The Hidden Ideological Stakes of SCOTUS Patent Case

MICHAEL C. DORF

Cornell law professor Michael C. Dorf describes the ostensibly complex legal issues presented in United States v. Arthrex, Inc., in which the U.S. Supreme Court heard argument earlier this week, and explains how those issues reflect an ideological divide as to other, more accessible matters. Professor Dorf argues that although many conservatives would like to dismantle the modern administrative state, our complex modern society all but requires these government agencies, so conservatives instead seek to make them politically accountable through a Senate-confirmed officer answerable to the president, furthering the so-called unitary-executive theory of Article II.

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Glaxo Group Limited, et al. v. DRIT LP

Docket: 25, 2020

Opinion Date: March 3, 2021

Judge: Seitz

Areas of Law: Business Law, Contracts, Patents

Glaxo Group Limited and Human Genome Sciences, Inc. (collectively, “GSK”) owned patents covering Benlysta, a lupus treatment drug. GSK filed a patent application with the United States Patent and Trademark Office (“PTO”) claiming a method for treating lupus. Biogen Idec MA Inc. (“Biogen”) held an issued patent covering a similar method for treating lupus. When parties dispute who was first to discover an invention, the PTO declares an interference. Rather than suffer the delay and uncertainty of an interference proceeding, the parties agreed to settle their differences through a patent license and settlement agreement (“Agreement”). GSK ended up with its issued patent. The PTO cancelled Biogen’s patent, and Biogen received upfront and milestone payments and ongoing royalties for Benlysta sales. Under the Agreement GSK agreed to make royalty payments to Biogen until the expiration of the last “Valid Claim” of certain patents, including the lupus treatment patent. The Agreement defined a Valid Claim as an unexpired patent claim that has not, among other things, been “disclaimed” by GSK. GSK paid Biogen royalties on Benlysta sales. After Biogen assigned the Agreement to DRIT LP - an entity that purchased intellectual property royalty streams - GSK filed a statutory disclaimer that disclaimed the patent and all its claims. GSK notified DRIT that there were no longer any Valid Claims under the Agreement and stopped paying royalties on Benlysta sales. DRIT sued GSK in the Superior Court for breach of contract and breach of the implied covenant of good faith and fair dealing for failing to pay royalties under the Agreement. The court dismissed DRIT’s breach of contract claim but allowed the implied covenant claim to go to a jury trial. The jury found for DRIT, and the court awarded damages. On appeal, GSK argued the superior court should have granted it judgment as a matter of law on the implied covenant claim. On cross-appeal, DRIT claimed that, if the Court reversed the jury verdict on the implied covenant claim, it should reverse the superior court’s ruling dismissing the breach of contract claim. The Delaware Supreme Court found the superior court properly dismissed DRIT’s breach of contract claim, but should have granted GSK judgment as a matter of law on the implied covenant claim. Thus, the superior court's judgment was reversed.

RSUI Indemnity Co. v. Murdock, et al.

Docket: 154, 2020

Opinion Date: March 3, 2021

Judge: Traynor

Areas of Law: Contracts, Insurance Law

An excess insurer under a directors’ and officers’ liability insurance policy sought a declaration from the superior court that coverage under the policy was not available to fund the settlement of two lawsuits: a breach of fiduciary duty action in the Court of Chancery, and a federal securities action in the United States District Court for the District of Delaware. In a series of decisions, the superior court rejected the insurer’s claims and entered judgment in favor of the insureds. Aggrieved, the insurer contended the superior court committed several errors: whether the insurance policy, which insured a Delaware corporation and its directors and officers but which was negotiated and issued in California, should have been interpreted under Delaware law; whether the policy, to the extent that it appeared to cover losses occasioned by one of the insureds’ fraud, was unenforceable as contrary to the public policy of Delaware; whether a policy provision that excluded coverage for fraudulent actions defeats coverage; and whether the superior court properly applied the policy’s allocation provision. Finding no reversible error, the Delaware Supreme Court affirmed the superior court.