Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Steady State Imaging, LLC v. General Electric Co.

United States District Court, D. Minnesota

January 17, 2018

STEADY STATE IMAGING, LLC, Plaintiff,
v.
GENERAL ELECTRIC COMPANY, Defendant.

          DEVAN V. PADMANABHAN, LISA B. ELLINGSON, AND PAUL J. ROBBENNOLT, WINTHROP & WEINSTINE, PA, FOR PLAINTIFF.

          MARLA R. BUTLER, ROBINS KAPLAN LLP, FOR DEFENDANT.

          MEMORANDUM OPINION AND ORDER ADOPTING REPORT & RECOMMENDATION

          JOHN R. TUNHEIM CHIEF JUDGE

         This diversity action arises out of an asset purchase by Defendant General Electric Company (“GE”) from Plaintiff Steady State Imaging, LLC (“SSI”), whose primary business involved technology that SSI licensed from the University of Minnesota (“U of M”), the original developer. SSI alleges that GE breached certain provisions of the asset-purchase agreement. SSI also asserts claims for breach of the implied covenant of good faith and fair dealing, breach of post-agreement contracts, and promissory estoppel. GE moved to dismiss all of SSI claims except the breach-of-contract claim related to the asset-purchase agreement.

         United States Magistrate Judge Katherine Menendez issued a Report and Recommendation (“R&R”) in which she recommended that GE's motion be granted in part and that SSI's claim for breach of the implied covenant of good faith and fair dealing be dismissed. SSI filed objections to the R&R. After a de novo review, the Court will overrule SSI's objections and adopt the R&R because SSI has failed to state a claim for breach of the implied covenant of good faith and fair dealing. Accordingly, the Court will dismiss that claim from SSI's complaint.

         BACKGROUND

         The U of M developed a new technique for magnetic resonance imaging (“MRI”) called “Sweep Imaging with Fourier Transform” (“SWIFT”). (Am. Compl. ¶¶ 6, 11, May 19, 2017, Docket No. 22.) The U of M owns numerous patents and patent applications related to SWIFT. (Id. ¶ 12.)

         In 2006, the U of M and SSI entered into an Exclusive Patent License Agreement (“PLA”) in which SSI licensed from the U of M the SWIFT-related patents, patent applications, and related intellectual property. (Id. ¶ 16.) The PLA requires SSI to commercialize SWIFT. Specifically, SSI must “use its commercially reasonable efforts, consistent with sound and reasonable business practices and judgment, to commercialize [SWIFT] as soon as practicable and to maximize sales thereof.” (Id. ¶ 19.)

         In 2011 GE entered into an Asset Purchase Agreement (“APA”) with SSI in which GE acquired substantially all of SSI's assets. (Id. ¶ 21.) Unlike SSI's agreement with the U of M, the APA does not require GE to commercialize SWIFT. It does, however, require GE to create an “ATD Program” - which is “an investigative research and development program whose purpose is to evaluate the clinical and technical feasibility of a particular technology” - and potentially also an “NPI Program, ” which is “a business program for pursuing the launch of a new commercial product.” (Id. ¶¶ 24-25.) Paragraph 2.2(a)(iv)(D) of the APA provides:

[GE] shall have no obligation to pursue the commercialization of [SWIFT] or use any specific level of efforts if [GE] chooses to commercialize [SWIFT]. Notwithstanding the preceding sentence, (1) following the Closing, [GE] shall create, in accordance with its standard policies and procedures, an ATD Program with respect to the SWIFT Technology and (2) if, following the completion of the ATD Program, [GE] determines in its sole discretion that an NPI Program is appropriate for any product using the SWIFT Technology, [GE] shall create, in accordance with its standard policies and procedures, an NPI Program with respect to such product.

         (Sealed Ex. 2 (“APA”) at 11, ¶ 2.2(a)(iv)(D), June 2, 2017, Docket No. 28.) The APA also requires GE to pay SSI per-unit royalties on any MRI scanners sold by GE that incorporate the SWIFT technology. (Am. Compl. ¶ 26; APA at 9-10, ¶ 2.2(a)(i)-(iv).)

         The APA includes a document titled “Instrument of Assumption.” (APA at 170.) In it, GE assumed all of SSI's rights and liabilities under SSI's PLA with the U of M. (Id.; see also Am. Compl. ¶ 22.)[1] The Instrument of Assumption states, however, that “[i]n the event that any provision of this Instrument of Assumption conflicts with, or is inconsistent with, any provision of the [APA], the provisions of the [APA] shall control.” (APA at 170.)

         SSI brought this action against GE, alleging that GE breached the APA by failing to create an ATD Program, not commercializing SWIFT, and prioritizing its own “Silent Scan” technology over SWIFT. (Am. Compl. ¶¶ 27-29.) SSI alleges that GE had “ulterior motives” for failing to commercialize SWIFT: namely, to avoid making royalty payments to SSI. (Id. ¶¶ 32-34.) SSI also alleges that, after the asset purchase, GE promised SSI that it would commercialize SWIFT. (Id. ¶¶ 35-40.) SSI asserts claims for breach of contract (Counts I and III), breach of the implied covenant of good faith and fair dealing (Count II), and promissory estoppel (Count IV). (Id. ¶¶ 41-63.)

         GE moved to dismiss all of SSI's claims except the claim for breach of the APA. (Def.'s Renewed Partial Mot. to Dismiss, June 2, 2017, Docket No. 24.) The Magistrate Judge recommended that GE's motion be granted in part: that SSI's claim for breach of the implied covenant of good faith and fair dealing (Count II) be dismissed, but that SSI's remaining claims not be dismissed. (R&R at 24, Nov. 2, 2017, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.