Swiss Pharma Co. Shakes Suit Over $120M Supply Contract
By Helen Christophi
Law360, Los Angeles (January 17, 2013, 6:06 PM ET) -- A New York federal judge on Wednesday ruled in favor of Ed. Geistlich Soehne AG in a dispute with Luitpold Pharmaceuticals Inc. over its $120 million licensing and distribution agreements for dental products, finding the Swiss chemical and pharmaceutical conglomerate had the right to terminate the contract for "any reason whatsoever."
Luitpold in 2011 sued Geistlich for breach of contract and related claims, accusing the company of wasting the money Luitpold spent developing a market for Geistlich's regenerative dental products in the U.S., Mexico, the Caribbean, Central America and Japan when it ended their commercial agreement two years ago. But Geistlich countered that the contract's ambiguous language rendered Luitpold's claims meritless.
U.S. District Judge Katherine B. Forrest held that although the contract language was indeed ambiguous, the evidence the two parties presented proved Geistlich didn't violate the contract when it terminated it.
"Presented with defendants' evidence and Luitpold's lack thereof, a reasonable fact-finder could only find that unilateral termination is permissible," Judge Forrest said in her opinion. "The facts and arguments offered by Luitpold do not create a genuine dispute as to that conclusion."
The New York-based drug and medical device company has made over $100 million in gross profits since 1994 distributing Geistlich's dental bone implant substitutes, the ruling said.
Judge Forrest pointed to three conflicting provisions in the contract that created the ambiguity. Two of the provisions allow either party to terminate the agreement, but a third provision states that a termination for "any reason whatsoever" won't release the "breaching party" from its contractual obligations.
But because Luitpold only presented the court with "a laundry list of circumstantial reasons" not to trust Geistlich's deposition testimony that the company simply thought the contract sanctioned unilateral termination for any reason, Judge Forrest sided with Geistlich.
"The facts and arguments offered by Luitpold do not create a genuine dispute as to [whether unilateral termination is permissible]," the judge said. "Accordingly, the court finds that defendants breached none of the agreements by terminating them unilaterally."
Luitpold also claimed breaches by repudiation of the commercial agreement and two separate licensing agreements the companies signed regarding the Geistlich's bone product, and requested prejudgment attachment of the patents and trademarks contained in the agreements.
The company asked for a declaration that Geistlich's termination notice couldn't be enforced and that it can't refuse to supply products to Luitpold for distribution — and if it does refuse, that it is contractually obligated to give Luitpold manufacturing information so that Luitpold can contract with a different supplier to make them.
Counsel for Luitpold declined to comment Thursday, and representatives for Geistlich weren't immediately available to comment.
Luitpold is represented by Hunter T. Carter and Jennifer L. Bougher of Arent Fox LLP and by Jeffrey H. Daichman and Dana M. Susman of Kane Kessler PC.
Geistlich is represented by David Y. Trevor, Christopher G. Karagheuzoff and Joseph W. Hammell of Dorsey & Whitney LLP.
The case is Luitpold Pharmaceuticals Inc. v. Ed. Geistlich Soehne AG Fur Chemische Industrie et al., case number 1:11-cv-00681, in the U.S. District Court for the Southern District of New York.
--Editing by Katherine Rautenberg.
All Content © 2003-2013, Portfolio Media, Inc.
By Helen Christophi
Law360, Los Angeles (January 17, 2013, 6:06 PM ET) -- A New York federal judge on Wednesday ruled in favor of Ed. Geistlich Soehne AG in a dispute with Luitpold Pharmaceuticals Inc. over its $120 million licensing and distribution agreements for dental products, finding the Swiss chemical and pharmaceutical conglomerate had the right to terminate the contract for "any reason whatsoever."
Luitpold in 2011 sued Geistlich for breach of contract and related claims, accusing the company of wasting the money Luitpold spent developing a market for Geistlich's regenerative dental products in the U.S., Mexico, the Caribbean, Central America and Japan when it ended their commercial agreement two years ago. But Geistlich countered that the contract's ambiguous language rendered Luitpold's claims meritless.
U.S. District Judge Katherine B. Forrest held that although the contract language was indeed ambiguous, the evidence the two parties presented proved Geistlich didn't violate the contract when it terminated it.
"Presented with defendants' evidence and Luitpold's lack thereof, a reasonable fact-finder could only find that unilateral termination is permissible," Judge Forrest said in her opinion. "The facts and arguments offered by Luitpold do not create a genuine dispute as to that conclusion."
The New York-based drug and medical device company has made over $100 million in gross profits since 1994 distributing Geistlich's dental bone implant substitutes, the ruling said.
Judge Forrest pointed to three conflicting provisions in the contract that created the ambiguity. Two of the provisions allow either party to terminate the agreement, but a third provision states that a termination for "any reason whatsoever" won't release the "breaching party" from its contractual obligations.
But because Luitpold only presented the court with "a laundry list of circumstantial reasons" not to trust Geistlich's deposition testimony that the company simply thought the contract sanctioned unilateral termination for any reason, Judge Forrest sided with Geistlich.
"The facts and arguments offered by Luitpold do not create a genuine dispute as to [whether unilateral termination is permissible]," the judge said. "Accordingly, the court finds that defendants breached none of the agreements by terminating them unilaterally."
Luitpold also claimed breaches by repudiation of the commercial agreement and two separate licensing agreements the companies signed regarding the Geistlich's bone product, and requested prejudgment attachment of the patents and trademarks contained in the agreements.
The company asked for a declaration that Geistlich's termination notice couldn't be enforced and that it can't refuse to supply products to Luitpold for distribution — and if it does refuse, that it is contractually obligated to give Luitpold manufacturing information so that Luitpold can contract with a different supplier to make them.
Counsel for Luitpold declined to comment Thursday, and representatives for Geistlich weren't immediately available to comment.
Luitpold is represented by Hunter T. Carter and Jennifer L. Bougher of Arent Fox LLP and by Jeffrey H. Daichman and Dana M. Susman of Kane Kessler PC.
Geistlich is represented by David Y. Trevor, Christopher G. Karagheuzoff and Joseph W. Hammell of Dorsey & Whitney LLP.
The case is Luitpold Pharmaceuticals Inc. v. Ed. Geistlich Soehne AG Fur Chemische Industrie et al., case number 1:11-cv-00681, in the U.S. District Court for the Southern District of New York.
--Editing by Katherine Rautenberg.
All Content © 2003-2013, Portfolio Media, Inc.