Mass. Eye and Ear Infirmary v. QLT PHOTOTHERAP. ( 2009 )


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  •             United States Court of Appeals
    For the First Circuit
    Nos. 07-2615, 07-2616
    MASSACHUSETTS EYE AND EAR INFIRMARY,
    Plaintiff/Counterclaim Defendant-Appellee/Cross-Appellant,
    v.
    QLT PHOTOTHERAPEUTICS, INC.,
    Defendant.
    QLT, INC.,
    Counterclaim Plaintiff, Appellant/Cross-Appellee,
    v.
    MASSACHUSETTS EYE AND EAR INFIRMARY;
    EVANGELOS S. GRAGOUDAS, M.D.; JOAN W. MILLER, M.D.,
    Counterclaim Defendants, Appellees/Cross-Appellants.
    Before
    Howard, Baldock1 and Selya,
    Circuit Judges.
    __________________________
    ORDER OF COURT
    Entered: February 23, 2009
    QLT has filed a petition for rehearing of our decision in
    this case.    One substantive issue presented in that petition
    warrants elaboration.      QLT highlights an objection to the
    confidential information theory of unjust enrichment raised in its
    brief   and   addressed   implicitly   in   our   prior   decision.
    Specifically, QLT argues that the voluminous evidence of its unfair
    1
    Of the Tenth Circuit, sitting by designation.
    behavior and repeated promises of compensation in exchange for
    MEEI's confidential information, introduced at trial and recited in
    our opinion, cannot support the conclusion that QLT profited from
    the use of MEEI's confidential information. Absent such a showing,
    QLT argues that the general principle that those who chose to make
    their work public must rely exclusively on patent law for
    protection of their work, Bonito Boats, Inc. v. Thunder Boats,
    Inc., 
    489 U.S. 141
    , 149 (1989), requires judgment in favor of QLT
    with respect to this theory. In making this argument, QLT concedes
    -- as it must -- that it is liable in unjust enrichment for any
    information it obtained and profited from as a result of its
    confidential relationship with MEEI and its researchers. Univ. of
    Colo. Found., Inc., v. Am. Cyanamid, Co., 
    342 F.3d 1298
    , 1306-07
    (Fed. Cir. 2003); see also Bonito Boats, Inc., 
    489 U.S. at
    155
    (citing Kewanee Oil Co. v. Bicron Corp., 
    416 U.S. 470
     (1974));
    Russo v. Ballrad Medical Products, 
    550 F.3d 1004
     (10th Cir. 2008).
    Thus, QLT has done nothing more than pour its old sufficiency of
    the evidence challenge into a new bottle.
    Despite this emphasis on preemption, QLT's argument remains
    unavailing.     There was evidence that QLT initiated its
    communications with CIBA with a confidential abstract that was
    submitted for publication but not yet published. There was further
    evidence that QLT was in difficult financial straights and
    therefore was eagerly seeking a partner, and that QLT was competing
    against CIBA's internally-developed competitor to BPD.           In
    addition, there was evidence that QLT needed Dr. Miller's assent to
    disclose all of her research results to CIBA Vision, some of which
    were published in March 1994, some of which were disclosed at a
    subsequent presentation, and some of which were never disclosed.
    The jury heard further evidence that both QLT and CIBA Vision were
    aware of Dr. Miller's publication and scheduled presentation, but
    that CIBA nevertheless felt expeditious access to Dr. Miller and
    all of her research results was "essential" to evaluating BPD.
    Indeed, even after Dr. Miller's public disclosures of portions of
    her work, CIBA continued to press for access to all of Dr. Miller's
    as-yet undisclosed work.   Finally, the jury heard evidence of Dr.
    Miller's concerns that she and MEEI be compensated fairly for her
    research and QLT's repeated promises to pay such compensation in
    exchange for Dr. Miller's personal involvement and her permission
    expeditiously to disclose her research results.2         From this
    evidence, a reasonable fact-finder could conclude that QLT unfairly
    2
    QLT's argument that information disclosed subsequent to the
    publication and conference was valueless is a difficult one to
    make, in view of the fact that QLT made repeated offers of
    compensation to obtain such information. Although those promises
    are not enforceable, the very fact that the promises were made is
    demonstrative of the value that QLT placed on receiving Dr.
    Miller's cooperation in disclosing this additional information.
    used MEEI's confidential information at MEEI's expense and that
    QLT's use of MEEI's confidential information was a substantial
    causal factor in the QLT-CIBA partnership.
    Neither Bonito Boats, nor the other precedents on which QLT
    relies preclude recovery once such a conclusion is established.
    QLT's liability stems from its exploitation of information that it
    obtained in confidence, pursuant to a confidential disclosure
    agreement, and received permission to disclose through offers of
    compensation -- not from published articles or presentations at
    ophthalmology conferences. Thus, QLT's liability flows from its
    less than savory business practices rather than its reliance on
    public domain sources of information. This is not the stuff of
    preemption. See Kewanee Oil Co., 
    416 U.S. at 480-81
     (declining to
    find Ohio trade secrets statute preempted because, inter alia,
    "[t]he necessity of good faith and honest, fair dealing is the very
    life and spirit of the commercial world") (internal quotation
    omitted); see also Bonito Boats Inc., 
    489 U.S. at 155-56
    (reaffirming authority of states to regulate use of intellectual
    property not inconsistent with federal law); Confold Pacific, Inc.
    v. Polaris Industries, Inc., 
    433 F.3d 952
    , 956, 959-960 (7th Cir.
    2006) (finding no unjust enrichment based on misuse of confidential
    information where Wisconsin law did not permit such a cause of
    action, and plaintiff failed to plead unfair competition or secret
    misappropriation under Wisconsin law); Waner v. Ford Motor Co., 
    331 F.3d 851
    , 856 (Fed. Cir. 2003) (finding dismissal of unjust
    enrichment claim appropriate where information was not trade secret
    and defendant was under no obligation to maintain confidentiality).
    Indeed, the Supreme Court has suggested that states should continue
    to regulate just these sorts of less-than-upright business
    practices, even if they incidently involve intellectual property
    and information that may be subject to federal patent laws.3 See
    Bonito Boats, 
    489 U.S. at
    156 (citing Aronson v. Quick Point Pencil
    Co., 
    440 U.S. 257
    , 262 (1979)).
    Accordingly, with this clarification of our decision, QLT's
    3
    In order to find preemption, the Supreme Court evaluates a state
    law on three dimensions: (1) whether it hinders the federal
    objective of providing an incentive to invent, (2) whether it
    inhibits full disclosure of inventions, and (3) whether it removes
    from the public domain that which the states lack the authority to
    remove. Kewannee Oil Co., 
    416 U.S. at 480-82
    ; 6 Donald S. Chisum,
    Chisum on Patents, § 19.03[6][l], at 19-416 (2007).      Where, as
    here, the inventors eventually sought protection of patent law, QLT
    and CIBA were free to exploit any of Dr. Miller's published
    research after it became freely available, if they so chose, and
    Dr. Miller's research was eventually published, the concerns that
    might lead the Supreme Court to find preemption are not
    sufficiently implicated to preempt the Massachusetts unjust
    enrichment cause of action, as it applies to this case.
    petition for rehearing is denied.
    By the Court:
    /s/ Richard Cushing Donovan, Clerk
    cc: Hon. William G. Young, Ms. Sarah Thornton, Clerk, United States
    District Court for the District of Massachusetts, Ms. Davison, Mr.
    Ware, Mr. Cushing, Mr. Donovan, Ms. Fiacco, Mr. Ridings,        Ms.
    Sereny, Mr. Chun, Mr. Helmer, Mr. Maffei, Mr. Herman, Mr. Richlin,
    Mr. McKelvie, Mr. Baker, Mr. Harnett, Ms. DeFranco, Ms. Metzger-
    Hare, Mr. Flattmann, Mr. Bone, Mr. Buford, Mr. Haley, Ms.
    Cooleybeck, Mr. Bromberg, Mr. Biddinger, Ms. Mangasarian, Mr.
    Schwartz, Mr. Taranto, Mr. Ainsworth & Mr. Panner.