Institut Pasteur v. Cambridge Biotech Corp.
United States Court of Appeals for the First Circuit
104 F.3d 489 (1997)
Cambridge Biotech Corp. (CBC) (debtor) manufactured and sold HIV test kits. Institut Pasteur owned patented procedures for diagnosing HIV2. In 1989, CBC and Pasteur entered cross-licenses allowing CBC to use Pasteur’s HIV2 procedures in CBC’s test kits. The cross-licenses broadly prohibited assignment or sublicensing but allowed either party to extend the benefits to affiliates including parent companies. CBC insisted on a right to terminate any sublicense Pasteur extended to a company called Genetic Systems if control of the company changed hands. CBC filed for reorganization in 1994 and continued to operate its HIV test-kit business as debtor-in-possession. CBC’s reorganization plan proposed that CBC would assume both cross-licenses and continue operating using Pasteur’s patented HIV2 procedures but sell all CBC’s stock to a bioMerieux subsidiary that competed directly with Pasteur. Pasteur objected, arguing that essentially amounted to CBC assuming the cross-licenses and assigning them to a third party, violating the cross-license terms and the federal common-law rule that patents are presumptively nonassignable. The bankruptcy court nonetheless authorized CBC to assume the cross-licenses. The district court affirmed, and Pasteur appealed.
Rule of Law
Holding and Reasoning (Cyr, J.)
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