Home » LAW » 2007 Massachusetts Eye and Ear Infirmary v QLT (right to a jury under 93A)

2007 Massachusetts Eye and Ear Infirmary v QLT (right to a jury under 93A)

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

)

MASSACHUSETTS EYE AND EAR )

INFIRMARY, )

)

Plaintiff, )

)

v. ) CIVIL ACTION

) NO. 00-10783-WGY

QLT, Inc., )

)

Defendant. )

)

MEMORANDUM AND ORDER

YOUNG, D.J. July 10, 2007

I. INTRODUCTION

This lawsuit is the result of failed business negotiations for

a royalty on the net sales of Visudyne, a blockbuster drug

prescribed to treat age-related macular degeneration. In the early

to mid-1990s, researchers at Massachusetts Eye and Ear Infirmary

(“MEEI”) demonstrated that the drug had promise in treating agerelated

macular degeneration, a leading cause of blindness. QLT,

Inc. (“QLT”) owns the compositional patent to the drug. QLT

promised MEEI that it would negotiate for the licensing rights to

the medical procedure. After the parties were unable to reach

agreement, this lawsuit followed.

Over QLT’s objections, this case was tried to a jury on the

claims of unjust enrichment and violation of Massachusetts General

2

Laws, chapter 93A. The trial, which lasted three weeks, was ably

handled by both parties. The jury displayed an extraordinary grasp

of the complex facts surrounding the development of Visudyne,

asking questions that cut to the core. After two days of

deliberation, the jury returned a verdict for MEEI. QLT then filed

a motion for judgment notwithstanding the verdict, contending that,

in federal court, the jury could only serve in an advisory

capacity. To decide this central issue, this Court must wade

through the murky waters of Seventh Amendment jurisprudence and a

dense thicket of First Circuit precedent.

II. PROCEDURAL POSTURE

MEEI filed the instant action on April 24, 2000. MEEI alleged

breach of contract, breach of implied contract, breach of the

covenant of good faith and fair dealing, conversion,

misrepresentation, unjust enrichment, misappropriation of trade

secrets, and violation of chapter 93A. The district court granted

summary judgment for QLT on all counts. On appeal, the First

Circuit affirmed in part and reversed in part. The First Circuit

held that MEEI could proceed on the theories of unjust enrichment,

misappropriation of trade secrets, and violation of chapter 93A.

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

(MEEI I), 412 F.3d 215 (1st Cir. 2005).

On remand, the case was assigned to this session of the Court.

QLT twice moved for summary judgment on the trade secrets claim.

3

This Court denied summary judgment, though it narrowed that claim

to the alleged disclosure of MEEI’s trade secrets by QLT on three

specific dates. This Court empaneled a jury over QLT’s objections

that MEEI had no right to trial by jury on the unjust enrichment

and chapter 93A claims. Trial commenced on October 16, 2006.

After MEEI presented its case, QLT moved for a directed verdict.

This Court granted the motion with respect to the trade secrets

claim. QLT then presented its defense to the unjust enrichment and

chapter 93A claims. On November 8, 2006, the jury returned a

verdict for MEEI on the unjust enrichment and chapter 93A claims.

Subsequently, QLT filed a motion for judgment notwithstanding

the verdict. QLT contended, among other things, that the jury

could serve in no more than an advisory capacity. This Court heard

the motion on December 20, 2006 and took the matter under

advisement. The Court invited the parties to submit proposed

findings of fact in the event that the Court ruled that the jury

had served in an advisory capacity only. MEEI and QLT requested

until March 20, 2007 to submit the appropriate documents and then

timely complied. Now, having fully considering the briefs and the

record, this Court is prepared to rule.

III. DISCUSSION

A. The Right to Trial by Jury

In a diversity action, the right to a jury trial is matter of

federal law. Simler v. Conner, 372 U.S. 221, 222 (1963). When

4

analyzing the right to a jury, the federal court “must look first

to state law to determine the elements of the cause of action and

the propriety of the remedies sought.” Gallagher v. Wilton

Enters., Inc., 962 F.2d 120, 122 (1st Cir. 1992). Once this is

done, “the court should turn to federal law to ‘characterize’ the

action and remedies as either legal or equitable.” Id. The

Supreme Court has delineated a two-part test to distinguish between

legal and equitable rights:

First, we compare the statutory action to the 18thcentury

actions brought in the courts of England prior to

the merger of the courts of law and equity. Second, we

examine the remedy sought and determine whether it is

legal or equitable in nature. The second inquiry is the

more important in our analysis.

Chauffeurs, Teamsters and Helpers, Local No. 391 v. Terry, 494 U.S.

558, 565 (1990) (citations omitted).

Determining “which actions belong[] to law and which to equity

for the purpose of delimiting the jury trial right continues to be

one of the most perplexing questions of trial administration.”

Wright & Miller, 9 Federal Practice and Procedure: Civil 2d § 2302.

This Court must here undertake that inquiry because MEEI contends

that it has a right to trial by jury on both the unjust enrichment

and chapter 93A claims.

1. Unjust Enrichment

The First Circuit has never squarely decided whether there is

a right to a jury on a theory of unjust enrichment. Instead,

different panels of that court merely assumed both that it was

5

proper to try the unjust enrichment claim to a jury, see, e.g.,

Jelmoli Holding, Inc. v. Raymond James Fin. Servs., Inc., 470 F.3d

14 (1st Cir. 2006), or to the bench, see, e.g., Levin v. Dalva

Bros., Inc., 459 F.3d 68 (1st Cir. 2006). The only case squarely

on point is a decision from the District of New Hampshire holding

that there is no right to a jury on an unjust enrichment claim

because New Hampshire courts traditionally have understood unjust

enrichment as an equitable claim and restitution is an equitable

form of monetary relief. Almaz v. Temple-Inland Forest Prods.

Corp., No. Civ. 97-374-JM, 2000 WL 36938 (D.N.H. Nov. 22, 1999).

Despite the lack of controlling precedent, the First Circuit

appears to have provided sufficiently definitive guidance to

resolve this matter. As described, the First Circuit’s holding in

Gallagher v. Wilton Enters., Inc. directs the court to begin the

inquiry by determining the elements of the state law claim in

question. 962 F.2d at 122. Under Massachusetts law, unjust

enrichment has the familiar requirement that one party be unjustly

enriched and the other party suffer an unjust detriment.

Massachusetts law has, however, an additional requirement for

unjust enrichment. Massachusetts courts have repeatedly held that

when there is an adequate remedy at law, there can be no unjust

enrichment. In Santagate v. Tower, 64 Mass. App. Ct. 324 (2005),

the Appeals Court stated that “[a]n equitable remedy for unjust

enrichment is not available to a party with an adequate remedy at

6

law.” Id. at 329; see also, e.g., Fox v. F & J Gattozzi Corp., 41

Mass. App. Ct. 581, 589 (1996) (unjust enrichment claim duplicative

when plaintiff had prevailed on breach of contract claim);

Popponesset Beach Ass’n, Inc. v. Marchillo, 39 Mass. App. Ct. 586,

593 (1996) (declining to reach the unjust enrichment theory because

plaintiff had suitable remedy at law). In the District of

Massachusetts, Judge Tauro, Judge Stearns, as well as this session

of the Court, have all invoked this principle in disposing of

unjust enrichment claims. See, e.g., In re Lupron Mktg. and Sales

Practices Litig., 295 F. Supp. 2d 148, 182 (D. Mass. 2003)

(Stearns, J.); One Wheeler Road Assocs. v. Foxboro Co., 843 F.

Supp. 792, 799 (D. Mass. 1994); Ben Elfman & Son, Inc. v. Criterion

Mills, Inc., 774 F. Supp. 683, 687 (D. Mass. 1991) (Tauro, J.).

Although federal law, and not state law, determines whether a

claim is legal or equitable in nature, Massachusetts’ requirement

that there be no available legal remedy expressly marks unjust

enrichment as an equitable remedy. Consequently, there is no

Seventh Amendment right to a jury solely on the basis of that

claim.

2. Chapter 93A

Under chapter 93A, “unfair or deceptive acts or practices in

the conduct of any trade or commerce” are unlawful. Mass. Gen. Law

ch. 93A, § 2(a). The First Circuit has explained that, in

determining whether a practice violates chapter 93A, the factfinder

7

must look to “(1) whether the practice . . . is within at least the

penumbra of some common-law, statutory, or other established

concept of unfairness; (2) whether it is immoral, unethical,

oppressive, or unscrupulous; [and] (3) whether it causes

substantial injury to consumers (or competitors or other

businessmen).” MEEI I, 412 F.3d at 243 (quoting PMP Assocs., Inc.

v. Globe Newspaper Co., 366 Mass. 593, 596 (1975)). The statute

provides for actual damages and attorneys’ fees. Mass. Gen. Laws

ch. 93A, § 11. If the defendant willfully or knowingly violated

chapter 93A, then the plaintiff is entitled to “up to three, but

not less than two, times” actual damages. Id. Injunctive relief

is available in some circumstances. Id.

When chapter 93A was first enacted, it referred to claims

brought “in equity.” Nei v. Burley, 388 Mass. 307, 311-12 (1983).

After the legislature struck these two words in 1978, id. at 312,

the belief among most of the justices of the Massachusetts Superior

Court who had to administer its enforcement was that chapter 93A

statutorily required trial by jury. Various Superior Court

decisions so held. See, e.g., Charles River Constr. Co. v.

Kirksey, No. 82-4847 (Mass. Super. Ct. Sept. 16, 1983), aff’d on

other grounds, 20 Mass. App. Ct. 333 (1985), reproduced as an

Appendix to In re Acushnet River & New Bedford Harbor: Proceedings

Re Alleged PCP Pollution, 712 F. Supp. 994, 1008-10 (D. Mass.

1989). The First Circuit, likewise, took this view. Capp Homes v.

8

Duarte, 617 F.2d 900, 902 n.2 (1st Cir. 1980). The judges who had

ascribed to this view, however, had guessed wrong.

In Nei v. Burley, the Massachusetts Supreme Judicial Court

ruled that the statute does not provide for trial by jury. 388

Mass. at 311-15. The court has further held that the state

constitution does not guarantee trial by jury on the chapter 93A

claim. Id. The court explained that the state legislature had

created a “sui generis” cause of action for unfair or deceptive

practices. Id. at 314. Analogies to common-law claims for breach

of contract, fraud, and deceit were inappropriate because chapter

93A “created new substantive rights in which conduct heretofore

lawful under common and statutory law is now unlawful.” Id. at

313-15.

Then a funny thing happened. Notwithstanding Nei, justices of

the Superior Court went right on trying chapter 93A cases to a jury

whenever related contractual or tort claims deserved such a trial

and where it served judicial efficiency. Massachusetts practice

allows judges, even in equitable cases, to frame factual issues for

a binding jury trial. Mass. R. Civ. P. 39(c). Following this

practice, the jury trial of chapter 93A cases became routine and

continues to this day. E.g., Dalis v. Buyer Adver., Inc., 418

Mass. 220, 225 n.7 (1994); Travis v. McDonald, 397 Mass. 230, 233-

34 (1986); Service Publ’ns, Inc. v. Goverman, 396 Mass. 567, 577-78

(1986) declined to be followed on other grounds by Commonwealth v.

It is the enduring union of judge and jury in the process 1

of fact finding that has made the American trial system the envy

of the world and has conferred upon its judiciary the moral

authority that has given birth to trial-level constitutional

interpretation — a jurisprudence unique in world history. See

William G. Young, The American Jury: Guarantor of Judicial

Independence, Address to the Florida State Bar, June 28, 2007

(copy on file in chambers).

9

Johnson Insulation, 425 Mass. 650, 667 n. 17 (1997); Madan v. Royal

Indem. Co., 26 Mass. App. Ct. 756, 757 n.2 (1989); Acushnet Fed.

Credit Union v. Roderick, 26 Mass. App. Ct. 604, 606 (1988);

Charles River Constr. Co., Inc., 20 Mass. App. Ct. at 337-39; Newly

Weds Foods, Inc. v. Westvaco Corp., No. 99-5194-C, 2001 WL 1586691,

at *1 (Mass. Super. Ct. Dec. 12, 2001) (Lauriat, J.); Linkage Corp.

v. Trustees of Boston Univ., No. 914660B, 1995 WL 809556, at *1

(Mass. Super. Ct. Mar. 28, 1995) (Volterra, J.). This practice of

submitting chapter 93A cases to the jury has resulted in the

rigorous development of chapter 93A jurisprudence because jury

fact-finding necessarily requires the most precise explication of

the law. The need to educate juries has brought into being 1

Justice Kass’ great aphorism that chapter 93A requires proof of

conduct “that would raise an eyebrow of someone inured to the rough

and tumble of the world of commerce,” Levings v. Forbes & Wallace,

Inc., 8 Mass. App. Ct. 498, 504 (1979), and later caused the

Supreme Judicial Court to disavow that formulation, Massachusetts

Employers Ins. Exch. v. Propac-Mass, Inc., 420 Mass. 39, 42-43

(1995), in perhaps the vain search for even more precision. It is

10

safe to say that the involvement of the jury has made chapter 93A

the robust and discerning remedy it is today in the courts of the

Commonwealth.

The right to trial by jury under the Seventh Amendment is,

however, matter of federal law. Simler, 372 U.S. at 222; see also

Gallagher, 962 F.2d at 122 (“The touchstone of our inquiry is the

Seventh Amendment, which, while it does not apply to state court

proceedings, nonetheless controls when a federal court is enlisted

to adjudicate a claim brought pursuant to a state’s substantive

law.”). Consequently, this Court must look not to Nei and its

progeny, but to federal court precedent in determining whether MEEI

has a right to trial by jury on the chapter 93A claim.

The First Circuit has never squarely decided the question.

Its most extensive discussion of the issue is found in Wallace

Motor Sales, Inc. v. American Motors Sales Corp., 780 F.2d 1049

(1st Cir. 1985). In that case, the parties stipulated, on the

basis of Nei, that there was no right to trial by jury on a chapter

93A claim. Id. at 1064. The parties tried two legal claims to a

jury. After the jury returned its verdict, the trial judge stated

on the record that he considered the same evidence that the jury

considered and did not agree with the conclusions that the jury had

reached. Although he did not disturb the jury verdict, he ruled on

the chapter 93A claim in a manner that was inconsistent with the

jury verdict. Id. at 1052-53, 1063-64.

11

On appeal, the parties presented to the First Circuit the

question whether the jury verdict on the legal claims bound the

determination of the chapter 93A claim. Id. at 1064. The court

observed that Supreme Court precedent does not permit a judge to

“depriv[e] a party of its constitutional right to a jury trial by

ruling on the equitable claims first with the result that the legal

claims become barred by the operation of collateral estoppel

principles.” Id. at 1066 (discussing Beacon Theatres, Inc. v.

Westover, 359 U.S. 500 (1959)). The court ruled that the trial

judge had not violated the strictures of Beacon Theatres, Inc.

because he had deferred ruling on the chapter 93A claim until

after the jury had returned its verdict. Id. at 1066.

In reaching its conclusion, the First Circuit observed that

the parties had stipulated that there was no right to trial by

jury. Id. at 1064. The court continued, “Although the Nei court

did not explicitly address the seventh amendment requirement, we

believe that the reasoning employed by the Massachusetts Supreme

Judicial Court in Nei is determinative of the seventh amendment

issue.” Id. QLT contends that this language squarely holds that

there is no Seventh Amendment right to trial by jury on a chapter

93A claim. The First Circuit did not, however, address that

Seventh Amendment issue in Wallace Motor. Rather, it addressed a

different issue — whether a jury determination of legal claims

controlled the outcome of a concededly equitable claim. Nei has

The First Circuit has repeatedly addressed precisely the 2

same issue that it first decided in Wallace Motor. Each time,

the court affirmed the district court’s resolution of the chapter

93A claim following the jury verdict. In so doing, the court

cited, without discussion, either Wallace Motor or Nei and its

progeny. Santos v. Sunrise Med., Inc., 351 F.3d 587, 590 n.2

(1st Cir. 2003); Continental Ins. Co. v. Bahnan, 216 F.3d 150,

153 (1st Cir. 2000) (citing Nei); Fredette v. Allied Van Lines,

Inc., 66 F.3d 369, 375-76 (1st Cir. 1995) (citing Wallace Motor);

Perdoni Bros., Inc. v. Concrete Sys., Inc., 35 F.3d 1, 5 (1st

Cir. 1994) (citing Wallace Motor); PH Group, Ltd. v. Birch, 985

F.2d 649, 652 (1st Cir. 1993) (citing Wallace Motor); Putnam v.

DeRosa, 963 F.2d 480, 487-88 (1st Cir. 1992) (citing Acushnet

Fed. Credit Union, 26 Mass. App. Ct. at 606 (citing Nei)); Refuse

& Env’t Sys., Inc. v. Industrial Servs. of America, Inc., 932

F.2d 37, 42, 42 n.2 (citing Nei); Nickerson v. Matco Tools Corp.,

813 F.2d 529, 531 (1st Cir. 1987) (citing Nei); Turner v. Johnson

& Johnson, 809 F.2d 90, 102 (1st Cir. 1986) (citing Wallace

Motor); cf. Veranda Beach Club Ltd. P’ship v. Western Sur. Co.,

936 F.2d 1364, 1386 (1st Cir. 1991) (citing Town of Norwood v.

Adams-Russell Co., Inc., 401 Mass. 677, 678 n.3 (1988) (citing

Nei)); Olin v. Prudential Ins. Co. of America, 798 F.2d 1, 7-8

(1st Cir. 1986) (citing Nei), overruled by Gallagher, 962 F.2d

120. In none of these cases did the First Circuit have occasion

to determine whether there was a federal right to trial by jury

on a chapter 93A claim.

Further, the First Circuit has cast doubt on the continuing

vitality of its holding in Wallace Motor. In Troy v. Bay State

Computer Group, Inc., 141 F.3d 378, 383 (1st Cir. 1998), the

court noted the general rule that a jury verdict binds the

resolution of equitable claims resting on common issues. In a

footnote, the court observed that it had “suggested that a

different rule might apply” with respect to chapter 93A claims.

Id. at 383 n.3. The court noted that “there will rarely be

inconsistent findings as between the jury and the judge because

of the unique findings required from the judge” in making chapter

93A determinations. Id. In Wallace Motor, this had been the

12

nothing to do with this issue of federal law. It was relevant in

Wallace Motor only to the extent that it persuaded the parties to

stipulate that the chapter 93A claim was an equitable claim, thus

depriving the First Circuit of any case or controversy as to the

actual nature of a chapter 93A claim in federal court. 2

case; the district judge had stated explicitly on the record that

he considered exactly the same evidence that the jury had

considered but had nonetheless drawn different factual

conclusions. 780 F.2d at 1062-63. Since the Troy court was not

squarely faced with the issues presented in Wallace Motor, the

court said that it would “leave the problem for another day.”

Troy, 141 F.3d at 383 n.3; see also Roche v. Royal Bank of

Canada, 109 F.3d 820, 826 n.6 (1st Cir. 1997) (“We need not reach

the issue since we affirm the chapter 93A judgment for defendants

on other grounds.”).

13

Somewhat incongruously, the First Circuit has explained that

it relied on Massachusetts law in reaching its result in Wallace

Motor. PH Group, Ltd., 985 F.2d at 652. Since the Seventh

Amendment right to trial by jury is matter of federal law and not

state law, however, the court’s acknowledgment in PH Group, Ltd.

confirms that Wallace Motor did not decide whether there is a

Seventh Amendment right to trial by jury on a chapter 93A claim.

The Southern District of New York reached this conclusion when

confronted with the question of what Wallace Motor and its progeny

held. That court observed that the First Circuit had “simply

cited” to Nei and “did not address the issue under the seventh

amendment.” In re Friedberg, 131 B.R. 6, 13 n.7 (S.D.N.Y. 1991).

Based on the foregoing authorities, this Court concludes that the

First Circuit has never ruled on the nature of chapter 93A claims

and whether there is an attendant Seventh Amendment right to a

jury. Cf. Sevinor v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

807 F.2d 16, 18-19 (1st Cir. 1986) (declining to determine the

equitable nature of chapter 93A claims).

14

In Puretest Ice Cream, Inc. v. Kraft, Inc., 614 F. Supp. 994

(D. Mass. 1985), Judge Skinner squarely addressed the Seventh

Amendment right to trial by jury on a chapter 93A claim. Id. at

995. Judge Skinner noted that the Supreme Court has analyzed the

right to trial by jury in fashion different from the Massachusetts

Supreme Judicial Court. Id. at 996. He explained that where Nei

had looked for evidence that chapter 93A claims actually existed at

common law, the Seventh Amendment simply requires “historical or

analogous connection to claims triable to a jury.” Id.; see also

Chauffeurs, Teamsters and Helpers, Local No. 391, 494 U.S. at 565

(confirming the nature of this inquiry under the Seventh

Amendment); Tull v. United States, 481 U.S. 412, 417 (1987) (same).

Turning to chapter 93A, Judge Skinner noted the statute’s

“unquestionably hybrid standard.” Puretest Ice Cream, Inc., 614 F.

Supp. at 996. On the one hand, “[t]he ‘unfairness’ of given acts

or practices presents a question of fact traditionally left to the

court for decision rather than to a jury.” Id. On the other hand,

allegations of deceptive conduct “closely resembles the common law

action of deceit as known in Massachusetts courts.” Id. at 997.

In view of chapter 93A’s “hybrid standard,” Judge Skinner gave

controlling weight to the remedy sought, observing that the

plaintiffs had asked for “actual and punitive damages, which, as

the form of relief customarily awarded in pre-merger courts of law,

would strongly support finding a right to jury trial, if it were

15

the only mode of relief they seek.” Id. Judge Skinner ruled that

to the extent that plaintiffs sought injunctive relief, they were

not entitled to trial by jury. Id.

Although Puretest preceded Wallace Motor, the Southern

District of New York stated that the reasoning of Puretest survived

Wallace Motor because the First Circuit had not decided whether

there was a Seventh Amendment right to trial by jury on a chapter

93A claim. In re Friedberg, 131 B.R. at 13 & n.7. After Puretest,

two courts have addressed the issue whether there is a Seventh

Amendment right to trial by jury on an unfair trade practices

claim. In Friedberg, the Southern District of New York found

Puretest’s reasoning persuasive. 131 B.R. at 13 n.7. In that

case, the court held that there was a right to trial by jury under

the South Carolina Unfair Trade Practices Act when the plaintiff

sought only actual and treble damages. Id. at 14. In L.L. Bean,

Inc. v. Drake Publishers, Inc., 629 F. Supp. 644, 647 (D. Me.

1986), the District of Maine ruled that there was no right to trial

by jury under the Maine statute because the statute authorized only

injunctive relief.

The trinity of cases considering the right to trial by jury on

an unfair trade practices claim is thus in agreement. There is a

right to trial by jury when the plaintiff seeks actual and treble

damages. In re Friedberg, 131 B.R. at 14; Puretest Ice Cream,

Inc., 614 F. Supp. at 997. By contrast, there is no right to trial

This result — that the Seventh Amendment requires trial 3

of chapter 93A claims by jury in federal courts where actual and

punitive damages are sought — has no effect on Massachusetts

16

by jury to the extent that the plaintiffs seek injunctive relief.

L.L. Bean, Inc., 629 F. Supp. at 647; Puretest Ice Cream, Inc., 614

F. Supp. at 997.

The reasoning of these cases is persuasive. Such a rule is

consistent with the First Circuit’s statement that an “action for

money damages is the ‘traditional form of relief offered in courts

of law.’” Gallagher, 962 F.2d at 123 (citing Curtis v. Loether,

415 U.S. 189, 196 (1974)). Although the court explained that not

every award of monetary damages is necessarily legal relief, id.,

drawing a line between “unfairness” and “deceptiveness” claims

would be unworkable in practice, see id. The Nei court itself

noted that “the line separating what is ‘deceptive’ from what is

‘unfair’ is thin indeed, and a claim for ‘deceptive practices’

might entail the same kinds of determinations which are inherent in

claims of ‘unfair practices.’” 388 Mass. at 313. The most

manageable way to sort out chapter 93A claims is to look to the

nature of the remedy sought. This rule is in keeping with the

First Circuit’s observation that chapter 93A provides for both

legal and equitable remedies. Gerli v. G.K. Hall & Co., 851 F.2d

452, 454 (1st Cir. 1988). Since MEEI seeks only actual and treble

damages, this Court holds that MEEI has a Seventh Amendment right

to trial by jury on its chapter 93A claim. 3

practice, of course, since the Seventh Amendment does not apply

to the states via the Due Process Clause of the Fourteenth

Amendment. Gallagher, 962 F.2d at 122. While it is generally

believed that the Declaration of Rights of the Massachusetts

Constitution grants the citizens of the Commonwealth greater

liberties than the United States Constitution, see generally,

e.g., Herbert P. Wilkins, Judicial Treatment of the Massachusetts

Declaration of Rights in Relation to Cognate Provisions of the

United States Constitution, 14 Suffolk U. L. Rev. 887 (1980),

here it is the Seventh Amendment contained in the Bill of Rights

that is more protective of individual liberties.

17

The Seventh Amendment requires a serious commitment to trial

by jury. “Maintenance of the jury as a fact-finding body is of

such importance and occupies so firm a place in our history and

jurisprudence that any seeming curtailment of the right to a jury

trial should be scrutinized with the utmost care.” Gallagher, 962

F.2d at 122 (quoting Chauffeurs, Teamsters and Helpers, Local No.

391, 494 U.S. at 565). As this Court has observed, “[o]ur juries

are the ultimate realization of our people working together, under

law, to do justice. De Tocqueville recognized with masterful

clarity that, in our jury system, Americans had embarked on a

stunning experiment in direct popular rule.” Lirette v. Shiva

Corp., 27 F. Supp. 2d 268, 271 n.3 (D. Mass. 1998). The right to

trial by jury is not a mere formality in civil cases. Rather, it

is direct democracy at work.

It is, in fact, the most vital expression of direct

democracy in America. Today, it is the New England town

meeting writ large, the people themselves governing. In

fact, the very processes of our judicial system

themselves vindicate and strengthen democracy by

involving litigants with standing in the application of

our laws. . . .

To empower the jury, this Court allows juries to take 4

notes and ask written questions. See, e.g., Gregory E. Mize &

Christopher J. Connelly, Jury Trial Innovations: Charting a

Rising Tide, Court Review (Spring 2004), available at

http://aja.ncsc.dni.us/courtrv/cr-41-1/CR41-1Mize.pdf (last

visited July 5, 2007). In this case, the jurors posed 33

18

When people recognize that they have been cut off

from their opportunity to govern directly through citizen

juries, the sense of government as community, as a shared

commonwealth, is severely diminished. Jury service is

the citizen’s only direct experience of government at the

federal level. Severing that shared bond, of course,

leaves citizens with their right to vote, but,

inevitably, as the government draws away from its

citizenry, that right seems less valuable. It is not too

much to say that, as our government is the ultimate

teacher, its devaluation of direct citizen participation

carries the implicit message that communitarian efforts

are simply not worth very much in an age of individual

self seeking.

Id. (citations omitted).

If ever there was doubt about the capacity of juries to

understand and resolve complex cases, a review of the transcript

here ought settle the matter. This case was exceedingly complex.

It tried over three weeks. The trial transcript ran 1,847 pages.

There were 330 exhibits, not the least of which included

labyrinthian scientific papers and patents concerning a medical

procedure that required learning a technical vocabulary to

understand.

Despite the daunting nature of the task that lay before it,

the jury came through masterfully. By the end of the three weeks,

the jury had seized control of the trial, requesting documents and

asking penetrating questions that cut to the core issues. The 4

questions.

19

attorneys often took their cue from the jury, following up on the

jury’s questions and requests for exhibits, including demonstrative

exhibits clarifying the complex relationships between the various

people and institutions mentioned in the case.

Nor is this jury’s thoughtful consideration of the evidence an

aberration. Juries, which are drawn from a representative sample

of Americans, have shown time and again that they have the capacity

to grapple with and pass judgment on a dizzying array of issues

that face us as a society. Jurors rely on a vast reservoir of

common sense based on everyday experiences and morals. This case

saw a representative sample of Americans at their best. It could

not be otherwise because the jury’s judgment directly reflects our

society’s capacity for reasoned consideration of evidence.

B. Standard for Review

This case was submitted to the jury on both the unjust

enrichment and chapter 93A claims. The First Circuit stated that

here the success of the chapter 93A claim was “not necessarily

dependent” on the success of the unjust enrichment claim. MEEI I,

412 F.3d at 243. On remand, however, MEEI failed to demonstrate

any other basis for a chapter 93A violation. This Court therefore

held that the chapter 93A claim depended on the unjust enrichment

claim. Accordingly, the Court instructed the jury to consider the

unjust enrichment claim first. If, and only if, the jury found

20

unjust enrichment could it proceed to the chapter 93A claim. The

jury’s finding of a chapter 93A violation therefore subsumes a

finding of unjust enrichment.

Under well-established Supreme Court precedent, the jury

determination of legal claims resolves equitable claims to the

extent that the claims factually overlap. Dairy Queen, Inc. v.

Wood, 369 U.S. 469, 479 (1962). Consequently, the jury’s chapter

93A determination controls the unjust enrichment claim. The Court

must therefore defer to the jury’s factual findings with respect to

both claims.

There is an added wrinkle. As described, unjust enrichment is

available only when there is no adequate remedy at law. Since MEEI

has prevailed on the chapter 93A claim, which provides a full

remedy at law, the unjust enrichment claim is duplicative. See,

e.g., In re Lupon Marketing, 295 F. Supp. 2d at 182. Having ruled

that the jury is the fact-finder with respect to the chapter 93A

claim, nothing logically remains but to enter judgment on that

claim in accordance with the jury’s verdict and dismiss the unjust

enrichment claim as duplicative — unless there is merit to some

other aspect of QLT’s motion for judgment notwithstanding the

verdict. There is no such merit.

Nonetheless, the best way conclusively to demonstrate that the

jury got it right is to rehearse the facts as they would

independently have been found by the Court had it been the factThis,

of course, is not the traditional way to go about 5

considering whether a jury verdict must stand. Courts accord

considerable deference to jury verdicts. See, e.g., Rivera

Castillo v. Autokirey, Inc., 379 F.3d 4, 9 (1st Cir. 2004).

Here, however, the Court independently found the facts and

presents them at this point in the opinion. I ought explain why.

First, in truth I commenced the trial under a

misapprehension. I thought (correctly) that the unjust

enrichment claim was equitable in nature and (wrongly) that I

would have to make findings under Fed. R. Civ. P. 52(b)

regardless of how the jury found with respect to the chapter 93A

claim. This was error because, as the trial developed, it became

clear that MEEI had nothing but the unjust enrichment claim upon

which to ground its claimed chapter 93A violation. Thus, as

explained above, the jury’s finding of the chapter 93A violation

is conclusive of the unjust enrichment claim. As it turns out,

there is really nothing left for me to do.

Second, while I have tried chapter 93A cases to a jury ever

since my days on the Massachusetts Superior Court, QLT’s vigorous

opposition to submitting to the judgment of the people came as a

first in my experience. “What if they’re right?” I thought. In

that case, the verdict of the jury would be advisory only, and

the Court’s findings would be required. Prudence required,

therefore, a careful, independent, and contemporary analysis of

the evidence.

Third, while trial judges are the jury’s strongest partisans

and with near unanimity say they agree with jury verdicts, many

scholarly analysts discount such views, concluding that it is

always easy to agree with the jury after the jury has returned

its verdict. While unorthodox, it is instructive, therefore, to

present the Court’s own independent findings derived from its

contemporaneous notes. These findings demonstrate —

emphatically — the American jury’s capacity and wisdom.

21

finder. As will be seen, this independent fact-finding is, save in

one respect, fully consistent with the jury’s verdict. 5

C. The Court’s Findings of Fact

1. The Development of Visudyne

The story of Visudyne begins in the late 1970s. Dr. Julia

Levy, an immunologist at the University of British Columbia, and

Both Julia Levy and Ed Levy hold doctorates. To 6

distinguish between the Drs. Levy, this Court will refer to Julia

Levy as “Dr. Levy” and Ed Levy as simply “Ed Levy.”

22

her husband Ed Levy, had a cottage on a remote island north of 6

Vancouver. Tr. at 1561:24-1562:5; 1584:20-22. Their children

would play in a field of cow parsley outside the cabin. Dr. Levy

noticed that sometimes after play, the children would develop

lesions on their legs and torsos that looked like scalds. She did

not know what it was. When the Levys returned to Vancouver, she

called a friend who was the head of the botany department at the

University of British Columbia. Her friend explained that cow

parsley contains a photosensitizer chemical that was activated by

light and that the children had likely gotten burned after they got

sap on their skin and sunlight activated the chemical. Tr. at

1584:22-1585:18.

Dr. Levy’s friend then told her about photodynamic therapy,

which uses light-activated drugs in medical treatment. Tr. at

1585:19-21. Photodynamic therapy works by shining light on a

chemical called a photosensitizer. When light is shined on the

photosensitizer, the chemical becomes energized. In this energized

state, the photosensitizer is toxic. When the photosensitizer is

targeted, it will kill only unwanted cells. Tr. at 1278:14-25;

1304:22-1305:3.

Dr. Levy became very interested in incorporating photodynamic

therapy into her work on cancer immunology. Tr. at 1585:19-25.

23

Working in a lab at the University of British Columbia, Dr. Levy

helped develop a photosensitizer called benzoporphyrin derivative

monoacid (“BPD”) that had a unique ability to deliver itself to new

blood vessels immediately following injection. Tr. at 1567:5-23;

1573:20-1574:14. BPD can also absorb light at a wavelength that

penetrates animal tissue. Tr. at 1579:15-19. The lab developed a

liposomal formulation that allowed the endothelial cells in blood

vessels to absorb BPD. Tr. at 1573:6-19; 1597:7-14; 1599:18-

1600:2. The lab developed the drug for cancer treatment as part of

a partnership at the time with American Cyanamid. Tr. at 1569:1-8;

1594:2-17; Ex. 303, at Q06642-44.

This work took place in the 1980s and early 1990s. The work

on BPD resulted in drug composition patents owned by the University

of British Columbia. Tr. at 1574:22-1575:5; 1581:13-21. By then,

Dr. Levy had co-founded a biotechnology company called QLT. Tr. at

1560:6-8; 1563:14-1564:16. The University of British Columbia

granted QLT the exclusive rights to BPD in exchange for a royalty

rate of 2% on net sales. Ex. 14 at 7; Tr. at 1581:13-21.

In 1988, Dr. Levy spoke about BPD at a conference in Boston.

Tr. at 1285:11-19. At the conference, she met Dr. Tayyaba Hasan,

a Harvard Medical School professor and biochemist at Wellman

Laboratories at Massachusetts General Hospital (“MGH”). Tr. at

1270:25-1271:2; 1332:6-8; 1586:17-1587:1. Dr. Hasan was also doing

work in photodynamic therapy. Tr. at 1272:9-11. Given their

24

shared professional interests, Dr. Levy and Dr. Hasan struck up a

good relationship. Tr. at 1332:3-5; 1336:11-1338:18; 1378:13-

1379:2. Dr. Levy told Dr. Hasan about BPD and QLT sponsored Dr.

Hasan’s work using BPD for rheumatoid arthritis and skin cancer.

Tr. at 1332:9-1333:6; 1664:24-1665:5; Ex. 303, at Q06644-46.

Around the same time, Dr. Hasan began collaborating with Dr.

Reginald Birngruber, a physicist specializing in ophthalmic laser

applications who was a visiting professor at the Wellman

Laboratories. Tr. at 1285:20-1286:18; 1386:13-1387:13. Their

research interests overlapped because Dr. Birngruber’s laser

expertise complemented Dr. Hasan’s focus on photodynamic therapy.

Tr. at 1303:4-8. Dr. Hasan had done work using photodynamic

therapy to close blood vessels in chick embryos. Tr. at 1284:24-

25; 1285:23-1286:1. Dr. Hasan and Dr. Birngruber decided to see if

they could extend this work to blood vessels in the eye. Tr. at

1302:4-23; 1304:19-21; 1305:5.

In 1990, Dr. Hasan and Dr. Birngruber hired Dr. Ursula

Schmidt-Erfurth, a German ophthalmologist, as a fellow to perform

the actual experiments. Tr. at 1286:4-18; 1387:19-1388:4. Over

the next two years, they designed and carried out experiments in

rabbits using various drug compounds, including BPD, to see if

photodynamic therapy could be used to close blood vessels in the

eye. Tr. at 1302:4-23; 1304:19-21; 1305:5. The experiments showed

25

that BPD worked well in closing blood vessels in rabbit eyes. Tr.

at 1305:16-19.

Dr. Schmidt-Erfurth wanted to apply this work to intraocular

tumors, which have unwanted blood vessels. Tr. at 280:18-283:16;

315:2-5. In June 1991, she applied for a fellowship with Dr.

Evangelos Gragoudas, a Harvard Medical School professor who was

doing work on intraocular tumors at MEEI. Tr. at 237:16-18;

239:12-15; 280:18-281:4; Ex. 227. Dr. Gragoudas did not know about

BPD but agreed to supervise her work, which resulted in the

publication of a paper on the use of BPD to treat intraocular

tumors. Tr. at 257:25-258:7; 283:17-284:4. In addition to this

work that Dr. Schmidt-Erfurth conceived, Dr. Gragoudas asked Dr.

Schmidt-Erfurth to see if BPD could be used to close normal

choroidal vessels in rabbit eyes without damaging the retina. Tr.

at 286:2-22; 420:1-14. This research was successful and resulted

in the publication of another paper after Dr. Schmidt-Erfurth had

completed her fellowship in June 1992 and returned to Germany. Tr.

at 287:21-24; 460:19-20; 1306:7-10.

In October 1991, while Dr. Schmidt-Erfurth was still a fellow,

Dr. Gragoudas hired Dr. Joan Miller, a former MEEI fellow who had

done photodynamic therapy work in monkeys treating abnormal blood

vessels in the choroid of the eye. Tr. at 252:13-253:10; 433:23-

434:21; 437:15-438:9. Dr. Gragoudas and Dr. Miller decided to use

monkeys to see if BPD could be used to treat age-related macular

26

degeneration, a disease that can feature abnormal vessels in the

choroid. Tr. at 193:1-8; 274:6-12; 346:24-25; Ex. 231. Dr. Hasan

played a role in reviewing the experimental plans and suggesting

testing parameters. Tr. at 1311:6-10; 1313:5-6; Ex. 310.

All of the work that Dr. Schmidt-Erfurth had done was in

rabbits. Both rabbit eyes and primate eyes have retinas. Rabbit

eyes, however, lack retinal vessels. Tr. at 187:4-20; 292:14-24.

Unwanted blood vessels in the retina can blur vision. At the time,

it was thought that the way to prove that photodynamic therapy

could be used to treat age-related macular degeneration was to show

that photodynamic therapy could close abnormal retinal vessels

without damaging underlying normal retinal vessels. This

demonstration was important because closing normal vessels results

in the loss of vision. Because rabbit eyes lack retinal vessels,

Dr. Schmidt-Erfurth’s work did not predict whether BPD could

successfully treat age-related macular degeneration. Tr. at

206:19-207:12; 274:13-17; 291:9-17; 293:1-11; 1374:5-1376:3; Ex.

315, at MGH00186. Previous experiments with other photodynamic

dyes to treat age-related macular degeneration had not been

successful. Tr. at 257:16-24.

Still, Dr. Schmidt-Erfurth’s work in rabbits provided Dr.

Miller with treatment parameters to use as a starting point in her

first experiments in the spring of 1992. Tr. at 441:8-9; 452:19-

25; 457:9-15. For those experiments, Dr. Miller obtained BPD from

27

Dr. Hasan, who had by then become QLT’s contact in Boston. Tr. at

444:1-12. To get the BPD, Dr. Miller signed a material transfer

agreement with QLT in February 1992. Tr. at 444:13-17; 596:10-14;

Ex. 8. Dr. Miller wanted to use the liposomal-complexed BPD that

Dr. Hasan was using in clinical trials, but Dr. Miller could obtain

only LDL-complexed BPD that Dr. Hasan prepared for her. Tr. at

462:16-463:19; 1310:6; 1311:8-9; 1313:5-6. QLT did not provide any

funding. Tr. at 1603:18-20.

The spring 1992 experiments showed that BPD had promise as a

photodynamic dye that could close abnormal vessels without damaging

the normal retinal vessels in monkeys. Tr. at 274:9-12; 458:17-23.

Dr. Miller shared the research results with QLT in September 1992

in a meeting that Dr. Hasan helped arranged. Tr. 459:12-15;

781:21-782:12; 1097:15-1098:2; 1108:11-14; 1317:22-1318:3; 1336:16-

18; 1600:4-1601:5; 1667:7-19; Ex. 9, at Q14495-96. Dr. Miller met

Dr. Levy for the first time and showed her MEEI’s facilities. Tr.

at 609:7-21; 781:21-24. Dr. Miller subsequently asked for

liposomal BPD but QLT provided only more LDL-complexed BPD. QLT

also did not commit any funding. Tr. at 463:20-25; 632:24-633:6;

782:8-12; 806:17-807:9; 1604:20-1605:10.

With the additional BPD, Dr. Miller carried out additional

experiments using higher irradiances than Dr. Schmidt-Erfurth had

used in the rabbit studies. Tr. at 465:8-15. Dr. Schmidt-Erfurth

had used an irradiance of 150 mW/cm but Dr. Miller found it 2

28

difficult to keep the laser focused for the length of time

necessary to administer the treatment. Tr. at 457:9-15; 461:18-24;

475:14-476:3. Studies using BPD to treat skin cancer had suggested

that using higher irradiances would damage normal tissue. 478:15-

20; 484:14-17. Nonetheless, Dr. Miller wanted to investigate

whether it was safe to use a higher irradiance that could result in

a shorter treatment time. Tr. at 461:25-462:2; 476:2-7. Dr.

Miller worked with Dr. Gragoudas in designing the new set of monkey

experiments using irradiance levels of 300, 600, 1200, and 1800

mW/cm . Tr. at 467:7-8; 477:23-478:1. From these experiments, Dr. 2

Miller learned that higher irradiances could be used without

damaging normal tissue. Tr. at 467:22-468:2; 478:25-479:4. Dr.

Miller also experimented with treatment parameters such as the

dosage of BPD and length of light exposure. Tr. at 479:21-480:3.

Dr. Miller communicated the experimental results to QLT in a

conference call in March 1993. Tr. at 480:4-18; Ex. 267. Dr.

Levy, who was in on the conference call, expressed surprise that

Dr. Miller had gone so high with the irradiance at a particular

drug dose and concluded that the eye must be different than the

skin. Tr. at 484:14-17; 754:13-755:8 792:14-18; Ex. 267. Toward

the end of the conference call, a person at QLT observed that Dr.

Miller’s work indicated that age-related macular degeneration was

the disease to treat with BPD. Tr. at 484:20-25; 792:25-793:7; Ex.

267.

29

Later that spring, QLT signed a preclinical agreement with Dr.

Miller that committed funding for the first time, though it did not

provide salary support for either Dr. Gragoudas or Dr. Miller. Tr.

at 480:4-18; 494:18-22; Ex. 236. In May and June 1993, QLT and Dr.

Miller signed a confidential disclosure agreement and a material

transfer agreement providing Dr. Miller with more BPD. Exs. 235,

243. The following year, in June 1994, the parties signed another

material transfer agreement. Ex. 25.

Dr. Miller performed the funded experiments from July 1993 to

the end of 1994, after some input from Dr. Levy about experimental

design. Tr. at 495:6-7; 1609:16-1613:17; Exs. 44, 236. In these

experiments, Dr. Miller was permitted, for the first time, to use

the liposomal-complexed BPD that could be used in clinical trials.

Tr. at 463:14-19; 596:15-23; 608:8-609:1. Dr. Miller tested

treating parameters such as drug dosage and length of light

exposure. Tr. at 495:17-18. In late 1994, Dr. Miller sent QLT a

preclinical report summarizing the results. Tr. at 495:22-25.

This preclinical report was subsequently sent to the Food and Drug

Administration (“FDA”) to initiate clinical trials in humans. Tr.

at 496:5-11.

Clinical trials in humans began in 1995 with Dr. Miller as the

principal investigator. Tr. at 503:16-20; Ex. 244. Dr. Miller

drafted a clinical protocol that other scientists reviewed,

including Dr. Birngruber, Dr. Schmidt-Erfurth, and Dr. Gragoudas.

30

Tr. at 674:23-675:15. Dr. Miller also worked with Dr. Gragoudas to

teach other clinical investigators how to interpret clinical data.

Tr. at 503:16-504:9. The clinical trials were conducted around the

world including in Boston, where Dr. Miller administered the firstever

treatment of Visudyne, and in Germany, where Dr. Schmidt-

Erfurth was a clinical investigator. Tr. at 680:8-24. QLT

reimbursed MEEI for the costs of patient care incurred during the

clinical trials. Tr. at 680:1-2.

The clinical trials resulted in FDA approval of BPD to treat

age-related macular degeneration. This approval came in 2000. Tr.

at 927:23-928:1; 1615:4-5. This treatment has been marketed as

Visudyne.

2. QLT’s Partnership with CIBA Vision

Even when Visudyne was still in the early stages of

development, the parties saw possibilities for commercial

exploitation almost immediately. QLT commenced a marketing study

after learning for the first time about the work that Dr. Miller

and Dr. Gragoudas had done on age-related macular degeneration.

Tr. at 1669:3-5. QLT was not willing to provide funding

immediately but reserved in the material transfer agreements the

right of first refusal to license any treatment. Tr. at 444:18-25;

782:5-12; 445:19-21; Ex. 8, at Q17928; Ex. 243. The agreements

required Dr. Miller to disclose research results to QLT, which

agreed not to share the results with anyone else. Tr. at 444:18-

31

25; Ex. 8, at Q17928; Ex. 243. Dr. Miller and QLT further signed

a confidential disclosure agreement. Ex. 235. As late as 1993,

however, QLT did not consider the work on eye diseases significant

enough to include in its annual report’s section on potential uses

for BPD. Tr. at 1674:16-1675:22; Ex. 306.

In November 1993, after Dr. Miller’s experiments began showing

promise, Ed Levy approached CIBA Vision, a Swiss company, about a

partnership. Ex. 296. Ed Levy named Dr. Schmidt-Erfurth and Dr.

Miller as the scientists doing the work. Id. The following month,

Ed Levy followed up with a letter further discussing the market

potential of Dr. Miller’s work on age-related macular degeneration.

Ex. 309. He noted that QLT had provided a grant to Dr. Miller for

preclinical work on age-related macular degeneration and that

clinical trials could soon follow. Id. To entice CIBA Vision, Ed

Levy attached confidential information. Tr. at 1105:8-1106:15.

In January 1994, QLT met with CIBA Vision in Switzerland to

discuss a partnership for commercializing BPD to treat age-related

macular degeneration. Ex. 299. During that meeting, Dr. Schmidt-

Erfurth presented on her own work. Tr. at 1142:7-15. QLT further

disclosed treatment parameters learned from Dr. Miller’s work. Tr.

at 1138:24-1142:6; Ex. 299. CIBA Vision learned that Dr. Miller

would be disclosing much of her work at an ophthalmology convention

in the spring. Tr. at 1140:23-1141:1; 1141:16-19; Ex. 299, at

N002954.

32

CIBA Vision found Dr. Schmidt-Erfurth’s presentation

persuasive but requested more information about Dr. Miller’s work.

Tr. at 1110:10-18; 1150:23-1151:5; Ex. 298. QLT promised to share

all experimental data, including the results of Dr. Miller’s work.

Tr. at 1111:12-25. QLT made these promises to CIBA Vision even

though it had signed confidentiality agreements with Dr. Miller.

QLT decided to ask Dr. Miller to travel to Switzerland and make a

presentation directly to CIBA Vision. Tr. at 555:16-20; 1114:25-

1116:1. Ed Levy promised Dr. Miller that QLT would enter into a

license agreement with MEEI. Tr. at 555:22-23. In a follow up

letter dated February 17, 1994, Dr. Miller expressed her desire to

have a draft licensing agreement within the next month for MEEI to

review. Ex. 239. In a response letter dated February 23, 1994, Ed

Levy confirmed that Dr. Miller would present to CIBA Vision in

April 1994. Ed Levy further reassured Dr. Miller that QLT was

looking into licensing. Ex. 266. In a conference call the

following week, QLT promised MEEI that it would license the

treatment from MEEI. Tr. at 533:19-25; Ex. 265, at Q00932.

In April 1994, Dr. Miller presented on her work to CIBA

Vision. Tr. at 559:13-14; 576:16-577:7; 579:10-19; 815:5-816:13;

1114:25-1115:8; 1146:19-1147:5. On the way to the meeting, Dr.

Miller sat in the back of the car with Dr. Levy and Ed Levy. She

expressed her concerns about discussing confidential work without

a formal written agreement in place. Tr. at 559:13-22. The Levys

33

promised Dr. Miller that QLT would protect the information that Dr.

Miller was about to present to CIBA Vision and that QLT would

license the new treatment method from MEEI. The Levys assured Dr.

Miller that QLT would treat MEEI fairly. Tr. at 559:18-22; 811:10-

16.

Shortly after Dr. Miller’s presentation, CIBA Vision expressed

a desire to enter into a partnership. In a letter, CIBA Vision

stated, “Dr. J. Miller’s (Harvard University) presentation has

impressed and convinced us that the Photodynamic Therapy will be

the treatment of Age-related macular degeneration of the future.”

Ex. 300. In May 1994, QLT and CIBA Vision entered into a more

detailed Letter of Intent for the worldwide development and

distribution of BPD. Exs. 12, 307. In recognition of the promises

that QLT had made to Dr. Miller, the Letter of Intent provided that

QLT and CIBA Vision would “manage the patent portfolio in

collaboration with the other party.” Ex. 12, § 2.3.5. The same

day that QLT and CIBA Vision issued a press release publicizing the

joint venture, MEEI issued its own press release declaring that

MEEI researchers “are participating in a joint worldwide project”

with QLT and CIBA Vision to treat age-related macular degeneration.

Exs. 42, 307.

At this time, Dr. Miller presented at an ophthalmology

convention some of the work that she had already disclosed to CIBA

Vision. Tr. at 766:4-7; 770:14-771:24; 813:5-814:18; Ex. 269. QLT

34

and CIBA Vision had been aware from the outset that Dr. Miller

would make this work public. During the convention, Dr. Miller had

the chance to discuss photodynamic therapy with a CIBA Vision

representative. Tr. at 773:16-23. After Dr. Miller’s presentation

at the ophthalmology convention, CIBA Vision pressed QLT for

additional details regarding the work at MEEI, telling QLT that it

is “essential that Dr. Miller does give a demonstration in monkeys”

and “essential that Dr. Miller shares all the information and

statistics with us.” Ex. 330.

Subsequently, at QLT’s request, Dr. Miller presented

additional clinical data from the monkey trials at a meeting for

clinical investigators in July 1994. Tr. at 560:2-5; 677:9-19;

777:10-778:1; 1673:16-22. Following the presentation, Dr. Miller

sent QLT the slides of the presentation, knowing that QLT would

distribute copies of the slides to people who had been present at

the meeting, including representatives of CIBA Vision. Tr. at

586:11-587:14; 778:2-779:4. The slides included both information

that had been presented at the ophthalmology convention and

information that had not yet been disclosed. Tr. at 588:4-590:2.

When Dr. Miller expressed concerns about licensing, QLT reassured

her that QLT would treat the infirmary fairly and not to worry

about compensation. Tr. at 560:5-8.

Subsequently, QLT signed a definitive agreement with CIBA

Vision in February 1995. Ex. 277; Ex. 305, at Q06733. Visudyne

35

has received marketing approval in approximately 40 countries

around the world with net revenues of approximately $2,200,000,000.

Tr. at 975:9-22; 1092:24-1093:2; Ex. 289.

3. The Patenting Process and Licensing Negotiations

While QLT was negotiating with CIBA Vision, Dr. Miller

publicly disclosed her work for the first time in two abstracts

that were submitted to the Association for Research in Vision and

Ophthalmology (“ARVO”) in December 1992 and published on March 15,

1993. Tr. at 803:3-6; Ex. 43. The publication of the abstract on

March 15, 1993 meant that a patent application had to be filed by

March 15, 1994, if at all. 35 U.S.C. § 102(b); Exs. 268, 271.

In late February 1994 and early March 1994, MEEI told QLT that

it wanted to patent the work that Dr. Miller and Dr. Gragoudas had

done. Tr. at 528:25-529:5. QLT scheduled the issue for discussion

as part of a conference call. Dr. Levy, Ed Levy, Dr. Hasan, and

Dr. Miller all participated in the conference call that followed

shortly after the correspondence between Dr. Miller and Ed Levy

described above. Tr. at 1458:12-15; Ex. 265.

During the conference call, the first issue of discussion

related to Dr. Hasan’s work applying BPD to rheumatoid arthritis.

When the subject turned to the inventorship issue that MEEI had

raised, Dr. Hasan dropped off the call. Tr. at 1495:11-25. QLT

suggested the use of its patent attorney, Kate Murashige. Tr. at

1631:3-1632:21; Ex. 238. QLT also indicated that it did not see

36

itself as an inventor on the patent and wanted to license the

treatment from MEEI. Tr. at 533:3-7; 559:2-10; Ex. 238. QLT

stated that it would discuss licensing down the road. Tr. at

533:19-25; Ex. 265, at Q00932.

A few days after the conference call, QLT memorialized these

representations in letters to Dr. Miller and to Carl Finn, MEEI’s

director of research administration and technology transfer. Tr.

at 831:3-22; 908:17-20; Exs. 238, 271. In both letters, QLT noted

the possibility that while it did not claim co-inventorship, there

might be others who could claim co-inventorship. Exs. 238, 271.

Nonetheless, QLT promised MEEI that it would pay MEEI a royalty

based on its sole ownership of the patent application. Ex. 293, at

Q21824.

Murashige had two weeks to investigate inventorship. At QLT’s

request, she interviewed Dr. Miller. Tr. at 1411:3-14. Dr. Miller

stated that she and Dr. Gragoudas were the sole inventors of the

method to use BPD to treat unwanted neovasculature. Dr. Miller

also provided documentation of her work and abstracts published by

Dr. Hasan, Dr. Birngruber, and Dr. Schmidt-Erfurth. Tr. at 804:16-

18; 1453:1-5; Ex. 268. Beyond her communication with Dr. Miller,

Murashige did not do anything else to determine inventorship. Tr.

at 1412:18-22; 1421:18-1422:3; 1424:23-1425:18.

Murashige drafted a patent application (the “’473

application”) describing in claim 1 a “method to treat conditions

37

of the eye characterized by unwanted neovasculature” using BPD.

This claim would cover all unwanted neovasculature, including in

the iris, cornea, and choroid. Tr. at 744:4-745:10; Ex. 317. The

second claim was directed specifically to choroidal neovasculature.

Tr. at 745:17-19; Ex. 317. Murashige also wrote more specific

claims describing methods where the BPD was complexed with LDL and

liposomes. Murashige named as the inventors Dr. Miller, Dr.

Gragoudas, and Dr. Lucy Young, a third MEEI researcher who had

contributed to a diagnostic method for observing conditions of

blood vessels in the eye. Tr. at 1422:5-16; Ex. 317. The patent

application was filed on March 14, 1994, just shy of the one-year

deadline. Ex. 317.

Soon after the patent application was filed, Dr. Hasan learned

that she had not been named an inventor. Dr. Miller and Dr. Hasan

began disputing Dr. Hasan’s role in the process. Tr. at 546:2-11;

1335:3-19; Ex. 4. In May 1994, David Glass, who handled patent

matters on MGH’s behalf, wrote to Murashige questioning the

inventorship on the ’473 patent application. Tr. at 1174:25-

1176:14; Ex. 4. Glass requested further investigation of

inventorship and the possible addition of Dr. Hasan and other MGH

researchers to the patent. Ex. 4. Dr. Miller responded that Dr.

Hasan was a “collaborator” who “did not contribute to the novel

aspects of this invention.” Ex. 260. Dr. Miller further stated

38

that Dr. Birngruber and Dr. Schmidt-Erfurth “were not even remotely

involved.” Ex. 260.

As Murashige investigated inventorship, Dr. Miller continued

to experiment with testing parameters for BPD. In June 1994, Dr.

Miller and QLT signed their third material transfer agreement

providing Dr. Miller with more BPD. Tr. at 604:20-24; Ex. 25. QLT

changed the wording of the document to provide for the grant to QLT

of a “worldwide royalty free non-exclusive license.” Dr. Miller

crossed out the words “royalty free” because QLT had indicated that

they would license the treatment method for a royalty. After she

crossed out those words, she signed the document. Tr. at 501:25-

502:18; Ex. 25. QLT did not complain about Dr. Miller’s crossing

out the words “royalty free.” Tr. at 502:16-18. QLT continued to

send BPD to Dr. Miller. Tr. at 528:18-24.

Even as Dr. Miller was performing the experiments, QLT came to

believe that the portion of the ’473 application dealing with agemacular

degeneration had to be “refocused” in light of disclosures

in the prior art. Exs. 272; 319, at Q18563. In a letter to CIBA

Vision, Ed Levy stated:

At one point we verbally conveyed to MEEI a more

negative view of the prospects and our willingness to

continue funding the application. Their response was,

roughly, “Send us the file.” We chose to soften our

position so that we could maintain control of the

process, especially in light of (2) below.

(2) In the original application the only inventors

are personnel at MEEI (Miller, Gragoudas, and Young). We

continue to believe that at least Ursula Schmidt-Erfurth,

39

possibly Julia Levy, and perhaps Reginald Birngruber and

Tayyaba Hasan could be inventors. But we think that this

discussion should be postponed until there is agreement

about what the invention, if any, is.

What all this amounts to is that there will be

additional negotiations with Joan and MEEI over these

matters, so even though we hold almost all of the cards,

we do not want to muddy the waters. For all I know there

may be other reasons not to get into a pissing match with

Joan (excuse the technical language) — e.g. she made

important contributions to the preclinical proof of

principle and she could be an extremely valuable clinical

investigator — but it seems to me that the patent

negotiations alone are a sufficient reason for all of us

to proceed carefully with Joan and her colleagues.

Ex. 319, at Q18563. In the course of the memo, Ed Levy noted that

the material transfer agreements gave QLT a right to a nonexclusive

royalty bearing license to any patent. Id. at Q18562.

During the summer, QLT considered the possibility of narrower

claims involving liposomal preparations of BPD. Such a limitation

might permit Dr. Levy to be added to the patent as an inventor.

Murashige rejected this possible limitation after Dr. Levy stated

that the liposomal composition was not superior to the LDL-based

composition. Ex. 272, at MEEI000018. Murashige subsequently told

MEEI that QLT saw claims to liposomal preparations as dependent

claims only. Tr. at 1463:13-21; Ex. 272, at MEEI000018.

The inventorship dispute between MGH and MEEI continued into

the fall. Murashige decided that a reasonable way to resolve the

matter would be to get everyone together and ask them to relate

what they had done in connection with the claimed invention. Tr.

at 1436:19-25. The parties agreed to meet in December 1994. Tr.

40

at 1437:1-4. Ahead of the meeting, Murashige wrote a letter to

MEEI’s attorney, Carl Finn. In the letter, she stated that she did

not want to be put in the position of making a unilateral decision

about inventorship. She explained that any decision about

inventorship would be more acceptable if it reflected a consensus.

Tr. at 1438:6-13; Ex. 318, at Q00502.

QLT had promised MEEI that QLT would pay a royalty based on

MEEI’s sole ownership of the patent application. Because MEEI

might lose its status as the sole owner of the patent application,

MEEI did not want to broaden inventorship. QLT assured MEEI that

a fair business arrangement would be made regardless of how

inventorship was sorted out. Ex. 293, at Q21824. QLT made these

assurances so that MEEI would have no financial incentive to block

the broadening of inventorship. Ex. 293, at Q21824. MEEI agreed

to cooperate on the basis of these representations.

At the meeting to sort out inventorship, Dr. Miller, Dr.

Gragoudas, Dr. Levy, and Dr. Hasan were present in person. Tr. at

847:15-20; 1438:19-1439:9. Dr. Schmidt-Erfurth participated by

telephone. Tr. at 548:4-5. MGH and MEEI were each represented by

counsel and research administrators. Tr. at 356:7-24; 846:7-15;

847:19-848:8; 1181:7-10; 1438:19-1439:5. At the meeting,

individuals took turns describing their role in the process. Tr.

at 547:4-548:9; 848:9-15; 1182:2-6; 1439:16-17. MGH’s attorney

suggested introducing the limitation of using BPD in a liposomal

41

composition. Tr. at 1441:25-1442:8; Ex. 302, at EJD-3. Although

Murashige had rejected this possibility over the summer, she now

understood that this limitation could allow the parties to claim

treatment methods with respect to a broader range of eye conditions

including the growth of unwanted new blood vessels associated with

tumors. Tr. at 1441:3-24; Ex. 302, at EJD-2. On the basis of this

understanding, Murashige proposed that the parties file a broader

patent application rather than argue over who did what. Tr. at

548:11-549:8; 849:18-850:10. The parties understood that were the

patent application broadened in this manner, inventorship would

properly include Dr. Miller, Dr. Gragoudas, Dr. Levy, Dr. Hasan,

and Dr. Schmidt-Erfurth. Tr. at 548:25-549:8; Ex. 302, at EJD-3.

The parties further understood that a continuation-in-part based on

this invention would be jointly assigned to MEEI, MGH, and QLT.

Ex. 302, at EJD-3.

Following the meeting, Dr. Miller showed the Levys around the

MEEI laboratory. While showing the Levys around, Dr. Miller

renewed her concerns about dropping the first patent application

and filing a broader application listing additional inventors. Tr.

at 549:16-22. The Levys reassured her that QLT would compensate

MEEI regardless of how the patent was drafted. Tr. at 549:25-

550:4. Dr. Miller and the Levys did not discuss a specific royalty

rate. Tr. at 712:18-22; 717:4-18.

42

Subsequently, Murashige filed continuations-in-part canceling

the ’473 application except with respect to the diagnostic method

that the parties had agreed was solely the work of MEEI scientists.

Ex. 276, at DCH-3; Ex. 302, at EJD-1. Murashige reworked the

canceled claims and filed them as part of a broader patent

application (the “’591 application”) as discussed at the meeting.

Tr. at 1184:13-1885:4; 1448:22-1449:1. MEEI went along on the

understanding that it would be treated as a sole owner of the

method to treat age-macular degeneration in primates described in

claims 7 and 14 of the new application. Tr. at 552:25-553:13;

554:16-555:8; 718:3-12; 1448:15-1448:20; Ex. 36; Ex. 321, at

MEEI000083.

Clinical trials began in 1995. The clinical trials were

conducted pursuant to two clinical trial agreements with QLT and

CIBA Vision. Tr. at 605:1-6; 605:25-606:5; Exs. 61, 244. The

clinical trial agreements provided for a worldwide license to QLT

under any resulting patent solely owned by MEEI or jointly owned by

MEEI and QLT. Ex. 61, at FLE-6. QLT provided MEEI with $15,000 in

salary support in recognition of Dr. Miller’s experimental work and

her role in preparing for the clinical trials. Tr. at 672:22-

673:7; Ex. 252.

In November 1995, QLT asked Dr. Miller to speak at an

investors’ meeting in Toronto. As Dr. Levy and Dr. Miller walked

to the meeting, Dr. Miller handed Dr. Levy a draft license

43

agreement. Tr. at 561:6-12. Dr. Levy reassured Dr. Miller that

QLT wanted to license the new treatment method and that QLT would

follow up with MEEI. Tr. at 561:12-16; 562:1-5.

The draft license agreement contained a royalty rate of 5%.

Tr. at 713:17-19; Ex. 242, § 4.1(c). This royalty rate reflected

discussions Dr. Miller had with Carl Finn prior to delivering the

draft agreement to Dr. Levy. Tr. at 713:23-714:3; 726:24-730:12.

The royalty rate was to be on net sales in jurisdictions covered by

an MEEI-owned patent. Tr. at 731:24-732:9; Ex. 242, §§ 1.3,

4.1(c). Dr. Miller believed that patents would be prosecuted

worldwide. Tr. at 793:12-16.

In December 1995, QLT sent a letter to Carl Finn stating:

This is to confirm that QLT wishes to enter into a

business agreement with the MEEI/MGH regarding the

technology which is the subject of the [’591

application]. QLT is now actively prosecuting this

[application] in a number of jurisdictions around the

world and as a co-assignee will be free to practice this

invention independently. QLT does, however, acknowledge

the contributions of all co-inventors. Consequently, QLT

does intend to negotiate in good faith with the MEEI/MGH

and other assignees to come to an agreement on reasonable

terms and royalty rates which will be consistent with

industry standards under similar circumstances. . . . It

is our intention to begin these negotiations when it is

clear patents will be issued and feasibility of the

Invention is proven.

Ex. 21. QLT thereafter refused to negotiate for a period of time.

Tr. at 1208:1-4.

In mid-1997, the Patent Office allowed the claims of the ’591

application, which would issue as the ’349 patent. Exs. 38, 322.

44

MEEI requested that negotiations resume. Ex. 38. In a letter

dated July 31, 1997, MEEI stated that Dr. Levy’s presence on the

application “places MEEI in the uncomfortable position of being

dependent on the fairness of QLT, despite its directly adverse

economic interest, in the negotiation of a license agreement.” Id.

MEEI reiterated its belief that “the commercially significant,

generic subject matter claimed in the [’591] application was

developed solely by its researchers.” Id. Accordingly, MEEI

requested that QLT “make a concrete license proposal immediately

and/or file a continuation application to permit correction of the

named inventors.” Id. In August 1997, Murashige sent a letter to

Carl Finn reassuring him that

QLT has every intention of promptly negotiating a

suitable agreement, both with MEEI and MGH. QLT

certainly recognizes the important role the primate model

had to play in reducing the invention to practice. As

you know, no one is taking the position that the role of

the primate model was unimportant.

Ex. 274.

In December 1997, representatives from QLT, MGH, MEEI, and

CIBA Vision met in Boston to negotiate a license agreement. Tr. at

866:22-867:3; 873:8-17; 874:6-8. QLT negotiated from the position

that it didn’t really need a license to the patent but wished to

recognize the contributions that MGH and MEEI had made to the

development of Visudyne. Tr. at 1212:17-23; 1213:7-10; 1637:7-

1638:8; Ex. 30. QLT offered MEEI a one-time $200,000 research

45

grant. Tr. at 874:14-876:4. QLT made a similar offer to MGH. Tr.

at 1190:8-1191:18. Neither institution accepted this offer.

The following month, in January 1998, QLT offered a royalty to

MGH and MEEI of 0.2% of net sales in the jurisdictions covered by

patents. Tr. at 1193:4-1194:2; Ex. 275. In return, QLT wanted

MEEI to grant an exclusive license and “any know-how or technology

relating to the invention disclosed in the ’591 [application].”

Ex. 275. MGH and MEEI made no immediate response. Tr. at 877:1-

10; 1626:10-12.

Up until this point, MGH negotiated alongside MEEI in part

because QLT was negotiating from the position that it did not

really need a license and MGH believed that it could not get

anywhere without MEEI. Tr. at 1211:19-1212:23. In September 1998,

MGH decided to negotiate directly with QLT. Dr. Rox Anderson, an

MGH scientist who had served on QLT’s scientific advisory board,

wrote in an internal e-mail that MEEI was taking an “unrealistic

stance” in licensing negotiations, whereas “QLT has been straight

with us all along.” Tr. at 1210:17-1211:8; Ex. 30. Dr. Anderson

further stated that MGH’s negotiating position would “never be

stronger.” Ex. 30. MGH subsequently made an offer to QLT that

included a 0.5% royalty rate. Tr. at 1199:14-18.

In October 1998, MEEI made a separate proposal to QLT. Under

the terms of the proposal, MEEI would give QLT an exclusive right

with the right to sublicense all of MEEI’s patent rights in

46

exchange for a $2,000,000 upfront payment and a minimum 3% royalty

on net sales of any product intended for treatment of unwanted

neovasculature of the eye using BPD. Ex. 255.

MEEI learned that MGH had proposed to QLT a royalty rate of

0.5%. MEEI acknowledged to MGH that such rate “may be reasonable”

assuming that QLT’s co-inventorship status was correct. Ex. 256.

MEEI explained that the “significantly larger financial terms” MEEI

proposed were based upon the assumption that QLT should not be a

co-owner. MEEI then proposed to MGH that, “in the interests of

rapidly reaching an amicable agreement,” MEEI and MGH split the 3%

royalty that MEEI had proposed to QLT. Ex. 256.

MGH did not go along with MEEI’s proposal. QLT accepted MGH’s

terms. QLT and MGH executed a license agreement in December 1998.

Ex. 40. Under the MGH license, the royalty rate of 0.5% is applied

to sales only in the United States and Canada because those are the

only countries in which MGH has issued or pending patents. Tr. at

1628:16-1629:5; Ex. 40, § 5.1(a). MGH and QLT further negotiated

a side letter adding a “most favored nations” clause. See Ex. 57.

In this side letter, QLT agreed that in the event that QLT agreed

to license MEEI’s rights in the jointly owned patent for payment of

royalties and other compensation to MEEI on terms less favorable to

QLT than the terms of the MGH license, QLT would renegotiate the

MGH license to provide MGH the same royalty rate paid to MEEI.

Id.; Tr. at 1200:3-1201:1; 1202:6-12; 1216:1-18; 1630:4-17.

47

MEEI and QLT met again in March 1999. Following the meeting,

QLT offered a 0.5% royalty with an upfront sum of $500,000

creditable against future royalties. Ex. 324. MEEI did not accept

this offer. The instant lawsuit followed shortly thereafter.

D. Unjust Enrichment

The First Circuit ruled that MEEI could proceed under two

theories of unjust enrichment, one growing out of the disclosure of

confidential information to CIBA Vision, and the other stemming

from the dropping of the ’473 patent application in favor of a

broader patent. On remand, MEEI vigorously pursued both theories.

The merits are addressed in order.

1. Disclosure of Confidential Information

The First Circuit held that MEEI’s unjust enrichment claim

survived summary judgment based on allegations of QLT’s misuse of

confidential information. MEEI I, 412 F.3d at 238. The court

explained that under Massachusetts law, “[a] constructive trust .

. . is imposed to avoid the unjust enrichment of one party at the

expense of the other where ‘information confidentially given or

acquired was used to the advantage of the recipient at the expense

of the one who disclosed the information.” Id. (quoting Mass Cash

Register, Inc. v. Comtrex Sys. Corp., 901 F. Supp. 404, 423 (D.

Mass. 1995) (quoting John Alden Transp. Co., Inc. v. Arnold Bloom,

11 Mass. App. Ct. 920, 920 (1981) (citing Barry v. Covich, 332

Mass. 338, 342 (1955)))).

48

The First Circuit noted that the same facts underlying this

theory of unjust enrichment also formed the basis of MEEI’s claim

of misappropriation of trade secrets. This Court directed a

verdict for QLT on the trade secret claim on the ground that MEEI

had failed to prove that QLT used MEEI’s trade secrets to forge an

alliance with CIBA Vision. Tr. at 1700:22-1701:1. This Court

further held that MEEI had failed to demonstrate that any trade

secrets were used in the actual treatment under Visudyne from which

profits are derived. Tr. at 1701:2-6. Finally, this Court ruled

that there were no damages because, to the extent there were any

trade secrets, Dr. Miller disclosed them at the ophthalmology

convention long before the commercialization of the treatment. Tr.

at 1700:17-21.

QLT argued that the expiration of MEEI’s trade secrets claim

spelled an end to any theory of unjust enrichment growing out of

the same set of facts. The First Circuit held, however, that MEEI

“should have the opportunity to prove the distinct elements of its

unjust enrichment and trade secret claims.” MEEI I, 412 F.3d at

238 n.13. The misappropriation of trade secrets claim, which

sounds in tort, required MEEI to show that it had taken steps to

keep secret confidential information and that QLT had breached its

duty not to disclose that information. See, e.g., Jet Spray

Cooler, Inc. v. Crampton, 377 Mass. 159, 165 (1979). By contrast,

unjust enrichment requires MEEI to show only that QLT used MEEI’s

49

confidential information at MEEI’s expense. MEEI I, 412 F.3d at

238. This confidential information does not need to be a trade

secret for the unjust enrichment claim to succeed.

QLT contends that there can be no unjust enrichment because

the material transfer agreements gave QLT a right of access to Dr.

Miller’s work. These material transfer agreements, however, did

not permit QLT to share this information with third parties. QLT

could disclose this information to CIBA Vision only with Dr.

Miller’s permission. Thus, while QLT had a right to Dr. Miller’s

data, it did not have an unrestricted right to use this data as it

wished.

QLT nonetheless shared this information with CIBA Vision

without Dr. Miller’s permission, disclosing in January 1994

treatment parameters learned from Dr. Miller’s work. When CIBA

Vision expressed interest in a partnership but first wanted to

learn more about Dr. Miller’s work, QLT promised that it would

share all experimental data. QLT made these promises even though

it was aware that it could not disclose this information without

Dr. Miller’s permission.

When QLT asked Dr. Miller to make a presentation directly to

CIBA Vision, Dr. Miller twice expressed concerns about disclosing

the results of her work without a licensing agreement in place.

Dr. Miller made the presentation after QLT assured her both times

that QLT would work out a licensing agreement with MEEI. Dr.

50

Miller’s presentation worked a great benefit for QLT. Shortly

after the presentation, CIBA Vision agreed to enter into a

partnership with QLT, stating that Dr. Miller’s work had “impressed

and convinced” it that photodynamic therapy was the way to treat

age-related macular degeneration.

Even as CIBA Vision and QLT were negotiating the agreement,

CIBA continued to emphasize the need for continued disclosure of

Dr. Miller’s work. CIBA Vision stated in a letter that it was

“essential” that Dr. Miller demonstrated her work in monkeys and

shared “all the information and statistics” with CIBA Vision. When

QLT asked Dr. Miller to make such a presentation, Dr. Miller again

expressed concerns about licensing. QLT again told Dr. Miller that

a licensing agreement was forthcoming.

Two clear patterns emerge from this factual recounting.

First, CIBA Vision specifically and repeatedly requested access to

Dr. Miller’s work. CIBA Vision further made clear that it saw

access to Dr. Miller’s work as an essential component of any

agreement with QLT. Second, QLT knew that Dr. Miller was reluctant

to share the results of her work without a licensing agreement in

place. Because QLT needed Dr. Miller’s cooperation in order to

please CIBA Vision, QLT assured Dr. Miller that it would license

the treatment from MEEI. In this fashion, QLT was aware that there

was commercial value to Dr. Miller’s work and that it could not be

had without paying something for it. QLT made the business

51

decision to promise payment for this information and reaped rich

rewards when, as a result of this disclosure, CIBA Vision agreed to

form a partnership to develop and market Visudyne, a collaboration

that resulted in net sales of over $2,200,000,000 worldwide.

QLT nonetheless protests that Dr. Miller disclosed much of her

work at an ophthalmology convention almost immediately after making

her first presentation to CIBA Vision. QLT, however, told CIBA

Vision almost from the outset that Dr. Miller was going to disclose

her work at the convention. Conceivably, CIBA Vision could have

waited until the convention to learn the details of Dr. Miller’s

work without going through QLT. But CIBA Vision wanted the

information sooner from QLT, and QLT was willing to make the

promises that it made to Dr. Miller in order to get her to make an

earlier presentation to CIBA Vision.

Furthermore, even after Dr. Miller made the public

disclosures, CIBA Vision continued to press QLT for more details of

her work. CIBA Vision, as described, wanted Dr. Miller herself to

give a demonstration in monkeys and to share all information and

statistics with CIBA Vision. This continued insistence for access

to Dr. Miller’s work showed that Dr. Miller continued to possess

valuable confidential information even after the public

Notably, Dr. Miller’s public disclosure of her work did 7

not lessen its commercial value to QLT. Because QLT owns the

compositional patent to BPD, no one could exploit Dr. Miller’s

work without first obtaining permission from QLT to use the drug.

This fact is a key reason why MEEI’s unjust enrichment claim

survived the directed verdict for QLT on the trade secrets claim.

Whereas Dr. Miller’s public disclosures destroyed the status of

any confidential information as trade secrets, her work continued

to have commercial value to QLT.

52

disclosures. QLT made further promises to Dr. Miller in order to

get her to share her work with CIBA Vision. 7

QLT obtained this information at MEEI’s expense. CIBA

Vision’s insistent requests for immediate access to Dr. Miller’s

work put MEEI in a powerful bargaining position to negotiate for a

licensing agreement. Dr. Miller presented her work to CIBA Vision

only after QLT assured her that MEEI would be fairly compensated.

After Dr. Miller disclosed her work to CIBA Vision and QLT entered

into a partnership with CIBA Vision, MEEI lost much of its

bargaining power and was unable to obtain a licensing agreement

that reflected the powerful bargaining position that MEEI once had.

QLT was unjustly enriched when it disclosed Dr. Miller’s

confidential information, and it did not compensate MEEI for the

detriment to its bargaining position.

2. Inventorship Agreement

MEEI’s second theory of unjust enrichment is that QLT induced

MEEI to abandon the ’473 application, on which MEEI scientists were

the sole inventors listed. In place of the ’473 application, the

parties filed the ’591 application, which listed scientists from

53

QLT, MGH, and MEEI. Because the ’591 application would permit QLT

to exploit the resulting patent without a license from MEEI, MEEI

was understandably reluctant to go along with the proposed change.

MEEI agreed to the switch in patent applications after QLT promised

MEEI fair compensation for its contribution. The First Circuit

accepted this framing of the issues. The court stated that while

“the proper inventorship of either the ’473 application or the ’591

application is . . . a non-negotiable question of federal law, the

question of which application to prosecute was a choice available

to the parties.” MEEI I, 412 F.3d at 232.

QLT contends that the unjust enrichment claim is preempted by

35 U.S.C. § 262, which reads: “In the absence of any agreement to

the contrary, each of the joint owners of a patent may make, use,

offer to sell, or sell the patented invention within the United

States, or import the patented invention into the United States,

without the consent of and without accounting to the other owners.”

The First Circuit recognized that the preemption issue was “close”

because “allowing MEEI’s claim to proceed would, to some extent,

impinge upon QLT’s rights as a co-inventor.” MEEI I, 412 F.3d at

235. The court noted, however, that “the statute itself admits of

an exception to those rights when there is ‘any agreement to the

contrary.’” Id. The court explained that such an “agreement” does

not have to be a written, legally enforceable contract. Id. The

54

court remanded the unjust enrichment claim to determine whether

there was, in fact, such an agreement.

On remand, QLT vigorously contests the inventorship of the

’473 application. QLT’s theory of the case is that the ’473

application should have included MGH and QLT scientists. As a

result, QLT would not have needed to obtain a license from MEEI

even if the ’473 application had resulted in a patent. Under this

theory, MEEI gave up nothing when it abandoned the ’473

application. This argument misses the mark. As the First Circuit

noted, “a claim seeking restitution for unjust enrichment does not

require consideration.” Id. at 234 n.7.

The issue for the factfinder on remand is therefore simply

whether “QLT induced MEEI to agree to the change in scope of the

claims, and then unjustly profited from that change by denying fair

compensation.” Id. at 234. This mandate required MEEI to prove,

by a fair preponderance of the evidence, that (1) there was an

agreement whereby MEEI would abandon prosecution of the ’473

application in exchange for fair compensation; and (2) that QLT’s

failure to honor this agreement resulted in unjust enrichment.

MEEI presented overwhelming evidence that MEEI agreed to drop

prosecution of the ’473 application in exchange for fair

compensation. When MEEI scientists were the sole listed inventors

on the ’473 application, QLT had told MEEI that it would pay a

royalty based on MEEI’s sole ownership of the patent application.

55

When MGH began disputing inventorship, QLT tried to back away from

its promises. QLT, in its own words, “verbally conveyed to MEEI a

more negative view of the prospects and [QLT’s] willingness to

continue funding the application.” Ex. 319, at Q18563. When

MEEI’s response was that it would fund the application itself, QLT,

again in its own words, “chose to soften [its] position so that

[it] could maintain control of the process.” Id.

QLT assured MEEI that it would fairly compensate MEEI no

matter how inventorship was sorted out. To ensure that MEEI would

cooperate fully in the broadening of inventorship, QLT represented

to MEEI that MEEI would not suffer any financial harm in the

process. To this effect, QLT led MEEI to believe that, no matter

how inventorship was sorted out, QLT would compensate MEEI as if

MEEI were the sole owner of the patent application.

In this manner, QLT made the business decision to tell MEEI

that it would be treated as if it were the sole owner no matter how

inventorship turned out. If, as QLT now contends, inventorship on

the ’473 application was incorrect, QLT may have made a bad

business decision. But that does not excuse QLT from paying a

royalty rate commensurate with the parties’ agreement in exchange

for MEEI dropping the ’473 application.

QLT’s failure to honor this agreement to compensate MEEI

resulted in unjust enrichment. MEEI gave up the opportunity to

prosecute the ’473 application which could have resulted in a

56

patent solely owned by MEEI. Such a solely owned patent, had it

issued, would have forced QLT to negotiate a license that allowed

MEEI to share in a percentage of net sales of Visudyne. MEEI

dropped this application in reliance on QLT’s assurances that MEEI

would not lose financially in the process. QLT then added itself

to the ’591 application and used its position as a co-owner of the

resulting patent to practice the patent without paying royalties to

MEEI. In this process, MEEI lost a chance at the rights to a

portion of the net sales of Visudyne that a solely owned patent

would have guaranteed. QLT was unjustly enriched when it persuaded

MEEI to switch patent applications and then did not compensate MEEI

as had been agreed.

E. Chapter 93A Claim

The First Circuit explained that “the same allegations

underlying MEEI’s unjust enrichment claim could potentially meet”

the requirements of chapter 93A. MEEI I, 412 F.3d at 243. As

described, these requirements include “(1) whether the practice .

. . is within at least the penumbra of some common-law, statutory,

or other established concept of unfairness; (2) whether it is

immoral, unethical, oppressive, or unscrupulous; [and] (3) whether

it causes substantial injury to consumers (or competitors or other

businessmen).” Id. (quoting PMP Assocs., Inc., 366 Mass. at 596).

There is a four-year statute of limitations on chapter 93A

claims. Mass. Gen. Laws ch. 260, § 5A. When the jury found that

57

MEEI prevailed on the chapter 93A claim, it necessarily found that

the claim was not barred by the statute of limitations. This Court

independently so finds. QLT points to the letter that it sent MEEI

on December 15, 1995, stating that it would begin licensing

negotiations “when it is clear patents will be issued and

feasibility of the Invention is proven.” Ex. 21. True to its

word, QLT began negotiations in 1997, after the Patent Office

allowed the claims of the ’349 patent. MEEI filed this lawsuit on

April 24, 2000, less than four years after negotiations began in

full earnest.

This Court further independently finds a chapter 93A

violation. Such a finding is well supported by the evidence.

QLT’s conduct fell within the penumbra of unjust enrichment, an

established common-law concept of unfairness. At trial, MEEI

proved the additional elements required to establish a chapter 93A

violation.

MEEI had, as described, powerful bargaining positions because

Dr. Miller pressed early and often for licensing agreements. Dr.

Miller presented her work to CIBA Vision only after QLT promised a

royalty-bearing licensing agreement. Subsequently, MEEI agreed to

drop prosecution of the ’473 application after QLT repeated these

promises and assured MEEI that it would not suffer financially from

cooperating in a patent application with broadened inventorship.

QLT made these promises because it needed Dr. Miller to disclose

58

confidential information to CIBA Vision. Further, QLT did not, in

its own words, want to get into a “pissing match” with Dr. Miller.

Ex. 319, at Q18563.

QLT held “almost all the cards” because it had induced MEEI

into surrendering its bargaining chips. When MEEI presented

concrete licensing proposals, QLT assured MEEI that a licensing

agreement would be forthcoming. Some years later, when QLT finally

agreed to negotiate, it started from the position that it did not

need to pay MEEI anything because Dr. Levy had been added to the

patent. QLT explained that it would nonetheless negotiate for a

licensing agreement because it wished to acknowledge the

contributions that MEEI had made. This position was inconsistent

with QLT’s earlier assurance that it would compensate MEEI as if it

were the sole owner of the patent. QLT took this new position

after it had obtained MEEI’s bargaining chips, forcing MEEI to

operate from a weak position. MEEI ultimately recognized the

position to which QLT had placed it, stating in a letter to QLT

that Dr. Levy’s presence on the ’349 patent placed MEEI “in the

uncomfortable position of being dependent on the fairness of QLT,

despite its directly adverse economic interest, in the negotiation

of a license agreement.” Ex. 38.

QLT offered a one-time $200,000 research grant. QLT made this

proposal even though it had repeatedly promised a royalty-bearing

licensing agreement. After MEEI rejected the offer, QLT finally

59

offered low royalty rates, terms that were not consistent with

QLT’s promises of fair compensation. When MEEI continued to resist

this treatment, negotiations broke down. In this fashion, QLT

employed bait and switch tactics to get what it needed from MEEI

without paying anything in return. This strategy, which caused

substantial injury to MEEI, was both unfair and unscrupulous.

This Court further finds, as did the jury, that QLT’s conduct

was neither knowing nor willful. QLT played rough hardball with

MEEI and tried to get MEEI to accept a low royalty rate on the

basis of a weak bargaining position. Despite these unscrupulous

tactics, however, QLT always intended to pay MEEI something for its

contributions to the development of Visudyne. After the low offer

of a $200,000 royalty rate, QLT offered successively higher royalty

rates, up to and including the 0.5% royalty rate that MGH had

proposed to QLT. QLT increased its offers in attempt to reach

agreement; QLT did not intend for negotiations ultimately to break

down. For these reasons, this Court independently finds that QLT’s

conduct was not knowing or willful.

F. Damages

1. Royalty Rate and Territorial Scope

There is, finally, the question of fair compensation. The

parties stand miles apart on what fair compensation requires, but

agree on one thing. They agree that the measure of damages should

be expressed in the form of a royalty rate on net sales of

60

Visudyne. This Court accordingly charged the jury with the task of

determining a reasonable royalty rate should it find that QLT had

been unjustly enriched at MEEI’s expense.

MEEI believes that it is entitled to a 13.5% royalty rate on

net sales worldwide. QLT counters that MEEI is entitled to no more

than what MGH got: a 0.5% royalty rate on net sales in the United

States and Canada. The truth lies somewhere in between these two

extremes.

It is first worth noting that MEEI prevailed on two theories

of unjust enrichment that give rise to different measures of

damages for a chapter 93A violation. The theory of unjust

enrichment that is based on disclosure of confidential information

gives rise to a worldwide royalty rate. The territorial scope is

worldwide because CIBA Vision required, as a condition to a

partnership, that QLT share all of Dr. Miller’s work with CIBA

Vision. The resulting collaboration resulted in the development

and marketing of Visudyne. Since the disclosure of Dr. Miller’s

work was an essential condition to the partnership, MEEI is

entitled to a share of the revenues growing out of that

partnership. Since revenues are worldwide, the royalty rate is

worldwide in scope. As this theory of unjust enrichment is not

based on a patent, such a royalty rate continues past the

expiration of the ’349 patent.

It is possible that QLT would not have practiced the 8

invention at all had it not been able to obtain a patent license

in the United States. In this hypothetical situation, MEEI would

have conferred a worldwide benefit on QLT when it agreed to

switch patent applications. Were this the case, MEEI would be

entitled to a royalty on worldwide revenues in exchange for

agreeing to switch patent applications. See Federal Trade Comm’n

v. Verity Int’l, Ltd., 443 F.3d 48, 67 (1st Cir. 2006)

(explaining that “[t]he appropriate measure for restitution is

the benefit unjustly received by the defendants.”). At trial,

however, MEEI produced no evidence to support such a finding.

61

The theory of unjust enrichment based on the switching of

patent applications cannot result in a worldwide royalty rate on

the basis of this record. Had the ’473 application resulted in a

patent, MEEI would have owned the exclusive rights to Visudyne only

within the territorial scope of the patent. QLT would have been

free to market Visudyne everywhere else, including in Europe. When

MEEI agreed to drop the ’473 application in favor of the broader

’591 application, QLT gained only the right to practice the

invention within the territorial scope of the ’473 application.

Although this territorial scope is the United States, QLT concedes

that it would have also had to pay a royalty on net sales in Canada

because a patent application is pending in Canada. Therefore, a

royalty rate based on the dropping of the ’473 application can be

only on net sales of Visudyne in the United States and Canada. 8

Since the jury determined that the royalty rate should be

worldwide in scope, it necessarily found that QLT was unjustly

enriched to MEEI’s detriment when QLT disclosed Dr. Miller’s

confidential information to CIBA Vision. The jury verdict further

In this case, it appears that net sales in the United 9

States and Canada account for approximately half of worldwide

revenues. MEEI might have reason to prefer a royalty rate based

on net sales in the United States and Canada if such a royalty

rate were more than twice as high as a royalty rate based on

worldwide sales. The jury necessarily found that this was not

the case when it determined that the most that MEEI was entitled

to was the worldwide royalty rate.

62

rules out the possibility that a royalty rate based on the

inventorship agreement was more than high enough to offset a

smaller territorial scope. This Court independently so finds. 9

So far in its recounting of factual evidence and conclusions,

this Court has agreed fully with the jury verdict. This Court,

however, would have awarded a different royalty rate. Whereas the

jury awarded MEEI a royalty rate of 3.01%, this Court would have

awarded a royalty rate of 3.5% based on the following:

QLT’s damages expert opined that MEEI is entitled to no more

than 0.5% royalty rate on net sales in the United States and

Canada. He based this conclusion on the assumption that MEEI was

entitled to a royalty rate only on the basis of its co-ownership of

the ’349 patent. Since the Court rejects that assumption, it does

not give any weight to the opinion of QLT’s damages expert.

MEEI’s damages expert opined that MEEI was entitled to a 13.5%

royalty rate. This figure is based on the opinion that MEEI is

entitled to half of QLT’s profits. This Court does not agree with

that assumption, which was not based on the evidence and therefore

could not be presented to the jury in the form of expert opinion.

63

Tr. at 985:12-986:14. This Court notes that while MEEI played an

essential role in the development of Visudyne, it did not carry

Visudyne on its back.

The benefit that QLT obtained from Dr. Miller’s presentations

was that QLT was able to share that information sooner with CIBA

Vision than it could have otherwise. CIBA Vision was aware that

Dr. Miller planned to disclose much of her work. Had QLT and CIBA

Vision wished, they could have waited until after she made the

disclosures and then used outside experts to help them understand

the implications of her work. CIBA Vision, however, wished to

learn about Dr. Miller’s work sooner rather than later, and wanted

her to be the expert teaching them about her work. Accordingly,

the value to QLT of Dr. Miller’s presentations to CIBA Vision was

not that she disclosed confidential information, but that she

disclosed the information herself and did so sooner than she would

have otherwise. This is a valuable benefit, but it is not one that

entitles MEEI to half of QLT’s profits.

Further, Dr. Miller’s work was not the only body of work that

QLT presented to CIBA Vision. Both Dr. Schmidt-Erfurth and Dr.

Miller made presentations to CIBA Vision. Together, they showed

that BPD worked in both rabbits and monkeys. The fact that BPD

worked in two different animal models persuaded CIBA Vision to

enter into a partnership with QLT. There is, again, no occasion to

determine whether the contributions of MGH scientists were such

64

that the MGH scientists should have been named as inventors on the

’473 application. What this Court concludes, however, is that the

experimental data gleaned from MGH’s work was, like the data from

MEEI’s work, commercially valuable to CIBA Vision. Thus while

MEEI’s work was essential to the partnership, it was not the only

such data. Certainly MEEI was not entitled to half of the profits

for presenting only part of the preclinical evidence, however

significant that evidence was.

Rather, on the basis of this record, this Court concludes that

MEEI is entitled not to half of QLT’s profits but to approximately

one-eighth of the profits. MEEI’s damages expert testified that

QLT made approximately $600 million in profits on $2,200,000,000 in

net revenues worldwide. Converting an approximate one-eighth share

of profits into a royalty rate yields approximately 3.5%. It is

this figure that the Court would have awarded MEEI.

This Court recognizes, however, that the jury’s determination

is binding provided that it is supported by the evidence. Although

this Court would award a slightly higher royalty rate, this Court

holds that the jury’s award of a 3.01% royalty rate is supported by

the evidence. See Ahern v. Scholz, 85 F.3d 774, 780 (1st Cir.

1996) (“[T]he district court judge cannot displace a jury’s verdict

merely because he disagrees with it or would have found otherwise

in a bench trial. The mere fact that a contrary verdict may have

been equally-or even more easily-supportable furnishes no

65

cognizable ground for granting a new trial.”) (internal citations

omitted).

Commercial resolution of this case might well have yielded yet

a different set of terms, conceivably even terms more precisely

reflecting the value of MEEI’s work. Nonetheless, because the

parties could not reach agreement, the task fell to the jury to

determine the fair value of MEEI’s contributions. The royalty rate

arrived at by this jury is necessarily somewhat arbitrary in its

imposition on the parties. But, because the parties could not

reach agreement on their own, the jury verdict controls.

2. Attorneys’ Fees

Having prevailed on its chapter 93A claim, MEEI is entitled to

its attorneys’ fees. Mass. Gen. Laws, ch. 93A, § 11. MEEI submits

an application for more than $36,000,000 in fees and costs.

Pursuant to Linthicum v. Archambault, 379 Mass. 381, 388-89 (1979),

abrogated on other grounds by Knapp Shoes, Inc. v. Sylvania Shoe

Mfg. Corp., 418 Mass. 737, 745 n.7 (1994), and having carefully

considered the “nature of the case and the issues presented, the

time and labor required, the amount of damages involved, the result

obtained, the experience, reputation and ability of the

attorney[s], the usual price charged for similar services by other

attorneys in the same area, and the amount of awards in similar

cases,” id., this Court awards attorneys’ fees and costs in the

aggregate sum of $14,093,855.42.

66

3. Prejudgment Interest

MEEI shall have pre-judgment interest at the Massachusetts

statutory rate upon the royalty decreed by the jury as those

royalties would have become due and payable, commencing on April

24, 2000 when this action was filed.

IV. CONCLUSION

The story of Visudyne is one of serendipity that would not

have been possible without the contributions of every one of the

researchers who entered the picture. Dr. Levy helped discover BPD.

Dr. Hasan and Dr. Birngruber thought to apply BPD to the eye. Dr.

Schmidt-Erfurth carried out much of the early work. Dr. Gragoudas

provided the link to Dr. Miller, who applied Dr. Schmidt-Erfurth’s

work to age-related macular degeneration. The resulting treatment,

Visudyne, should have been a cause for the celebration of the

extraordinary contributions that each of these scientists made.

Instead, the parties have squabbled over inventorship,

minimizing and even dismissing outright the contributions made by

others. This dispute over inventorship is exceptionally unseemly,

all the more so because determining correct inventorship was not

necessary to a just determination of the case. This dispute does

not befit the advancement of science, which builds on the

contributions of all. Unless the parties can repair their

relationships in the name of science, the losers may well be those

During trial, MEEI made the judicial admission that it 10

would grant QLT an exclusive license to the ’349 patent. Tr. at

1222:11-16. Although this promise was not necessary to the

outcome of this case, it constitutes a judicial admission and as

such is binding on MEEI.

67

who should have been the biggest winners — those who suffer from

eye diseases such as age-related macular degeneration.

Judgment shall enter for MEEI with the award of a 3.01%

royalty rate on net sales worldwide of Visudyne, past, present and

future. MEEI is entitled to pre-judgment interest. Finally, MEEI 10

is awarded attorneys’ fees in the amount of $14,093,855.42.

SO ORDERED.

/s/ William G. Young

WILLIAM G. YOUNG

DISTRICT JUDGE

Free Email Updates
Get the latest content first.
We respect your privacy.