New York Univ. v Pfizer Inc NY Slip Op 32702(U) December 18, 2015 Supreme Court, New York County Docket Number: /2013 Judge: Shirley

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1 New York Unv. v Pfzer nc NY Slp Op 32702(U) December 18, 2015 Supreme Court, New York County Docket Number: /2013 Judge: Shrley Werner Kornrech Cases posted wth a "30000" dentfer,.e., 2013 NY Slp Op 30001(U), are republshed from varous state and local government webstes. These nclude the New York State Unfed Court System's E-Courts Servce, and the Bronx County Clerk's offce. Ths opnon s uncorrected and not selected for offcal publcaton.

2 [* FLED: 1] NEW YORK COUNTY CLERK 12/21/ :47 AM NDEX NO /2013 NYSCEF DOC. NO. 45 RECEVED NYSCEF: 12/21/2015 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK C UNTY. r~r "'r= ce :~r r:.:...,,.,.. c... J '.~ <"": -- ;''l"'"~ - PRESENT: JU;;: ;\..:. ~Y~H-,-J- ~ ".. -;:...:._. -~ ~....:-, :... ;...; ~-... ;. ~~:.-::~H PART 5Cf ndex Number : /2013 NEW YORK UNVERSTY VS. PFZER NC. SEQUENCE NUMBER : 001. DSMSS Justce l NDEX NO MOTON DATE /O/j//5 MOTON SEQ. NO. The followng papers, numbered 1 to, were read on ths moton ;to/for Notce of Moton/Order to Show Cause -Affdavts - Exhbts _ No(s). 5'- / 0 Answerng Affdavts - Exhbts " No(s). ~ - 3 l '37 Replyng Affdavts! No(s). 3~ -f/ Upon the foregong papers, t s ordered that ths moton s w ' 0 j:: en :::>., g c w a: 0::: w LL w 0::: > !:!!.... z ::> 0 LL (/J... < 0 w w 0::: g, CJ w z 0::: - en 3: - 0 w... en _, < 0 0 LL -z ::c w 0... j:: 0::: 0 0 ::!: LL Da~: r5. --:;:fj~~~:l5'--.~~fe' J.S.C. ~"<..\. SHRLEY CH 1 1. CHEC~ ONE:... ~CASE DSPOSED 0 NON-FNAL DSP~~T~ 2. CHECK AS APPROPRATE:... MOTON S: ~GRANTED l 0 DENED 0 GRANTED N PART 0 OTHER 3. CHECK F APPROPRATE:... 0 SETLE ORDER 0 SUBMT ORDER ' 0DONOTPOSl" 0 FDUCARY APPONTMENT 0REFERENCE

3 [* 2] SUPREME COURT OF THE STATE OF NEW YORK. COUNTY OF NEW YORK: PART )(. NEW YORK UNVERSTY, ndex No.: /2013 -aganst- Plantff, DECSON & ORDER PFZER NC., Defendant )( SHRLEY WERNER KORNRECH, J.: The plantff n ths acton, New York Unversty '.(NYU), seeks to compel defendant Pfzer nc. (Pfzer) to pay t royaltes allegedly due under'. a lcense agreement for sales of a cancer treatment drug known as )(alkor. Pfzer moves, pursuant to CPLR 32, to dsmss NYU's Amended Complant (the AC). Pfzer's moton s granted for the reasons that follow.. Background & Procedural Hstory As ths s a moton to dsmss, the facts rected are taken from the AC (Dkt. 3) and the documentary evdence submtted by the partes. NYU s a promnent unversty located n Manhattan. Pfzer s a global pharmaceutcal company. n 1990, NYU's Medcal Center hred non-pahy Dr. Joseph Schlessnger to serve as Professor and Charman ofnyu's Department of Pharm~cology. Dr. Schlessnger was "a poneer and expert n elucdatng the mechansm of acton of[ receptor tyrosne knases (RTKs)] and other tyrosne knase as well as the role played by these enzymes and ther sgnalng ; pathways n cancer and other dseases." AC~ 11. "The keneral objectve of hs work was to nvestgate the role of RT Ks and ther sgnalng pathways as a means to nhbt or control the ;, growth of cells, such as cancer cells." d. Dr. Schlessnger had a belef, not shared at the tme ' by some n the scentfc communty, "that novel antcan~er agents could be desgned by

4 [* 3] conductng research n the structure and functon of the tyrosne knase receptor famly, ncludng research focusng on elucdatng the structurafnteractons between these receptor protens n complex wth small molecule nhbtors." ~ 2. The ultmate goal was to change how cancer patents were treated. Rather than treat patents ~th chemotherapy, whch klls both cancerous cells and healthy cells and, as a result, can cajse serous sde effects and complcatons, the dea was to develop medcaton that cnly targets mutated cell receptors ' responsble for the cancer. See Dkt. 18 at 8-9. To devefop such medcaton, "those targets frst 1: needed to be dentfed." See Dkt. 0 at 5. Once dentfed, drugs could be developed to bnd to,, those targets. NYU and Dr. Schlessnger agreed "that NYU would work to dentfy possble receptor targets, and [Dr. Schlessnger] would work to d~velop drugs that bnd to those targets.'" d. Dr. Schlessnger formed a company, Sugen, nc. (Sugen), to perform hs work. On August 16, 1991, NYU and Sugen executed~ lcense agreement whereby "Sugen agreed to fund an 'NYU Research Project' n the feld of certan 'Receptors,' ncludng tyrosne knases, beleved to be useful n the development of drugs to treat cancer"; "NYU granted Sugen an exclusve worldwde lcense to ts 'Research Technolbgy."' See Dkt. 10 at 7. "n exchange for that lcense, Sugen agreed to pay NYU a royalty on drugs that Sugen developed based on NYU Research Technology that target dentfed recept~~s.'' d. The lcense agreement was frst amended n November The operatve verson s the second amended lcense agreement executed n See Dkt. 8 (the Agreement). The seccmd amended Agreement addressed Sugen's possble acquston by another pharmaceutcal bompany. Ths, as dscussed below, ' occurred twce, and s why Pfzer s the defendant n th~~ acton. 2

5 [* 4] The Agreement s a robust contract clearly drafted by sophstcated counsel. t s governed by New York law, contans a merger clause, an~ provdes for jursdcton n ths court. See Dkt. 8 at The Agreement contans an extensve defntons secton, whch, as pertnent to ths acton, defnes the followng terms n secton : () "NYU Know-How" shall mean the Pref Exstng nventons and any nformaton and materals (ncludng, but not lmted to, pharmaceutcal, chemcal, bologcal and bochemcal products, rtformaton, trade secrets, knowhow, techncal and non-techncal data, materals, 1 methods and processes and any drawngs, plans, dagrams, specfcatons and/or 6ther documents contanng such nformaton) dscovered, developed or acqured 'by or on behalf of students or employees of NYU (ncludng [Dr. Schlessnger]) durng the term and n the course of the NYU Research Project (as herenaft~r defned). For the avodance of doubt, NYU Know-How shall nclude any of t~e foregong that are developed durng the term and n the course of the NYU Resbrch Project whether funded by SUGEN or by Unted States government agences':under Secton 4(c) hereof. U) "NYU Patents" shall mean NYU's share n all Unted States and foregn patents and patent applcatons, and any dvson~, contnuatons, n whole or n part, ressues, renewals and extensons thereof, and pendng applcatons therefor: (x) whch clam Pre-Exstng nventond and whch are dentfed on Appendx hereto; or (y) whch clam nventons that are made, 1n whole or n part, by students or employees of NYU (ncludng [Dr. Scrylessnger]) durng the term and n the course of the NYU Research Project (as herenafter defned). For the avodance of doubt, NYU Patents sh~ll nclude any such nventons that are made durng the term and n the course of the NYU Research Project, whether funded by SUGEN or! by Unted States government agences under Secton 4 ( c) hereof. (k) "NYU Research Project" shall mean the nvbstgatons durng the Research Perod nto the feld of the Receptors under the 1 drecton of the NYU Scentst whch are funded by SUGEN and nclude the ~esearch programs descrbed n Appendx hereto whch forms an ntegral part hereof.!; () "Patentable nventon" shall mean a clam n ~n ssued, unexpred patent that has not been held nvald by any fnal decson of~ a court n the relevant country. t also ncludes clams n a pendng applca~on that has prorty from a specfcaton fled less than seven years prevous. 3

6 [* 5] (m) "Receptor" shall mean: ) receptor tyrosne knases, ntracellular tyrosne knases, or receptors that drectly or ndrectly actvate non-rec~ptor tyrosne knases; and/or. ) receptor serne/threonne knases, ntracellular serne/threonne knases, or receptors that drectly or ndrectly actvate serne/threonne knases; and/or ; ) receptor tyrosne phosphatases, ntracellular tyrosne phosphatases, or receptors that drectly or ndrectly actvatf tyrosne phosphatases; and/or v) molecules that regulate the sgnalng pf the above receptors. (n) "Research Perod" shall mean the [ 12] year perod commencng on the Effectve Date hereof and any extenson thereot as to whch NYU and SUGEN shall mutually agree n wrtng. (o) "Research Technology" shall mean all NYU Patents and NYU Know-How. : (q) "SUGEN Product" shall mean any product 1 for the dagnoss, treatment or preventon of human dsease whch contans or c9mprses: ' ) any Receptor (as herenafter defned); ~nd/or ) any substance whch actvates or p 1 revents actvaton or otherwse modulates actvaton of a Receptor; and/o ~,, ) any substance whch nduces, prjvents or otherwse modulates ntracellular actvty of ether the actvated or restng Receptor; and/or v) any substance whch otherwse physcally nteracts wth a Receptor; and/or : v) DNA or RNA encodng any of sad substances, ncludng probes, vectors or cells modfed to contan such DNA or RNA; provded that an nvestgatonal New Drug (~D) applcaton s fled for such SU GEN Product wthn 4 years from the end Jr the Research Perod. SU GEN Product shall not nclude any product that s ltensed by SUGEN from a thrd party other than MPG, provded that such pro~uct does not act by actvatng, preventng actvaton, or otherwse modulatng a ::Valdated Target. 4

7 [* 6] (r) "Valdated Target" shall mean a Receptor t~rget that has been shown to be correlated wth a partcular dsease n whch a srhall molecule therapeutc would offer a reasonable commercal opportunty, a~d where nhbton of target functon n n vtro and n vvo models leads to effectve nhbton of pathophysology. See Dkt. 8 at 7-9 (underlne and talcs n orgnal; bold added). Secton 8(b) provdes: n consderaton for the grant of the Lcense ard durng the term provded n Secton 7(b) provded n Secton 7(b) wth respect to each SUGEN Product[,] SUGEN shall pay to NYU: () a royalty of 1 % of the Net Sales of SU GEN or kny Corporaton Entty; and () a porton of Lcense Revenues determned as follows: (A) 5% of Lcense Revenues wth respect to any SU GEN Product; or : (B) 6.25% of Lcense Revenues wth respect to any SU GEN Product that s covered under SUGEN's agreements wth [REDACTED], and any extensons, modfcatons, or revsohs thereof, provded that wth respect to amounts pad to NYU for ~byaltes such amounts shall not exceed 1 % of the Sublcensee's Net Sa, es n any perod; See Dkt. 8 at 15 (underlne n orgnal). As noted earler, the Agreement - the 1996 secon~ amendment to the orgnal 1991 lcense agreement - specfcally was drafted n contemplaton of Su gen beng acqured by r another company. Ths s addressed n secton 9, ttled "SUGEN Ownershp Change": n the event that SU GEN s acqured or merged wth another company, or that SUGEN acqures or forms a jont venture wth another company, then SUGEN may at ts opton notfy NYU that such othef company wshes to make a determnaton as to whch targets shall be ncluded under the terms of the Agreement pror to the effectve date of any su~h acquston, merger, or jont venture, or as soon as possble thereafter. Ths determnaton shall be made n good fath by NYU and SUGEN and shall b~ based on an examnaton of SUGEN's lab books and other nformaton avalable to the partes, full access (under approprate confdentalty agreements) to ~hch wll be provded to NYU. Wth respect to targets that were adopted by SUG:EN nto drug dscovery pror to the effectve date of the acquston, merger, or jont venture, SUGEN Products developed based on such targets shall be subject to the lcense payments descrbed 5 '

8 [* 7] n Secton 8 hereto. SUGEN Products that are, developed based on Receptor targets whch were not adopted nto drug dsco.very at the tme of the effectve date of such acquston, merger, or jont venture 1 shall be subject to a). a royalty of 2.5% on Net Sales of SUGEN, and/or Corporaton Entty, whch may be offset by 50% of the royaltes pad by SUGEN to t~rd partes (other than MPG), provded that the royaltes due to NYU shall not be less than 1.5% of Net Sales of SUGEN and /or Corporaton Entty and b). 10% qflcense Revenues wth respect to any SUGEN Product, provded that wth respect to such SUGEN Product there exsts a Patentable nventon wth respect to such target and/or ts utlty whch s derved from or based on the Research Technclogy, and provded further that such SUGEN Product shall nclude a product rrespectve of whether an ND applcaton s fled wth respect thereto wthrl 4 years from the end of the Research Perod, or not. See Dkt. 8 at n 996, durng the Research Perod, Sugen began researchng a target called "c-met". NYU alleges that Sugen 's work on c-met led to the creaton of a substance called "crzotnb",! whch s the actve ngredent n Xalkor. Crzotnb, a "small-molecule nhbtor", can nhbt multple targets, one of whch s c-met. Sugen 's ntal development of crzotnb was focused on ts specfc nhbton of c-met. That allegedly occurr~d durng the Research Perod, whch ended on September, n 1999, Sugen was acqufed by a company called Pharmaca. n ',. 2003, Pfzer acqured Pharmaca. Pfzer, thus, s the successor to Sugen under the Agreement. On December 12, 2005, more than four years after the Research Perod ended, Pfzer fled an ND applcaton for crzotnb. "An ND Applc~ton s a request for authorzaton from the Food and Drug Admnstraton (FDA) to admnster an nvestgatonal drug to humans." See Dkt. 0 at 8 n.1. The applcaton named c-met as the target receptor. Whle that applcaton was. pendng, n 2007, scentsts at a Japanese unversty publjshed an artcle n Nature dentfyng another mutated receptor called "EML4-ALK". Pfzer became aware of ths artcle, conducted 1 Secton 11 governs the "Development and Commercalzaton" of a Valdated Target. See Dkt. 8 at

9 [* 8] research on EML4-ALK and dentfed t as a target for crzotnb. Pfzer amended ts crzotnb ND applcaton, changng the target to EML4-ALK. 2 T~e FDA ultmately approved Pfzer s ND applcaton to sell medcne wth crzotnb to target'!eml4-alk. Pfzer named that medcaton Xalkor. NYU clams t s enttled to royaltes of2.5% of Pfzer's Xalkor sales under secton 9 of ' the Agreement. NYU, however, concedes that t s not erttled to royaltes under Secton 8 :; because the ND applcaton for crzotnb was fled n D~cember 2005, more than four years.r after the Research Perod ended n September 200. Nonetheless, NYU clams that Xalkor s a Sugcn Product developed wth NYU Know-How. Pfzcrhsagrccs because Xalkor targets EML4-ALK, a receptor not researched or dscovered wt~ the beneft ofnyu Know-How., NYU docs not dspute ths, but contends that under secton 9, all that s requred for Xalkor to be subject to a royalty s that ts actve ngredent, crzotnb/ was developed wth Research Technology durng the Research Perod. As dscussed below, NYU s wrong. On October 6, 2013, NYU commenced ths acton by flng ts orgnal complant. NYU fled the AC on January 5, 2015, whch contans a sngle ~ausc of acton for breach of secton 9 of the Agrccment. 3 See Dkt. 3. Pfzer fled the nstant mbton to dsmss on January 27, The court reserved on the moton after oral argument. Se~ Dkt. 44 (9/22/15 Tr.).. Legal Standard On a moton to dsmss, the court must accept as t-ue the facts alleged n the complant as } well as all reasonable nferences that may be gleaned frorrt those facts. Amaro v Gan Realty 2 Substances such as crzotnb can mpact multple rcccp(ors, regardless of the target desgnated on the ND applcaton. For the purposes of obtanng regulatory approval from the FDA, however, the applcant must dentfy whch receptor the proposed medcaton wll target. 3 t s undsputed that the Agreement s stll n effect betw~en NYU and Pfzer. Pfzer s currently payng royaltes to NYU for another drug developed by Sugen, called Sutent. 7!

10 [* 9] Corp., 60 AD3d 491 (1st Dept 2009); Skll games, LLC v'.:brody, 1 AD3d 24 7, 250 (1st Dept ~ 2003), ctng McGll v Parker, 179 AD2d 98, 105 ( 1992) 1 ; see also Cron v Harago Fabrcs, 91 NY2d 362, 366 ( 1998). The court s not permtted to ass~ss the merts of the complant or any of ts factual allegatons, but may only determne f, assumhg the truth of the facts alleged and the nferences that can be drawn from them, the complant st~tes the clements of a legally cognzable cause of acton. Sk!lgames, d., ctng Guggenhemer v G.,nzburg, 43 NY2d 268, 275 (1977). " Defcences n the complant may be remeded by affdavts submtted by the plantff. Amaro, ; 60 NY3d at 491. "However, factual allegatons that do not state a vable cause of acton, that consst of bare legal conclusons, or that are nherently n~redble or clearly contradcted by documentary evdence are not enttled to such consderathn." Skllgames, 1 AD3d at 250, ctng Cangla v Chcago Trbune-New York News Syndcate, 204 AD2d 233 (1st Dept 1994). Further, where the defendant seeks to dsmss the complant basedl upon documentary evdence, the moton wll succeed f "the documentary evdence utterly/efutes plantffs factual allegatons, conclusvely establshng a defense as a matter of law." Goshen v Mutual l{fe ns. Co. ofn. Y., 98 NY2d 314, 326 (2002) (ctaton omtted); Leon v Mart'Ynez, 84 NY2d 83, 88 (1994). ;. ll. Dscusson Ths case turns on the nterpretaton of secton 9 of the Agreement, whch apples where,., as here, Sugen "s acqured or merged wth another company." t s well settled that contracts must be "construed n accord wth the partes' ntent." G~eenfeld v Phl/es Records. nc., 98 NY2d 562, 569 (2002). "The best evdence of what partds to a wrtten agreement ntend s what they say n ther wrtng. Therefore, a wrtten agreement t~hat s complete, clear and ; unambguous on ts face must be enforced accordng to th~ plan meanng of ts terms." d. (ctatons omtted). "A contract s unambguous f the language t uses has 'a defnte and precse 8

11 [* 10] meanng, unattended by danger of msconcepton n the purport of the [agreement] tself, and concernng whch there s no reasonable bass for a dffeence of opnon." d., quotng Breed v ns. Co. ofn. Am., 46 NY2d 351, 355 (1978). "Thus, f ~he agreement on ts face s reasonably susceptble of only one meanng, a court s not free to alt~r the contract to reflect ts personal notons of farness and equty." Green.feld, 98 NY2d at ~ Moreover, "a contract should,, be 'read as a whole, and every part wll be nterpreted wth reference to the whole; and f possble t wll be so nterpreted as to gve effect to ts ge:neral purpose."' Beal Sav. Bank v. Sommer, 8 NY3d 318, (2007), quotmg Westmoreland Coal Co. v Entech, nc., 100 NY2d 352, 358 (2003). Fnally, "a contract should not be nterpreted to produce an absurd result, one that s commercally unreasonable, or one that s contrar~ to the ntent of the partes." Cole v Mack/owe, 99 AD3d 595, 596 (1st Dept 2012), ctng n ~e Lpper Holdngs, LLC, AD3d 170, ' 7 ( st Dept 2003) (ctatons omtted). As noted, NYU admts t s not enttled to royaltes under secton 8 because Xalkor was not "adopted by SU GEN nto drug dscovery pror to the 1 effectve date of the acquston, merger, or jont venture" [see Dkt. 8 at 6] and the ND ~pplcaton for crzotnb was fled more ' than four years after the Research Perod ended. Rather,::NYU clams enttlement to royaltes under secton 9, whch apples to "SUGEN Products that 1 are developed based on Receptor 1, targets whch were not adopted nto drug dscovery at the tme of the effectve date of such acquston, merger, or jont venture." See d. NYU's enttlement to royaltes under secton 9 s.!subject to the caveats set forth n the concludng language of that secton: [] provded that wth respect to such SUGEN Product there exsts a Patentable nventon wth respect to such target and/or ts utlty whch s derved from or based on the Research Technology, and [2] provded further that such SUGEN 9

12 [* 11] :, Product shall nclude a product rrespectve of w~ether an ND applcaton s fled wth respect thereto wthn 4 years from the end bf the Research Perod, or not. '. See d. at (brackets added). The partes dspute whether caveat [ 1] apples to :Xalkor. As a threshold matter, under secton 9, NYU s only enttled to royaltes on SUGEN Products, whch are defned n secton,. ( q) to mean "any product for the dagnoss, treatment of preventon of human dsease whch :1. contans or comprses: ) any Receptor (as herenafter defned); and/or ) any substance whch actvates or prevents adtvaton or otherwse modulates actvaton of a Receptor; and/or ) any substance whch nduces, prevents or dtherwse modulates ntracellular actvty of ether the actvated or restng Rece~tor; and/or v) any substance whch otherwse physcally nt acts wth a Receptor; and/or v) DNA or RNA encodng any of sad substan~es, ncludng probes, vectors or cells modfed to contan such DNA or RNA; :, provded that an nvestgatonal New Drug (ND) applcaton s fled for such SU GEN Product wthn 4 years from the end Jr the Research Perod. SU GEN Product shall not nclude any product that s l~ensed by SUGEN from a thrd party other than MPG, provded that such product does not act by actvatng, preventng actvaton, or otherwse modulatng a Valdated Target. See Dkt. 8 at 8-9 (emphass added).! t s undsputed that the bolded condton does not apply, ether to the ntal crzotnb applcaton for the c-met target or the subsequent appldton for the EML4-ALK target, both of whch were fled more than four years after the Research 1 :Perod ended. Ths, however, does not matter, snce caveat [2] n secton 9 expressly amends th~ defnton of SU GEN Product to,, elmnate ths requrement. Thus, Xalkor meets the def~ton of SU GEN Product because t s a 10

13 [* 12] cancer treatment drug that contans a substance affectng,a Receptor. EML4-ALK s a Receptor because t s a mutated verson of ALK, an RTK. The only dsputed materal ssue s the meanng of the words "wth respect to such SUGEN Product there exsts a Patentable nventon wth ~espect to such target and/or ts utlty whch s derved from or based on the Research Technoldgy." The partes dspute the sgnfcance of the phrase "wth respect to such target and/or ts utlty" and dsagree about whether "and/or ts utlty" modfes the words "such targkt" or "Patentable nventon". Pfzer contends "and/or ts utlty" modfes "such target" and af,gues that snce Xalkor targets EML4- ALK, a target dscovered by Japanese scentsts wthout the ad of any NYU technology, NYU s not enttled to royaltes on Xalkor under secton 9. NYU. dsagrees. NYU avers that "and/or ts utlty" modfes "Patentable nventon" and contends that snce crzotnb, the actve ngredent! n Xalkor, was developed based on NYU's Research Technology (e.g., X-ray crystallography),!; NYU s enttled to royaltes on Xalkor. Essentally, the partes' dsagreement s whether secton ' 9 grants NYU royaltes on () any drug developed wth t~e beneft of NYU 's Research Technology; or (2) only a drug that targets a receptor dertfed wth the beneft of NYU's Research Technology. Secton 9 s not ambguous. See Unversal Am. djrp. v Nat 1 Unon Fre ns. Co. of Pttsburgh. Pa., 25 NY3d 675, 680 (2015) ("partes canndt create ambguty from whole cloth where none exsts, because provsons 'are not ambguou~ merely because the partes nterpret them dfferently."'), quotng Mount Vernon Fre ns. Co. ~Creatve Housng Ltd., 88 NY2d 347, 352 (1996). The only commercally reasonable way to n!erpret "and/or ts utlty" s as a modfer to "target". NYU's nterpretaton makes no grarhmatcal sense because the expresson "a Patentable nventon wth respect to ts utlty" s not a;cogent statement. f anythng, t s 11

14 [* 13] :1 redundant, as one can only patent somethng wth utlty. 35 USC 01 ("Whoever nvents or dscovers any new and useful process, machne, manufac'ture, or composton of matter, or any :j new and useful mprovement thereof: may obtan a paten,t therefor, subject to the condtons and requrements of ths ttle") (emphass added); see Alce Corp. v CLS Bank nt'/, 134 SCt 2347, 2354 (2014) ("abstract deas are not patentable"). n contrast, the expresson "such target and/or ts utlty" expresses a clear concept,.e., a target's utlty~ such as how medcaton nteracts wth the target.,. That sad, regardless of the words modfed by "and/or ts utlty", Pfzer's nterpretaton,, s correct. Xalkor was not "derved from or based on th~' Research Technology'' because NYU had nothng to do wth Xalkor's target, EML4-ALK. Wfule t s undsputed that NYU's Research Technology dd not ad n the dscovery of Xal~or's target, NYU contends ths does not matter. However, f the partes ntended the Agreeme:nt to carry NYU's nterpretaton, the words "wth respect to such target and/or ts utlty" would not have been ncluded. Secton 9's caveat [] would have nstead read "wth respect to such SU GEN Product there exsts a Patentable nventon whch s derved from or based on th,e Research Technology." The court may not nterpret secton 9 wthout gvng meanng to the.' words "wth respect to such target and/or ts utlty" because the "law requres that the termstof a contract be read n context." CT,; nv. Mgmt. Co., LLC v Chart s Specalty ns. Co., 130 A~3d 1, 7 (1st Dept 2015). Courts must ;f "avod an nterpretaton that would leave contractual clau~es meanngless." TBA Global. LLC v Fdus Partners, LLC, 132 AD3d 195, 204 (1st Dept 2015), ctng Two Guys.from llarrson-n. Y. ;.. " v SF. R. Realty Assocs., 63 NY2d 396, 403 (1984); see Kolbe v Tbbetts, 22 NY3d 344, 354 (2013) (rejectng nterpretaton that "both conflcts wth t~e most natural readng of the sentence and renders meanngless the [subject contractual] provson"); see also Beal, 8 NY3d at ' 12

15 [* 14] ("a contract should be 'read as a whole, and every part wll be nterpreted wth reference to the whole; and f possble t wll be so nterpreted as to gve 1 effect to ts general purpose"), quotng Westmoreland, 100 NY2d at 358. NYU concedes that EML4-ALK was not dentfed wth the beneft of any ofnyu's Research Technology. NYU wrongly focuses on the fact that crzotnb, as well as Xalkor, may.; both be consdered SUGEN Products. That fact would merely satsfy the requrement that the "Patentable nventon... s derved from or based on the Research Technology." Such fact has no bearng on whether what was "derved from or based?n the Research Technology" s a "Patentable nventon wth respect to such target and/or ts utlty." NYU has not alleged any Patentable nventon (whether owned by NYU or anyone: else) relatng to EML4-ALK, the target, whch was derved from NYU's Research Techno!ogy. To be sure, there may exst a Patentable nventon derved from NYU's Research Technology wth respect to crzotnb, but that does not matter. The relevant nqury s not whether the Sugen Product or ts actve ngredent was produced wth the beneft ofnyu's Rese~rch Technology. What matters s whether that Patentable nventon concerned the target, not the substance that affects that target. To be clear, the reason NYU s not enttled to royjtes on Xalkor does not tum on whether NYU has any connecton to the development of 9rzotnb. ndeed, the court assumes, as t must on ths moton, that crzotnb was developed by Sugen wth the beneft ofnyu technology. However, to be enttled to royaltes under se6to'n 9, there.. must be a nexus to the product's target. When secton 9 speaks of utlty, t s referencng the noton that t~e product beng developed s a cancer drug desgned to target a spe~fc receptor. Xalkor, as dscussed, was approved by the FDA to target EML4-ALK, not c-m~t. 13

16 [* 15] n concluson, t should be noted that the context Of Secton 9' s addton to the Agreement supports Pfzer's nterpretaton. Secton 9, whch dd not': exst n the pror versons of the Agreement, was specfcally added n 1996 n contempla~on of Sugen beng acqured. t ' expands the crcumstances n whch NYU s enttled to a ~oyalty. Unlke royaltes due under secton 8, royaltes under secton 9 can apply to products';submtted for FDA approval more than four years after the end of the Research Perod. The purpose of secton 9, captured by the caveats, s that medcaton targetng a receptor dentfed!as a result of NYU's contrbutons should be subject to royaltes. As dscussed, NYU's contrbuton was to dentfy targets and Sugen's contrbuton was to develop medcne for those targets. Therefore, t makes commercal :1 sense for the caveats to lmt NYU's enttlement to royaltes under secton 9 to products developed long after the Research Perod ended when the product targets a receptor dentfed by NYU or by someone else wth the beneft of NYU's technology or know-how. Otherwse, the product would not have resulted from NYU's contrbutdns to Sugen. The only commercally reasonable nterpretaton of secton 9 s that NYU must have contrbuted to the dscovery of Xalkor's target. NYU dd not. Consequently, t s not enttled to royaltes on Xalkor. Accordngly, t s ORDERED that the moton by defendant Pfzer nc. to dsmss plantff New York l Unversty's Amended Complant s granted, and the Clerk s drected to enter judgment dsmssng the Amended Complant wth prejudce. Dated: December 18, 2015 ENTER: J..c. SHRLEY VERNER KORNR~~~~ 14