2011.01.03 Infusive v. Sagent

1. MARK A. LARSEN mlarsen@larsenrico.com (3727)
LISA C. RICO lrico@larsenrico.com (8901)
LARSEN CHRISTENSEN & RICO, PLLC
Attorneys for Plaintiff Infusive Technologies, LLC
50 West 300 South, Suite 400
Salt Lake City, Utah 84101
Telephone: (801) 364-6500
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
INFUSIVE TECHNOLOGIES, LLC,
Plaintiff,
vs.
SAGENT HOLDING CO.,
Defendant.
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Case No. 1:10-cv-00220-BCW
COMPLAINT and JURY DEMAND
Judge Brooke C. Wells
Filed Electronically
Plaintiff Infusive Technologies, LLC, alleges as follows:
PARTIES
1. Plaintiff Infusive Technologies, LLC (“Infusive”), is a limited liability company,
organized and existing under the laws of the State of Nevada, with its principal place of
business in Bountiful, Utah.
2. Defendant Sagent Holding Co. (“Sagent”) is a corporation, organized and
existing under the laws of the Cayman Islands, with its principal place of business in
Schaumburg, Illinois.
JURISDICTION & VENUE
3. This Court has personal jurisdiction over Sagent pursuant to Utah Code Ann.
§§ 78-27-22 and 78-27-24 because Sagent subjected itself to the general jurisdiction of
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this Court, having conducted business in the State of Utah or having caused injury in the
State of Utah.
4. This Court has subject matter jurisdiction over this action pursuant to
28 U.S.C. § 1332(a) because the amount in controversy exceeds $75,000, exclusive of
interest and costs, and is between citizens of different states.
5. Venue of this matter is proper pursuant to 28 U.S.C. § 1391(2).
BACKGROUND
6. By September of 2008, Infusive developed and patented syringe-based
devices or other infusion therapy related products or devices, including U.S. Patent Nos.
6,997,910 (“the ‘910 patent”) 7,048,720 (“the ‘720 patent”) and 7,101,354 (“the ‘354
patent”). Infusive also had other patents pending, both in the United States and in foreign
countries.
7. Sagent is a pharmaceutical company primarily focused on generic injectable
products. Sagent offers its customers a broad range of pharmaceutical products across
anti-infective, oncolytic and critical care indications in a variety of forms, including single-
and multi-dose vials, and prefilled ready-to-use syringes and premix bags.
8. In September of 2008, Infusive and Sagent entered into an Asset Acquisition
Agreement. Among other things, the Asset Acquisition Agreement transferred to Sagent
the ‘910 patent, the ‘720 patent and the ‘354 patent.
FIRST CLAIM FOR RELIEF
(Breach of the Asset Acquisition Agreement)
9. Infusive incorporates by reference paragraphs 1 through 8, inclusive, of this
Complaint.
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10. Infusive fully performed all of its obligations set forth in the Asset Acquisition
Agreement.
11. Paragraph 7.1 of the Asset Acquisition Agreement states:
After the Effective Date, Sagent shall own any and all Patent Rights,
Technology Rights, and Technical Information, whether first
conceived or discovered by either Infusive or Sagent or jointly, or by
their respective employees or agents.
12. Paragraph 4.1 of the Asset Acquisition Agreement states:
Upon the Effective Date, Sagent shall assume full responsibility for
the research and development related to the Patented Products and
use reasonable commercial efforts to develop and commercialize the
Patented Products.
13. Although “Reasonable Commercial Efforts” is a defined term in the Asset
Acquisition Agreement (Paragraph 1.8), it is not used as a defined term in Paragraph 4.1
of the Asset Acquisition Agreement. When used as a defined term, reasonable
commercial efforts is in initial capitals. See, e.g., Paragraph 11.3.
14. Under the terms of the Asset Acquisition Agreement, therefore, Sagent
assumed full responsibility for the research and development related to the Patented
Products, the development and commercialization of the Patented Products.
15. Paragraph 4.2 of the Asset Acquisition Agreement states:
Sagent shall be responsible for all design verification, design
validation, regulatory submissions and activities, marketing, launch
and sale activities, related to the Patented Products.
16. Under the terms of the Asset Acquisition Agreement, therefore, Sagent also
solely was responsible for all design verification, design validation, regulatory submissions
and activities, marketing, launch and sale activities, related to the Patented Products.
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17. Sagent failed to use reasonable commercial efforts to develop and
commercialize the Patented Products.
18. As a result of Sagent’s failure to use reasonable commercial efforts to
develop and commercialize the Patented Products, the Approval of the 510k for the first
product application of the Patented Products was not obtained.
19. A pertinent part of Paragraph 3.1 of the Asset Acquisition Agreement states:
Sagent shall remit or allow the following payments to or for the benefit
of Infusive:
a) One million two hundred fifty thousand dollars ($1,250,000)
within five (5) days after the Effective Date, …
b) One million dollars ($1,250,000) within ten (10) days after the
Approval of the 510k for the first product application of the
Patented Products (the payments described in Section 3.1(a)
and (b), are collectively referred to as the (“Assignment
Payments”). Sagent agrees to file the 510k with the
appropriate administrative agencies for the first product
application of the Patented Products no later than five
business days after this Agreement is executed by the Parties.
If the 510k is not filed within said five business day period then
the Assignment Paymentreferenced in this Section 3.1(b) shall
be due and payable in full no later than the earlier of the (i)
December 15, 2008 or (ii) upon Approval of the 510k for the
first product application of the Patented Products.
. . . .
20. As a result of Sagent’s failure to use reasonable commercial efforts to
develop and commercialize the Patented Products, and obtain the Approval of the 510k
for the first product application of the Patented Products, Sagent avoided paying the
Assignment Payment to Infusive of $1,250,000. If Sagent had used reasonable
commercial efforts to develop and commercialize the Patented Products, and obtain the
Approval of the 510k for the first product application of the Patented Products, the
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Assignment Payment to Infusive of $1,250,000 would have become due no less than six
months ago.
21. The Asset Acquisition Agreement also contains the following relevant
provisions, among others:
(a) A pertinent part of Paragraph 2.1 of the Asset Acquisition Agreement states:
Until the date on which Sagent remits payment up to the amount of
two million five thousand dollars ($2,500,000) pursuant to Section
3.1(a) and (b) hereinbelow (the “Transfer Date”), Infusive shall retain
a lien against the Assignment. . . .
(b) A pertinent part of Paragraph 2.2 of the Asset Acquisition Agreement states:
To secure the payment of the Assignment Payments (defined below),
Sagent hereby grants a security interest to Infusive, its successors
and assigns, in the Patent Rights, Technical Information and
Technology Rights (the “Collateral”). If Sagent does not pay the
Assignment Payments to Infusive when due, then, upon written notice
from Infusive to Sagent and Sagent’s failure to pay the amount owing
within ten (10) days after such notice, Sagent shall assign all right,
title and interest in and to the Collateral to Infusive free and clear of
any claims from Sagent or otherwise. . . .
22. A pertinent part of Paragraph 11.2 of the Asset Acquisition Agreement states:
In the event this Agreement is terminated by Sagent pursuant to
Section 11.1, Sagent shall assign to Infusive all right, title and interest
in and to the Patent Rights, Technical Rights, Technical Information,
and related proprietary information. . . .
23. Sagent claims to have terminated the Asset Acquisition Agreement.
24. Because Sagent did not paythe Assignment Payments to Infusive when due,
on November 18, 2010, counsel for Infusive demanded in writing that Sagent pay the
amount owing within ten days after such notice and demanded that Sagent assign all right,
title and interest in and to the Collateral – the ‘910 patent, the ‘720 patent and the ‘354
patent – to Infusive free and clear of any claims from Sagent. Despite such notice, Sagent
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did not pay the amounts due and did not assign all right, title and interest in and to the
Collateral to Infusive free and clear of any claims from Sagent.
25. Sagent’s failure to pay the Assignment Payments to Infusive constitutes a
breach of the Asset Acquisition Agreement, damaging Infusive in the sum of $1,250,000,
plus interest.
26. Further, Sagent’s failure to use reasonable commercial efforts to develop and
commercialize the Patented Products, including its failure to fund and pursue all design
verification, design validation, regulatorysubmissions and activities, marketing, launch and
sale activities, related to the Patented Products, constitutes a breach of the Asset
Acquisition Agreement.
27. Additionally, Sagent’s failure to obtain the Approval of the 510k for the first
product application of the Patented Products, including its failure to fund and pursue all
design verification, design validation, regulatory submissions and activities, relating to the
Patented Products, constitutes a breach of the Asset Acquisition Agreement.
28. If Sagent had not breached the Asset Acquisition Agreement in these, and
other ways, Infusive would have received Commercialization Payments in the minimum
amount of at least $2,000,000 per year for the remaining life of the ‘910 patent, the ‘720
patent and the ‘354 patent. The present value of these payments, the past and future
damage, is at least $15,000,000.
29. As a result of Sagent’s multiple breaches of the Asset Acquisition Agreement,
Infusive has been damaged in a sum of at least $15,000,000, plus interest.
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SECOND CLAIM FOR RELIEF
(Breach of the Covenant of Good Faith and Fair Dealing)
30. Infusive incorporates by reference paragraphs 1 through 29, inclusive, of this
Complaint.
31. Sagent breached the covenant of good faith and fair dealing implied in every
contract under Utah law. The breach of the duty of good faith and fair dealing is not limited
to the express terms of the Asset Acquisition Agreement. It is fundamental that every
contract imposes a duty on the parties to exercise their contractual rights and perform their
contractual obligations reasonably and in good faith.
32. Even though the express terms of a contractual provision may appear to
permit unreasonable actions, the implied duty of good faith and fair dealing limits the
parties’ ability to act unreasonably in contravention of the other party’s reasonable
expectations.
33. Sagent breached the covenant of good faith and fair dealing found in the
Asset Acquisition Agreement by exercising its discretion in contravention of Infusive’s
reasonable expectations.
34. Sagent exercised its discretion in contravention of Infusive’s reasonable
expectations in the following ways, among others:
A. Sagent failed to use reasonable commercial efforts to develop and
commercialize the Patented Products. Sagent failed to devote sufficient
resources to properly develop and commercialize the Patented Products.
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B. As a result of Sagent’s failure to use reasonable commercial efforts to
develop and commercialize the Patented Products, the Approval of the 510k
for the first product application of the Patented Products was not obtained.
C. As a result of Sagent’s failure to use reasonable commercial efforts to
develop and commercialize the Patented Products, and obtain the Approval
of the 510k for the first product application of the Patented Products, Sagent
avoided paying the Assignment Payment to Infusive of $1,250,000. If
Sagent had used reasonable commercial efforts to develop and
commercialize the Patented Products, and obtain the Approval of the 510k
for the first product application of the Patented Products, the Assignment
Payment to Infusive of $1,250,000 would have become due no less than six
months ago.
D. Sagent failed to devote sufficient resources to properly develop and
commercialize the Patented Products to avoid having to pay the Assignment
Payment to Infusive of $1,250,000.
E. Further, Sagent’s failure to use reasonable commercial efforts to develop
and commercialize the Patented Products, including its failure to fund and
pursue all design verification, design validation, regulatory submissions and
activities, marketing, launch and sale activities, related to the Patented
Products, constitutes a breach of the Asset Acquisition Agreement.
F. Additionally, Sagent’s failure to obtain the Approval of the 510k for the first
product application of the Patented Products, including its failure to fund and
pursue all design verification, design validation, regulatory submissions and
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activities, relating to the Patented Products, constitutes a breach of the
covenant of good faith and fair dealing.
G. Sagent failed to devote sufficient resources to properly develop and
commercialize the Patented Products to avoid having to pay the
Commercialization Payments to Infusive of at least $2,000,000 a year.
35. Sagent did not pay the Assignment Payments to Infusive, which constitutes
a breach of the Asset Acquisition Agreement, damaging Infusive in the sum of $1,250,000,
plus interest.
36. If Sagent had not breached the Asset Acquisition Agreement in these, and
other ways, Infusive would have received Commercialzation Payments in the minimum
amount of $2,000,000 per year for the remaining life of the ‘910 patent, the ‘720 patent
and the ‘354 patent. The present value of these payments, the past and future damage,
is at least $15,000,000.
37. As a result of Sagent’s multiple breaches of the Asset Acquisition Agreement,
Infusive has been damaged in a sum of at least $15,000,000, plus interest.
38. Paragraph 13.10 of the Asset Acquisition Agreement states: “This Agreement
shall be governed by and construed in accordance with the laws of the State of Nevada.”
39. Through these acts and others, Sagent intentionally or recklessly breached
the covenant of good faith and fair dealing found in the Asset Acquisition Agreement in
complete disregard of Infusive’s property interests.
40. As a result, under Nevada law, Infusive is entitled to punitive damages
against Sagent in the amount of at least $50,000,000, or such other amount as may be
proven at trial.
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WHEREFORE, Infusive requests judgment against Sagent as follows:
A. On the First Claim for Relief, for a judgment in favor of Infusive and against
Sagent for compensatory damages in the sum of at least $15,000,000, plus
interest, or such other amount as may be proven at trial.
B. On the Second Claim for Relief, for a judgment in favor of Infusive and
against Sagent for compensatory damages in the sum of at least
$15,000,000, plus interest, or such other amount as may be proven at trial.
C. On the Second Claim for Relief, for a judgment in favor of Infusive and
against Sagent for punitive damages in the sum of at least $50,000,000, plus
interest, or such other amount as may be proven at trial.
D. On all Claims for Relief, for attorneys’ fees and costs in an amount to be
proven at trial.
E. On all Claims for Relief, for such other and further relief as the Court may
deem appropriate.
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JURY DEMAND
Pursuant to Fed. R. Civ. P. 38(b), Infusive demands a trial by jury of any issue
triable of right by jury and tendered the statutory jury fee upon the filing of this Complaint.
Dated: January 3, 2011.
LARSEN CHRISTENSEN & RICO, PLLC
/s/ Mark A. Larsen
________________________________
Mark A. Larsen
Attorneys for Plaintiff Infusive Technologies,LLC
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