Tech Transfer eNews Blog

Michigan State asks judge to dismiss licensee lawsuit alleging fraud, breach of contract


By Jesse Schwartz
Published: August 21st, 2019

Michigan State University (MSU) is asking a judge to dismiss a lawsuit alleging the university committed fraud and breach of contract concerning a technology designed to protect soldiers and athletes.

The lawsuit comes from two Detroit-based companies, Composite Innovation Group (CIG) and its subsidiary Atomic Composites. The companies say that MSU tried to license them the technology without taking the necessary steps to patent it, thereby unfairly burdening the companies with protecting the intellectual property behind the technology. (For more background, go here.)

In a response sent to the Michigan Court of Claims recently, MSU says there are a number of problems with the complaint, including issues with timing and failure to meet legal standards. According to the university’s attorney James Cleland, the companies failed to submit a verified complaint, a requirement in Michigan courts designed to deter people from making false statements in lawsuits.

In their suit, CIG and Atomic say Richard Chylla, head of MSU Technologies, told them the university held patent rights for potential inventions during license negotiations, and that this swayed their decision on whether to enter the agreement. Chylla maintains, however, that he “never met or spoke to” anyone with either of the companies until May 2018, the original negotiations having occurred in 2013.

The companies also claim MSU terminated the license so it could take over the patents and development work CIG and Atomic had performed and cover up its failure to meet deadlines. But MSU tells a different story in its response, stating that the companies failed to make a $50,000 payment reimbursing the university for patent-related costs, despite deadline extensions, and failed to provide enough detail in a business plan for 2018, thus leading to the termination of the license.

MSU also claims immunity from three of the companies’ allegations, citing the state’s Governmental Tort Liability Act.

“MSU is entitled to immunity, even from the tort of fraud,” it states, adding that immunity extends to Chylla in his role at MSU Technologies. The university also says that the claim of breach of contract is “facially insufficient and fails to state a claim” for which the companies can ask for relief. According to MSU, the claim is “a mere vague conclusion, with no alleged facts to support it.”

Source: Lansing State Journal

Posted under: Tech Transfer e-News

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