Cases & Deals

LabCorp prevails in Tenth Circuit appeal rejecting Metabolite damages claims following patent dispute

Client(s) Laboratory Corporation of America Holdings

On February 2, 2011, the United States Court of Appeals for the Tenth Circuit affirmed a grant of summary judgment in favor of Jones Day client Laboratory Corporation of America Holdings ("LabCorp"), rejecting claims by Metabolite Laboratories, Inc. ("Metabolite") for post-judgment damages following the 2001 verdict in a patent dispute between the parties.

The Tenth Circuit's opinion is the most recent decision in this almost twelve-year-old dispute. In 1991, Metabolite granted to LabCorp, a provider of leading-edge medical laboratory tests and services, a license to certain "know-how" and patent rights related to a patent that claims a method for detecting deficiencies of vitamin B12 and folate. In 1999, Metabolite and the patent holder (Competitive Technologies, Inc., "CTI") sued LabCorp for breach of the license agreement and patent infringement, respectively. In 2001, prior to Jones Day's involvement, a jury found that LabCorp had breached the license agreement and was liable to both Metabolite and CTI. The Federal Circuit affirmed the verdict and the U.S. Supreme Court granted certiorari.

Meanwhile, in the trial court, Metabolite claimed that LabCorp owed Metabolite millions of dollars in post-judgment royalties for LabCorp's continued use and outsourcing of Metabolite's "know-how technology."  LabCorp, in 2004, filed a separate declaratory-judgment action seeking a determination that the license agreement had been terminated, and that LabCorp did not owe Metabolite any post-judgment royalties. In June 2006, the U.S. Supreme Court dismissed its grant of certiorari as improvidently granted and Jones Day was retained as co-counsel for the post-judgment proceedings and the related declaratory judgment action. In September 2006, the district court deferred all of the post-judgment issues to be decided along with the declaratory judgment action.

On August 15, 2008, the United States District Court for the District of Colorado granted LabCorp summary judgment on all claims, holding that the 2001 jury had found that the license agreement between Metabolite and LabCorp had been terminated and thus that LabCorp owed no further royalties under the license agreement. Metabolite appealed to the U.S. Court of Appeals for the Federal Circuit. LabCorp argued the Federal Circuit lacked jurisdiction to decide the contract issues in dispute. The Federal Circuit agreed with LabCorp and in March 2010 transferred the appeal to the Tenth Circuit. The Tenth Circuit affirmed the district court's grant of summary judgment in its February 2 opinion, and denied Metabolite all claims for post-judgment damages.

Laboratory Corporation of America Holdings (doing business as LabCorp) v. Metabolite Laboratories, Inc., 410 Fed. Appx. 151 (10th Cir. 2011)