Crowley v. EpiCept Corp.

Summary

Kenton Crowley and John Flores, both doctors (the Doctors), assigned their patent rights concerning a non-FDA-approved drug (the Drug) to a pharmaceutical company (EpiCept). The agreement, made under the laws of New Jersey, stated in part that the Doctors must notify and assign EpiCept the rights to any improvements made during the term, including those "conceived prior to the Effective Date." The agreement also provided that rights would revert to the Doctors if they properly terminated after providing EpiCept with an opportunity to cure. The Doctors failed to disclose that, prior to the effective date, one of the Doctors used the Drug to treat burns (the Treatment). Years after EpiCept postponed development of the Drug, the Doctors brought at action for breach of contract and related causes of action. After sundry court procedures, EpiCept argued at trial that its conduct was excused, and the Doctors waived their reversion rights, because nondisclosure of the Treatment materially breached the agreement. The jury received various instructions stating the relevant law regarding material breach and contract claims. A verdict was returned for EpiCept on all counts. On appeal, the Doctors contend the court erred regarding jury instructions, and that the denial of their motion for a new trial was an abuse of discretion.

Affirmed. The panel held the jury instructions were proper because the "instructions correctly state the law, and the jury was clearly and adequately informed that only a material breach by the Doctors could defeat their breach of contract claim against EpiCept." Further, under Medivox Prods., Inc. v. Hoffman-La Roche, Inc., a party to an agreement commits a material breach under New Jersey law if essential obligations under the agreement are failed to be performed. Here, EpiCept's evidence sufficiently demonstrated the Treatment and its subsequent nondisclosure constituted a material breach.

— David Mendenhall