Lynn v. Becton, Dickinson & Co.

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LAWRENCE A. LYNN, Plaintiff-Appellant, v. BECTON, DICKINSON & CO., Defendant-Appellee.

No. 23-3214

United States Court of Appeals, Sixth Circuit

February 6, 2024

NOT RECOMMENDED FOR PUBLICATION

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO

Before: COLE, GILMAN, and LARSEN, Circuit Judges.

OPINION

RONALD LEE GILMAN, Circuit Judge.

In 1998, Dr. Lawrence Lynn and Becton, Dickinson &Co. (BD) contracted for BD to license several patents owned by Lynn. The parties amended their Patent License Agreement twice thereafter and, as relevant to this appeal, those amendments addressed the duration of the license and the amount of royalties that BD owed Lynn. Based on BD's belief that the License Agreement ended on August 12, 2019, it stopped paying royalties to Lynn after that date. But Lynn contends that royalty payments under the License Agreement extended until at least December 7, 2021, so he sued BD in federal court, alleging breach of contract and breach of the implied duty of good faith and fair dealing.

The district court granted summary judgment in favor of BD concluding that BD's obligation to pay royalties to Lynn ended on August 12, 2019. It also concluded that Lynn had failed to establish a genuine dispute of material fact regarding the amount of royalties that BD was obligated to pay him. As a result, the court granted summary judgment to BD on all of Lynn's claims.

Lynn now appeals. He asserts that the district court erred in (1) interpreting the provision of the License Agreement governing the end date for the payment of royalties, and (2) concluding that the evidence he provided was insufficient to establish a genuine dispute of material fact as to the amount of royalties due him. Because we conclude that none of Lynn's arguments has merit, we AFFIRM the judgment of the district court.

I. BACKGROUND

A. The parties and their agreement

Lynn is a physician who has invented several medical devices, including a class of devices known as Blunt Cannula Penetration Medical Valves (the Valves). He owns several patents relating to the Valves, which are used to facilitate the delivery of medication to patients through an intravenous system. BD is a global technology company that develops, manufactures, and sells a variety of medical supplies and devices.

The License Agreement granted BD the exclusive right to several of Lynn's patents and patent applications, including "any continuations, continuations in part, divisions, extensions, substitutions, reissues or reexaminations thereof, and all patents issuing therefrom; and any subsequently filed patent applications, and any patents issuing therefrom owned by or assigned to Dr. Lynn which claim [the Valves]." In exchange, BD agreed to pay royalties to Lynn for sales of "Royalty Bearing Products," which the License Agreement defined as

any Blunt Cannula Penetration Medical Valve (1) whose manufacture, use, sale, offer for sale, or importation by BD or a Sublicensee, but for this Agreement, in a jurisdiction where a Valid Claim, as defined below, exists, would infringe, induce infringement of, or constitute contributory infringement of such a Valid Claim, and/or (2) which falls within the scope of the disclosures or claims of any patent applications included in the Licensed Patents, and/or (3) which falls within the scope of a pending patent application or patent of any improvement thereto which is made or has been made by BD prior to the end of three years after the First Commercial Sale.

The Royalty Bearing Product at issue here is BD's Q-Syte^TM (the Q-Syte), a needle-free connector that helps reduce the risk of accidental needle-stick injuries to healthcare workers. Under the original License Agreement, BD's obligation to pay royalties would end "[a]t the expiration of the last to expire patent under the Licensed Patents having a Valid Claim covering Royalty Bearing Products." (Although BD disputes whether the Q-Syte is a qualifying Royalty Bearing Product under the parties' Licensing Agreement, we need not address this argument because we affirm the district court's grant of summary judgment in BD's favor on other grounds).

In February 2005, the parties amended the License Agreement to adjust the royalties payable to Lynn. As relevant here, this First Amendment stated as follows:

The royalty amounts set forth in this Exhibit A will be adjusted each Fiscal Year by an amount equal to 50% of the change, if any, during the prior Fiscal Year in the Consumer Price Index - All Urban Consumers promulgated by the U.S. Department of Labor, or any successor index.

In March 2007, Lynn filed a patent application that was published as patent application number 20070225635 (the '635 Application). Two months later, Lynn filed patent application number 11/801,649, which both parties refer to as the '649 Application. The '649 Application was a "continuation-in-part" of the '635 Application and another patent application. For reference, § 201.08 of the Manual of Patent Examining Procedure states that "[a] continuation-in-part is an application filed during the lifetime of an earlier nonprovisional application, repeating some substantial portion or all of the earlier nonprovisional application and adding matter not disclosed in the earlier nonprovisional application."

In February 2008, when both the '635 and the '649 Applications were still pending, the parties amended the License Agreement once again. One of the sections of this Second Amendment provided that, subject to certain exceptions, BD "shall have no further obligation to Dr. Lynn under the Licensed Patents or Technical Information as of August 12, 2019." The Second Amendment also clarified which patents were "Licensed Patents" under the License Agreement, utilizing the following language:

For clarity, and not for the purpose of limitation, Licensed Patents shall include all Blunt Cannula Penetration Medical Valve patent applications or patents, filed by BD or Dr. Lynn and Dr. Lynn's interest in such patent applications or patents that are jointly owned with BD that are filed or granted after of [sic] the effective date of this Second Amendment. The parties agree that Licensed Patents shall not include applications and patents which claim swab pouches, swabs and protectors for luer valves, and/or swab pouch related methods for swabbing and protecting luer valves including, without limitation, patent applications nos. 20080039803, 20080038167, and 20070225660 and provisional application 61062976 or subsequently filed applications or patents including foreign counterparts claiming these inventions.

In June 2009, the United States Patent and Trademark Office (the Patent Office) deemed the '635 Application abandoned after Lynn failed to "timely file a proper reply" to the Patent Office's October 2008 Non-Final Rejection letter. No patent ever issued directly from the '635 Application itself, but in July 2013, U.S. Patent No. 8,480,968 (the '968 Patent) issued directly from the '649 Application, which is a continuation-in-part of the '635 Application.

On August 12, 2019, BD stopped making royalty payments to Lynn. Almost a year and a half later, on February 5, 2021, BD statutorily disclaimed three patents to which it had sole ownership, including U.S. Patent No. 7,947,032 (the '032 Patent).

B. The proceedings below

In October 2021, Lynn sued BD for breach of contract, breach of the implied duty of good faith and fair dealing, and declaratory relief as to the parties' rights under the License Agreement. He alleged that BD owed him Q-Syte-related royalties until December 7, 2021, and that it had therefore breached the License Agreement by (1) failing to pay royalties between August 12, 2019 and December 7, 2021, and (2) failing to adjust the royalty payments for changes in the Consumer Price Index as required by the License Agreement's First Amendment. Lynn also alleged that BD breached the implied duty of good faith and fair dealing by disclaiming the '032 Patent in February 2021. Although Lynn did not contend that he owned the '032 Patent, he asserted that because the Q-Syte fell within the scope of the '032 Patent, BD's disclaimer of that patent in February 2021 was done so that it could stop paying Q-Syte-related royalties eight months before BD's royalty obligation would otherwise expire on December 7, 2021.

BD moved to dismiss Lynn's complaint, which the district court converted into a motion for summary judgment. After permitting the parties to submit supplemental declarations and simultaneous briefing, the district court granted summary judgment in favor of BD on all claims. The court concluded that the phrase "any patent that issues from [the '635 Application]," as used in the License Agreement's Second Amendment, "unambiguously means only those patents that directly issue from an application; it does not cover patents that may issue from continuation-in-part or other related applications." Lynn v. Becton, Dickinson &Co., 661 F.Supp.3d 742, 747 (S.D. Ohio 2023) (emphasis in original). As a result, the court concluded that BD did not breach the License Agreement because (1) its obligation to pay royalties ended on August 12, 2019 pursuant to Section 2 of the Second Amendment, and (2) Lynn offered "no meaningful evidentiary support for his claim" for Consumer Price Index adjustments. Id. at 750. The court further held that it did not need to address the implied-duty claim because that claim related to BD's actions after August 2019, when BD no longer had any obligation to make royalty payments to Lynn. Id. at 748 n.6. This timely appeal followed.

II. ANALYSIS

A. Standard of review

We review de novo the district court's decision to grant summary judgment....