February 19, 2013

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BYU v. Pfizer

BYU Professor Stakes a Claim Against a Drug Giant

Heather Stewart

February 19, 2013

In 2006, Brigham Young University and Professor Daniel Simmons filed suit against the drug giant Pfizer. The legal dispute was big in the sense that it potentially involved billions of dollars—and it also had ramifications for how companies deal with electronic document retention and discovery.

The lawsuit stemmed from the early ‘90s, when Simmons discovered the gene and enzyme Cox 2. BYU and Simmons entered into a contractual partnership with Monsanto to develop an anti-inflammatory drug that would inhibit the Cox 2 enzyme, providing long-term relief from the pain and inflammation associated with arthritis and other chronic conditions, without the gastrointestinal side effects of traditional pain relievers.

According to attorney Mark Bettilyon of Ray Quinney & Nebeker, who represented BYU and Simmons, Monsanto agreed to protect the intellectual property and include Simmons on any patents. Under the agreement, BYU was to receive royalties from drug sales. Monsanto was eventually absorbed into Pfizer, which took over the contract. “Years later, Dr. Simmons realized he had been misled by Pfizer,” says Bettilyon.

Pfizer disagreed that there had been any breach of contract and claimed Simmons’ contributions were not important—that it was its own independent discoveries that ultimately led to the development of the drug, explains Bettilyon.

The drug, Celebrex, has become hugely profitable for Pfizer—the plaintiffs requested 15 percent of Pfizer’s revenue from the drug, or $9.7 billion. Additionally, the court could have awarded billions more in punitive damages. The parties settled a few weeks before the case was scheduled to go to trial in 2012. Although neither party disclosed the terms of the settlement, in regulatory filings Pfizer reported a $450 million charge against earnings to settle the dispute.       

“BYU is very happy with the settlement,” says Bettilyon, who cannot discuss the specific details of the settlement. “It will have a very positive impact on the university.” He notes the university intends to use some of the money to establish a Daniel Simmons Chair in recognition of the professor’s contributions to healthcare and science.

At its heart, the BYU v. Pfizer case was a simple breach of contract dispute. “Unfortunately, this happens with some degree of regularity in America,” says Bettilyon. However, the case also raised important issues about discovery and document retention.

In 2009, mid-way through the dispute, Pfizer was ordered to pay more than $850,000 in fines and attorney fees for discovery delays and document destruction. BYU later filed additional motions for sanctions related to discovery, but the judge ruled that Pfizer appeared to be cooperating and that the company was not required to retain electronic documents dating back to the ‘90s without the reasonable expectation of legal proceedings related to the data.

 The case highlights the importance for companies of implementing a good-faith document retention policy that allows for electronic data to be deleted after a set period of time and when it is clear the data is not pertinent to an impending legal action.

Bettilyon also says Pfizer’s original misconduct and subsequent sanctions highlights the need for attorneys to discuss discovery with their clients early on. “When you are at the beginning stages of litigation, counsel should have a conversation with their client to make sure they understand their obligations in regard to retaining and producing documents,” he says.

With the six-year legal battle now settled, Bettilyon says, “This was a fascinating case because it involved a lot of biotechnology. It was an incredible opportunity for me to learn new things.”

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