Hirsch-Chemie Ltd. v. Johns Hopkins University

Hirsch-Chemie Limited (Hirsch) (plaintiff) was a biotechnology company, and Johns Hopkins University (the university) (defendant) was a major research university. On July 27, 1983, Hirsch and the university entered into a joint development agreement (JDA) under which Hirsch agreed to invest a specified sum to support the university’s cancer research and, in exchange, Hirsch obtained the first option to acquire a worldwide license to make, use, and sell any inventions or products that were developed through the research. The JDA, including its option provision, was set to expire in three years—in July 1986—unless (1) the JDA was sooner terminated or extended by mutual consent, (2) a license was granted, or (3) the JDA was terminated by either party based on the other party’s material breach. Any modification of the JDA was required to be in writing, executed by both parties. In October 1985, the university notified Hirsch by letter that it had developed an invention or product from the research. Hirsch responded the following month, expressing its desire to enter into a licensing agreement. The parties began negotiations. Hirsh was unable to provide its production and sales goals for marketing the invention, despite requesting and receiving an additional month from the university to provide the data. Months after July 1986, the parties were still attempting to negotiate a license, but in the end, they could not and did not reach a final agreement. After Hirsch materially breached another of the parties’ contracts, the university declared that it was terminating both contracts. Hirsch sued the university, claiming breach of the JDA, among other claims. The court granted summary judgment in favor of the university. Hirsch appealed, arguing that the parties extended the JDA’s expiration date by their conduct and created an implied license.