Intellect Neurosciences, Inc. vs. Pfizer Inc. Doc 90

8/13/2019 Intellect Neurosciences, Inc. vs. Pfizer Inc. Doc 90

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1

2 SUPREME COURT OF THE STATE OF NEW YORK

3 COUNTY OF NEW YORK : CIVIL TERM : PART 48 _______________________________________4 X

INTELLECT NEUROSCIENCES, INC.,5

Plaintiff6 Index Number

- against - 653320/127

PFIZER, INC., and RINAT NEUROSCIENCE8 CORP.,

Defendants9 _______________________________________X

10 60 Centre Street New York, New York

11 January 8 , 2014

12 B E F O R E :

13 HONORABLE JEFFREY K. OING, Justice

14 A P P E A R A N C E S :

15

Attorneys for Plaintiff:16

STANLEY K. SHAPIRO, ESQ.17 225 Broadway - Suite 1803

New York, New York 1000718

19 Attorneys for Defendant:

20 KIRKLAND & ELLIS LLP 601 Lexington Avenue

21 New York, New York 10022

By: ATIF KHAWAJA, ESQ.22 SAMARA PENN, ESQ.

23

24 DENISE WILLIAMS, RPR

25 Official Court Reporter

26

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ILED: NEW YORK COUNTY CLERK 01/10/2014 INDEX NO. 653320/

YSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/10/


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2 THE COURT: The Court has before it the matter of

3 Intellect Neurosciences verses Pfizer, index number 6533204 of 2012. This is Motion Sequence Number 2 which is a

5 motion by Defendants to dismiss the complaint.

6 Just for the record, the complaint alleges two

7 causes of action: First cause of actions are breach of

8 contract; second cause of action is for breach of the

9 implied covenant good faith and fair dealing. It is a pre-

10 answer motion CPLR 3211(e)(7) for failure to state a cause

11 of action.

12 Parties enter their appearances for the record.

13 For the Plaintiff?

14 MR. SHAPIRO: Stanley K. Shapiro, attorney for

15 the Plaintiff.

16 THE COURT: Thank you.

17 For Defendants?

18 MR. KHAWAJA: Atif Khawaja on behalf of Defendant

19 Pfizer.

20 THE COURT: Thank you.

21 I'm pretty much familiar with what the facts are

22 here since you all were here last time, I think, on a

23 sealing order which I granted to the extent of redacting

24 certain information. This is now their breach of contract.

25 I have to say, I was expecting a much larger

26 contract, I mean larger complaint, and when I looked at it

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2 it was pretty straightforward in terms of what you are

3 saying you are entitled to get under the contract.4 So, why should I dismiss this complaint for

5 breach of contract?

6 MR. KHAWAJA: The complaint should be dismissed,

7 Your Honor, because there is a necessary threshold

8 condition that needs to take place before there can be a

9 breach. They are seeking to recover a milestone payment

10 and I'm happy -- I'm sure you have a copy of the

11 contract --

12 THE COURT: I got it.

13 MR. KHAWAJA: But, Section 3.13 of the milestone

14 makes clear that before you can get the milestone and they

15 are suing count one and we will get into count two in a

16 second, but the breach claim is breach of the milestone and

17 the milestone is only reached when the Plaintiff receives a

18 patent that a licensed patent with at least one valid claim

19 that covers a licensed product.

20 THE COURT: But, isn't what has been -- isn't

21 what they are paying after this agreement from the U.S.

22 Patent Office -- they did get a patent?

23 MR. KHAWAJA: They did.

24 THE COURT: They did.

25 MR. KHAWAJA: No dispute.

26 THE COURT: They got a patent and that that

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2 patent was for a product or was for a design or --

3 MR. KHAWAJA: Method.4 THE COURT: Method, thank you, that was part of

5 this agreement that was listed.

6 MR. KHAWAJA: Absolutely not. That's what and

7 that's the fundamental issue that we have.

8 If you go to Schedule One of that agreement it

9 lists the IP that Pfizer received a license to.

10 In other words, there were certain patents that

11 Pfizer or that Intellect held at the time that the

12 agreement was entered and this is, it should be page 17,

13 and you see this list right here. It says Confidential at

14 the top, License Patent Schedule One on the top.

15 THE COURT: I got Schedule One.

16 MR. KHAWAJA: Okay.

17 THE COURT: Top right.

18 MR. KHAWAJA: Right. So these are the things

19 that Pfizer received a license to in 2008 and, you know, as

20 the Plaintiff pleads in Paragraph 28 of his complaint the

21 patent that we are here today about didn't exist until

22 2012.

23 So, if you look on this there are certain numbers

24 here, I think its the fourth column from the right you can

25 see various numbers, the patent number that we are dealing

26 with today is not at issue here. There were six patents

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2 that were covered here. You can see those. You can

3 identify them because it says issue in the right most4 column under status.

5 THE COURT: Right.

6 MR. KHAWAJA: And those were the six issued

7 patents that existed at the time that the parties entered

8 this agreement in 2008, and the Milestone Provision was

9 basically a way for the parties to talk about future

10 patents that Intellect might get.

11 THE COURT: Right. Because once you get a patent

12 its worth more or, correct, or no?

13 MR. KHAWAJA: You might never get a patent. You

14 may try to get a patent and many of the published --

15 THE COURT: But, the milestone takes care of that

16 in the event there may come a point maybe during the life

17 of this contract you get a patent, you get a payment for

18 it.

19 MR. KHAWAJA: To the extent it covers a licensed

20 product.

21 THE COURT: A licensed product.

22 MR. KHAWAJA: In other words, this is an

23 insurance policy for Pfizer. You know, we paid the -- I

24 don't want to get into the amounts pursuant to the order

25 before, but we paid a fee in 2008 to get the benefit of

26 what existed at that time.

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2 THE COURT: Right.

3 MR. KHAWAJA: We hold that now. We didn't know4 if Intellect was ever going to get another patent if

5 actually applied to what Pfizer did. So the milestone was

6 set up. That's why there is an infringement matter.

7 THE COURT: But, didn't -- isn't it, the way I

8 read the record here is its the method or manner -- what is

9 the word?

10 MR. KHAWAJA: Its a method of treating

11 Alzheimer's.

12 THE COURT: Method right. It's the method of

13 treating Alzheimer's and there was a particular component

14 of that and that was the --

15 MR. KHAWAJA: Ponezumab.

16 THE COURT: Correct. Where they are saying that

17 that was part of -- although its not specifically set forth

18 in the schedule here, but that is part of what this whole

19 deal was about was treatment of Alzheimer's and they got a

20 patent specifically for that I can't --

21 MR. KHAWAJA: Ponezumab. And For the record I

22 will spell it. P-o-n-e-z-u-m-a-b.

23 THE COURT: That was the drug or that was the

24 component that treated Alzheimer's and that's what they got

25 the patent for so that it covers, although it wasn't

26 specifically, I should point it out, in Schedule One here

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2 that's not here but its contemplated that its part of this

3 whole Alzheimer's treatment so that that's what -- that's4 their complaint in a sense that that's why we are entitled

5 to milestone.

6 MR. KHAWAJA: There are two things, Your Honor.

7 First of all, they have not pled an allegation in their

8 complaint and we can look through it. There is not a

9 single allegation in there that Pfizer has done anything

10 with Ponezumab, with any Ponezumab product that would fall

11 within this patent.

12 But, the second thing is as a matter of contract

13 interpretation. This contract does not say if you have

14 something related to Ponezumab they get the milestone fee,

15 and the way that I would say the proof of that is in the

16 licensed product definition because the Milestone Provision

17 specifically calls for a licensed product and this is at

18 page 2 of the contract. Its the definition Section. Its

19 Section 1.11. And this is, I think, the crux of the

20 dispute between us because the license product is defined

21 to mean, and this is the direct quote, any product in any

22 dosage form containing the Pfizer compound. Now if it

23 stopped there that would be enough. That would be

24 Ponezumab. Pfizer produced Ponezumab, no problem, but it

25 goes on and it goes on for 27 more words to say, the

26 development, manufacture, use, sale or importation of wence

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2 product would absent the license granted by licensor to

3 licensee herein infringe any valid claim in any license4 patent.

5 So, its not enough that it just be the Pfizer

6 compound. If it was simply the patent that covered the

7 Pfizer compound we wouldn't be here today. Its this 27

8 word criteria for licensed product.

9 THE COURT: I'm glad you highlighted it because

10 that 27 word it doesn't say -- it doesn't just say

11 infringe. It says would infringe.

12 MR. KHAWAJA: Agree.

13 THE COURT: Which means then its contemplated at

14 that point its a potential or possibility. Its not

15 necessarily a definite event because it doesn't say that

16 infringes on, so which means that you would have to

17 actually infringe before you get the milestone.

18 It says would infringe which gives it the air of

19 potentiality, air of -- its very broad in that sense in

20 terms of what you can do, so that, you know, okay you may

21 not use Ponezumab at all within any of the methods that you

22 are treating or producing drugs, but that's not the

23 question. The way this is set up or the contract, the way

24 this agreement is set up is would use or would infringe, so

25 that you don't have to, as long as its there guess what,

26 according to the Plaintiffs you got to pay me a milestone

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2 because now we got a patent for that particular method or

3 for that particular compound.4 MR. KHAWAJA: So, same thing, first argument,

5 Your Honor, is its not pled in the complaint anywhere and

6 I'm happy to go through. The closest they come is

7 Paragraph 32 where they say in the subjunctive in the

8 passive voice that the use of Ponezumab by someone,

9 somewhere would infringe the ones that have the patent.

10 They haven't said that we do. They haven't said that we

11 are doing anything with Ponezumab, and the second point

12 that I would really like to address here when you say

13 would, yes its would infringe absent the license granted by

14 licensor or licensee.

15 So, its conditional. Its would infringe if you

16 didn't have a license.

17 THE COURT: You have a license.

18 MR. KHAWAJA: How do I have the license?

19 THE COURT: Sorry.

20 MR. KHAWAJA: I don't think we have the license.

21 THE COURT: You don't have --

22 MR. KHAWAJA: We don't get the license. The

23 milestone is the license. The milestone acts as the

24 license.

25 THE COURT: Wait a minute. The whole -- the

26 whole agreement here is a licensing agreement.

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2 MR. KHAWAJA: That's true to the six patents.

3 THE COURT: To the six patents.4 MR. KHAWAJA: Yes.

5 THE COURT: And the six patents, but there is

6 also on the schedule here the ones that are still pending.

7 MR. KHAWAJA: Yes.

8 THE COURT: Correct?

9 MR. KHAWAJA: Yes.

10 THE COURT: So when the pending ones become

11 issued or when the pending ones become patent you get a

12 patent for the pending ones doesn't that cover then the

13 exact area that we are talking about here?

14 MR. KHAWAJA: To the extent they cover, they do.

15 That's all --

16 THE COURT: That's the contract. Now we are

17 getting into the heart, the meat of the contract because

18 then now the question becomes what does that mean though to

19 the extent that we use it.

20 MR. KHAWAJA: There has to be an allegation that

21 we are doing what is covered by the patent.

22 THE COURT: Not according to the way this

23 contract, at least the arguments I heard. Maybe I

24 misunderstood the contract, but that when you don't have --

25 when its still pending and later on it gets issued, okay,

26 that its not so much that you're actually using the

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2 THE COURT: By just highlighting by just making

3 those highlights in front of me right now we are getting4 past the pleading stage and we are getting to the guts of

5 the contract which gets further down the road because at

6 the pleading stage the question is whether or not they have

7 stated a cause of action. Okay. You are saying that --

8 your first argument I thought was they didn't state a cause

9 of action because its not covered in this contract. We

10 don't -- its not there.

11 MR. KHAWAJA: And its not.

12 THE COURT: That's your position.

13 But, then when you get further into the argument

14 and I start raising some of these points about how their

15 what Plaintiff's arguments are, it gets further away from

16 your saying its not covered by this contract to maybe it is

17 covered by the contract perhaps.

18 And here is the other point, when you were saying

19 its not alleged in the complaint, they have an affidavit I

20 have an affidavit from Plaintiff that talks about or at

21 least asserts that Pfizer, the Defendant, is testing

22 Ponezumab in their studies.

23 MR. KHAWAJA: Right.

24 THE COURT: So, that in a sense, you know, you

25 can always I can always look at other submissions to sort

26 of amplify the pleadings on a Motion to Dismiss and that's

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2 important.

3 You're saying Ponezumab is not being used by us4 at all. But they are asserting, accurate or not, that you

5 guys are testing it.

6 MR. KHAWAJA: Right.

7 THE COURT: Which means then it falls under this

8 whole general the compound Ponezumab which they got a

9 patent for saying guess what, the milestone has been

10 completed.

11 MR. KHAWAJA: Your Honor, I come back to the

12 first point is this patent is not in that contract.

13 THE COURT: Right.

14 MR. KHAWAJA: Its not there. It couldn't be

15 there and the way --

16 THE COURT: Why couldn't it be there again?

17 MR. KHAWAJA: Because it didn't exist. And at

18 the time --

19 THE COURT: The patent didn't exist?

20 MR. KHAWAJA: The patent didn't exist.

21 THE COURT: But the compound or the compound or

22 the method did exist.

23 MR. KHAWAJA: I'm not taking that position

24 because I don't think the patent is valid, but that's not

25 here nor there.

26 THE COURT: The patent is not valid. The U.S.

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2 Patent Office issued it.

3 MR. KHAWAJA: Fifty percent of patents that get4 issued are invalid and the patent office challenges them

5 and the contract --

6 THE COURT: Do we know if this patent is being

7 challenged?

8 MR. KHAWAJA: Well, I can tell you that if

9 indeed --

10 THE COURT: What about this part that the patent

11 has been published and its listed in the schedule?

12 MR. KHAWAJA: That wasn't the patent. That was a

13 published application that was filed, and if you were to

14 compare the actual issued patent to what was in the

15 application they are different things and that's the way

16 the patent office works. You submit an application. You

17 can submit one tomorrow for an Iphone. It doesn't mean you

18 are going to get it.

19 THE COURT: Right.

20 MR. KHAWAJA: There are people that are going to

21 oppose it and even after you get it there are going to be

22 challenges to it and that's why this was a milestone

23 provision and Pfizer wanted the security. This is really a

24 damages cap, Your Honor, because the way Pfizer uses we

25 paid the license initially to cap the damages that they

26 could ever get on infringement. If another one comes up we

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2 will cover it but I do want to address your point on the

3 pleading because let's get back to first principles what's4 before Your Honor.

5 The published application is not what he's suing

6 on. He is not suing on a published application. He's

7 suing on a May 12 -- May, 2012, patent at issue after the

8 contract. Its not mentioned in the contract.

9 With respect to Your Honor's comment about the

10 affidavit, this is I believe Exhibit 9 to the Maza's

11 affidavit. We still -- I think its pretty much undisputed

12 there's no allegation in the complaint that Pfizer is

13 actually doing anything with this patent. I don't think

14 the word Pfizer infringe or Pfizer in use or Pfizer import

15 or sell, market or develop that's not there. So there is

16 no textbook pleading of infringement. I don't even know

17 that the milestone says at least one valid claim the patent

18 needs to be covered. I don't know which valid claims he

19 thinks exist.

20 So, there is a fundamental notice defect.

21 With respect to Exhibit N this multiple dose

22 study of patients with mild to moderate Alzheimer's

23 disease, Pfizer doesn't dispute that they engaged in

24 studies, but this is their affidavit this is the material

25 he cites. The first line says this study has been

26 completed, and so this study that he's pointing to is over

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2 which is exactly what we point out in the pleadings that

3 Ponezumab doesn't work for Alzheimer's. That's why we4 stopped using it.

5 THE COURT: You know, its interesting when you

6 say that the drug itself or the compound itself doesn't

7 work and you stop using it. That's so much -- that's

8 still --

9 MR. KHAWAJA: I agree its in the facts.

10 THE COURT: It becomes a factual assertion at

11 that point getting beyond -- the pleadings are very

12 straightforward and very simple for me. Do I have enough

13 for them or at least for me to say they stated a cause of

14 action or not and at this point we are getting -- -- the

15 arguments I'm hearing from you is getting me further down

16 away from the point that there is no stated cause of action

17 and getting further down or closer to a point where it may

18 be right for summary judgment because at this point you are

19 making all these arguments and they are getting less

20 away -- the way I look at stating a cause of action have

21 they dotted all their I's and crossed their Ts. Did they

22 plead, for example, negligence, a duty, a breach of that

23 duty, proximate cause. Have they done all those elements

24 and for the contract have they pleaded the contract, is

25 there a breach. You are getting more into the guts of the

26 argument.

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2 You are taking every position you have taken that

3 I heard from you today is opposed to -- is the opposite of4 what Plaintiff says. So that at that point I'm getting two

5 versions of an interpretation of a contract which goes

6 further away from whether or not they stated a cause of

7 action and more whether or not they even have one which is

8 at that point subject to I don't know how these compounds

9 work. Sure, science in college. I ran away from

10 chemistry. So with all these compounds and how they work

11 and how the patent office works suffice it to say and then

12 with the term it would infringe verses your argument that

13 its an infringement the word would doesn't do anything.

14 That's diametrically opposite to what Plaintiff is saying.

15 Oh, no wait a minute. This milestone was put in place so

16 we get the payment and it covers any possibility and that's

17 why it was written the way its written. You know --

18 MR. KHAWAJA: I understand, Your Honor, where we

19 are going and I will say that I think then I will just rest

20 really.

21 THE COURT: Don't go so fast. There is also the

22 second cause of action are for the breach of implied --

23 MR. KHAWAJA: These that's completely

24 duplicative. I don't even think -- they try to replead it

25 in the Motion to Dismiss as some level and intent by Pfizer

26 to shut down their business. If we are operating under the

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2 contract there is no implied covenant of breach.

3 THE COURT: That's simple enough there.4 MR. KHAWAJA: I think that's simple, but I would

5 come back one first because I think what we would need and

6 what we are really asking for we don't need to get on the

7 merits, Your Honor, but we do need a game plan or some road

8 map to how to litigate this case.

9 What I don't have is the Defendant here is --

10 real notice of what it is he's alleging. I don't know

11 what -- what I have done -- there is no allegation.

12 THE COURT: You are in the position of every

13 single defendant that comes into my courtroom. What are

14 the plaintiffs suing me for. I have no idea.

15 In terms of the roadmap, that's subject to the

16 discovery phase. You will get at some point -- you will

17 make your demand for Bill of Particulars or if that's the

18 case or you make all that all comes into play, is

19 crystalized later on in terms of what exactly -- this is

20 where we are sort of the infant stage of this case where he

21 is just the Plaintiff has just made an assertion of breach

22 of contract and, rightly so, you want to flesh out what

23 exactly did we breach, how did we breach it in that regard

24 so that the roadmap will be developed. If you are asking

25 for one right now, I can't give you one right now.

26 MR. KHAWAJA: I think as a matter of contract

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2 interpretation what we would like to know and if you think

3 there is enough there, that's fine, but we would like to4 know if there is this infringement test or not. That's a

5 legal question. That's not a fact question. We think its

6 implicit on the milestone. It might short circuit what

7 discovery is needed. We fundamentally think the pleading

8 is clear, the patent isn't there and there is no allegation

9 of what we have done. If we can get some specificity on

10 that in the pre-answer stage that's appropriate.

11 THE COURT: I will think about it.

12 Your answer?

13 MR. SHAPIRO: I think Your Honor has a very good

14 handle on the issue. Few points whether the patent that

15 was issued is covered by the schedule and by the license,

16 that's really straightforward. That's right in the

17 contract. Pfizer --

18 THE COURT: The bottom line is you had this

19 agreement. You guys are the owner of the product or the

20 method and you want to make sure you are going to get

21 compensated for everything and you are going to write a

22 contract that's going to cover all instances of maybe of

23 potential use not just actual use but potential

24 infringement.

25 MR. SHAPIRO: Its not infringement. For them to

26 get -- the definition of license patent is a defined term

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2 in the agreement Section 1.10 and it says license patent

3 means any U.S. and ex-U.S. patent and applications listed4 on Schedule One that claims having claims that encompass

5 the Ponezumab, broader than that but certainly by

6 definition Ponezumab and also international, you know,

7 European patents and other patents, but it says patent

8 applications listed included there and the patent that was

9 issued in May of 2012 was issued upon one of the patent

10 applications that's listed on Schedule One.

11 Also, there is no question its part of the

12 licensed patents that is subject to the patent Milestone

13 Provision. The patent Milestone Provision is a

14 straightforward provision that was -- its intent is clear

15 that when one of the -- when an actual patent in the United

16 States is issued on one of -- providing one of the valid

17 claims covering Ponezumab and broader than that but

18 certainly covering Ponezumab, then an obligation is

19 generated to make a milestone.

20 THE COURT: Let's not get into the exact figure.

21 MR. SHAPIRO: I'm sorry, to make a milestone

22 payment and that payment is due within 30 days after the

23 patent is issued. Its not conditioned on any conduct by

24 Pfizer. Its not conditioned on Pfizer's use of the patent.

25 Its not -- its not conditioned on Pfizer's success with

26 Ponezumab.

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2 THE COURT: Let me ask you this question in terms

3 of contract terms, these milestone agreements are they4 typical?

5 MR. SHAPIRO: Its very standard, Your Honor, that

6 they have milestone provisions along the way during the

7 process. They --

8 THE COURT: You just never know as to what's

9 going to happen in the future and you want to make sure as

10 the developer of this product or compound that you want to

11 get -- you are going to get compensated later on down the

12 road if something good happens.

13 MR. SHAPIRO: Exactly. They are getting the

14 rights to the patent while the patent application is

15 pending its worth more --

16 THE COURT: Once it gets --

17 MR. SHAPIRO: Once the patent is issued, but

18 they've already got right now. The contract itself they

19 say we stopped using it. We did -- we were using it and we

20 stopped using it. Now that, Your Honor, is pointed out

21 that's in factual dispute as to whether we stopped using it

22 or not but its also -- its not relevant to this milestone

23 payment --

24 THE COURT: Whether they use it or not that's

25 their choice. The bottom line is you're arguing this

26 contract is clear. Once I get a patent for the compound

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2 Ponezumab that's at issue here it doesn't matter whether

3 you use it or not, if its part the schedule that we talked4 about in this whole contract here guess what, the milestone

5 payments trigger attorney.

6 MR. SHAPIRO: Exactly, Your Honor.

7 THE COURT: That's the plain -- that's what the

8 sense I get is very simple. It doesn't matter what you do.

9 The other way, the other argument is from the other side

10 saying no it does matter what I do. If I don't use it at

11 all, use it at all and its not even in ply inventory I

12 don't have to pay the milestone which gets to the heart of

13 the contract in terms of what does the contract actually

14 stand for.

15 MR. SHAPIRO: Right. Correct.

16 In that respect, the contract has built into it a

17 termination provision and it says in two places and, in

18 fact, the milestone section it may interpreted -- Section

19 7.5 I think it is it says the contract Pfizer may terminate

20 at any time after cessation of activities related to the

21 development, ba, ba, ba, on 60 days notice, but they never

22 gave that notice and in Section -- the Mile Stone Provision

23 Section 3.1.3 -- 3.1.3C says for the avoidance of doubt if

24 any milestone payment that comes -- it doesn't say it. It

25 says specifically milestone payment 3.1.3A that's the

26 patent milestone, U.S. patent milestone, is payable if you

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2 terminate, yet then you have to pay it and even after you

3 terminate if it came due during the time before you4 terminated, its owed. Its an obligation.

5 I don't know if Your Honor -- I think Your Honor

6 has it. I don't know if we need to go there in terms of

7 the construction of the contract --

8 THE COURT: No.

9 MR. SHAPIRO: I think what was the intent of the

10 parties at the time and I think we put in I show that this

11 is a phoney artificial claim they are making --

12 THE COURT: Its an interesting argument because

13 it gets into a lot of what ifs and but suffice to say I'm

14 more persuaded by your argument with respect to the first

15 cause of action, but the second cause of action for breach

16 of implied covenant to me when I looked at it, first of

17 all, its only three paragraphs long. It wasn't very long.

18 Thank goodness.

19 MR. SHAPIRO: I did not spend a lot of time on

20 that.

21 THE COURT: That sort of sense -- strikes me of

22 you are really upset and annoyed by the Defendants and I

23 want to throw something at you.

24 MR. SHAPIRO: That's true. Its alleged this is

25 not merely a breach but they are acting in bad faith and I

26 think their motion is reflective of that bad faith,

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2 particularly when you look at the negotiation process and

3 the drafting process that I did put in on this motion and4 that's why I put it in, Your Honor, and then I amplified

5 what we mean by the bad faith allegation in Mr. Maza's.

6 THE COURT: Something like that in terms of bad

7 faith is such, you know, on this record it sounds I know

8 you had this there was an argument here about the European

9 dispute that's going on and you believe that there may be

10 some sort of untoward, you know, shifting of the powers

11 within the pharmaceutical industry putting your client sort

12 of behind the eight ball. You know, I saw that but, you

13 know, for me to agree with you and say this is at this

14 point pleaded sufficiently, a bad faith element, I'm not

15 sure its there, but having said that, as you go through

16 discovery once you start doing depositions and you get some

17 more fire power, some more ammunition as they say, suffice

18 it to say there is always the opportunity to amend the

19 complaint and assert another claim, but at this point I

20 don't believe that the second cause of action is -- its

21 more duplicative of the first cause of action and less in

22 the sense standing on its own independently of the first.

23 You have a straightforward breach of contract and

24 within the contract itself there is, you know, there is

25 always an implied covenant good faith and fair dealing and

26 there should be no, you know, untoward, I guess, breach of

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2 that covenant.

3 MR. SHAPIRO: Exactly.4 THE COURT: -- terms of executing the contract.

5 MR. SHAPIRO: What I tried to bring out in Mr.

6 Maza's affidavit what happens was subsequent to the entry

7 of this contract with this license, Pfizer acquired another

8 company that had a competing product that has been the

9 subject of the patent litigation in --

10 THE COURT: That's the European?

11 MR. SHAPIRO: That's in Europe and sort of now

12 riding -- it started at the time that this, at least as of

13 the time that the patent, the U.S. patent milestone came

14 due it was that was a potential blockbuster and it was

15 ahead of Ponezumab and they decided let's try to harm.

16 That's the allegation.

17 THE COURT: That's the allegation.

18 MR. SHAPIRO: And there is some, you know,

19 reason to believe that.

20 THE COURT: I heard the arguments here. This is

21 my decision and order with respect to the Motion to

22 Dismiss.

23 I'm going to that branch of the Motion to Dismiss

24 the first cause of action is denied. Based on the

25 arguments I have heard here today, its less about whether

26 or not the Plaintiff has stated a cause of action and more

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2 about whether or not they have a valid claim.

3 Hearing the arguments, its clear from me that the4 two parties are taking different positions on the

5 interpretation of the contract, specifically whether or not

6 the compound or the drug or the component at issue is

7 covered under the contract that is in fact subject to a

8 milestone payment.

9 There are sharp differences on that

10 interpretation of the contract that convinces me its less

11 of a stated cause of action and more right for Summary

12 Judgment Motion later on in terms of interpreting the

13 contract and whether or not there is even an ambiguity.

14 That's going to be later on to be fleshed out by the

15 attorneys as we go along in this case.

16 With respect to that branch of the motion to

17 dismiss the second cause of action for breach of implied

18 duty of good faith, I'm going to grant that motion and

19 dismiss the second cause of action.

20 I find the second cause of action is duplicative

21 of the first cause of action. Dismissing that second cause

22 of action is without prejudice, subject to further

23 discovery later on if the Plaintiff does in fact acquire

24 information or evidence that will support such a claim or

25 any other claim they are free to make a Motion to Amend the

26 complaint and assert additional claims in that regard.

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2 So, that's my decision and order. The first

3 cause of action remains. The second cause of action is4 dismissed without prejudice. That's my decision and order.

5 Counsel, you are the moving party. Please order

6 a transcript. I will so order it and it you will have it

7 for the records.

8 I guess you need to serve an answer to the

9 complaint. Today is January 8. Why don't we give you

10 until February 7 to serve an answer to the complaint.

11 I don't know if you want to talk to my law clerk

12 in the meantime to maybe start the discovery schedule.

13 MR. KHAWAJA: Sure. I would anticipate filing

14 some type of early summary judgment motion.

15 THE COURT: That's absolutely fine. That would

16 be its -- okay. That's good to do that.

17 Thanks very much.

18 * * *

19 CERTIFIED THAT THE FOREGOING IS A TRUE AND

20 ACCURATE TRANSCRIPT OF THE STENOGRAPHIC MINUTES IN

21 THESE PROCEEDINGS.

22 ___________________________________

23 DENISE WILLIAMS, RPR

24 Official Court Reporter

25

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Documents

Intellect Neurosciences, Inc. vs. Pfizer Inc. Doc 90