## Facts

- Massachusetts Eye and Ear Infirmary (MEEI) conducted research on photodynamic therapy for age-related macular degeneration (AMD).
- QLT Phototherapeutics, Inc. (QLT) owned or controlled rights to a photosensitive compound (BPD) and sought clinical applications for it.
- QLT and MEEI entered a confidential research funding arrangement: QLT supplied BPD and funding, and MEEI performed research on use of BPD for AMD.
- MEEI researchers generated know-how, data, and presentations relevant to clinical development, regulatory approval, and commercialization.
- MEEI alleged QLT used MEEI’s confidential work to secure and advance commercial partnerships for Visudyne while refusing to grant MEEI a license or revenue share that MEEI claimed QLT had implied or encouraged.
- After a prior appeal restored key claims for trial, a jury found QLT liable for unjust enrichment and for unfair or deceptive acts under Massachusetts General Laws chapter 93A.
- The jury awarded restitution measured as a running royalty of 3.01% of global net Visudyne sales; the district court entered judgment and awarded attorneys’ fees under chapter 93A.

## Issues

1. Whether the evidence supported unjust enrichment liability under Massachusetts law for QLT’s use of benefits conferred by MEEI in developing and commercializing Visudyne.
2. Whether restitution could be measured by a running royalty on global product sales, and whether the 3.01% rate was supported by the record.
3. Whether QLT’s conduct supported liability under Massachusetts General Laws chapter 93A, §§ 2 and 11.
4. Whether alleged evidentiary, instructional, or trial-management errors required a new trial or other relief.
5. Whether the chapter 93A attorneys’ fee award was properly supported and reviewable on appeal, and whether enhanced damages were required.

## Decision

- Affirmed the jury’s finding of unjust enrichment, concluding the record permitted a finding that QLT knowingly received and retained benefits from MEEI under circumstances making retention without compensation unjust.
- Affirmed the restitution remedy as a 3.01% running royalty on global net Visudyne sales, holding that Massachusetts restitution law permits a sales-based royalty where the benefit conferred is closely tied to the revenue stream and precise valuation is difficult.
- Rejected QLT’s argument that the royalty improperly created patent-like rights or conflicted with federal patent law; the remedy was state-law restitution tied to the parties’ dealings.
- Affirmed chapter 93A liability based on evidence of misuse or disclosure of confidential information and inducement of further disclosures through suggestions of a future license or compensation.
- Found no reversible trial error in the challenged evidentiary rulings or jury instructions.
- Affirmed entitlement to attorneys’ fees under chapter 93A but remanded for further proceedings because the record did not permit meaningful appellate review of the amount.
- Rejected MEEI’s request for greater chapter 93A relief, including multiple damages, finding no basis to disturb the trial court’s denial of enhancement.

## Legal Principles

- Under Massachusetts law, unjust enrichment requires proof that the defendant knowingly received a benefit and that retention of the benefit without payment would be unjust in the circumstances.
- Restitution may be measured flexibly, including by approximations, when the value of the benefit is difficult to quantify but the enrichment is demonstrably connected to a commercial product or revenue stream.
- A running royalty tied to sales can be a permissible restitution measure when the plaintiff’s contributions are closely linked to the defendant’s product revenues.
- State-law restitution remedies for misuse of confidential research benefits are not preempted merely because the subject matter relates to scientific innovation; the remedy may stand where it does not grant exclusive patent rights or conflict with federal patent policy.
- Massachusetts General Laws chapter 93A, §§ 2 and 11 reaches unfair or deceptive conduct in commercial dealings, including misuse of confidential information and inducing disclosures through misleading assurances in a business relationship.
- A prevailing chapter 93A plaintiff is entitled to reasonable attorneys’ fees, but the fee amount must be supported by a record sufficient for review.

## Conclusion

The First Circuit upheld liability for unjust enrichment and chapter 93A violations and sustained a 3.01% running royalty on global Visudyne sales as a permissible restitutionary measure, while remanding only for further support and clarification of the attorneys’ fee amount.


Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47 (1st Cir. 2009)