Biosynexus, Inc. v Glaxo Group Ltd.

[*1] Biosynexus, Inc. v Glaxo Group Ltd. 2006 NY Slip Op 50359(U) [11 Misc 3d 1062(A)] Decided on March 13, 2006 Supreme Court, New York County Fried, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 13, 2006
Supreme Court, New York County

Biosynexus, Inc., Plaintiff,

against

Glaxo Group Limited and MedImmune, Inc., Defendants.



604485/2005



For Plaintiff:
Simpson Thacher & Bartlett LLP (Barry R. Ostrager, Esq., Robert A. Bourque, Esq., and Noah M. Liebowitz, Esq.)
425 Lexington Avenue
New York, New York 10017


For Defendant Glaxo Group Ltd:
Skadden, Arps, Slate, Meaghor & Flom LLP (Kenneth Plevan, Esq.)
Four Times Square
New York, New York 10036-6522


For Defendant MedImmune, Inc:
Dewey Ballantine LLP (Harvey Kurzweil, Esq. and Henry J. Ricardo, Esq.)
1301 Avenue of the Americas
New York, New York 10019-6092



Bernard J. Fried, J.

Plaintiff, Biosynexus, Inc. ("Biosynexus"), brings this motion seeking, among other things, to preliminarily enjoin defendant Glaxo Group Limited ("GSK") from continuing to transfer confidential information to MedImmune, Inc. ("MedImmune") and to also enjoin MedImmune from exploiting any confidential information it may have already received.

Biosynexus formed a joint venture with GSK to develop and exploit technology, invented [*2] by Biosynexus, that appears to effectively prevent staphylococcal infections in humans.[FN1] These parties recorded their agreement in a Commercialization and Development Agreement ("CDA"), which specifies their respective rights and obligations under the joint venture. As co-venturers, Biosynexus and GSK each contributed certain resources to the joint venture: Biosynexus contributed its patents and confidential information comprising the technology. GSK contributed its financial resources and development and commercialization capabilities.

The cornerstone of the CDA consists of a broad license to GSK of Biosynexus's technology. The license grants GSK the right to "make, have made, use, sell offer for sale, and import" the technology and also an unrestricted right to sublicense the technology.[FN2] GSK's right to sublicense even extends to Biosynexus's confidential information, so long as any sublicensee agrees to the confidentiality requirements provided in the CDA.[FN3] The CDA, in an anti-assignment clause, specifically prohibits GSK from assigning its rights without Biosynexus's prior approval.[FN4][*3]

In exchange for the rights granted to it under the CDA, GSK agreed to take on several obligations. It is obligated to pay certain up-front and milestone payments, to develop and commercialize the technology for use in vaccine and monoclonal anti-body (MAB) products, and to pay royalties to Biosynexus on the sale of those products. Biosynexus granted GSK broad authority to fulfill its development obligations in accordance with GSK's "business, legal, medical, and scientific judgment."[FN5] Despite this authority, oversight of the development program is left to a Steering Committee consisting of representatives of Biosynexus and GSK.[FN6]

The profits from the joint venture will be, generally, the profits from the sale of commercialized products based on the technology. Biosynexus's share of the profits consists primarily of the royalties paid by GSK on the sale of the commercialized products. Thus, the royalty provisions of the CDA determine how profits are to be shared among the co-venturers. The CDA was executed in April of 2004.

Pursuant to its duties under the CDA, GSK began work to develop a MAB product called A110. However, it had trouble producing usable quantities of A110 all samples produced by GSK were contaminated or otherwise unuseable. Eventually, according to Biosynexus, GSK terminated one of its employees who bore responsibility for the manufacturing of MAB samples. (Mond[*4] Affidavit of Jan. 17, 2006, at ¶ 3). Biosynexus claims that it and GSK agreed that the manufacturing of A110 should be sublicensed [FN7] "[without] altering [GSK's] many other duties and obligations under the CDA." (Scher Aff. of Dec. 22, 2006, at ¶ 4).

On August 26, 2006, GSK entered into an agreement with MedImmune, where GSK purported to sublicense to MedImmune the same rights to the MAB technology granted to GSK under the CDA, including the right to make, use, and sell the technology for use in MAB products ("GSK/Med agreement").[FN8] In this agreement, GSK also delegated to MedImmune substantially all of its obligations under the CDA, including the obligation to develop and commercialize MAB products such as A110.[FN9] The agreement holds "MedImmune[] . . . solely responsible for . . . the development and commercialization of MABs Products." [FN10] MedImmune must fulfill all of GSK's [*5]obligations to pay royalties and report to Biosynexus.[FN11] In § 3.6(b) GSK agrees to "not take any actions with respect to the development and commercialization of MABs Products. . . ."[FN12] GSK even granted MedImmune the right to cure any breach of the CDA.[FN13] In addition, MedImmune owes a duty to pay GSK additional royalties on the sale of such products.[FN14]

Biosynexus claims that MedImmune is a competitor and moves for a preliminary injunction preventing GSK from (i) transferring confidential information to MedImmune, (ii) from failing to [*6]exploit the intellectual property, and (iii) from further implementing the GSK/Med agreement. Plaintiff also seeks to enjoin MedImmune from continuing to tortiously interfere with the CDA and from exploiting any confidential information already passed to MedImmune through the GSK/Med agreement. In its underlying complaint, Biosynexus seeks a permanent injunction for the relief mentioned above. As a basis for its claims, Biosynexus argues that GSK breached its fiduciary duty by assigning its interest in the joint venture to MedImmune without consent, by breaching its contractual duties with regard to the confidential information, and by causing Biosynexus to bid against MedImmune for GSK's interest in the MAB products. GSK cross-moves to compel Biosynexus to submit to arbitration and to stay all proceedings pending the completion of the ADR process as provided in the CDA. As discussed below, the dispositive issue on the application for a preliminary injunction is whether the GSK/Med agreement constitutes a license or an assignment.

To obtain "a preliminary injunction, the moving party must demonstrate: (1) a likelihood of success on the merits; (2) irreparable injury if provisional relief is not granted; and (3) that the equities are in [its] favor" (Preston Corp v. Fabrication Enter., 68 NY2d 397, 406 [1986]). Furthermore, there can be no preliminary injunction where there is an adequate remedy at law. (See Wall Street Parking Corp. v. New York Stock Exchange, Inc., 10 AD3d 223, 227 [1st Dep't 2004]).

As joint-venturers, Biosynexus and GSK owe each other a fiduciary duty. (E.g., Meinhard v. Salmon, 164 N.E. 545, 546 [NY 1928]). This fiduciary duty bars any member of the venture from assigning to a third party its interest in the venture without the consent of the other co-venturers. (Schlesinger v. Regenstrseif, 26 Misc 2d 604, 608 [NY Sup. 1954]). It is also a breach of fiduciary duty for any co-venturer to earn a secret profit or engage in self-dealing during the existence of the joint venture. (Birnbaum v. Birnbaum, 73 NY2d 461, 466 [1989]; R.C. Gluck & Co. v. Tankel, 24 Misc 2d 841, 848 [NY Sup. 1960] affd 12 A.D.2d 339 [1st Dep't 1961]).

Biosynexus argues that it is likely to succeed on its underlying claims because the GSK/Med agreement qualifies as an assignment, which is explicitly prohibited under the CDA and would be a breach of GSK's fiduciary duty and the anti-assignment clause of the CDA. They argue that such an assignment would cause irreparable injury because GSK will transfer to MedImmune some portion of the confidential information. However, the CDA, in § 8.4, explicitly allows GSK to transfer confidential information to any sublicensees of GSK. Thus, if the GSK/Med agreement qualifies as a sublicense, rather than an assignment, GSK may permissibly transfer confidential information to MedImmune and there is no likelihood of success on Biosynexus's claim for breach of fiduciary duty based on an assignment of the MAB technology and development program.

The question to be resolved, then, is whether the GSK/Med agreement is an assignment or a sublicense. Biosynexus contends that it is improper to assign rights to the technology for the purpose of completing all of the remaining development and commercialization of MAB products. GSK and MedImmune argues that the transfer of the development obligations and commercialization rights was a sublicense, permissible under the CDA.

An assignment is the complete transfer to another party of an interest or an undivided part of that interest. (See Griffey v. NY Cent. Ins. Co., 100 NY 417, 422 [1885]; Sardanis v. Sumitomo Corp., 282 AD2d 322, 323 [1st Dep't 2001]; Coastal Commercial Corp. v. Samuel Kosoff & Sons, Inc., 10 AD2d 372, 376 [4th Dep't 1960])(See also NY Jur. 2d Assignments § 1 [2005]; Restatement 2d of Contracts § 317 [1] [2005]). The transfer of the interest must be [*7]complete to qualify as an assignment, meaning the assignor must be divested of control over the rights assigned. (See Arnold Productions, Inc. v. Favorite Films Corp., 176 F. Supp. 862, 866 [S.D.NY 1959]; Griffey, 100 NY at 422; see also NY Jur. 2d Assignments § 33; Corbin on Contracts § 861 [2005]).

While Biosynexus contends that the GSK/MedImmune agreement qualifies as an assignment under the principles stated above, it also contends that the question presented here should be resolved in the context of generally accepted patent principles as stated in the seminal Supreme Court decision of Waterman v. Mackenzie, (138 U.S. 252 [1891]). Waterman held that, for the purpose of determining standing for patent infringement, the transfer of any of three interests in a patent qualifies as an assignment: (1) the transfer of "the whole patent;" (2) the "transfer of an undivided part" of the patent; (3) or the transfer of an exclusive right to use the patent in "a specified part of the United States." (Id. at 256). If the transfer is an assignment under Waterman, the assignee has standing to sue for patent infringement. On the other hand, if the transfer is a license, the licensee lacks standing to sue for patent infringement.

GSK and MedImmune contend that the Waterman standard is not relevant to the issue of assignment, because no party in this case asserts any rights under federal patent law. Essentially, they argue that the question presented here is whether there was an assignment of a right arising from a New York contract and that only New York law on assignment should govern this dispute.

However, it is clear that both agreements at issue, the CDA and the GSK/Med agreement, involve the grant from one party to another of rights to various patents. The patents and confidential information constitute the substance of the agreements. Moreover, nothing has been submitted to indicate that the parties intended the use of the term assignment in the anti-assignment clause of the CDA to differ from the commonly understood meaning of assignment in the patent milieu. Indeed, it would seem that if such was intended, this agreement dealing with the grant of patent rights would have so provided. Thus, to me, the issue of assignment versus license should be resolved by generally accepted patent principles.

When determining whether an agreement qualifies as an assignment or license, the legal effect of the agreement must govern. (Vaupel Textilmaxchinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870, 875 [Fed. Cir. 1992]). It makes no difference whether the parties call the agreement a license in the granting clause of the agreement (id.), the document evidencing the agreement must be examined in its entirety to determine its legal effect. (See 2-15 Milgrim on Licensing § 15.01 [2005]). If the agreement transfers "all substantial rights" to a patent, then it qualifies as an assignment. (Vaupel, 944 F.2d at 875).

Examination of the GSK/Med agreement shows that GSK intended to effect an assignment to MedImmune of substantially all its rights to the patented MAB technology and development program. GSK granted to MedImmune the full right to use the patents, including the rights to make, use, and sell the technology for the development and sale of MAB products. (GSK/Med Agmt. § 2.1). GSK's grant of patent rights was exclusive to MedImmune and encompassed the entire United States. Such a grant would appear to qualify as an assignment under the third prong of the Waterman standard because it is an "exclusive right under the patent within and throughout a specified part of the United States." (Waterman, 138 U.S. at 255; see Vaupel, 944 F.2d at 873).

Furthermore, the terms of the agreement tend to show that GSK intended to divest itself of substantially all control over the technology and its development. As stated above, the agreement [*8]delegated GSK's development duties by holding "MedImmune[] . . . solely responsible for . . . the development and commercialization of MABs Products." (GSK/Med Agmt. § 3.3 [a]). GSK agreed to "not take any actions with respect to the development and commercialization of MABs Products. . . ." (GSK/Med Agmt. § 3.6 [b]). MedImmune must fulfill all of GSK's royalty and reporting obligations. (GSK/Med Agmt. § 3.3 [c]). And, MedImmune received the right to cure breaches of the CDA. (GSK/Med Agmt. § 5.5 [c]). Theses provisions demonstrate that GSK, for all practical purposes, ceded to MedImmune control of the MAB patent rights and development of MAB products.

But, the transfer from GSK to MedImmune goes even further. In some circumstances, GSK must seek authorization or instruction from MedImmune before engaging in certain development activity. Section 3.5(a) requires GSK to take actions, when participating in the Steering Committee, that "give effect to MedImmune's intentions and strategies. . . ."[FN15] GSK agreed, in § 3.6(f), to not take any action under the CDA that affects MAB products without authorization or instruction from MedImmune.[FN16]

[*9]Moreover, GSK granted MedImmune the right to sue for infringement of the patents.[FN17] (GSK/Med Agmt. § 11.5). Because such a grant involves one of the most important rights under a patent, the transfer to a licensee of the right to sue for infringement may be viewed as a "fundamental characteristic of an assignment rather than a license." (Sybron Transition Corp. v. Nixon, Hargrave, Devans & Doyle, 770 F. Supp. 803, 808 [W.D.NY 1991]; see Camco Intern. Inc. v. Perry R. Bass, Inc., 926 S.W.2d 632, 637 [Tex. App. 1996]; see generally Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 43 [1923]).

The portions of the GSK/Med agreement discussed above show that GSK intended to transfer to MedImmune as much of the MAB program as possible. If GSK believed it could have given MedImmune more, it is evident that GSK would have done so. When considering the substance of this transaction, it becomes "obvious what is going on." (Cook Inc. v. Boston Scientific Corp., 333 F.3d 737, 743 [7th Cir. 2003]). GSK intended to transfer to MedImmune its entire interest in the MAB patents and development program. The GSK/Med agreement, in the words of Judge Posner, "differs from an assignment only in formal . . . respects." (Id.).

GSK argues that it retained a substantial portion of the development program, or at least sufficient control over the development program, so that the agreement qualifies as a sublicense. GSK bases its argument, in part, on the restriction of MedImmune's right to sublicense the technology. The GSK/Med agreement provides that sublicensees of MedImmune require permission from GSK before the technology may be further sublicensed. However, these sublicensing restrictions are not substantial rights that would prevent this agreement from qualifying as an assignment. (See Vaupel, 944 F.2d at 875; E. I. du Pont de Nemours, 432 F.2d 1052, 1056 [3d Cir. 1970]; Bell Intercontinental v. United States, 381 F.2d 1004, 1017 [Ct. Cl. 1967]; Camco, 926 S.W.2d at 637). Such a right does not qualify as a substantial proprietary interest because it does "not substantially interfere with the full use . . . of the exclusive rights under the patent." (Vaupel, 944 F.2d at 875). There is no substantial interference with MedImmune's full use of the exclusive rights under the patent because the sublicensing restrictions apply only to sublicensees of MedImmune. Nothing submitted by the parties shows that the restriction placed on sublicensees of [*10]MedImmune would prevent MedImmune from fully exploiting its use of the MAB patent rights.

GSK also claims that its right to an accounting by MedImmune qualifies as a substantial portion of the MAB patent rights and development program. Even though MedImmune must account for all sales of MAB products, the provisions that govern the accounting requirement, §§ 6.1 and 6.2, serve only to facilitate the calculation of royalties owed to GSK and Biosynexus.[FN18] Nothing in those provisions reflects any right to control development of the products or the patented technology. Such a limited accounting provision "constitutes a policing mechanism, not a substantial proprietary right." (Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1252 [Fed. Cir. 2000]).

GSK argues that its reversionary interest in the MAB patent rights and development program should cause this agreement to be viewed as a sublicense. But, such termination rights are "entirely consistent with an assignment." (Vaupel, 944 F.2d at 875; see Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1378-79 [Fed. Cir. 2000]; Watson v. United States, 222 F.2d 689, 691 [10th Cir. 1955]; see generally Aspex Eyewear, Inc. v. Miracle Optics, Inc., 434 F.3d 1336, 1343 [Fed. Cir. 2006]). The existence of a reversionary interest merely makes the assignment "liable to be defeated by non-performance of a condition subsequent." (Vaupel, 944 F.2d at 875 [citing Waterman v. Mackenzie, 138 U.S. at 256] [quotations omitted]).

Finally, GSK argues that its contractual liability to Biosynexus evidences enough of a substantial interest in the MAB patent rights and development program to require that I find the agreement to be a license. GSK's contractual liability to Biosynexus is a matter of mere form rather than substance. Under the terms of the GSK/Med agreement, GSK, as discussed above, has practically no contractual control over the MAB technology or development program. Furthermore, [*11]GSK is not only fully indemnified by MedImmune for losses incurred "with respect to the Biosynexus MABs Program," but MedImmune even bears the responsibility to defend and hold harmless GSK against certain contract claims brought by Biosynexus under the CDA.[FN19] Thus, even if GSK technically may be held contractually liable to Biosynexus, the duty to defend against this liability, and to pay for a judgment, will be born by MedImmune rather than GSK.

The foregoing analysis compels the conclusion that Biosynexus is likely to succeed in proving that GSK breached its fiduciary duty by assigning its interest in the MAB technology and development program and that such an assignment was in violation of the anti-assignment provision of the CDA. Based on the papers before me, GSK assigned to MedImmune substantially all of its interest in the MAB patent rights and development program, and that assignment would constitute a breach of the fiduciary duty owed by GSK to its joint-venturer, Biosynexus. The assignment also constitutes a breach of the anti-assignment clause of the CDA.

Because Biosynexus's claims are based on the transfer of confidential information in contravention of the CDA, there exists a substantial risk of irreparable injury if a preliminary injunction does not issue in this case. (See Spiselman v. Rabinowitz, 270 A.D. 548, 550 [1st Dep't 1946] appeal denied 270 A.D. 921 [1st Dep't 1946]). Should the information be improperly disclosed to MedImmune, it would be impossible to once again make it confidential.

In addition, the balance of the equities weighs in favor of Biosynexus. For a plaintiff to prevail in a balance of the equities, it must be shown that "the irreparable injury to be sustained by the plaintiff is more burdensome to it than the harm caused to defendant through imposition of the injunction." (Nassau Roofing & Sheet Metal Co., Inc. v. Facilities Development Corp., 70 AD2d 1021, 1022 [3d Dep't 1979]). Here, the risk of irreparable injury, the risk that Biosynexus's[*12] confidential information will fall into the hands of a competitor, outweighs the harm caused to the defendants. The preliminary injunction sought by Biosynexus requires GSK to merely continue to fulfill obligations it was already responsible for under the CDA. The harm to MedImmune will be purely financial, in the form of the payments MedImmune has already made to GSK. This harm does not outweigh the harm to Biosynexus because MedImmune likely has a cause of action against GSK.[FN20]

Accordingly, Biosynexus's motion for a preliminary injunction is granted, conditioned upon the posting of an undertaking. Upon Biosynexus's recommendation, the undertaking will be set at $10,000,000.00 dollars.[FN21] Should GSK and MedImmune wish to be heard on the amount of the undertaking, they may submit to the court within three days, letters on this matter of no more than three pages.

GSK cross-moves for an order directing Biosynexus to submit to alternative dispute resolution as provided in the CDA ("ADR provision") and to stay all proceedings before this court pending the resolution by arbitration of Biosynexus's claims. Biosynexus argues that its complaint should not be subject to ADR because all of its causes of action fall under an exception for complaints seeking preliminary or permanent injunctions to preserve the status quo or protect the confidential information.[FN22]

The ADR provision of the CDA sets forth a detailed process by which the parties agreed to "resolve all disputes under the AGREEMENT." (GSK/Med Agmt. § 17.1). This provision requires the parties to first try to negotiate a settlement, then to participate in mediation, and finally to submit the dispute to binding arbitration. However, § 17.7 of the CDA provides that any party "may file a complaint to seek a temporary restraining order, preliminary or permanent injunction or other equitable relief, if in his sole discretion such action is necessary to avoid irreparable damage, to preserve the status quo, or to protect the CONFIDENTIAL INFORMATION." Furthermore, it adds that "[d]espite such action, the PARTIES will continue to participate in good faith in the" ADR process.

Where the contract in question affects commerce, the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., governs any alternative dispute resolution provision in the agreement. The FAA manifests "a policy guaranteeing the enforcement of private contractual arrangements. . ." and "creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate." (Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625-26 [*13][1985] [citations omitted]). Federal law under the FAA requires that the court determine first whether the parties entered into an agreement to arbitrate. (See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Shaddock, 822 F. Supp. 125, 131-32). Next, the court must determine whether the parties agreed to resolve the issues presented by the methods provided in the dispute resolution provision. (See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 [2002]; Diamond Waterproofing Systems, Inc. v. 55 Liberty Owners Corp., 4 NY3d 247, 253 [2005] [applying the FAA]). Any dispute as to the arbitrability of an issue must "be resolved in favor of arbitration." (See Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 475 [1989]).

The parties do not dispute the validity of the ADR provision, the applicability of the FAA to this dispute,[FN23] or that I should decide this issue.[FN24] Rather, Biosynexus and GSK disagree over the interpretation of § 17.7, the section that provides for the filing of a complaint as described above. GSK argues that § 17.7 should be interpreted to allow Biosynexus to seek preliminary equitable relief, but that the arbitrator must be the ultimate finder of fact. Biosynexus contends that the proper interpretation should be that claims for permanent injunctions and other equitable relief are expressly excepted from ADR and may be resolved in the courts, and that all other claims must be resolved by the procedures provided in the ADR provision.

GSK argues that its interpretation should prevail because the exception must be read in conjunction with the requirement that the parties "participate in good faith in the" ADR procedures. They argue that this requirement leads to an interpretation that would allow a court to issue a preliminary injunction or temporary restraining order, for the dispute to then be heard by an arbitrator, and, if the arbitrator believes a permanent injunction is justified, the parties should then petition the court for a permanent injunction.[FN25]

[*14]Considering the language of § 17.7 of the CDA, it seems clear that the parties agreed to except certain complaints from the ADR provisions. Section 17.7 allows complaints to be filed in court if they seek "temporary restraining orders, preliminary or permanent injunctions, or other equitable relief . . . to preserve the status quo, or to protect the CONFIDENTIAL INFORMATION." Biosynexus, seeks a preliminary and permanent injunction to preserve the status quo and protect the confidential information, and, contends its complaint should not be subject to the ADR provision.

In light of the unambiguous meaning of § 17.7 of the CDA, it is evident that the exception "carves out" of the ADR process Biosynexus's claims for a preliminary and permanent injunction to protect the confidential information. Because Biosynexus has narrowed its claims in this action, it appears that there is no basis to order any portion of this action to ADR. Therefore, GSK's motion to compel arbitration is denied, with leave to renew.

Biosynexus has asked that the records in this case be unsealed. The Uniform Rules For The New York State Trial Courts state, in part:

Except where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as of the parties.

(NY Ct. Rules § 216.1 [a]). I have reviewed the documents in this case and am satisfied that there is no good cause for the records in this case to remain sealed. GSK and MedImmune offer only conclusory statements to support their position that the records should remain sealed. Considering the public interest in disclosing court records, as expressed in § 216.1 above, Biosynexus's request to unseal the records in this case is granted.

The parties are ordered to submit to the court within fourteen (14) days a completed pre-trial scheduling order. Such scheduling order should set forth an appropriate schedule for disclosure, specify that note of issue shall be filed within twelve (12) months of the date of the request for judicial intervention in this action, and set a date in May for a compliance conference, following consultation with the Clerk of Part 60.

According, it is

ORDERED that the motion for preliminary injunction is granted, upon the posting of an undertaking in the amount of $10,000,000.00 dollars, provided that Glaxo Group and MedImmune shall have three days to submit letters regarding the amount of the undertaking; and it is further

ORDERED that defendant Glaxo Group Limited is enjoined and restrained, during the pendency of this action, from doing or suffering to be done, any of the following acts:

(i) improperly disclosing proprietary and confidential information in violation of Article 8 of the Collaborative Development and License Agreement between Biosynexus and Glaxo Group Limited dated April 5, 2004;

(ii) failing to exploit the intellectual property, including the confidential information, licensed by Biosynexus to Glaxo pursuant to the Collaborative Development and License Agreement of April 5, 2004; and[*15]

(iii) further implementing the License Agreement, dated August 26, 2005, between MedImmune and Glaxo Group;

and it is further

ORDERED that defendant MedImmune, Inc. is enjoined and restrained, during the pendency of this action, from doing or suffering to be done, any of the following acts:

(i) tortiously interfering with Biosynexus's rights regarding the intellectual property, including the confidential information, licensed to Glaxo Group under the Collaborative Development and License Agreement of April 5, 2004;

(ii) utilizing, exploiting, or, in any way profiting from the confidential information and intellectual property rights assigned by Glaxo to MedImmune pursuant to the License Agreement dated August 26, 2005;

and it is further

ORDERED that the cross-motion to compel arbitration and for a stay of proceedings is denied, with leave to renew; and it is further

ORDERED that the records in this action are to be unsealed; and it is further

ORDERED that the parties submit to the court, within fourteen (14) days of the filing of this decision, a pre-trial scheduling order, completed in accordance with this decision.

Dated: ____________

ENTER:

_________________________

J.S.C. Footnotes

Footnote 1:Prior to the formation of the joint venture with GSK, Biosynexus had considered forming a similar relationship with defendant MedImmune. Biosynexus alleges that it chose GSK as a joint venture partner specifically because GSK had no monoclonal antibody technology similar to the technology in dispute here.

Footnote 2:Section 4.1 of the CDA provides: LICENSOR hereby grants to LICENSEE an exclusive license, with the right to grant sublicenses, under PATENTS and KNOW-HOW to make, have made, use, sell offer for sale, and import, MABs, ANTIGEN and/or any PRODUCT in the TERRITORY. The license granted to LICENSEE shall include all activities concerning the subject matter of PATENTS and KNOW-HOW which would, but for the license herein granted, infringe LICENSOR's rights in PATENTS and KNOW-HOW. For the avoidance of doubt, each sale of each PRODUCT by LICENSEE, its AFFILIATES or sublicensees (except as expressly provided otherwise in the definition of NET SALES) shall be subject to the payment of a royalty described in Clause 5.5 below.

Footnote 3:Section 8.4 of the CDA provides that: Nothing herein shall be construed as preventing LICENSEE from disclosing any information received from LICENSOR to an AFFILIATE, sublicensee or distributor of LICENSEE, provided, in the case of a sublicensee or distributor, such sublicensee or distributor has undertaken an obligation of confidentiality no less burdensome than that contained herein with respect to the CONFIDENTIAL INFORMATION.

Footnote 4:Section 22.1 of the CDA provides: This AGREEMENT and the licenses herein granted shall be binding upon and inure to the benefit of the successors in interest of the respective PARTIES. Neither this AGREEMENT nor any interest hereunder shall be assignable by either PARTY without the written consent of the other; provided, however, that LICENSEE may assign this AGREEMENT or any part of its rights and obligations hereunder, or any PATENT owned by it, to any AFFILIATE of LICENSEE or to any corporation with which LICENSEE may merge or consolidate, or to which it may transfer all or substantially all of its assets to which this AGREEMENT relates, without obtaining the consent of the LICENSOR.

Footnote 5:Section 2.4 of the CDA provides, in part, that "LICENSEE and LICENSOR will exercise their reasonable efforts and diligence in carrying out their respective obligations under the DEVELOPMENT PROGRAMS in accordance with their respective business, legal, medical and scientific judgment . . . ." Section 7.1 of the CDA provides, in part, that "LICENSEE will exercise its reasonable efforts and diligence in commercializing PRODUCTS in accordance with its business, legal, medical and scientific judgment. . . ."

Footnote 6:Section 7.4 of the CDA provides: Promptly after the EFFECTIVE DATE, the PARTIES shall form a STEERING COMMITTEE whose mandate shall be to oversee all matters relating to the DEVELOPMENT PROGRAMS . . . in order to direct the technical and scientific development of PRODUCTS necessary to receive regulatory approval for the commercialization of PRODUCTS in the TERRITORY. * * * Membership shall include representation from each PARTY'S Research and Department and Business departments and/or representation from such other departments as the PARTIES may deem appropriate.

Footnote 7:Certainly such a sublicense would have been permissible under GSK's right to grant sublicenses.

Footnote 8:Section 2.1 of the GSK/Med agreement states Subject to the terms and conditions set forth in this Agreement, during the Term, GSK hereby grants to MedImmune an exclusive (even as to GSK), royalty-bearing sublicense, with the right to grant sublicenses only pursuant to Section 2.6, under the Biosynexus Licensed Patents and Biosynexus Licensed Know-How, to make, have made, sell, offer for sale, and import, MABs and/or any MAB Product in the Field in the Territory. The foregoing sublicense granted to MedImmune shall include all activities concerning the subject matter of the Biosynexus Licensed Patents and Biosynexus Licensed Know-How and the rights relating to the foregoing granted to GSK, as it relates to the making, having made, use, selling, offering for sale, and importing MABs and/or any MABs Products in the Field in the Territory.

Footnote 9:GSK did not license the technology to MedImmune for development of vaccine products.

Footnote 10:Section 3.3 [a] of the GSK/Med agreement states: MedImmune shall, as between GSK and MedImmune, be solely responsible for and undertake the development and commercialization of MABs Product in the Field in the Territory and shall do so in compliance with the terms, conditions, limitations, restrictions, obligations and rights set forth in the Biosynexus/GSK Agreement pertaining to LICENSEE under and/or in connection with the MABs PRE-CLINICAL DEVELOPMENT PROGRAM, MABs CLINICAL DEVELOPMENT PROGRAM, MABs PRODUCTS and MABs (as such capitalized terms are defined and used in the Biosynexus/GSK Agreement) (collectively, the "Biosynexus MABs Program"), including without limitation the terms, conditions, limitations, restrictions, obligations and rights set forth in Clause 2.2 of the Biosynexus/GSK Agreement.

Footnote 11:Section 3.3 [c] of the GSK/Med Agreement provides: MedImmune shall timely furnish all information and data directly to Biosynexus to meet the reporting requirements under the Biosynexus/GSK Agreement with respect to Biosynexus MABs Program. Without limiting the generality of the foregoing or being limited thereby, at the request of Biosynexus or GSK, but at least annually, and for the purpose of Biosynexus and GSK being able to ascertain whether equity investments, milestone payments, or royalties are payable under the Biosynexus/GSK Agreement, MedImmune shall provide a written report to Biosynexus and GSK specifying progress of MedImmune's efforts to develop and commercialize MABs Product.

Footnote 12:Section 3.6 [b] of the GSK/Med Agreement provides: During the Term of this Agreement, GSK agrees that GSK shall not take any actions with respect to the development and commercialization of MABs Products pursuant to the Biosynexus/GSK Agreement and/or with respect to the Biosynexus MABs Program unless authorized by MedImmune in advance. Without limiting the foregoing, during the Term of this Agreement any and all actions of GSK as a member of the Steering Committee insofar as such actions have any effect on the Biosynexus MABs Program and/or development or commercialization of MABs Products shall be in accordance with MedImmune's instructions as authorized in advance by MedImmune.

Footnote 13:Section 5.5 [c] of the GSK/Med Agreement provides: [GSK] will promptly provide MedImmune with any notice of material breach of the Biosynexus/GSK Agreement and/or intent to terminate the Biosynexus/GSK Agreement and/or the rights and licenses with respect to MABs and/or MABs Products thereunder and it shall use commercially reasonable efforts to cure any such breach and/or to prevent termination of such Biosynexus/GSK Agreement and/or such rights and licenses to MABs and/or MABs Products thereunder, except to the extent caused by MedImmune, its Affiliates or any Sublicensee and if GSK fails to do so, MedImmune shall have the right, but not the obligation, to cure such breach and/or prevent such termination at the cost and expense of GSK and/or at the cost and expense of MedImmune with such cost and expense being reimbursed to MedImmune by GSK.

Footnote 14:Section 4.4 [a] of the GSK/Med Agreement provides: "As further consideration to GSK for the licenses and other rights granted to MedImmune under this Agreement, during the Royalty Term in a country MedImmune shall pay to GSK a royalty . . . on all Net Sales in such country."

Footnote 15:Section 3.5 [a] of the GSK/Med agreement provides: Unless and until such time as the Biosynexus/GSK Agreement is amended to bifurcate the Steering Committee into two separate committees, one to govern the development of ANTIGENS and VACCINE PRODUCTS . . . and the other to govern the development of MABs, subject to Section 3.4, GSK agrees to take such actions through operation of the Steering Committee as appropriate to give effect to MedImmune's intentions and strategies for the development and commercialization of the MABs Product in the Field in the Territory as set forth herein and GSK shall permit and shall make reasonable efforts to Cause Biosynexus to permit MedImmune to attend all meetings of the Steering Committee . . . that affect the Biosynexus MABs Program. Without limiting the generality of the foregoing, consistent with Sections 3.4(c)(i) and 3.4(c)(ii), MedImmune may cause GSK to terminate any particular MABs Product or any portion of a Biosynexus MABs Program.

Footnote 16:Section 3.6 [f] of the GSK/Med agreement provides: GSK covenants and agrees to the extent GSK has the right to perform an act and/or take an action under the Biosynexus/GSK Agreement that affects or relates to MABs and/or MABs Product and/or the Biosynexus MABs Program, GSK shall perform such act and/or take such action as instructed by MedImmune unless such act and/or action as instructed by MedImmune will result in termination of the Biosynexus/GSK Agreement and/or GSK's licenses to MABs and MABs Products under the Biosynexus/GSK Agreement. Without limiting the foregoing, any dispute resolution and/or failure to obtain consent by the Steering Committee shall be pursued by GSK as instructed by MedImmune.

Footnote 17:Section 11.5 of the GSK/Med agreement provides: In the event that GSK or MedImmune becomes aware of actual or threatened infringement of a Licensed Patent anywhere in the Territory, that Party shall promptly notify the other Party in writing. MedImmune shall have the first right but not the obligation to bring, at its own expense, an infringement action against any Third Party with respect to a MABs Product(s) and to use GSK's name in connection therewith and to name GSK as a Party thereto and GSK shall use reasonable efforts to cause Biosynexus to do the same if applicable. If MedImmune does not commence a particular infringement action within ninety (90) days of receipt of the notice of infringement, then GSK, after notifying MedImmune in writing, shall be entitle to bring such infringement action at its own expense. The Party conducting such action shall have full control over its conduct, including settlement thereof subject to Section 11.8. In any event, GSK and MedImmune (and GSK shall cause Biosynexus to do the same if applicable) shall assist one another and cooperate in any such litigation at the other's reasonable request without expense to the requesting Party.

Footnote 18:Section 6.1 of the GSK/Med Agreement provides: MedImmune shall keep, and require its Affiliates and Sublicensees to keep, complete and accurate records of all sales of MABs Products under the licenses granted herein. GSK shall have the right, at GSK's expense, through a certified public accountant or like person reasonably acceptable to MedImmune, to examine such records during regular business hours during the life of this Agreement and for six (6) months after its termination; provided, however, that such examination shall not take place more often than once a year and shall not cover such records for more than the preceding three (3) years and provided further that such accountant shall report to GSK only as to the accuracy of the royalty statements and payments. [emphasis in original]. Section 6.2 of the GSK/Med Agreement provides: Within sixty (60) days after the close of each Calender Quarter, MedImmune shall deliver to GSK a true accounting of all MABs Products sold by MedImmune and its Affiliates and Sublicensees during such quarter and shall at the same time pay all royalties due. Such accounting shall show sales on a country-by-country, Selling Party-by-Selling Party, and MABs Product-by-MABs Product basis. Such accounting shall also show the accounting of all royalties and all other payments paid to Biosynexus by or on behalf of MedImmune or its Affiliates or Sublicensees.

Footnote 19:Section 8.1 of the GSK/Med Agreement provides: MedImmune agrees to indemnify, defend and hold harmless GSK . . . from and against all losses, liabilities, damages and expenses (including reasonable attorney's fees and costs) incurred in connection with any claims, demands, actions or other proceedings by any Third Party . . . to the extent arising from: (a) acts or omissions by or on behalf of MedImmune . . . with respect to the Biosynexus MABs Program and/or the licenses and/or rights granted to MedImmune . . . under this Agreement and/or the Biosynexus/GSK Agreement and/or MedImmune's . . . obligations pursuant to this Agreement and/or the Biosynexus/GSK Agreement; or (b) any act performed by GSK or action taken by GSK as instructed by MedImmune pursuant to this Agreement; or (c) any breach or alleged breach (i) by GSK of Clause 2.2.5 or Clause 2.4 of the Biosynexus/GSK Agreement with respect to the Biosynexus MABs Program on or after the Effective Date caused by actions taken by MedImmune . . . and/or (ii) by MedImmune of Section 3.2 of this Agreement if and only if the Third Party incurring such Losses is Biosynexus . . . .

Footnote 20:In the GSK/Med agreement, GSK represented to MedImmune that it had "the full right, power and authority to enter into th[e] Agreement, and to grant the rights and licenses granted to MedImmune. . . ." (GSK/Med Agmt. § 5.1 [a]).

Footnote 21:At argument on the temporary restraining order, counsel for Biosynexus stated, "[W]e're prepared to put up a 10 million dollar bond pending the development of a factual record here." (Tr. of Jan. 30, 2006, at p.13).

Footnote 22:During argument on the preliminary injunction, counsel for Biosynexus stated, "It is certainly our intent to limit our claim . . . against Glaxo to that which is required to preserve the status quo or protect the confidential information." (Tr. of March 3, 2006, at p.30).

Footnote 23:At argument on the preliminary injunction, I asked counsel for GSK the following question: "You've agreed, as I read your papers, that this is governed by the FAA; is that correct?" Counsel for GSK responded, "Yes, judge." (Tr. of March 3, 2006, at p.32). When presented with a similar question, counsel for Biosynexus replied "the FAA and the New York arbitration procedure are co-extensive, equally applicable. . . ." (Tr. of March 3, 2006, at p.24).

Footnote 24:In response to my question, during argument on the preliminary injunction, as to whether this issue should be heard by the arbitrator, counsel for GSK stated, "I don't think it goes to an arbitrator. . . ." (Tr. of March 3, 2006, at p.38). Counsel for Biosynexus replied, "I think . . . there is no issue here that it's for the Court to decide the application of 17.7." (Tr. of March 3, 2006, at p.25).

Footnote 25:Counsel for GSK stated, at oral argument, that § 17.7 should be interpreted as follows: [T]he only way that this can be properly interpreted in light . . . [of] those last two sentences is that [Biosynexus has] the right to [a] TRO and preliminary injunction at the beginning of a case, then the fact-finder is the arbitrator; and at the end, if needed, you're entitled to get a permanent injunction by going to a court.