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MCNEILAB, INC. v. SCANDIPHARM

September 2, 1994

McNEILAB, INC.
v.
SCANDIPHARM, INC. SPECIAL MANAGEMENT TRACK



The opinion of the court was delivered by: NORMA L. SHAPIRO

 NORMA L. SHAPIRO, J.

 September 2nd, 1994

 Plaintiff McNeilab, Inc. ("McNeil") brought this action for patent infringement against defendant Scandipharm, Inc. ("Scandipharm") under the Patent Laws of the United States, Title 35 United States Code. Presently before the court is defendant's Motion for Summary Judgment. Because the undisputed material facts show that plaintiff lacks standing to maintain this action, defendant's motion will be granted.

 I. BACKGROUND

 McNeil is a Pennsylvania corporation with its principal place of business in Pennsylvania. BASF Aktiengesellschaft ("BASF"), a German corporation, is the record owner of the patents in suit. The patents relate to certain microtablets containing pancreatic enzymes that assist the digestion of fat. In 1988, McNeil entered into an agreement with a wholly owned subsidiary of BASF, Knoll Aktiengesellschaft ("KAG"), for production and marketing of these microtablets which McNeil then marketed under the brand name "Pancrease MT."

 In 1990, when BASF's European patent application was pending, Eurand International, S.p.A. ("Eurand"), an Italian corporation, was developing "minitablets" containing pancreatic enzymes. BASF and Eurand entered into negotiations to avert conflicts over the marketing and sale of their respective products. BASF stated in a letter to Eurand dated May 4, 1990, that BASF would not assert its European patents or their equivalents in other countries against Eurand, its affiliated companies, or their customers if Eurand's minitablets conformed to certain specifications. BASF stated in another letter to Eurand on May 10, 1990, that licensees of KAG would not assert the European patents against Eurand's marketing of the pancreatic enzyme tablets in the form referred to in the May 4th letter. Eurand then signed the May 4th letter ("Letter Agreement") and returned it to BASF.

 Eurand markets pancreatic enzymes in minitablets under the brand name Ultrase. In July, 1991, Eurand granted Carlson-Rensselaer Corporation ("C-R"), a Pennsylvania corporation, an exclusive right to market Ultrase Minitabs in the United States and Canada. On August 5, 1991, C-R granted Scandipharm, a Delaware corporation with its principal place of business in Alabama, the exclusive right to register, manufacture, and market Ultrase Minitabs in the United States.

 McNeil subsequently filed this action for patent infringement against Scandipharm. Scandipharm asserted a counterclaim seeking a declaration of patent invalidity and non-infringement and a third party complaint against BASF. Scandipharm contended that it was a third party beneficiary of the Letter Agreement and relied on the Letter Agreement and other representations that it would not be sued for patent infringement. Eurand filed a motion to intervene as third party plaintiff against BASF. The court granted BASF's motion to dismiss Scandipharm's third party complaint because Scandipharm's claims against BASF were independent of McNeil's claims against Scandipharm and the third party complaint did not state a claim for contributory infringement under 35 U.S.C. ยง 271(c). *fn1" Memorandum and Order of June 17, 1993. The court denied Eurand's motion to intervene as moot. Id.

 II. FACTS

 BASF is the record owner of United States Patent Number 4,797,287 and 4,828,843, acquired respectively on January 10, 1989 and May 9, 1989. Def. Ex. B. The former patent is for a cylindrical microtablet of specified proportions consisting "essentially of pancreatin," with a dependent claim for a microtablet with a pancreatin content of 99.5%. Id. The latter patent is for a microtablet of the same composition and proportions as the first patent with a coating resistant to gastric juices, with a dependent claim for a microtablet with a specified coating. Id.

 On April 19, 1988, KAG and McNeil entered into a "Know-How and License Agreement," Def. Ex. A ("License Agreement"); according to McNeil, the License Agreement transferred rights to the BASF patents to McNeil. Scandipharm disputes McNeil's assertion that BASF authorized KAG to license rights to the patents in suit; however, the evidence of record suffices to create a disputed issue of fact regarding KAG's licensing authority. See, e.g., Pl. Ex. 9 at 158, 186-90. For this motion for summary judgment, the court must assume that BASF did grant KAG licensing authority.

 Section 3.1 of the License Agreement states in part: "KAG hereby grants to McNeil a right and license to use the Know-How relating to the Product and the Patent Rights to make, use and sell the Product within the Territory. Such right and license shall be exclusive."

 The License Agreement contains the following definitions:

 
"Product" means the finished pharmaceutical specificity containing the Compound formulated into micro-tablets in capsules conforming to the specifications and data analyses attached hereto as Exhibit I as well as any improvement thereof according to Section 6.8. Exhibit I shall be amended accordingly.
 
. . . .
 
"Combination Product" means a Product which contains at least one other active ingredient in addition to the Compound.
 
"Compound" means Pancrelipase that conforms to the specifications and data analyses attached hereto as Exhibit II. Exhibit II may be amended at any time by KAG with respect to improved lipase activity.
 
. . . .
 
"Patent Rights" means any patent issued based on a patent application previously or hereafter filed by or on behalf of KAG or subsequently assigned, licensed or granted to KAG in the Territory, that is based on an invention relating to the manufacture or use of the Compound or Product, but only to the extent that said patents or the claims thereof cover the Compound or Product, their use, or a process for their manufacture. . . .
 
"Territory" means the United States of America, its territories, and possessions, and Canada.
 
"Trademark" means McNeil's trademark 'Pancrease' used in conjunction with appropriate suffixes to designate and differentiate KAG's pancrelipase formula and strengths (e.g. ...

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