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Eli Lilly & Co. v. Emisphere Techs., Inc.
United States District Court for the Southern District of Indiana
408 F. Supp. 2d 668 (S.D. Ind. 2006)
Eli Lilly & Co. (Lilly) (plaintiff) entered into a collaborative agreement with Emisphere Technologies, Inc. (Emisphere) (defendant), under which the parties would work together to use Emisphere’s technology to develop oral delivery of some of Lilly’s therapeutic compounds. The agreement necessitated and provided for a confidential exchange of proprietary information between the parties. In addition, Lilly exercised an option in the agreement to obtain an exclusive license to use Emisphere’s carrier technology to develop oral products. Lilly paid $4 million to exercise the option. While the collaborative research was ongoing, Lilly employees working on the research formed a secret team without Emisphere’s knowledge in order to apply Emisphere’s carrier technology to other Lilly compounds not contemplated in the agreement. After this secret research, Lilly filed for a patent for combinations of 56 delivery agents, including Emisphere’s carriers that Emisphere had divulged as part of the original collaborative contract. At this point, Emisphere terminated the original agreement and the subsequent license agreement. Lilly 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.
Rule of Law
Holding and Reasoning (Hamilton, J.)
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