UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
MASSACHUSETTS EYE AND EAR )
v. ) CIVIL ACTION
) NO. 00-10783-WGY
QLT, Inc., )
MEMORANDUM AND ORDER
YOUNG, D.J. July 10, 2007
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
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.
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.
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
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
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
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
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
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.
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
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).
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
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
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.
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
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.”).
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).
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
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
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
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.
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
visited July 5, 2007). In this case, the jurors posed 33
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
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
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
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
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
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
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.
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.”
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
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;
Dr. Levy became very interested in incorporating photodynamic
therapy into her work on cancer immunology. Tr. at 1585:19-25.
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
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
that BPD worked well in closing blood vessels in rabbit eyes. Tr.
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
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
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
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.
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.
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.
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
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-
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
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
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-
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
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
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
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
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
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
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,
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.
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
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.
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
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
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.
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.
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
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-
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
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.
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)))).
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.
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
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
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.
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
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.
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
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
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.
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
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
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
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
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
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
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.
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
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
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.
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.
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.
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
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
cognizable ground for granting a new trial.”) (internal citations
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.
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.
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.
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.
/s/ William G. Young
WILLIAM G. YOUNG