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Laboratory Corporation v. Metabolite Laboratories, Inc., 19-4120 (2011)

Court: Court of Appeals for the Tenth Circuit Number: 19-4120 Visitors: 44
Filed: Feb. 02, 2011
Latest Update: Feb. 21, 2020
Summary: FILED United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS February 2, 2011 TENTH CIRCUIT Elisabeth A. Shumaker Clerk of Court LABORATORY CORPORATION OF AMERICA HOLDINGS, d/b/a LabCorp, Plaintiff–Appellee, No. 10-1194 (D.C. No. 1:04-CV-01662-ZLW-CBS) v. (D. Colo.) METABOLITE LABORATORIES, INC., Defendant–Appellant. ORDER AND JUDGMENT* Before, LUCERO, EBEL, and HARTZ, Circuit Judges. Laboratory Corporation of America Holdings (“LabCorp”) and Metabolite Laboratories, Inc. (“
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                                                                                 FILED
                                                                     United States Court of Appeals
                                                                             Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                          February 2, 2011
                                   TENTH CIRCUIT
                                                                         Elisabeth A. Shumaker
                                                                             Clerk of Court


 LABORATORY CORPORATION OF
 AMERICA HOLDINGS, d/b/a LabCorp,

        Plaintiff–Appellee,                                  No. 10-1194
                                                (D.C. No. 1:04-CV-01662-ZLW-CBS)
 v.
                                                              (D. Colo.)
 METABOLITE LABORATORIES, INC.,

        Defendant–Appellant.



                              ORDER AND JUDGMENT*


Before, LUCERO, EBEL, and HARTZ, Circuit Judges.


       Laboratory Corporation of America Holdings (“LabCorp”) and Metabolite

Laboratories, Inc. (“Metabolite”) are parties to a license agreement that provides

LabCorp a sublicense to certain patents for detecting vitamin deficiencies, and a license

to certain “know-how” related to the patented technology (the “Licensed Patents”). After

LabCorp halted royalty payments to Metabolite with respect to a specific test, the


       * This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. This court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 32.1.
“homocysteine-only test,” Metabolite and the patent holder brought suit alleging breach

of contract and patent infringement. Because infringement damages would not be

available if the contract were merely breached, but not terminated, the jury was presented

with a special verdict form specifically inquiring as to termination. The jury found that

the License Agreement had been terminated with respect to the homocysteine-only test,

and the Federal Circuit affirmed.

       Although Metabolite won a preliminary injunction against the use of its know-how

by LabCorp, LabCorp continued to conduct the test at issue after judgment pursuant to a

stipulated stay order. When the case became final, LabCorp filed a second suit seeking a

declaration that it was not liable to Metabolite for post-judgment royalties because the

License Agreement had been partially terminated. Metabolite filed several

counterclaims. The district court granted summary judgment in favor of LabCorp,

holding that the jury in the first case found the License Agreement had been terminated

as to the homocysteine-only test. On appeal, Metabolite advances several arguments

suggesting that the License Agreement was never properly terminated.

       Regardless of the strength of these arguments, we conclude that Metabolite is

estopped from making them. What Metabolite once called a “termination,” it now

attempts to relabel a mere “breach.” But the first jury found termination, at Metabolite’s

urging and to LabCorp’s detriment, and that finding binds us. Metabolite cannot have its

cake and eat it too. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.


                                            -2-
                                             I

       A full account of the facts of this dispute can be found in the opinion affirming the

prior judgment. See Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 
370 F.3d 1354
(Fed. Cir. 2004). Accordingly, we provide only a summary here.

       In 1990, Dr. Robert Allen and others patented a method for detecting certain

vitamin deficiencies by using an assay for homocysteine levels. The “’658 patent” was

assigned to University Patents, Inc., a company succeeded by Competitive Technologies,

Inc. (“CTI”). CTI licensed the patent to Metabolite, a company owned by Dr. Allen.

Metabolite in turn sublicensed the patent to Hoffmann-La Roche Inc., the predecessor in

interest to LabCorp.

           Under the License Agreement between Metabolite and LabCorp,1 LabCorp

obtained a non-exclusive sublicense to use certain “Licensed Patents,” along with a

license to use “technology and know-how” developed by Metabolite for conducting

“Licensed Assays.” In exchange, LabCorp agreed to pay Metabolite a 21.5% royalty on

Licensed Assays, and a 6% royalty to CTI. The License Agreement allowed LabCorp to

terminate “with respect to a particular Licensed Assay” if a more cost-effective method

became available, provided that the new method did not infringe on a Licensed Patent.

Metabolite was entitled to terminate in the event of a material breach. In both instances,

the terminating party was required to provide sixty days notice.

       1
        Although the License Agreement was actually signed by Hoffmann-La Roche,
Inc. and assigned to LabCorp, we will use “LabCorp” throughout for ease of reference.

                                            -3-
       In 1998, LabCorp began using a test developed by Abbott Laboratories as an

alternative to one of the Licensed Assays covered by the License—the homocysteine-

only assay conducted on serum. LabCorp informed Metabolite that it would stop paying

royalties on that assay, but continued to pay royalties on other Licensed Assays, and on

the homocysteine-only assays conducted on urine.

       Metabolite took the position that the Abbott test infringed on a Licensed Patent.

On May 4, 1999, Metabolite and CTI filed suit against LabCorp alleging breach of

contract and patent infringement. Both companies were represented by the same counsel.

With respect to the infringement claim, LabCorp asserted an affirmative defense that

“Metabolite has licensed LabCorp under the ’658 patent, which license has not been

terminated.” The case proceeded to trial, where Dr. Allen testified that LabCorp’s

cessation of royalty payments on the homocysteine-only assay constituted an “absolute

termination” of “the license agreement with respect to that individual assay.” In closing

argument, Metabolite’s counsel argued that “LabCorp wrongfully terminated the

Metabolite license agreement to get out of paying these royalties; and thus, the license

agreement evaporates for them.”

       A jury instruction setting forth the parties’ positions described Metabolite’s theory

of the case as follows:

       LabCorp’s termination of the license agreement and discontinuance of its
       royalty payments with respect to [the homocysteine-only] test constitutes a
       breach of its contract with Metabolite. And LabCorp’s ongoing
       performance of these tests following its termination of the license

                                            -4-
       agreement with respect to those tests, constitutes contributory infringement
       and infringement by inducement of the patent owned by CTI.

The same instruction noted LabCorp’s defense that it “did not terminate the license

agreement or any portion of it with respect to homocysteine tests . . . .”

       On the special verdict form, question one asked the jury whether “LabCorp is

licensed under the ’658 patent and that license has not been terminated in whole or in

part?” If the jury answered yes to that question, it was directed to determine whether

LabCorp breached the license agreement, and to calculate damages arising from that

breach. The jury answered “no” to question one, and was thus directed to question five,

which asked, “Do you find, by a preponderance of the evidence, that LabCorp breached

its license agreement by terminating it with respect to its performance of the Abbott

test?” The jury answered that question “yes.” It was accordingly instructed to state the

damages to Metabolite, which it set at $3,652,724.61. Based on its answer to question

five, the jury was also required to determine whether “LabCorp has contributed to or

induced infringement of claim 13 of the ’658 patent.” The jury answered “yes,”

awarding $1,019,365.01 in damages to CTI. It also found that LabCorp’s infringement

was willful, and that claims 13 and 18 of the ’658 patent were valid. The damages

represented the royalty payments calculated between 1998 and the trial.

       The district court entered judgment in accordance with the jury’s verdict, and

doubled CTI’s damages pursuant to the patent laws’ enhanced damages provision, 35

U.S.C. § 284. In addition, the court entered an injunction prohibiting LabCorp from

                                             -5-
conducting homocysteine-only assays. However, the parties agreed to a stipulated stay

order which allowed LabCorp to continue conducting homocysteine-only assays, but

required it to pay CTI a 6% royalty, and provide an accounting of all such assays to

Metabolite along with a calculation of a 21.5% royalty that might be due on such tests.

LabCorp was further required to “secure its obligation to pay such 21.5% amount to

Metabolite (in the event it is held liable therefor in this case) with a bond or letter of

credit in an amount that increases monthly to equal the accounted-for amount.”

However, the stipulated stay was expressly made “without prejudice to any party’s

position or arguments on appeal or otherwise.”

       On appeal to the Federal Circuit, LabCorp argued there was no evidence presented

at trial that the License Agreement had been terminated because neither party complied

with the termination provisions contained in that agreement. In response, Metabolite

cited Dr. Allen’s testimony that LabCorp’s cessation of royalty payments constituted a

termination and noted that Ҥ 4.02 of the license agreement explicitly sets forth a

mechanism for termination on an assay-by-assay basis.” The Federal Circuit agreed with

Metabolite:

       The jury found that “LabCorp breached the license agreement by
       terminating it” for the Abbott test. LabCorp contends that it did not
       formally terminate the contract, because the contract requires that the
       licensee provide written notice. The record contains no evidence of a
       written termination. The record does show, however, that LabCorp
       stopped paying royalties on the total homocysteine tests. Refusal to pay
       royalties is a material breach of the license. See Dow Chem. Co. v. United
       States, 
226 F.3d 1334
, 1346 (Fed. Cir. 2000). A material breach, in turn,
       constitutes termination even where the license agreement termination
                                              -6-
       clause does not expressly so provide. See Apex Pool Equip. Corp. v. Lee,
       
419 F.2d 556
, 562 (2d Cir. 1969) (holding that a licensee’s material breach
       implicitly gives rise to a licensor’s right to terminate); see also Ross-
       Simons of Warwick, Inc. v. Baccarat, Inc., 
217 F.3d 8
, 10 (1st Cir. 2000)
       (“Every contract involves a bargained-for exchange of obligations, the
       material breach of which by one party gives the other party a right to
       terminate.”); Restatement (Second) of Contracts § 237 (1981).

Metabolite Labs., 
Inc., 370 F.3d at 1370
.

       Following affirmance, Metabolite filed a post-judgment motion seeking to draw

on the letter of credit for post-judgment royalties. LabCorp filed a new suit requesting a

declaration that it was not liable for those post-judgment royalties. Although the district

court indicated that it was inclined to grant Metabolite such royalties, it held that

LabCorp’s declaratory judgment action provided the appropriate vehicle for considering

post-judgment liability. Metabolite then filed counterclaims in that case.

       On competing motions for summary judgment in the declaratory judgment action,

the district court concluded that the License Agreement was terminable on an assay-by-

assay basis but not on a license-by-license basis. It further held that the jury’s verdict in

the first trial established that the License Agreement had been terminated with respect to

the homocysteine-only assay. The court held that the partially terminated License

Agreement relieved LabCorp of any obligation to pay post-judgment royalties on

homocysteine-only assays, and accordingly granted summary judgment in favor of

LabCorp. Metabolite appealed that decision to the Federal Circuit. However, that court

ruled that the appeal did not present a disputed question of patent law and transferred the

appeal to this court. See Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 599 F.3d
                                             -7-
1277, 1283, 1286 (Fed. Cir. 2010).

                                              II

       We review the grant of summary judgment de novo. Hobbs ex rel. Hobbs v.

Zenderman, 
579 F.3d 1171
, 1179 (10th Cir. 2009). A party is entitled to summary

judgment only if, viewing the evidence in the light most favorable to the non-moving

party, the movant is entitled to judgment as a matter of law. 
Id. A The
parties appear to agree that the jury verdict in the original trial has some

estoppel effect. As the district court noted, “[n]either party disputes that [it is] bound by

the rulings in the previous case under the doctrine of collateral estoppel.” They disagree,

however, on what that effect is. LabCorp contends, and the district court agreed, that the

jury found the License Agreement to be terminated with respect to homocysteine-only

assays. Metabolite argues that the jury instead found that the patent license to conduct

homocysteine-only assays was terminated, but the License Agreement was merely

breached.2

       Collateral estoppel has four elements:


       2
         Several claims raised below are no longer at issue on appeal. Metabolite
voluntarily dismissed its counterclaim for unjust enrichment below and does not advance
any argument on appeal with respect to its other counterclaims. Accordingly, we
consider only Metabolite’s contention that the district court erred in holding that the
License Agreement does not give rise to a post-judgment obligation to pay know-how
royalties. See State Farm Fire & Cas. Co. v. Mhoon, 
31 F.3d 979
, 984 n.7 (10th Cir.
1994) (issues not raised in briefing are waived).

                                             -8-
       (1) the issue previously decided is identical with the one presented in the
       action in question, (2) the prior action has been finally adjudicated on the
       merits, (3) the party against whom the doctrine is invoked was a party or in
       privity with a party to the prior adjudication, and (4) the party against
       whom the doctrine is raised had a full and fair opportunity to litigate the
       issue in the prior action.

Murdock v. Ute Indian Tribe of Uintah & Ouray Reservation, 
975 F.2d 683
, 687 (10th

Cir. 1992) (citation omitted). If these criteria are met, the determination made in the prior

case “is conclusive in subsequent suits based on a different cause of action involving a

party to the prior litigation.” True v. Comm’r (In re Estate of H. A. True), 
390 F.3d 1210
, 1232 (10th Cir. 2004) (quotation omitted).

       There can be no dispute that the second and third elements of this test are satisfied.

The first action became final when the Supreme Court dismissed certiorari as

improvidently granted. See Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 
548 U.S. 124
, 125 (2006). And both parties to the present suit were parties to the first case.

Metabolite makes one argument that could be construed as related to the fourth prong

(which we will address in Section II.C, infra), but the parties’ primary disagreement

concerns the issue that the jury actually decided. On that score, we agree with the district

court: the jury determined that the License Agreement was terminated with respect to the

homocysteine-only assay.

                                             B

       We begin with the language of the special verdict form. That form presented the

jury with a type of flow chart, directing the jury to answer certain subsequent questions

                                            -9-
depending on their answers to the initial questions. The threshold issues for the jury were

whether LabCorp had a license under the ’658 patent and whether the License Agreement

had “not been terminated in whole or in part.” These issues were central to the first trial

because they bore directly on CTI’s patent infringement claim and LabCorp’s affirmative

defense of license.

       [I]n cases where a license is plead [sic] as a defense, or where the license
       defense is anticipated in the complaint, . . . the most expeditious conduct of
       the trial would necessitate that the license issue be resolved first, for if the
       license issue is resolved in the defendant’s favor the infringement issue is
       mooted. In this sense, infringement is conditional upon a license defense
       when raised.

Air Prods. & Chems. v. Reichhold Chems., 
755 F.2d 1559
, 1563 (Fed. Cir. 1985).

       In other words, the jury had to first find whether LabCorp was licensed to practice

homocysteine-only assays before it could decide CTI’s infringement claim. The special

verdict form reflects this necessary ordering of proof. If the jury found that LabCorp was

licensed under the ’658 patent, and that license had not been terminated, it was directed

to a set of questions that would allow it to award damages for breach of contract but not

for patent infringement. If the jury concluded that LabCorp was not licensed under the

’658 patent, the jury was instructed to answer a separate set of questions that would allow

both contract and patent infringement damages.

       The jury indeed found that LabCorp was not licensed, and thus proceeded to the

latter set of questions. First among that set was question five, which asked: “Do you

find, by a preponderance of the evidence, that LabCorp breached its license agreement by

                                             -10-
terminating it with respect to its performance of the Abbott test?” The jury answered that

question “yes,” opening the door for the $1,019,365.01 award for patent infringement,

later doubled by the district court, in addition to the $3,652,724.61 it awarded for breach

of contract.

       Metabolite faces an uphill task in light of the jury’s answer to question five. The

plain language of that question strongly suggests the jury found that the License

Agreement was terminated with respect to the homocysteine-only test. In arguing that

the verdict does not estop it from claiming post-verdict damages for breach of the License

Agreement, Metabolite contends the jury did not find that the “know-how license” had

been terminated, only that the patent license had been terminated. This argument goes to

the first prong of the collateral estoppel test, which requires a showing that “the issue

previously decided is identical with the one presented in the action in question.”

Murdock, 975 F.2d at 687
(citation omitted). To award patent infringement damages, the

jury was required to find the patent license was no longer in effect regardless of the status

of the know-how rights. But Metabolite’s contention that the patent and know-how

issues were somehow severed is inconsistent with the jury instructions, the evidence and

arguments adduced during the first case, and the License Agreement itself.

       The jury was instructed on Metabolite’s claim that “LabCorp’s termination of the

license agreement and discontinuance of its royalty payments with respect to [the

homocysteine-only] test constitutes a breach of its contract with Metabolite.” This

instruction does not suggest that LabCorp terminated only a patent license. It states that
                                            -11-
LabCorp terminated the “license agreement . . . with respect to [the homocysteine-only]

test.” See Jones v. United States, 
527 U.S. 373
, 393 (1999) (special verdict form should

be construed in context of jury instructions as a whole).

       Our conclusion that the jury found the entirety of the License Agreement

terminated with respect to the homocysteine-only test is cemented by the trial evidence

presented by Metabolite. Dr. Allen, Metabolite’s principal, testified that LabCorp’s

actions caused an “absolute termination” of “the license agreement with respect to that

individual assay.” Similarly, Metabolite’s counsel argued that “LabCorp wrongfully

terminated the Metabolite license agreement to get out of paying these royalties; and thus,

the license agreement evaporates for them.” Neither Dr. Allen nor Metabolite’s counsel

suggested that only the patent license had been terminated.

       Metabolite referred to Dr. Allen’s testimony in defending the jury verdict on

appeal, and convinced the Federal Circuit that “[t]he jury found that ‘LabCorp breached

the license agreement by terminating it’ for the Abbott test.” Metabolite Labs., 
Inc., 370 F.3d at 1370
. Metabolite also argued on appeal that Ҥ 4.02 of the license agreement

explicitly sets forth a mechanism for termination on an assay-by-assay basis.” That claim

is accurate: section 4.02 of the License Agreement does permit assay-by-assay

termination. Although Metabolite argues now that a patent license could expire without

termination of the corresponding know-how rights, it does not provide any basis to

conclude the jury so limited its finding of termination. Rather, the verdict, instructions,

evidence, and argument all lead us to the same conclusion: the jury found that the
                                            -12-
License Agreement was terminated with respect to the homocysteine-only assay.

                                               C

       Second, Metabolite advances an argument that appears related to the fourth prong

of the collateral estoppel test, the requirement that it “had a full and fair opportunity to

litigate the issue in the prior action.” 
Murdock, 975 F.2d at 687
(citation omitted).

Metabolite claims that it could not have sought damages for post-judgment royalties in

the first action. But this contention is incorrect.

       When one party commits a material breach of contract, the other party has a
       choice between two inconsistent rights—he or she can either elect to allege
       a total breach, terminate the contract and bring an action, or, instead, elect
       to keep the contract in force, declare the default only a partial breach, and
       recover those damages caused by that partial breach . . . .

Richard A. Lord, 13 Williston on Contracts § 39:32 (4th ed. 2010). This concept of

election of remedies has been adopted into New Jersey law, which governs the License

Agreement. See Frank Stamato & Co. v. Lodi, 
71 A.2d 336
, 339 (N.J. 1950).

       As outlined in Section 
II.B, supra
, Metabolite elected to proceed on a termination

theory rather than alleging only partial breach. This choice opened the door to patent

infringement damages, and further permitted Metabolite to argue for damages including

expected post-judgment income.

       [I]f the breach has been such that the plaintiff has the right to treat the
       contract as absolutely and finally broken by the defendant, and he so elects
       to treat it, the damages are assessed as of a total breach of an entire
       contract. Such damages are not special or prospective damages, but are the
       damages naturally resulting from a total breach of the contract, and are
       suffered when the contract is broken, and are assessed as of that time.
       From the nature of the contract, they include damages for not performing
                                             -13-
       the contract in the future, as well as in the past.

Pierce v. Tenn. Coal, Iron, & R.R. Co., 
173 U.S. 1
, 12 (1899). Adopting this theory, the

New Jersey Supreme Court has held that a party who elects to proceed on a partial breach

theory may recover damages from the date of the breach through trial (as well as

injunctive relief), or “he could treat the breach as total and seek recovery of one lump

sum representing the present value of the monetary benefits he could have received over

his expectancy.” Stopford v. Boonton Molding Co., 
265 A.2d 657
, 667 (N.J. 1970).3

New Jersey law does not bar future lost-profits damages; it merely requires that damages

be proven with “reasonable certainty.” Perini Corp. v. Greate Bay Hotel & Casino, Inc.,

610 A.2d 364
, 379 (N.J. 1992), abrogated on other grounds by Tertina Printing, Inc. v.

Fitzpatrick & Assocs., Inc., 
640 A.2d 788
, 789 (N.J. 1994).

       The jury instructions accurately relayed this standard. They stated that a

successful breach of contract plaintiff “is entitled to compensatory damages for such

losses as may fairly be considered to have arisen naturally from defendant’s breach of

contract. Alternatively, Metabolite may be entitled to such damages as may reasonably

be supposed to have been contemplated by both parties at the time they made the contract

as the probable result of the breach of such contract.” At the time of trial, Metabolite

knew when the ’658 patent would expire and had a lengthy history of royalty payments.

       3
         Although these authorities refer to the entire contract being terminated, the
question we consider is whether the entire contract with respect to the homocysteine-only
test was terminated.


                                             -14-
Although Metabolite chose not to extrapolate those figures over a post-judgment, pre-

expiration timeframe, it certainly had a full and fair opportunity to do so.4

                                              D

       Finally, Metabolite spends the bulk of its briefing arguing that the License

Agreement could not have been terminated under the facts presented to the jury in the

first trial. It claims that LabCorp’s breach did not terminate the contract because several

of the termination provisions were not satisfied, that Metabolite did not formally exercise

a right to terminate the contract, and that the parties’ post-verdict conduct is inconsistent

with termination. But these are simply arguments that the jury was incorrect in the first

case. Collateral estoppel prevents us from reexamining the wisdom of the prior

determination. Even if we viewed Metabolite’s arguments as entirely persuasive,

Metabolite would still be bound by the jury’s finding, upheld by the Federal Circuit, that

the License Agreement was terminated with respect to the homocysteine-only assay. See

Metabolite Labs., 
Inc., 370 F.3d at 1370
. “Ultimately, in allowing collateral estoppel,

courts have decided that the occasional permanent encapsulation of a wrong result is a


       4
         In a somewhat related vein, Metabolite also argues that the License Agreement
was never “[l]awfully” terminated with respect to the homocysteine-only assay. But the
wrongfulness of the termination was the basis for the jury’s award of expectation
damages in the first action. See 
Stopford, 265 A.2d at 667
. Had the contract been
terminated pursuant to the provisions allowing for termination, there would be no
grounds to award any damages. And because Metabolite had a full and fair opportunity
to seek all of its expectation damages in the first case, the alleged unlawfulness of the
original termination has no bearing on the estoppel effect of the jury’s finding that the
License Agreement was terminated with respect to the homocysteine-only assay.

                                             -15-
price worth paying to promote the worthy goals of ending disputes and avoiding

repetitive litigation.” Sec. Exch. Comm’n v. Monarch Funding Corp., 
192 F.3d 295
, 304

(2d Cir. 1999) (quotation omitted).

       We further note that the striking similarity between the arguments advanced by

Metabolite in this case and those advanced by LabCorp in the prior action renders

estoppel particularly appropriate. For example, on appeal to the Federal Circuit in the

first case, LabCorp quoted section 4.02 of the License Agreement and argued that

although “LabCorp advised Metabolite that it would not pay royalties on the Abbott

single homocysteine test . . . LabCorp did not give notice to Metabolite that it was

terminating the Agreement with respect to any Licensed Assay.” Metabolite now quotes

the very same portion of the License Agreement and claims that “LabCorp made no effort

to comply with the termination requirements of Section 4.02.” But Metabolite convinced

the jury and the Federal Circuit that the License Agreement was terminated with respect

to the homocysteine-only assay the first time around, see Metabolite Labs., 
Inc., 370 F.3d at 1370
, and cannot now be heard to argue the opposite proposition. New Hampshire v.

Maine, 
532 U.S. 742
, 749 (2001) (“Where a party assumes a certain position in a legal

proceeding, and succeeds in maintaining that position, he may not thereafter, simply

because his interests have changed, assume a contrary position . . . .”) (quotation




                                            -16-
omitted).5

       We recognize the apparent disconnect between the Federal Circuit’s conclusion

that “a material breach . . . constitutes termination” and the authority it cites, which

stands for the proposition that a material breach provides the non-breaching party a right

to terminate. See Ross-Simons of 
Warwick, 217 F.3d at 11
(material breach “gives the

other party a right to terminate”); Apex Pool 
Equip., 419 F.2d at 562
(same); Restatement

(Second) of Contracts § 237 (same). However, neither the propriety of the Federal

Circuit’s conclusion nor the question of whether the agreement was terminated is

properly before this court.

                                              III

       Because the License Agreement was terminated with respect to the homocysteine-

only assay, and Metabolite was already awarded expectation damages for that termination

in the first action, we agree with the district court that LabCorp was not obligated by the

       5
          Metabolite, citing the same language from New Hampshire, makes its own
argument for estoppel in light of LabCorp’s arguments during a post-verdict hearing
regarding the injunction. LabCorp stated that Metabolite would have “additional claims
for relief” for post-verdict damages if Metabolite won its appeal before the Federal
Circuit. When the district court stayed the injunction, LabCorp was required to create a
letter of credit to pay potential future damages. Metabolite contends that these actions
demonstrate that it is entitled to post-verdict damages and that LabCorp is estopped from
making arguments to the contrary. However, LabCorp’s change in its position was
occasioned by the success of Metabolite’s argument. A loser in one suit is permitted to
adopt the winner’s position in a future suit. Hartley v. Mentor Corp., 
869 F.2d 1469
,
1475 (Fed. Cir. 1989) (“There could be no possible affront to the . . . court by [the losing
party] adopting the position in a second suit which that court held was correct.”).
Further, the stipulated stay order explicitly disclaimed any prejudice in favor of either
party’s claims.

                                             -17-
License Agreement to pay Metabolite royalties based on conduct subsequent to the first

judgment. Accordingly, the judgment of the district court is AFFIRMED.



                                        Entered for the Court



                                        Carlos F. Lucero
                                        Circuit Judge




                                          -18-

Source:  CourtListener

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