Southern District Court Grants Partial Summary Judgment for Eli Lilly and Company in Dispute With Parkinson’s Disease Drug Licensee Over Products Liability Lawsuit

Indianapolis. IN – Judge Tanya Walton Pratt of the Southern District of Indiana has granted a Partial Summary Judgment for Eli Lilly and CompanyThumbnail image for lilly.jpg of Indianapolis, Indiana in a dispute with licensee Valeant Pharmaceuticals International of Irvine, California involving the costs associated with product liability lawsuits over Lilly’s Parkinson’s disease drug.

Lilly began selling a product called Permax, which is used to treat Parkinson’s disease, in 1989. In March 2002, Lilly entered an exclusive licensing agreement with Amarin Corporation allowing Amarin to market, use and sell Permax in the United States, including the licensed use of Permax trademarks. The parties’ license agreement prohibited either party from assigning rights or obligations under the contract to any third party absent written consent of the other party. In 2004, Valeant purchased the assets of Amarin, including the rights under the Permax license. Lilly provided written consent to this assignment in a letter agreement that also addressed costs and indemnification relating to defending a pending products liability lawsuit involving Permax. The present lawsuit was filed when a dispute arose between Lilly and Valeant over the costs and indemnification relating to the products liability lawsuit. After settlement of one of the products liability cases, Valeant refused to indemnify Lilly. Lilly sought a declaratory judgment requiring Valeant to pay certain litigation and settlement costs relating to the products liability suit.

In the court’s decision, Judge Pratt found that the parties’ contract was clear and unambiguous in providing a schedule for sharing costs associated with the product liability suit. Thus Valeant must pay Lilly pursuant the schedule in the contract.

Practice Tip: This case illustrates that license agreements, which grant the licensee limited rights to use the intellectual property, owned by the licensor, can come with additional responsibilities and obligations. It is important to have an intellectual property attorney draft and review license agreements to ensure that the parties understand what is included.

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