Dispute Details
These lawsuits are quite significant as they demonstrate aggressive behavior by the University of Georgia against one of their own inventors. Indeed, the Board of Regents of the University System of Georgia proclaimed in its meeting minutes of March 2005, “licensing income at UGA in fiscal year 2004 totaled more than $28 million, due in large part to the licensing of Restasis”.
Policies of the Board of Regents of the University System of Georgia apply to all public universities within the state, including the University of Georgia. In Section 603.01 of the Board of Regents Policy Manual, it states:
"The rights and privileges, as well as the incentive, of the inventor or creator must be preserved so that his or her abilities and those of other faculty, staff or students of colleges and universities of the University System may be further encouraged and stimulated."
The actions of the University of Georgia in its every dealing with Dr. Kaswan contradicted both the letter and spirit of this policy.
Primary Issue(s) Encountered
Ownership of the Intellectual Property
Dr. Kaswan discovered an ophthalmic treatment for chronic dry eye which had applications in veterinary medicine as well as human medicine. Dr. Kaswan's innovations were not developed using Federal funds or corporate sponsorship, nor was the research specifically assigned to her by UGA. As such, in accordance with the University of Georgia's Intellectual Property Policy, the invention should have been classified as either IIC, “University-Assisted Individual Effort” or IID “Individual Efforts”.
Though required by its own policies, the University of Georgia Research Foundation never did assign her invention a classification. Then, without notifying Dr. Kaswan, they altered their file documents by inserting “2A” into an Invention Disclosure Form Dr. Kaswan had submitted in 1983. UGARF relied heavily upon this altered document as "proof" that the University owned controlling rights to the invention.
Dr. Kaswan was denied the opportunity to appeal the ownership dispute to the UGA Faculty Intellectual Property Committee, which UGARF's Policy Section III.L. requires.
A classification of IIC or IID would put ownership and control of the patents and innovations innovation in Dr. Kaswan's hands, while a IIA or IIB classification vested ownership in UGARF and allowed them control over the destiny of what was to become the most successful invention to emerge from University of Georgia. When Dr. Kaswan attempted to appeal the classification of her invention, UGA's Executive Legal VP instructed the UGA Faculty Appeal Committee to refuse her request for a hearing, erroneously claiming that Dr. Kaswan forfeited her rights to appeal by choosing litigation. It was UGARF and not Dr. Kaswan that initiated litigation and at the time the appeal was made, Dr. Kaswan had yet to file even a counterclaim.
In 1987, KB Visions, a small business start-up incorporated in Georgia by Dr. Kaswan, contracted with UGARF for the exclusive license for veterinary use of the Kaswan patents. KB Visions sublicensed the veterinary field of use to Schering-Plough who produced Optimmune®. The FDA approved Optimmune® for veterinary use in 1995 and the royalties from this product have been significant to both Kaswan and UGARF ever since.
In 2001, domestic sales of Optimmune® were interrupted due to non-compliance at one of Schering-Plough's manufacturing facilities. Compounding pharmacies were eager to provide a replacement and supply the market but doing so violated the patents. UGARF directed KB Visions to downgrade the Schering-Plough license to non-exclusive and license compounding pharmacies to produce a generic equivalent of Optimmune®. UGARF also directed KB Visions to assume patent enforcement responsibility.
Allergan, who had obtained a sublicense for human use of the product from Novartis and UGARF, pursued FDA approval, but the FDA process stalled in 1999. Then Allergan invested in a partnership with Inspire Pharmaceuticals to co-develop a different dry-eye treatment, diquafosol, and UGARF and Kaswan agreed that Allergan was no longer meeting its due diligence contractual requirements.
In negotiations in 2001-2002, UGARF verbally agreed to wholly assign the rights of Kaswan patents to KB Visions in exchange for 25% royalties of the Restasis® income.
Final revisions of the patent reassignment agreement were exchanged between legal counsel for UGARF and Kaswan on December 19, 2002, then UGARF staff dispersed for holiday. All parties received a Christmas surprise; FDA approval of Restasis® was granted to Allergan December 24th, 2002. Lawyers for UGARF took immediate command even without consulting the UGARF director who, unbeknownst to Kaswan, was on a month-long vacation.
In January 2003, litigators reneged on the agreement to reassign the patents to Dr. Kaswan, threatened termination of KB Visions' veterinary license, then filed a federal suit alleging trademark infringement and other claims against KB Visions and Kaswan.
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