principal

faculties potentially affected by policies in this area and from
the administration, and its chairman is a senior administrative
9

officer of the University reporting directly to the President.
It is charged with responsibility for interpreting and applying
University policy in individual cases, and for recommending such
changes in University policy as from time to time may be
required.”

MD Ex. C at 1.

No subsequent versions of the IP

Policy refer to the Committee on Intellectual Property and/or
Patents and Copyrights as a “standing” committee.
Harvard’s “Concise Guide” to its IP Policy, which makes
reference to the 2008 amendments to that policy, describes the
“University Committee on Intellectual Property” as a “standing
committee appointed by the President.”
5.

Am. Compl. Ex. C, § VI.

Dr. Charest Assigns the Patents to Harvard and
Harvard Licenses the Patents to Tetraphase

In a document signed on August 17, 2005, Dr. Charest
assigned his rights in the Pioneering Patents covering his work
on the synthetic creation of tetracycline antibiotics to the
President and Fellows of Harvard College.
Ex. B.

Am. Compl. ¶ 29; MD

That document recites that the assignment was given

“[i]n consideration of One Dollar ($1.00) and other good and
valuable consideration.”

MD Ex. B at 1.

At the time that he made the assignment, Dr. Charest
expected that Harvard would abide by the IP Policy.
¶ 30.
10

Am. Compl.

Harvard, through OTD, licensed the Pioneering Patents to
Tetraphase, a company created by OTD and Dr. Myers for the
purpose of commercializing the Pioneering Patents.2
Compl. ¶ 41.

Original

Dr. Myers served and serves as a founder and

consultant for Tetraphase.

Original Compl. ¶ 42.

On the basis

of the value provided by the Pioneering Patents, Tetraphase
raised more than $25 million in funding from investors.
Original Compl. ¶ 44.

In the license agreement, Tetraphase

agreed to pay Harvard milestone payments and royalties on future
sales of tetracycline drugs, as well as an upfront payment of
$250,000.

Original Compl. ¶¶ 44, 130.

The Tetraphase license is OTD’s most successful license to
date.

Over the life of the license, OTD could claim credit for

bringing in over $1 billion in revenue.

2

Am. Compl. ¶ 34.

As a

In amending his complaint, Dr. Charest appears inadvertently to
have omitted those factual allegations, included in the original
complaint, regarding the founding of Tetraphase and the
licensing of the Pioneering Patents to it. I refer to those
here from the original complaint to provide full context. To
the extent that Plaintiff’s case survives motion to dismiss
practice, I will direct Plaintiffs to file another amended
complaint correcting this error, along with a redline for the
court’s review. See In re New Motor Vehicles Canadian Export
Antitrust Litig., 350 F. Supp. 2d 160, 169 (D. Me. 2004)
(accepting correction of “typographical error” in complaint
after filing of motion to dismiss).
11

result of the success of this license, Dr. Myers is held in high
regard and given significant latitude by the OTD.
6.

Id.

The Allocation of Royalty Shares from the Licensing of
the Pioneering Patents

On August 8, 2006, Dr. Erik Halvorsen, then director of
business development for OTD, emailed Dr. Charest and the other
non-faculty inventors on the Pioneering Patents.
35.

Am. Compl. ¶

Dr. Halvorsen’s email informed the non-faculty inventors of

the creation of Tetraphase and explained that, instead of an
equal distribution of royalties, Dr. Myers would receive 50%,
Dr. Charest, Dr. Seigel and Dr. Lerner would each receive 15%,
and Dr. Brubaker would receive 5%.

Am. Compl. ¶¶ 35-36.

This

allocation was made without consultation with the non-faculty
inventors.

Am. Compl. ¶ 40.

agreement for them to sign.

Dr. Halvorsen’s email included an
That agreement stated that “[w]e

acknowledge that the Harvard University Royalty Sharing Policy
for Intellectual Property specifies that, for inventions, the
creators’ share normally will be divided equally among all
creators unless they agree otherwise.”

Am. Compl. ¶ 37.

After receiving the email from Dr. Halvorsen, Dr. Charest
discussed the allocation with the other inventors.

The other

inventors agreed to adjust the shares so that Dr. Charest
received 18.75%, Dr. Siegel received 11.25%, and Dr. Lerner and
12

Dr. Brubaker received 10% each.

Am. Compl. ¶ 38.

When

approached by Dr. Charest, Dr. Halvorsen stated that Dr. Myers’
share was not open to discussion.
7.

Am. Compl. ¶ 39.

Dr. Myers and Dr. Halvorsen Threaten Dr. Charest in
Order to Induce him to Accept the Proposed Allocation

When Dr. Charest spoke with Dr. Myers expressing his
opposition to the allocation, Dr. Myers told Dr. Charest to
“tread lightly” and “be careful,” which Dr. Charest understood
to be threats.

Am. Compl. ¶ 39.

Dr. Myers followed through on

these threats by refusing to act as a reference, a rarity in the
field of academic chemistry, when Dr. Charest was applying for a
venture capital job.

Am. Compl. ¶ 42.

This refusal was a

contrast to the strong recommendations given by Dr. Myers to Dr.
Charest prior to the royalty dispute arising.

Am. Compl. ¶ 43.

During discussions about the royalty allocation, Dr.
Halvorsen told Dr. Charest that, if he did not accept the
proposed allocation, he would reduce Dr. Charest’s royalty share
by allocating 50% of the license royalties to another,
undisclosed patent on which Dr. Charest was not an inventor.
Am. Compl. ¶ 46.

Dr. Halvorsen refused to show Dr. Charest the

patent application even when Dr. Charest offered to sign a nondisclosure agreement, but represented that it warranted half of
the license royalties.

Am. Compl. ¶¶ 48-49.
13

The undisclosed patent application has never been issued as
a patent and has been effectively abandoned, indicating that it
was of little value.

Am. Compl. ¶¶ 49-50.

Dr. Charest contends

that this patent application was added to the Tetraphase License
only as leverage to compel him to accept the allocation
proposal, a belief which is supported by the fact that the
patent application was filed and included in the license
agreement only after the financial terms of the license had been
agreed upon.

Am. Compl. ¶ 51.

If Dr. Charest had known that

the undisclosed patent application had no or little value, he
would not have agreed to accept less than the default equal
allocation of royalties provided for in the Royalty Sharing
Policy.
8.

Am. Compl. ¶ 53.
The Reallocation of License Income to the Intermediary
Patent

On November 24, 2009, Dr. Laura Brass, who replaced Dr.
Halvorsen as the director of business development for OTD, wrote
to Dr. Charest informing him that Harvard and Tetraphase had
amended their license to include a new patent application (the
“Intermediary Patent”) and explaining that OTD was retroactively
assigning 33% of the license income to the new patent
application.

Am. Compl. ¶ 55.

The Intermediary Patent was

licensed on January 31, 2007 to Tetraphase in exchange for a
14

one-time payment of $25,000.

Am. Compl. ¶ 57.

See also Supp.

MD Ex. D.
The scope of the Intermediary Patent was narrower than the
Pioneering Patent: The latter described new tetracycline
compounds, methods of use and making those compounds,
intermediaries used to make the compounds, and methods for
making those intermediaries; the former described only an
alternative method for making the intermediary.

Am. Compl. ¶

56.
Dr. Charest contends that the $25,000 fee represents the
true commercial value of the Intermediary Patent.
Compl. ¶¶ 59-64.

See Am.

During conversations with the OTD, Dr. Charest

said that the value assigned by the license agreement should
control the allocation of royalties, as required by the Royalty
Sharing Policy.

OTD refused to make an allocation in line with

the $25,000 paid for the addition of the Intermediary Patent to
the license.

Am. Compl. ¶ 66.

Dr. Charest spoke with Dr. Brass on December 12, 2009
regarding the allocation of royalties to the Intermediary
Patent.

During that call, she told Dr. Charest that if he did

not agree to the proposed re-allocation to the Intermediary
Patent, his royalty share would be reduced even further than the
proposed 33%.

Am. Compl. ¶ 67.

Dr. Brass also told Dr. Charest
15

that the 33% was not an OTD determination, but a proposal for
agreement and made clear that if he did not sign on OTD would
make an official determination that was less favorable.
Compl. ¶ 69.

Am.

Ultimately, Dr. Charest would not agree to the

proposed 33% allocation to the Intermediary Patent.

Am. Compl.

¶ 71.
9.

Harvard’s Committee on Intellectual Property and the
Hearing Regarding the Royalty Allocation

Harvard’s IP Policy (as effective after both the 2008 and
2010 amendments) provided that the Committee on Intellectual
Property (the “IP Committee”) would be a committee appointed by
Harvard’s President.

The IP Committee’s responsibilities

include interpreting the IP Policy, and resolving questions and
disputes concerning it, as well as hearing appeals as provided
for under the IP Policy.
VI.

Am. Compl. ¶ 72-74; MD Exs. E, F, §

Dr. Charest alleges that the IP Committee is a standing

committee at Harvard which includes professors from Harvard’s
business and law schools, a senior administrator, and members of
numerous other departments.

Am. Compl. ¶¶ 73, 75.

After Dr. Charest inquired about making an appeal of the
allocation of royalties to the Intermediary Patent, Dr. Maryanne
Fenerjian, the director of the Office of Technology Transfer,
responded on April 13, 2010, writing that:
16

The committee designated in the IP Policy as having
responsibility for such appeals is not a standing
committee, but instead must be convened on an ad hoc
basis. If and when we receive your notice, I will
request that Provost Hyman appoint and seat the
committee. Once he has done so, a committee
representative will contact you to schedule your
appeal and to answer any procedural questions that you
might have. As the committee will set its own
procedures, I am afraid that I cannot offer you any
guidance with respect to the timing or mechanics of
the appeal process, should you elect to move forward
with it.
Am. Compl. ¶ 77, Ex. G.
Instead of sending the appeal of the OTD administrative
decision to a standing Committee on Intellectual Property, OTD
sent the appeal to this “ad hoc committee,” appointed at the
request of OTD, which included four science professors, who,
rather than being independent and unbiased, relied upon OTD for
funding.

Am. Compl. ¶ 79.3

On December 15, 2010, Dr. Fenerjian wrote an email to Dr.
Charest telling him that “[t]he committee likely will meet for
the first time in mid-to-late January.

3

In preparation for that

Dr. Charest has also alleged, contrary to OTD’s
representations, that the committee was selected by OTD. Am.
Compl. ¶ 80. During the hearing on the Defendants’ Motion to
Dismiss, it became clear that this specific allegation was
speculation cobbled together from inadequate circumstances and
raw conjecture, raising serious Rule 11 issues. Recognizing
that Plaintiff lacks an adequate foundation for this allegation,
I will not consider this allegation when determining whether to
dismiss the complaint.
17

meeting, I will provide the committee members with background
materials about the licensed technologies and efforts on the
part of Tetraphase toward their eventual commercialization.”
Am. Compl. ¶ 82.

In response to this letter, Dr. Charest

submitted a letter and a short PowerPoint presentation to the ad
hoc committee on December 22, 2010.

Up to that date, Dr.

Charest had not been provided with an articulation of OTD’s
reasoning for its allocation, and the materials that Dr. Charest
sent to the committee provided only background information on
the patents, rather than Dr. Charest’s substantive arguments
regarding the relative value of the Pioneering and Intermediary
Patents.

Am. Compl. ¶¶ 84-85.

Dr. Charest closed his letter by

expressing his interest in communicating with the ad hoc
committee regarding the appeal and his willingness to travel to
Harvard to participate in the process.

Am. Compl. ¶ 85.

On January 11, 2011, OTD submitted a memorandum to the ad
hoc committee detailing their position on the valuation of the
patents.

Dr. Charest was not provided a copy of the materials.

Am. Compl. ¶ 86.

Shortly after, the committee met and two

members of OTD attended, Isaac Kohlberg and Dr. Fenerjian.

Dr.

Charest was not told about this meeting or given the opportunity
to attend or present his views.

Am. Compl. ¶¶ 87-88.

Dr.

Charest found out about this meeting only when he was informed
18

that his royalty share was being reduced as the royalties would
be split 55% to the Pioneering Patents and 45% to the
Intermediary Patent.

Am. Compl. ¶ 87.

Dr. Charest was never

given an opportunity to present his views regarding the
appropriate allocation of royalties between the Pioneering and
the Intermediary Patents to the committee.

Am. Compl. ¶ 88.

Dr. Charest contends that OTD presented material and
information to the ad hoc committee that was misleading and
materially incorrect, and which overstated the value of the
Intermediary Patent.

Am. Compl. ¶¶ 89-95.

In fact, Dr. Charest

contends that if OTD’s representations to the committee
regarding the value of the Intermediary Patent were correct,
they would have been negligent, unethical, or grossly
incompetent in licensing that technology to Tetraphase, a
company affiliated with Dr. Myers, for only $25,000.
¶ 96.

Am. Compl.

Dr. Charest contends that Dr. Myers controlled the OTD

appeals process and engineered an outcome favorable to himself.
Among the information provided to the committee were opinions by
Dr. Hunter Baker and Dr. Louis Plamondon.

Dr. Myers and Dr.

Baker knew each other well, having received their Ph.D.’s after
working at the same laboratory at Harvard.

Am. Compl. ¶ 131.

Dr. Baker had worked with Dr. Myers on a number of patenting
issues, as well as issues related to the establishment of
19

Tetraphase.

Id.

Dr. Plamondon is Tetraphase’s Vice President

for Chemistry and has worked at Tetraphase since its founding,
while Dr. Myers has acted as a consultant, per the licensing
agreement.

See Am. Compl. ¶ 132, Ex. E.

At the same time that Dr. Charest was informed of the
outcome of the appeal of OTD’s allocation decision, Harvard
requested that he sign a form acknowledging and accepting this
decision as final as a condition of receiving the royalties owed
to him.

Am. Compl. ¶ 100, Ex. B.

Subsequently, when contacted

by Dr. Charest’s counsel, Harvard requested a release of all
claims against Harvard as a condition of the disbursement of
royalties.
10.

Am. Compl. ¶ 101.
Dr. Myers’ Motive to Allocate Royalties to the
Intermediary Patent

In his original complaint, Dr. Charest alleged, upon
information and belief, that Dr. Myers was motivated to
reallocate royalties from the Pioneering Patents to the
Intermediary Patent because he was entitled to a larger share of
royalties from the latter than the former.

Limited discovery

has shown that OTD in fact paid 100% of the royalties on that
patent to another inventor, Dr. Brubaker.

Dr. Myers contends

this was in error, and that OTD corrected the error by directing
a payment of the correct (50%) share to himself (without
20

requiring a clawback of the incorrect payment to Dr. Brubaker).
Am. Compl. ¶ 107, Ex. F (Deposition of Dr. Andrew Myers) at
14:7-17:23.

Thus Dr. Myers’ share of the royalties was not

increased by the re-allocation of royalty income to the
Intermediary Patent.
Dr. Charest now contends that the payment was made to Dr.
Brubaker as compensation for Dr. Brubaker performing research
which Dr. Myers was obligated to perform for Tetraphase and
which benefitted Dr. Myers and Tetraphase.
114.

Am. Compl. ¶¶ 109-

Dr. Charest contends that Dr. Myers directed Dr. Brubaker

to perform this research for his own and Tetraphase’s benefit
and that this represents a violation of Harvard’s ethical rules
and poses a conflict of interest for Dr. Myers in his dual roles
as a company scientist employed by Tetraphase and an academic
supervisor.

Am. Compl. ¶¶ 115-121.

By allocating royalties

from the Pioneering Patent to the Intermediary Patent, Dr. Myers
was able to compensate Dr. Brubaker for performing this work at
no cost to himself or Tetraphase, while, in effect, buying Dr.
Brubaker’s silence and loyalty.
11.

Am. Compl. ¶¶ 122-123.

Demand under Massachusetts General Law Chapter 93A

On May 28, 2013, Dr. Charest sent a Chapter 93A demand
letter to Harvard and Dr. Myers describing his allegations and
the relief sought.

Am. Compl. ¶¶ 136, 138.
21

In their response

letter, Defendants did not offer any settlement to Dr. Charest,
but instead asked Dr. Charest to sign a release of all claims
against them in exchange for the disbursement of the royalties
accrued and payable to Dr. Charest under Harvard’s allocation.
Am. Compl. ¶¶ 140-141.

Harvard had withheld any payment to Dr.

Charest since Dr. Charest refused to accept the legitimacy of
the 55%/45% allocation.

Am. Compl. ¶ 142.

In response to my request, Harvard filed additional
briefing regarding its alleged refusal to make payments of
royalty amounts owed to Dr. Charest according to Harvard’s own
determination of a 55%/45% allocation between the Pioneering and
Intermediary Patents.

Harvard represented that “OTD requested

that each inventor return a signed acknowledgment--not a release
of claims--upon receipt of which OTD would distribute each
inventor’s respective share of the royalties” (emphasis by
Harvard) and attached the letter dated March 1, 2011 in which
Dr. Kohlberg, Harvard’s Senior Associate Provost, wrote: “To
acknowledge your acceptance of the Committee's determination,
thereby enabling OTD to distribute to you your inventor share of
such Net Royalties, please sign and date a copy of this letter
in the space provided below, and return it to my attention at
the above address.”

22

In response, Dr. Charest filed an additional brief in which
he contests Harvard’s representation that it did not condition
payment of Dr. Charest’s share on his release.

Attached to that

filing is a letter from Harvard’s counsel to Dr. Charest’s
counsel.

The penultimate paragraph of that letter reads:

As it has in the past, Harvard stands willing to
distribute to Dr. Charest his percentage share of all
royalty payments that have been received to date in
connection with the tetracycline patents. Harvard is
holding these sums in escrow for Dr. Charest, which
currently total $50,261.72, and is agreeable to
releasing them upon his execution of the March 1, 2011
acceptance and acknowledgment letter regarding the
allocation of royalties between the various patents
released to Tetraphase. In addition, given Dr.
Charest’s threat of litigation, an appropriate release
of claims would also be required.
This letter fully belies Harvard’s claim that it did not request
a release from Dr. Charest in exchange for disbursement of funds
that it admits owing to him.
Harvard has now represented that, as of February 3, 2014,
it made payment to Dr. Charest of the amount owed according to
the 55%/45% royalty allocation determination of the IP Committee
and that it will make all applicable royalty payments to Dr.
Charest going forward in a timely manner and without condition.
B.

Procedural Background
Dr. Charest filed his first complaint in this matter on

July 28, 2013.

Harvard and Dr. Myers moved to dismiss the case
23

for failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6) and for lack of standing under Rule 12(b)(1).
At a hearing on December 19, 2013, recognizing that there
were certain factual disputes regarding the allocation of
royalties to Dr. Myers which could be easily resolved, I entered
an order permitting Dr. Charest to conduct limited discovery and
amend or supplement his complaint, and allowing the Defendants
to respond to any such amendments.
On January 17, 2014, Dr. Charest filed his amended
complaint.

Harvard and Dr. Myers subsequently filed additional

briefing in support of their previously-filed motion to dismiss.
I held a hearing regarding the motion to dismiss filed by
Harvard University and Dr. Myers on January 29, 2014.

During

that hearing, as discussed above, I requested additional
briefing from Harvard regarding the allegation that Harvard has
conditioned payment of amounts owed to Dr. Charest on his
execution of a release of claims against Harvard and whether
such conduct constitutes a violation of Massachusetts General
Law Chapter 93A.
Harvard filed additional briefing on February 3, 2014.
addition to discussing the refusal to make payments to Dr.
Charest, Harvard also offered evidence which it contends
contradicts Dr. Charest’s allegation that he was not given
24

In

adequate notice and an opportunity to present his substantive
arguments to the IP Committee.

In response, Dr. Charest

contends that the evidence offered by Harvard is one-sided and
incomplete.

He represents that he repeatedly requested

information from Harvard University regarding the appeals
process, but did not receive the requested information until
after the completion of the appeals process.
The seriatim offers of evidence in this case by both
parties demonstrates the wisdom of the phased decision-making
process established by the Federal Rules of Civil Procedure.
Those rules provide that, at this phase of the proceeding,
before the parties have had the opportunity for discovery, my
review is limited to testing the sufficiency of the allegations
set forth in Dr. Charest’s complaint, subject only to “narrow
exceptions” for the consideration of certain extrinsic evidence.
See Freeman v. Town of Hudson, 714 F.3d 29, 36 (1st Cir. 2013);
see generally supra note 4.

The sufficiency of the evidence of

a party is tested only “after adequate time for discovery,”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

If genuine

issues of material fact remain after such discovery, precluding
the entry of summary judgment, those factual disputes are to be
resolved by a trial.

25

I will not short-circuit this process by indulging in an
attempt to resolve factual disputes based upon the tit-for-tat
offers of evidence and representations of the parties.

While I

will consider, along with the well-pled allegations in the
complaint, those documents which are central to Dr. Charest’s
claim, I will not extend my review to include the weighing of
evidence that the Defendants have submitted to contradict the
allegations Dr. Charest has made regarding the opportunity (or
lack thereof) afforded to him to participate in the IP appeal.
II. STANDARD OF REVIEW
In order to survive a motion to dismiss pursuant to Fed. R.
Civ. P. 12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (citation and internal quotation marks omitted).
I “must accept all well-pleaded facts alleged in the Complaint
as true and draw all reasonable inferences in favor of the
plaintiff.”

Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).

While I am “generally limited to considering facts and documents
that are part of or incorporated into the complaint,” I “may
also consider documents incorporated by reference in the
[complaint], matters of public record, and other matters
susceptible to judicial notice.”
26

Giragosian v. Ryan, 547 F.3d

59, 65 (1st Cir. 2008) (citation and internal quotation marks
omitted) (alteration in original).
Dismissal for failure to state a claim is appropriate when
the pleadings fail to set forth “factual allegations, either
direct or inferential, respecting each material element
necessary to sustain recovery under some actionable legal
theory.”

Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997)

(quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.
1988) (internal quotation marks omitted)).

“[W]here the well-

pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged--but
it has not ‘show[n]’--‘that the pleader is entitled to relief.’”
Maldonado v. Fontanes, 568 F.3d 263, 269 (1st Cir. 2009)
(quoting Iqbal, 556 U.S. at 679).
III. ANALYSIS
Based upon the factual allegations detailed above, the
Plaintiff has asserted seven separate causes of action against
Harvard and/or Dr. Myers: (1) breach of contract; (2) fraud in
relation to the original allocation of royalties from the
Pioneering Patents; (3) tortious interference with contract; (4)
breach of fiduciary duty; (5) promissory estoppel; (6) violation
of Mass. Gen. Laws c. 93A, § 9; and (7) violation of Mass. Gen.
Laws c. 93A, § 11.
27

A.

Has Plaintiff Adequately Alleged That Harvard’s IP Policy
is a Contract?
While brought under several different theories, Dr.

Charest’s claims largely begin with a single common threshold
issue: Whether the IP Policy imposes binding contractual
obligations upon Harvard.4
In support of its contention that the IP Policy is not a
contract, Harvard relies primarily on Jackson v. Action for
Boston Community Dev. Inc., 525 N.E.2d 411 (Mass. 1988), in
which the Massachusetts Supreme Judicial Court held that an
employer’s personnel manual did not form the basis for an
implied contract of employment for a defined term.

In reaching

that conclusion, the Supreme Judicial Court identified several
factors relevant to that decision, including that: (1) the
employer retained the unilateral right to modify the manual’s
terms; (2) the manual provided that it was for “guidance” as to
the employer's policies; (3) there was no negotiation between
the employer and the employee regarding the terms of the manual;

4

On more than one occasion, Massachusetts courts have found that
an institution’s intellectual property policies are binding on
individual employees as signatories. See, e.g., Greene v.
Ablon, 2012 WL 4104792 (D. Mass. Sept. 17, 2012); Grocela v.
General Hosp. Corp., No. 11-991-BLS1, 30 Mass. L. Rptr. 176
(Mass. Sup. Ct. July 18, 2012) (unreported decision). In those
cases, as here, the individual expressly agreed to be bound by
the policy.
28

(4) the manual stated no term of employment; (5) the employer
called no special attention to the manual; and (6) the employee
did not sign or manifest his assent to the manual or acknowledge
that he understood its terms.

Id. at 415-16.

Here, as in Jackson, Harvard retained the right
unilaterally to modify the IP Policy.

It also appears that no

negotiations occurred between the parties regarding the terms of
the policy, again supporting Harvard’s claim that it is not a
contract.
Charest.

Other factors, however, weigh in favor of Dr.
Harvard did call special attention to the IP Policy.

In 2003, Dr. Charest signed a “Participation Agreement” in which
he agreed to be bound by the IP Policy and in which he
acknowledged that he understood and accepted the terms of
Harvard’s royalty sharing policy.

See Am. Compl. Ex. A.

In

addition, while the manual at issue in Jackson spoke in terms of
providing “Guidance,” the IP Policy speaks in mandatory terms:
“Except as otherwise provided in this policy, the following
formula will apply to the distribution of Net Royalties among
Creators . . .”; “Personal shares will be allocated among
Inventors . . . according to a written agreement among them or,
if there is no agreement, in equal shares.”
(E) (emphasis added).

29

MD Ex. F, § 5(B),

Looking at the factors identified in Jackson alone (upon
which the defendant relies), I cannot conclude dispositively
that the terms of the IP Policy are not a part of the contract
between Harvard and Dr. Charest.
Furthermore, the factors in Jackson do not stand alone.
Since Jackson, the Massachusetts Supreme Judicial Court has
substantially clarified its teaching on the issue of when an
employer manual becomes a part of an employment agreement.

In

O'Brien v. New England Tel. & Tel. Co., 664 N.E.2d 843 (Mass.
1996), the Supreme Judicial Court explained that the
circumstances identified in Jackson “are not a rigid list of
prerequisites, but rather explain factors that would make a
difference or might make a difference in deciding whether the
terms of a personnel manual were at least impliedly part of an
employment contract.”

Id. at 847.

The central question (upon

which those factors shed light) is whether an employee “would
reasonably conclude that the employer was presenting the manual
as a statement of the conditions under which employment would
continue.”

Id. at 848.

See also Ferguson v. Host Intern. Inc.,

757 N.E.2d 267, 271 (Mass. App. 2001) (“[S]uch manuals [are] to
be enforced to the extent that they instill a reasonable belief
in the employees that management will adhere to the policies
therein expressed.”).
30

As noted, the Participation Agreement signed by Dr. Charest
makes explicit reference to Harvard’s royalty sharing policy-supporting Dr. Charest’s reasonable belief that Harvard would
adhere to the policies therein.

In addition, the policy itself

states that it is intended to be a “more definitive statement[]
of policy that [is] applicable to the entire Harvard community”
and that “[w]here royalties are generated by Harvard as a
consequence of commercializing a Supported Invention, royalties
will be shared with the Inventor(s) as described in Section V of
this policy.”

MD Ex. F at 1, § I(F).

conduct leads to the same conclusion.

Finally, Harvard’s own
According to Dr.

Charest’s allegations, in August of 2006, Dr. Halvorsen emailed
Dr. Charest and the other non-faculty inventors of the
Pioneering Patents.

In the email, Dr. Halvorsen specifically

referenced the IP Policy and acknowledged that, absent agreement
among the inventors, royalties from the commercialization of the
invention would be divided equally among all the named inventors
on the patent.

Am. Compl. ¶ 37.

Similarly, in its letter dated

March 1, 2011, in which Harvard informed the inventors of the
Pioneering Patents of the outcome of Dr. Charest’s challenge to
the allocation of royalties between the Pioneering and
Intermediary Patents, Harvard specifically referenced the IP
Policy as the basis for both the process and the outcome.
31

See

Am. Compl. Ex. B.

By following the IP Policy, Harvard’s conduct

demonstrates that it does view the policy as imposing binding
obligations upon the university.

See Jackson, 525 N.E.2d at 415

(“[T]he defendant’s adherence to the grievance procedures is
some evidence of the existence of a contract.”).
Dr. Charest contends that he expected Harvard to honor its
contractual obligations to pay him royalties as defined by the
IP Policy.

The Amended Complaint alleges a reasonable basis for

concluding, in light of the circumstances, that a contract
existed between Dr. Charest and Harvard, evidenced by the terms
of the Participation Agreement which Dr. Charest signed, by the
terms of the IP Policy, and by Harvard’s conduct.

“‘It would be

unfair to allow an employer to distribute a policy manual that
makes the workforce believe that certain promises have been made
and then to allow the employer to renege on those promises.’”
Ferguson, 757 N.E.2d at 272 (quoting Woolley v. Hoffmann-La
Roche, Inc., 491 A.2d 1257 (N.J. 1985)).5

5

In addition, although they are not binding upon me, I note that
this conclusion is in accord with a number of out-of-state cases
cited by the plaintiff in which courts have found that
university intellectual property policies are a part of the
employment contract. See, e.g., St. John’s Univ., New York v.
Bolton, 757 F. Supp. 2d 144, 161 (E.D.N.Y. 2010) (“Federal
courts have consistently upheld the validity of patentassignment obligations imposed on university students, faculty
and staff”); Regents of the Univ. of New Mexico v. Knight, 321
32

Dr. Charest alleges two separate time periods of misconduct
on the part of Harvard and Dr. Myers with respect to the alleged
contract.

The first occurred in 2006, when the university and

Dr. Myers sought to obtain Dr. Charest’s agreement to a royalty
allocation that would grant Dr. Myers 50% of the royalty income
from the licensing of the Pioneering Patents to Tetraphase.
The second instance of alleged misconduct began when
Harvard informed Dr. Charest of OTD’s decision to add the
Intermediary Patent to the license agreement with Tetraphase and
allocate a 33% share of the Tetraphase royalties to that patent.
After Dr. Charest protested this decision, the committee hearing
his appeal determined that the proper allocation was 55% to the
Pioneering Patents and 45% to the Intermediary Patent.

I turn

F.3d 1111, 1118 (Fed. Cir. 2003) (finding that the university
patent policy formed an “implied contract”); Fenn v. Yale Univ.,
283 F. Supp. 2d 615, 628-29 (D. Conn. 2003) (“University patent
policies such as Yale’s have long been recognized as a valid and
enforceable part of the contract of employment.”) (citing Chou
v. Univ. of Chicago, 254 F.3d 1347, 1356–57 (Fed. Cir. 2001) and
Univ. of West Virginia Bd. of Trustees v. VanVoorhies, 84
F.Supp.2d 759, 769–71 (N.D.W.Va. 2000)). In Molinelli-Freytes
v. Univ. of Puerto Rico, 2012 WL 4665638 (D.P.R. Feb. 15, 2012),
the court held that ownership of intellectual property was not
determined by the university’s intellectual property policy. In
reaching that conclusion, however, the court specifically relied
on 17 U.S.C. § 201(b), which provides that initial ownership of
copyright in a work performed for hire may be altered only upon
a express written agreement signed by both parties, id. at *13,
making that specific holding inapposite here.
33

to a consideration of those two time periods in Sections III.B
and III.C below.
B.

Claims Based Upon the 2006 Allocation of the Pioneering
Patents Royalties Are Barred by the Statute of Limitations.
According to Dr. Charest, in order to induce his agreement

to the 2006 allocation, Harvard, through Dr. Halvorsen,
misrepresented the existence of valuable technology that was
part of the Tetraphase license agreement and threatened to
divert royalties to that patent--reducing Dr. Charest’s royalty
share--if Dr. Charest would not agree.

Dr. Myers, for his part,

is said to have used his position of authority to level threats
against Dr. Charest regarding his future employment prospects-threats which were eventually carried out.
This conduct would arguably be actionable under one or more
of the theories asserted by Dr. Charest.

A party may not

misrepresent facts and then use those misrepresentations as
leverage to deprive another party of its contractual rights.
See Massachusetts Employers Ins. Exch. v. Propac-Mass, Inc., 648
N.E.2d 435, 438 (Mass. 1995) (holding that “conduct undertaken
as leverage to destroy the rights of another party to [an]
agreement while the agreement is still in effect” constituted
not only a breach of contract, but “warranted a finding of
unfair acts or practices” under Mass. Gen. Laws c. 93A);
34

Anthony's Pier Four, Inc. v. HBC Assocs., 583 N.E.2d 806, 822
(1991) (“[K]nowing use of a pretext to coerce” a party into
paying more than the amount owed under a contract constituted a
breach of the contractual duty of good faith and fair dealing,
and violated Mass. Gen. Laws c. 93A “as a matter of law.”).
The statute of limitations, however, poses a hurdle to the
claims arising from events occurring in 2006.

Claims for breach

of contract and promissory estoppel are subject to a six year
statute of limitations.

Mass. Gen. Laws c. 260, § 2.

A claim

for violation of Mass. Gen. Laws c. 93A is subject to a four
year statute of limitations.

Mass. Gen. Laws c. 260, § 5A.

Claims for breach of fiduciary duty, tortious interference with
contract, and fraud must be brought within three years.
Gen. Laws c. 260, § 2A.

Mass.

Because claims arising from the initial

allocation of royalties among the inventors of the Pioneering
Patents relate to conduct that occurred more than six years
before this action was filed, such claims presumptively are
barred by the applicable statutes of limitation.
Seeking to avoid this result, Dr. Charest asserts that the
running of the limitations period should be extended by the
discovery rule which “tolls the commencement of the statute of
limitations until the plaintiff knew or reasonably should have
known of the alleged harm.”

Abdallah v. Bain Capital, 880 F.
35

Supp. 2d 190, 197 (D. Mass. 2012).

The rule operates in three

circumstances: “[W]here a misrepresentation concerns a fact that
was ‘inherently unknowable’ to the injured party, where a
wrongdoer breached some duty of disclosure, or where a wrongdoer
concealed the existence of a cause of action through some
affirmative act done with the intent to deceive.”

Patsos v.

Albany Corp., 741 N.E.2d 841, 846 (Mass. 2001).
1.

Was the Statute of Limitations Tolled Because These
Claims were “Inherently Unknowable”?

“The discovery rule provides that a cause of action for the
redress of an ‘inherently unknowable’ wrong does not accrue
until the plaintiff knew, or in the exercise of reasonable
diligence should have known, of the factual basis for a cause of
action.”

Patsos, 741 N.E.2d at 846-47.

Tolling lasts until

“events occur or facts surface which would cause a reasonably
prudent person to become aware that she or he had been harmed.”
Felton v. Labor Relations Com'n, 598 N.E.2d 687, 689 (Mass. App.
1992).

A plaintiff is placed on “inquiry notice” of his claims

“when the first event occurs that would prompt a reasonable
person to inquire into a possible injury at the hands of the
defendant.”

Epstein v. C.R. Bard, Inc., 460 F. 3d 183, 188 (1st

Cir. 2006) (citing Szymanski v. Boston Mut. Life Ins. Co., 778
N.E.2d 16, 20-21 (Mass. 2002)).

“[K]nowledge of ‘every fact
36

necessary to prevail on the claim’ is not required to put the
plaintiff on inquiry notice and trigger the accrual period.”
Id. (citing Int'l Mobiles Corp. v. Corroon & Black/Fairfield &
Ellis, Inc., 560 N.E.2d 122, 124 (Mass. App. 1990)).
Here, Dr. Charest alleges that he discussed the allocation
of royalties from the Pioneering Patents with Dr. Myers and Dr.
Myers told him to “tread lightly” and “be careful.”

As Dr.

Charest explicitly alleges, he “understood these statements to
be threats.”

Am. Compl. ¶ 41.

When Dr. Halvorsen threatened to

reduce Dr. Charest’s share by allocating royalties to an
undisclosed patent, Dr. Charest asked Dr. Halvorsen to show him
the undisclosed patent application because he “wanted . . . to
determine the veracity of Dr. Halvorsen’s threat.”
¶ 49.

Am. Compl.

These facts demonstrate that Dr. Charest had sufficient

information to know that he had been harmed (by the reduction in
his royalties) and that this harm resulted from improper conduct
on behalf of both defendants.
2.

Did the Defendants Breach a Fiduciary Duty of
Disclosure?

Where a fiduciary relationship exists, a party’s “failure
to affirmatively and adequately disclose facts that would give
rise to knowledge of the cause of action” tolls the limitation
period “until the plaintiff actually becomes aware of the
37

operative facts underlying the cause of action.”

OrbusNeich

Medical Co., Ltd., BVI v. Boston Scientific Corp., 694 F. Supp.
2d 106, 115 (D. Mass. 2010) (citing Demoulas v. Demoulas Super
Markets, Inc., 677 N.E.2d 159 (Mass. 1997) and Mass. Eye and Ear
Infirmary v. QLT Phototherapeutics, Inc., 412 F.3d 215, 242 (1st
Cir. 2005)).
Tolling on this basis necessarily relies on the existence
of a fiduciary relationship.

Dr. Charest claims that Dr. Myers

assumed the role of a fiduciary by virtue of his role as Dr.
Charest’s supervisor and academic advisor, and as head of Dr.
Charest’s laboratory, Am. Compl. ¶¶ 166-69, and that Dr. Myers
breached his fiduciary obligations by using his position to
obtain a more favorable share of the royalties from the
tetracycline research at Dr. Charest’s expense.

Am. Compl.

¶ 262.
Dr. Charest’s attempt to allege a fiduciary relationship
fails for two reasons.

First, I conclude that under

Massachusetts law, a student-advisor relationship is not
fiduciary in nature.

Justice Fremont-Smith of the Massachusetts

Superior Court addressed precisely this issue in Battenfield v.
Harvard Univ., No. 915089F, 1 Mass. L. Rptr. 75 (Mass. Sup. Ct.
Aug. 31, 1993), and held that the relationship of an academic
advisor to a student does not constitute a fiduciary
38

relationship, explaining that “[o]ne party cannot unilaterally
transform a business or academic relationship into a fiduciary
relationship by reposing trust and confidence in another.”

Id.

at *9. (Citing Comstock v. Livingston, 97 N.E. 106, 108 (Mass.
1912)).6
Second, as Dr. Charest explicitly states in his opposition
to the motion to dismiss “[t]his dispute involves Defendants’
actions that span over a period of five years, all after Dr.
Charest had left Harvard.”

Even if a fiduciary relationship

arising from the academic mentorship existed at some point
between Dr. Charest and Dr. Myers, that relationship would have

6

Dr. Charest contends that the relationship at issue in
Battenfield v. Harvard Univ., 1 Mass. L. Rptr. 75 (Mass. Sup.
Ct. Aug. 31, 1993) was an employee-employer relationship, making
that case inapplicable. It is clear that, as to at least one
defendant in Battenfield, Sue Weaver Schopf, the relationship
was purely that of an academic advisor, which the court
determined was not fiduciary in nature. Id. at *9. Dr. Charest
also relies upon Chou, 254 F.3d 1347, for the proposition that a
student-advisor relationship is fiduciary in nature. In
addition to being decided under Illinois law, there were
specific facts existing in Chou that are absent in the present
case. These include the fact that Chou’s advisor “specifically
represented to her that he would protect and give her proper
credit for her research and inventions” and had “responsibility
to make patenting decisions regarding Chou's inventions.” Chou,
254 F.3d at 1362. There is no allegation that Dr. Myers made
any such promises or assumed such responsibilities with respect
to Dr. Charest.
39

ended when Dr. Charest left Harvard and was no longer Dr. Myers’
supervisee.
Because Dr. Charest has not alleged the existence of a
legally cognizable fiduciary relationship--and certainly not one
which existed at the time of the challenged conduct--the statute
of limitations cannot be tolled on this basis.
3.

Was the Statute of Limitations Tolled by the Doctrine
of Fraudulent Concealment?

Where a defendant fraudulently conceals a cause of action
from the plaintiff, the statute of limitation is tolled until
the plaintiff has “actual knowledge” of his cause of action.
Demoulas, 677 N.E.2d at 174; Mass. Gen. Laws c. 260, § 12.

The

doctrine of fraudulent concealment “concerns plaintiffs’ ability
to know of the ‘cause of action’ itself, not the particular
identity of the tortfeasor.”

Gauthier v. United States, No. 10-

40116, 2011 WL 3902770, *5 (D. Mass. Sept. 2, 2011) (citing
White v. Peabody Const. Co., Inc., 434 N.E.2d 1015 (Mass.
1982)).
When asked to sign an agreement which would have allocated
him only 15% of the royalties from the Pioneering Patents, Dr.
Charest refused and protested the decision.

Am. Compl. ¶ 37-38.

Dr. Charest was informed by OTD that Dr. Myers’ share was not
open for discussion.

When Dr. Charest spoke to Dr. Myers about
40

his outsize allocation, Dr. Charest’s overtures were met with
threats.

Am. Compl. ¶ 41.

Similarly, Dr. Halvorsen threatened

to allocate royalties to another patent on which Dr. Charest was
not an inventor and “Dr. Charest understood Dr. Halvorsen to be
using the undisclosed patent as leverage over him.”
¶ 46.

Am. Compl.

Dr. Charest in fact wrote to Dr. Halvorsen that he (Dr.

Halvorsen) “issued the written warning that my portion of the
inventor allocation would be reduced if I proceed forward.”

Id.

These facts are the gravamen of Dr. Charest’s claims and they
were known to him as they occurred.

The allegation of fraud and

deceit--that “[i]f Dr. Charest had known the truth about the
undisclosed patent application [i.e., that it was without any
value], he would never have agreed to a reduction in his share
of the Inventor Royalties”--suggests only that Dr. Halvorsen’s
leverage was weaker than Dr. Charest recognized and that Dr.
Charest has come to regret acceding to the demands.
4.

Conclusion

At bottom, any claim of tolling fails because the complaint
demonstrates that Dr. Charest recognized the harm and
wrongfulness of the conduct as it occurred.

He was presented

with an agreement that would reduce his share of the royalties,
and threatened by Dr. Myers and Dr. Halvorsen if he did not
accede to their demands.

Rather than promptly bringing his
41

claims, he chose not to do so for more than six years, after
which time the statute of limitations had run.
I will consequently dismiss Counts I and III-VII to the
extent that they depend upon the initial allocation of royalties
from the Pioneering Patents, and Count II in its entirety, on
statute of limitations grounds.7
C.

Breach of Contract Claims Based Upon Re-Allocation of
Royalties to the Intermediary Patent Turn on the Propriety
of the Process Employed in Effecting that Re-Allocation
Dr. Charest contends that OTD violated the IP Policy in

three distinct ways when re-allocating royalties from the
Pioneering Patents to the Intermediary Patents.
First, the IP Policy provides a right of appeal of OTD’s
allocation decisions, allowing an affected individual to appeal
“to the Committee on Intellectual Property for final
determination.”

MD Ex. F, § V(F).

Dr. Charest contends that

Harvard breached this requirement by sending his appeal of OTD’s
re-allocation decision to an ad hoc committee rather than to the
Harvard IP Policy Committee and by refusing him the opportunity

7

In addition, because I have determined that no fiduciary
relationship is properly alleged between Dr. Myers and Dr.
Charest, I will dismiss Count IV in its entirety on that ground
as well.
42

to participate in a meaningful way in the appeals process.

Am.

Compl. ¶ 148.
Second, he claims that the IP Policy requires that
royalties from the Tetraphase License be allocated between the
Pioneering and Intermediary Patents according to the values
assigned to those patents by the terms of the license and that
Harvard’s allocation breached this requirement.

Am. Compl.

¶¶ 145-46.
Third, Dr. Charest claims that, if the license agreement
does not place a value upon individual patents, royalties must
be allocated according to their commercial value--which Harvard
has failed to do.
1.

Am. Compl. ¶ 147.

Did Harvard Breach the IP Policy in the Handling of
Dr. Charest’s Appeal?

After being informed of OTD’s initial determination that
33% of the royalties from the Tetraphase License should be
allocated to the Intermediary Patent, Dr. Charest sought to
exercise his right to appeal this determination to the IP
Committee--a right provided by Harvard’s IP Policy.

MD Ex. F,

§ V(F).
Dr. Charest alleges a series of irregularities and
improprieties in the handling of his appeal to the OTD.
Dr. Charest challenges the procedures of his appeal.
43

First,

Specifically, Dr. Charest alleges that, despite representations
from Harvard that he would have notice of the appeal hearing and
an opportunity to present materials to the IP Committee, he was
not informed of the hearing of his appeal until after it had
been completed, he was given no opportunity to respond to
materials submitted to the committee by OTD, he was not informed
of the substantive positions of adverse parties, and he never
was able to present his substantive arguments to the IP
Committee.

Dr. Myers and OTD, in contrast, were afforded an

opportunity to submit their substantive arguments to the
committee, and two representatives from OTD, Mr. Kohlberg and
Dr. Fenerjian, actually appeared before the committee during the
hearing on Dr. Charest’s appeal.
Second, Dr. Charest challenges the constitution of the
committee which heard his appeal.

He claims that OTD directed

his appeal to an ad hoc committee convened for the specific
purpose of hearing his appeal, rather than sending the appeal to
the IP Committee, a standing committee appointed by Harvard’s
President.
While the IP Policy provides the opportunity for an appeal
of an OTD determination, it does not dictate any specific
procedural formalities that must be followed during such an
appeal.

It does not specify that an appellant will be given
44

notice of the committee hearing, an opportunity to present
substantive evidence to the committee, an opportunity to appear
before the panel and present arguments, or an opportunity to be
apprised of the arguments of adverse parties.

And Harvard has

not promulgated any rules or regulations governing the appeals
provided under its IP Policy.

This lack of definition, however,

does not mean that Harvard is unfettered in structuring its
appeals process.

To have fulfilled its contractual promise,

Harvard must provide an appeal process sufficiently robust to be
worthy of that term.
In Hooters of America, Inc. v. Phillips, 173 F.3d 933 (4th
Cir. 1999), the Fourth Circuit addressed a circumstance in which
the restaurant chain Hooters and its employees agreed to
arbitrate disputes “pursuant to the company’s rules and
procedures . . . as promulgated by the company from time to
time.”

Hooters, 173 F.3d at 936.

Pursuant to this provision,

Hooters promulgated rules that “when taken as a whole . . . were
so one-sided that their only possible purpose is to undermine
the neutrality of the proceeding.”

Id. at 938.

The Fourth

Circuit held that doing so was a contractual violation, id. at
940 (“By creating a sham system unworthy even of the name of
arbitration, Hooters completely failed in performing its

45

contractual duty.”), and violated the implied covenant of good
faith and fair dealing:
Hooters had a duty to perform its obligations in good
faith . . . Phillips agreed to the prompt and
economical resolution of her claims. She could
legitimately expect that arbitration would not entail
procedures so wholly one-sided as to present a stacked
deck. Thus we conclude that the Hooters rules also
violate the contractual obligation of good faith.
As the Fourth Circuit explained, Hooters and its employees
agreed to a contract under which Hooters was obligated to
establish an arbitration system and had discretion in fulfilling
this obligation.
however.

Hooters’ discretion was not unbounded,

Hooters could not establish such unfair rules as to

make the arbitration process a sham and was required to exercise
its discretion in accordance with the covenant of good faith and
fair dealing inherent in all contracts.

Here, Harvard was

entrusted with contractual discretion to establish the
procedures for hearing appeals from the royalty allocation
decisions of OTD.

Harvard, like Hooters, is obligated to

exercise its contractual discretion in good faith when setting
the rules for an appeal to the IP Committee.
Good faith execution of the contractual terms does not
require that Harvard meet some Platonic ideal in designing its

46

appellate procedures.8

Nor would it be appropriate for this

court to determine the appropriate procedures to govern an
appeal to the IP Committee and then attempt to measure Harvard’s
conduct against that standard.9
However, I need not measure Harvard’s conduct only against
such abstract ideals.

According to Dr. Charest, Harvard made

specific procedural promises to him.

Although the

8

Although not precisely applicable here, the Supreme Court’s
statement that “(d)ue process unlike some legal rules, is not a
technical conception with a fixed content unrelated to time,
place and circumstances” but instead “is flexible and calls for
such procedural protections as the particular situation
demands,” Mathews v. Eldridge, 424 U.S. 319, 334 (1976)
(citations omitted), underscores the difficulty of trying to
devise in the abstract the procedural requirements Harvard was
obligated to provide to fulfil its promise of an appeal under
Section V(F) of the IP Policy.
9

In the somewhat analogous circumstance in which a student has
attacked the fairness of a University’s disciplinary
proceedings, the First Circuit, applying Massachusetts law, has
explained that “[w]here, as here, the university specifically
provides for a disciplinary hearing before expulsion, we review
the procedures followed to ensure that they fall within the
range of reasonable expectations of one reading the relevant
rules . . . . We also examine the hearing to ensure that it was
conducted with basic fairness.” Cloud v. Trustees of Boston
University, 720 F. 2d 721, 724-25 (1st Cir. 1983). In
performing this review of a University’s internal decisionmaking, however, “courts are chary about interfering with
academic . . . decisions made by private colleges and
universities.” Schaer v. Brandeis Univ., 735 N.E.2d 373, 381
(Mass. 2000) (citations omitted).
47

communications were made subsequent to the formation of the
contract, they are reflective of the parties’ understanding of
what constitutes a proper appeals process under the IP Policy.
See Lanier Prof. Servs., Inc. v. Ricci, 192 F.3d 1, 4 (1st Cir.
1999) (describing use of extrinsic evidence to interpret
contractual terms under Massachusetts law).

He alleges that

Harvard represented that he would be given notice of the date of
the hearing of his appeal, that he would be an opportunity to
present his substantive arguments, that he would be given notice
of the substantive positions of adverse parties, and that he
would be given the chance to appear before the tribunal that
would decide his appeal.

Dr. Charest alleges that rather than

making good on these promises, Harvard reneged and instead
presented the outcome of the appeals process to him as a fait
accompli.10

Arguably, such a proceeding would not constitute an

10

One of Dr. Charest’s complaints--though perhaps only a minor
one--is that the committee that heard his appeal was convened by
the Provost of Harvard, rather than the President. During oral
argument, counsel for Harvard suggested that this deviation was
excused because the Provost was empowered under the IP Policy to
make “amendments and modifications” to it. The authority to
amend or modify a policy does not entail the authority to
violate the rules. While the University may have the power to
modify the rules, those rules are generally applicable and must
be enforced as they stand--until they are actually modified.
What Harvard may not do is alter the rules on the fly and on an
ad hoc basis to suit its immediate purposes.
48

appeal even without this extrinsic evidence — these are
allegations of serious procedural shortcomings — but with that
evidence, it is clear that Dr. Charest has alleged a breach of
contract.
In the somewhat analogous context of a University
disciplinary proceeding, Justice Ireland of the Massachusetts
Supreme Judicial Court explained (in dissent, but on this point
in it basic agreement with the majority) that: “if the
university puts forth rules of procedure to be followed in
disciplinary hearings, the university should be legally
obligated to follow those rules . . . the university cannot tell
its students that certain procedures will be followed and then
fail to follow them.”

Schaer v. Brandeis University, 735 N.E.2d

373, 383 (Mass. 2000) (Ireland, J., dissenting).
is applicable here.

That approach

Dr. Charest has alleged that Harvard

promised him an appeals process worthy of the name, and revealed
what specific procedures it understood to be owed under the
contract, but did not follow through on this promise.

If these

allegations are true, Harvard has deprived him of the meaningful
and fair hearing it was obligated to provide under Section V(F)
of its IP Policy.
2.

Did OTD Improperly Value the Intermediary Patent?

In addition to claiming that Harvard failed to abide by the
49

promises it made regarding the procedural handling of his
appeal, Dr. Charest also claims that the substantive outcome of
that process violated Harvard’s IP Policy.
The IP Policy provides that “when an executed license
agreement assigns different values to different Creations
licensed as a package, that value shall be the value assigned
for purposes of allocating Net Royalties among such Creations.”
MD Ex. F, § V(E)(3).
Nowhere in the License Agreement is there an explicit
statement regarding the relative value of the Intermediary and
Pioneering Patents or an assessment of their relative value to
Tetraphase.

Instead, Dr. Charest relies on valuations implicit

in the Tetraphase License royalty structure.

As discussed

above, as consideration for the initial grant of a license to
the Pioneering Patents, Tetraphase made an upfront payment of
$250,000 to Harvard, along with commitments to make future
milestone payments (based upon the progress of commercializing
the technology) and royalty payments (based upon sales).
Am. Compl.

Ex. E, § 6.

See

Although Dr. Charest alleges that the

only consideration for the addition of the Intermediary Patent
is $25,000, Compl. ¶ 58, a review of the actual amendment,
Compl. Ex. D, First Amendment, shows that it says the initial
upfront payment is “partial consideration” for the license to
50

the additional patent.

This is a meaningful distinction because

when a new patent is added to a royalty paying license, the
licensor’s consideration may come in forms other than an upfront
payment; if that patent increases the licensee’s sales,
percentage-based royalties accruing will correspondingly
increase as well.

This would constitute additional

consideration, not necessarily explicit, that rises or falls
with the value of the additional patent.

The $25,000 upfront

payment for the addition of the Intermediary Patents to the
Tetraphase License cannot appropriately be viewed as an
assignation of the relative value of that patent to the license.
For purposes of evaluating Dr. Charest’s first alleged
species of breach of contract, the relevant question is whether
the “license agreement assigns different values to different
Creations licensed as a package.”
agreement does not.

The Tetraphase license

The most Dr. Charest has alleged (and the

license itself shows) is that Harvard has received consideration
in different forms for the different patents.

This falls short

of the explicit assignation of value necessary to trigger the
provision of the IP Policy, which requires that the license
actually “assign[] . . . values” to different patents.
Alternatively, Dr. Charest contends that, if the license
does not assign values to the different patents, OTD was
51

required to do so in accordance with the commercial value of the
patents--and that the allocation determination made by OTD was
inconsistent with the commercial value.
The relevant language in the IP Policy provides that: “upon
request of any of the Creators, OTD will determine the relative
value to the package of each of the Creations.”
§ V(E)(3).

MD Ex. F,

This provision reveals the central failing of Dr.

Charest’s second species of contract claim.

In the absence of a

specification of relative value in the license agreement, the
contract does not entitle Dr. Charest to a specific royalty
amount or an assessment against a specified benchmark.

Rather,

it provides him the right to have OTD make a determination of
the relative value of his patent.

And he has undoubtedly

received such a determination from OTD in the form of a 33%/66%
split which he subsequently appealed.
In his complaint, Dr. Charest sets forth various
allegations of facts which would support his view that the value
of the Intermediary Patent was relatively minimal and therefore
OTD’s determination was incorrect.
89-96.

See, e.g., Compl. ¶¶ 58-63,

But Dr. Charest points to nothing that suggests that OTD

was obligated to consider the various facts he enumerates in his
complaint nor even that he was entitled to some objectively

52

correct allocation of royalties.11

The contractual promise was

procedural, not substantive: that OTD would make a determination
of relative value.12

Harvard provided such a determination to

Dr. Charest.
D.

Tortious Interference with Contractual Relations
In support of his claim for tortious interference with

contractual relations, Dr. Charest asserts that Dr. Myers worked
with OTD, Dr. Baker, and Dr. Plamondon to misrepresent the
relative value of the two patents to the “ad hoc committee”
hearing the allocation appeal.

Am. Compl. ¶¶ 162-165.

In order

11

This procedural obligation retains a substantive flavor
because OTD must make a determination for “relative value”
(emphasis supplied). The procedure must serve that ultimate
end. If, for example, OTD held a hearing that allocated
royalties 66%/33% because Dr. Myers was twice as old as Dr.
Charest, or on the roll of a dice, it would have breached its
contractual obligation to determine “value,” no matter how many
procedural safeguards were employed. However, Dr. Charest does
not allege that OTD’s hearing ignored value in this way.
Indeed, the Amended Complaint alleges that OTD told Dr. Charest
that its determinations would be based on “value.” Am. Compl.
¶ 66, 84. As alleged, OTD made a determination of value and
therefore kept its obligation under the IP Policy.
12

Dr. Charest specifically alleges that “relative value” in the
IP Policy must equate to “commercial value”--picking up on a
phrase used in the letter from OTD informing inventors of the
outcome of Dr. Charest’s appeal of OTD’s determination. Am.
Compl. Ex. B. That may be so, as Massachusetts allows course of
dealings evidence to be used to resolve ambiguous contract
terms. See Keating v. Stadium Mgmt. Corp., 508 N.E.2d 246, 25152 (Mass. App. Ct. 1987). But since the Amended Complaint does
not allege that OTD ignored value, commercial or otherwise, this
is immaterial.
53

to make out a claim for tortious interference with contractual
relations, a plaintiff must allege “(1) he had a contract with a
third party; (2) the defendant knowingly induced the third party
to break that contract; (3) the defendant’s interference, in
addition to being intentional, was improper in motive or means;
and (4) the plaintiff was harmed by the defendant’s actions.”
G.S. Enterprises, Inc. v. Falmouth Marine, Inc., 571 N.E.2d
1363, 1369 (Mass. 1991).
Dr. Charest’s allegations fail to state a claim for
tortious interference with contractual relations for several
reasons.

First, while he alleges that Dr. Myers worked with

OTD, Dr. Baker, and Dr. Plamondon to present false information
to the ad hoc committee, he fails to link these allegedly false
statements to any breach of a contractual provision.

Nothing in

the IP Policy bars the IP Committee from hearing the views of
Dr. Myers, Dr. Plamondon, and OTD.

As discussed above, even if

their false submissions led the IP Committee to reach an outcome
unfavorable to Dr. Charest, that does not constitute a breach of
contract; the IP Policy does not guarantee to Dr. Charest any
substantive outcome.13

13

To be clear, a lower allocation to the Pioneering Patent may
be the harm resulting from some alleged breach of contract. But
the substantive fact of a lower allocation does not constitute a
breach of any contractual provision.
54

Second, to state a claim, the alleged interference must be
“improper in motive or means.”

The Massachusetts Supreme

Judicial Court has explained that “for example . . . a party is
justified in interfering with a third-party’s contract with
another by filing a lawsuit in a good faith effort to assert
legally protected rights” but that this conduct would be
malicious if the initiator “does not have probable cause to
believe the suit will succeed, and is acting primarily for a
purpose other than that of properly adjudicating his claims.”
G.S. Enterprises, 571 N.E.2d at 1370.

Here, Dr. Charest has

initiated a proceeding--the appeal to the IP Committee--that is
in some ways akin to a lawsuit.

Dr. Myers, as an individual

with a stake in the process, undoubtedly has the right to
participate in the appeal.

In doing so, Dr. Myers’ conduct is

protected by something akin to the “litigation privilege.”
Cf. Loltek-Jick v. O’Toole, 29 Mass. L. Rptr. 269 (Mass. Super.
Ct. 2011) (applying privilege to arbitration as well as
litigation).

That privilege provides that statements by a

party, counsel or witness in the institution of, or during the
course of, a judicial proceeding are absolutely privileged so
long as such statements relate to that proceeding.
Raymond, 345 N.E.2d 882, 883 (Mass. 1976).

Sriberg v.

This privilege

applies not only to claims of defamation and slander, but also
55

to other torts, including claims of intentional interference
with contractual relations.

See, e.g., Blanchette v. Cataldo,

734 F.2d 869, 877 (1st Cir. 1984).

Dr. Charest alleges that Dr.

Myers and other participants made false statements regarding the
relative value of the Pioneering and Intermediary Patents to the
IP Committee during the hearing of Dr. Charest’s appeal.

It is

imperative for the functioning of such a process that
participants be free to express their opinions and advocate for
their viewpoint without fear of legal liability.

The

allegations set forth by Dr. Charest do not show that Dr. Myers’
participation in the appeal was “improper in motive or means.”
To the contrary, this participation was the exercise of a
protected right--the right to participate freely in litigation
affecting one’s interests.14
Third, resolving Dr. Charest’s claim of tortious
interference would require a finder of fact to determine whether
Dr. Myers falsely represented the value of the Intermediary
Patent, as Dr. Charest has alleged.

That determination,

however, is vested in the IP Committee and it is for that

14

If Dr. Charest alleged that Dr. Myers had interfered with the
contract by causing the appeal to be unfair in its very
constitution, for example by convening a prejudiced tribunal in
the first place, this privilege might not apply. But Dr.
Charest only alleges that Dr. Myers interfered through his
communications with the committee.
56

committee, not for this court, to determine the appropriate
relative values of the patents.

For the court to make that

determination would be an unwarranted interference in a decision
that the contractual arrangements among the parties has reserved
to the IP Committee.
E.

Promissory Estoppel
In his promissory estoppel claim, Dr. Charest simply seeks

to enforce the terms of the IP Policy as a promise made by
Harvard to induce Dr. Charest to assign the Pioneering Patents
to Harvard.

Under Massachusetts law, the doctrine of promissory

estoppel is implicated only in “the absence of an express
contract.”

Northrup v. Brigham, 826 N.E.2d 239, 244 (Mass. App.

Ct. 2005).

Because I have already determined that the IP Policy

is a contract binding upon Harvard, promissory estoppel is
inapplicable here.
F.

Violation of Chapter 93A
Although Dr. Charest alleges a litany of conduct which he

contends constitutes a claim under Massachusetts General Law
Chapter 93A, see Compl. ¶¶ 180-191, the allegations boil down to
essentially three instances of conduct.
The first, discussed above, is that surrounding the initial
allocation of royalties among the inventors of the Pioneering
Patents.

And, as discussed above, claims relating to those
57

events are untimely and barred by the statute of limitations and
will be dismissed.
The second instance of conduct is OTD’s decision to reallocate royalties to the Intermediary Patent and then, when Dr.
Charest challenged this determination, engineering the appeal
process to favor Harvard’s faculty member and punish Dr. Charest
for exercising his contractual right of appeal.

According to

Dr. Charest, OTD threatened that his allocation would be further
reduced if he challenged its allocation decision, and followed
through on this threat by diverting the appeal from the IP
Committee to a committee selected to be favorable to Dr. Myers
and OTD and by preventing Dr. Charest from having meaningful
involvement in the appeal.
These allegations concern the internal governance
procedures of Harvard University for allocating royalties
arising from patented inventions developed jointly by multiple
researchers working at Harvard University and the relationship
between Dr. Charest and Harvard from which these allegations
arise is akin to that of an employee and an employer.

Chapter

93A is inapplicable to disputes that are private and concern the
internal governance of an entity.

See, e.g., Zimmerman v.

Bogoff, 524 N.E.2d 849, 856 (Mass. 1988) (“The transactions at
issue here were principally private in nature and thus do not
58

fall within the purview of G.L. c. 93A.”); Riseman v. Orion
Research, Inc., 475 N.E.2d 398, 400 (1985) (Chapter 93A is
inapplicable in a case involving “the internal governance of a
corporation.”); Manning v. Zuckerman, 444 N.E.2d 1262, 1265
(Mass. 1983) (“[E]mployment agreements between an employee and
the organization of which he is a member do not constitute
‘trade’ or ‘commerce.’”).
The third alleged instance of conduct arose after the IP
Committee rendered its decision regarding Dr. Charest’s appeal
of OTD’s initial allocation.

Since that decision, until the

onset of this lawsuit, Harvard refused to pay to Dr. Charest any
of the royalties owed to him according to the IP Committee’s
decision unless and until Dr. Charest signed a release accepting
the committee’s decision and releasing Harvard from any
liability for its conduct.
In its February 3, 2014 brief regarding these events,
Harvard explained that the OTD made payments to all inventors
until they became aware that Dr. Charest sought to appeal the
royalty allocation decision.
payments to all inventors.

At that time, they suspended all

After the IP Committee rendered its

decision, OTD informed the inventors of the decision and
requested “a signed acknowledgment--not a release of claims-upon receipt of which OTD would distribute each inventor’s
59

respective share of the royalties.”

According to Harvard, this

release is important because once Harvard makes royalty payments
to an inventor, it is their long-standing practice not to seek
recoupment of overpayments.

Rather, in the case of a

misallocation, Harvard makes the underpayee whole out of its own
funds.

The acknowledgment of the IP Committee’s decision

mitigates Harvard’s risk of making such overpayments which it
will later be required to cover.

With the exception of Dr.

Charest, all of the inventors returned the requested
acknowledgment and received their royalty payments.
I find several problems with Harvard’s explanation of its
conduct.

First, while Harvard claims that it requested only an

“acknowledgment” as a condition of releasing funds, the
subsequent letter provided by the plaintiff appears to show that
Harvard was holding Dr. Charest’s funds in escrow and that “an
appropriate release of claims would . . . be required” as a
condition of the release of those funds to Dr. Charest--directly
contradicting Harvard’s representations to this court.

Second,

while Harvard represented in its latest brief that it suspended
payment of all royalties to all inventors upon receiving notice
of Dr. Charest’s appeal, in an earlier brief submitted to this
court, the defendants stated: “Dr. Myers received his 50% share
of the first royalty payment in January 2008 and 50% of every
60

other royalty payment to the Intermediate Method Patent since
that time”--a statement which seems to suggest that Dr. Myers
received his payments without interruption from 2008 until the
present.

It would appear strikingly unfair if Harvard continued

to make payments to its own faculty members while suspending
payments to unaffiliated (or only formerly affiliated)
scientists when the relevant contract provided no greater
priority to Dr. Myers than to Dr. Charest.

Third, at the core,

Harvard’s representations simply reaffirm Dr. Charest’s
allegations, albeit with some context provided.

Dr. Charest

stood on contractually equal footing with his co-inventors on
the Pioneering Patents--each had the same contractual rights to
payments from the royalty streams (although in different
percentages).

Those who signed and return the requested forms

from Harvard (whether termed an acknowledgment or release),
received disbursements of funds.

Dr. Charest did not sign and

return the forms requested by Harvard and Harvard, in turn,
refused to release funds held in escrow to him.

Yet nothing in

the contractual arrangements between Harvard and Dr. Charest--or
Harvard and the co-inventors--made signing these forms a valid
precondition to the disbursement of funds or otherwise justified
this differential treatment.

This was a unilateral decision by

61

Harvard that it was able to effect because it controlled the
monies flowing from the Tetraphase License.
Unlike the allegations regarding OTD’s conduct and the IP
Committee’s allocation decisions, the Chapter 93A claim relating
to Harvard’s withholding of monies may not be dismissed as
arising purely from a private matter of Harvard’s internal
governance.

At the time that the funds were withheld, Dr.

Charest was no longer associated with Harvard in a business
venture and the internal governance procedures necessary for the
disbursement of funds had concluded.

As Harvard explained in

its March 1, 2011 letter, “[a]ll appeal rights under the IP
Policy have now been finally and completely exhausted.”

At that

point, the only then-existing relationship between Harvard and
Dr. Charest was that Harvard had contractual obligations to payover money received from the Tetraphase License.15

Dr. Charest

had no relationship with Harvard nor with Tetraphase after the
completion of the IP appeal.

At least at the stage of a motion

to dismiss, I cannot conclude that this is anything other than a

15

Harvard’s argument that Dr. Charest’s statement that he and
the IP Committee are both a part of the “Harvard community”
makes them all members of a joint enterprise is hardly
compelling; it is tantamount to a contention that no Harvard
alum may sue another under Chapter 93A because every alum is a
member of the “Harvard community.”
62

commercial relationship--little more than that of creditor and
debtor--and not a joint enterprise.
The remaining question is whether the conduct alleged by
Dr. Charest is of the sort outlawed by Chapter 93A.

Chapter 93A

makes unlawful “unfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or
commerce.”

Mass. Gen. Laws. c. 93A, § 2.

While the standard

for a violation of Chapter 93A has sometimes been described in
uninstructive terms, such as whether the conduct has “attain[ed]
a level of rascality that would raise an eyebrow of someone
inured to the rough and tumble of the world of commerce,”
Levings v. Forbes & Wallace, Inc., 396 N.E.2d 149, 153 (Mass.
1979), Massachusetts courts have specifically identified certain
conduct that violates Chapter 93A.

In particular, the Supreme

Judicial Court has said that conduct “in disregard of known
contractual arrangements and intended to secure benefits for the
breaching party constitutes an unfair act or practice for c. 93A
purposes,” Anthony’s Pier Four, 583 N.E.2d at 475 (citing Wang
Labs., Inc. v. Business Incentives, Inc., 444 N.E.2d 1262 (Mass.
1986)), and the First Circuit has explained Chapter 93A makes it
unlawful for a party to withhold “monies which they legally owed
as a form of extortion — to force [the plaintiff] to do what
otherwise it could not be legally required to do.”
63

Pepsi-Cola

Metro. Bottling Co. v. Checkers, Inc., 754 F.2d 10, 17-19 (1st
Cir. 1985).

Dr. Charest has alleged that Harvard and OTD has

done precisely this.

While knowing that royalties are owed to

Dr. Charest and while paying royalties to other similarly
situated inventors, Harvard has withheld royalties from Dr.
Charest until and unless he signs various forms acknowledging
acceptance of Harvard’s decision and executes releases of
liability--acts which he has no contractual or other legal
obligation to perform.
Adding to the unfair quality of the alleged is the obvious
inequality between the parties, not only in terms of
institutional size and authority, but also in terms of the
contractual structure.

With the Participation Agreement and IP

Policy, Harvard has created a mechanism for the licensing and
commercialization of the inventions developed by its faculty and
students.

While presenting significant benefits to inventors,

this mechanism vests authority and discretion in OTD in terms of
structuring licensing agreements, valuing inventions, and, as
relevant here, collecting and distributing royalties.

Dr.

Charest’s allegations suggest that OTD abused this authority-engaging in what the defendants aptly, if disapprovingly,
describe as an allegation of a “grand conspiracy”--which
hindered and punished Dr. Charest for the exercise of his
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contractual rights by refusing to pay amounts owed to him.
While it may be that evidence developed during discovery will
show that Harvard and OTD’s conduct has been proper and
forthright, Dr. Charest’s allegations suggest otherwise.
IV. CONCLUSION
For the reasons set forth more fully above, I will grant
Defendants’ Motion to Dismiss (Dkt. No. 11) as to Claims II-VI.
I will also GRANT Defendants’ Motion to Dismiss Claim I to the
extent that those claims relate to the initial allocation of
royalties among the inventors of the Pioneering Patents.

I will

also GRANT Defendants’ Motion to Dismiss Claim VII to the extent
that those claims relate to the initial allocation of royalties
among the inventors of the Pioneering Patents.

The Defendants’

Motion to Dismiss is DENIED as to Claim I, as it relates to
Defendants’ failure to provide, procedurally, the appeals
process promised.

The Motion to Dismiss is DENIED as to Claim

VII, as it relates to Defendants’ withholding of monies owed.
In addition, because I have dismissed all of the claims
against Dr. Myers, he is dismissed from the case as a defendant.

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It is FURTHER ORDERED that that the parties shall file on
or before March 4, 2016 a joint scheduling submission outlining
a proposal for bringing this case to final judgment.

/s/ Douglas P. Woodlock______
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE

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