Massachusetts Eye and Ear Infirmary v. QLT Phototherapeutics, Inc.

Dr. Julia Levy was a university immunologist. In conducting research on photodynamic therapy (PDT), Levy developed a novel photosynthesizer, BPD. Photosynthesizers could be used to kill unwanted cells in the human body. QLT Phototherapeutics, Inc. (QLT) (defendant) obtained the sole right to license BPD, for which QLT paid Levy’s university a 2 percent royalty. Levy and a team of scientists conducted research to find a clinical use for BPD. Meanwhile, Dr. Joan Miller of Massachusetts Eye and Ear Infirmary (MEEI) (plaintiff) performed groundbreaking research showing that PDT could be used to treat age-related macular degeneration, a leading cause of adult blindness. QLT agreed to fund Miller’s investigations of BPD to treat the eye disease under a confidentiality agreement. Despite the agreement, QLT improperly disclosed Miller’s confidential research to a company called CIBA Vision. QLT was trying to partner with CIBA Vision to manufacture and distribute a BPD-based treatment called Visudyne. At QLT’s request and based on QLT’s promise to enter a licensing agreement with MEEI, Miller presented her research to CIBA Vision. After hearing Miller’s presentation, CIBA Vision agreed to partner with QLT. Miller’s work also contributed to government approval of Visudyne. Thereafter, Visudyne was successfully marketed and sold at high profits. QLT did not enter a licensing agreement with MEEI, and MEEI sued QLT for unjust enrichment. The ensuing trial involved extensive testimony on the parties’ dealings and expert testimony on how to value the benefits conferred on QLT, expressed as royalty rates from the sales of Visudyne. According to MEEI, a reasonable royalty to grant MEEI could be as high as 13.5 percent, representing half of QLT’s net profits from sales of Visudyne. In comparison, QLT presented reasonable royalty rates of 0 percent to 2 percent because, for instance, Levy was a co-inventor with an independent right to practice the invention or because QLT had paid 2 percent for BPD. The jury awarded MEEI a running royalty of 3.01 percent of global net Visudyne sales. QLT appealed.