Contracts Keyed to Scott
Eli Lilly & Co. v. Emisphere Techs., Inc.
Eli Lilly & Co. (Plaintiff) entered into a collaborative agreement with Emisphere Technologies, Inc. (Defendant), under which the parties would work together to use Defendant’s technology to develop oral delivery of some of Plaintiff’s therapeutic compounds. The agreement necessitated and provided for a confidential exchange of proprietary information between the parties. In addition, Plaintiff exercised an option in the agreement to obtain an exclusive license to use Defendant’s carrier technology to develop oral products. Plaintiff paid $4 million to exercise the option. While the collaborative research was ongoing, Plaintiff employees working on the research formed a secret team without Defendant’s knowledge in order to apply Defendant’s carrier technology to other Lilly compounds not contemplated in the agreement. After this secret research, Plaintiff filed for a patent for combinations of fifty-six delivery agents, including Defendant’s carriers that Defendant had divulged as part of the original collaborative contract. At this point, Defendant terminated the original agreement and the subsequent license agreement. Plaintiff brought suit for breach of contract, arguing that the secret research could result in a patent infringement claim at most, but not termination of the agreements.
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