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Contract Intellectual Property – Royalties – Unfair Trade Practices Claim — Civil Practice – Statute of Limitations

Contract Intellectual Property – Royalties – Unfair Trade Practices Claim — Civil Practice – Statute of Limitations

 Stack v. Abbott Laboratories, Inc. (Lawyers Weekly No. 13-03-1040, 24 pp.) (Thomas D. Schroeder, J.) 1:12-cv-00148; M.D.N.C.

Holding: Plaintiff’s claim for royalties affects only his relationship with defendant Abbott Laboratories, Inc. and its affiliates under the parties’ consulting contract; the failure to pay the royalties is alleged only to be a breach of contract and no more. Therefore, plaintiff’s unfair trade practices claim predicated on the failure to pay royalties fails. Defendants’ motion to dismiss is granted in part and denied in part. Even if Abbott’s failure to include plaintiff’s name on Abbott’s patent applications violates the parties’ contract and was done “deliberately and in bad faith, to marginalize [plaintiff’s] value in the marketplace, to advance defendants’ market position, and to enrich defendants financially,” such conduct was nevertheless within the contemplation of the parties when they drafted their contract. The claim is thus one of contract interpretation and performance, which is regulated by contract law, not the Unfair and Deceptive Trade Practices Act. Plaintiff argues that Abbott’s removal of a reference to someone else’s patent from its product packaging caused plaintiff harm (because that other patent referred to one of plaintiff’s patents). Even if that is the case, plaintiff fails to explain how he enjoys any right to insist on the reference to someone else’s patent on any of Abbott’s products. Any effect on plaintiff would be collateral, at best, and falls well outside the bounds of an unfair trade practices claim. The only link between defendant Abbot Vascular, Inc. and plaintiff’s claims is the fact that an Aug. 28, 2006 letter – regarding Abbott Lab’s purchase of the company plaintiff had done business with – was written on Abbott Vascular’s letterhead. The motion to dismiss Abbott Vascular is granted without prejudice. The parties’ contract is governed by California law, which has a four-year statute of limitations. All claims accruing before Feb. 13, 2008 fall outside the limitations period. A letter from an Abbott employee acknowledging Abbott’s obligation to make a payment is not enough to equitably estop Abbott from relying on the statute of limitations defense. Any of plaintiff’s claims that accrued before Feb. 13, 2008 are dismissed without prejudice. Plaintiff has pleaded a plausible breach of contract claim by alleging that Abbott has failed to pay royalties and “launch payments” relating to three specifically defined product types that Abbott agreed (in the contract) were “Royalty Bearing Products.” If Abbott was satisfied, as it necessarily was, to have these definitions serve as the basis for assessing its liability for payment of royalties to plaintiff, the court is not persuaded by Abbott’s current claim that it now lacks adequate notice of which of its products plaintiff’s lawsuit is about.

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