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Sinotau Pharmaceutical Group v. Navidea Biopharmaceuticals, Inc.

United States District Court, D. Massachusetts

September 29, 2016

SINOTAU PHARMACEUTICAL GROUP
v.
NAVIDEA BIOPHARMACEUTICALS, INC.

          MEMORANDUM OF DECISION

          RYA W. ZOBEL SENIOR UNITED STATES DISTRICT JUDGE.

         In 2015, Sinotau Pharmaceutical Group (“Sinotau”) and Navidea Biopharmaceuticals, Inc. (“Navidea”), executed a Binding Term Sheet involving an exclusive license to NAV4694, a pharmaceutical imaging agent. In this lawsuit, Sinotau alleges that Navidea breached its contractual obligations to Sinotau by refusing to abide by the parties' agreement (Counts I and II) and that Navidea tortiously interfered with Sinotau's advantageous prospective business relationships (Count III). Sinotau also brings alternative claims of promissory estoppel, breach of the implied covenant of good faith, and failure to use best efforts (Counts IV, V, and VI). Navidea has moved to dismiss all claims. See Docket # 17.

         I. Factual Background

         These facts are alleged in the plaintiff's amended complaint (Docket # 16). See Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 5 (1st Cir. 2011).

         Navidea holds an exclusive license that covers patent rights to NAV4694, a pharmaceutical imaging agent owned or controlled by AstraZeneca AB (“AZ”). Under an agreement entered into by Navidea's predecessor (the “Navidea-AZ License Agreement”), Navidea owns the transferrable right to manufacture, develop, and commercialize NAV4694. Between the end of 2014 and the beginning of 2015, Navidea approached Sinotau about assuming Navidea's worldwide license of NAV4694. In early 2015, Sinotau and Navidea began negotiating terms of the anticipated NAV4694 worldwide license agreement.

         In March 2015, the parties signed a “Binding Term Sheet for Exclusive License” (“Binding Term Sheet”), under which Navidea agreed to grant Sinotau an exclusive license to NAV4694 subject to the “re-negotiation of the Navidea-AZ License Agreement to include economic terms acceptable to [Sinotau] as specified in the ‘Updated Proposal for Worldwide Licensing of NAV4694' forwarded by [Sinotau] to [Navidea] on March 4, 2015." Docket # 16 ¶ 68 (alterations in original) (quoting the Binding Term Sheet).

         After signing the Binding Term Sheet, Sinotau and Navidea exchanged draft licensing agreements. During this time, Navidea tried to renegotiate the material terms in the Binding Term Sheet. Sinotau claims that it “entertained Navidea's proposed modifications” but that the “parties never reached final agreement as to a proposed modification to the Binding Term Sheet.” Docket # 16 ¶¶ 116, 119. Sinotau sent Navidea an exclusive license agreement on June 23, 2015, that included material terms from the Binding Term Sheet as well as additional terms and conditions Navidea had proposed. Navidea did not sign this license agreement nor any other exclusive license agreement with Sinotau. Sinotau alleges several reasons why Navidea “wanted to back away from the deal it had struck, ” including that it had “entertained at least one proposal from a Sinotau competitor that surpassed the economic terms set forth in the Binding Term Sheet” and that clinical results for a related drug increased NAV4694's perceived value. Docket # 16 ¶¶ 109-111.

         In August 2015, Sinotau filed the present suit, and in October 2015, it amended its complaint. Navidea now moves to dismiss the amended complaint.

         II. Legal Standard

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         For purposes of a motion to dismiss, the court accepts all well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff's favor. See Rodríguez-Reyes v. Molina-Rodríguez, 711 F.3d 49, 52-53 (1st Cir. 2013). In addition to facts and documents included in or incorporated into the complaint, the court “may also consider ‘documents incorporated by reference in [the complaint], matters of public record, and other matters susceptible to judicial notice.'” Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008) (alteration in original) (quoting In re Colonial Mortg. Bankers Corp., 324 F.3d 12, 20 (1st Cir. 2003)).

         III. Analysis

         A. Choice of Law

         The parties disagree whether Massachusetts or Delaware law should apply to Sinotau's contract and tort claims. Federal courts sitting in diversity, as here, apply state substantive law. See Crellin Techs., Inc. v. Equipmentlease Corp., 18 F.3d 1, 4 (1st Cir. 1994) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). “In determining what state law pertains, ...


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