agreement mentions only a right to sell, exclusive distributor arrangements can be

permissible. See Unidisco, Inc. v. Schattner, 824 F.2d 965, 968 (Fed. Cir. 1987); Lisle,

777 F.2d at 694-95, But the Angiotech Agreement specifically separates the right to
distribute from the right to sell. This language evinces a clear intent that distributing,
or selling for the purpose of resale, was not included in the companion right to sell. The
structure of the Angiotech Agreement thus indicates that the right to distribute the
Licensed Applications is not congruent with the tight to sell, but the parties did not
define what activities the term “distribute” includes. In the absence of an explicit
definition, we must assume that the parties intended the word to maintain its ordinary
meaning. Blue Mountain Memorial Gardens v. Washington, 971 P.2d 75, 77 (Wash.
App. Ct. 1999). To distribute is to act as a wholesaler or other “merchant middleman”
who is authorized by a manufacturer or supplier to sell chiefly to retailers and
commercial users. Black’s Law Dictionary 475-76 (6th ed. 1990). As stated, the ability
of a patent licensee to sell a licensed product to a distributor, who then resells the
product, is carried out under “sale” rights of licenses. See Unidisco, 824 F.2d at 968;
Lisle, 777 F.2d at 694-95. The licensee exercises its right to sell the licensed product
in making the first sale to the distributor, and the distributor then resells the product to
other parties. But for the patent exhaustion doctrine, the distributor’s resale would be
an impermissible activity barred by the license. As we have noted, the Angiotech
Agreement does not use a blanket grant of a right to sell the Licensed Applications, as

was the case in Unidisco and Lisle; instead, the license specifically uses the separate

-13-


material fact .” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting
Fed.R.Civ.P. 56(c)). This initial burden may be satisfied by presenting specific evidence
on a particular issue or by pointing out “an absence of evidence to support the non-

moving party’s case.” Celotex, 477 U.S. at 325. Once the movant has met this burden,

the non-moving party cannot simply rest on the allegations in the pleadings, but “must
set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P.
56(e). A “genuine issue” in the context ofa motion for summary judgment is not simply

a “metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co., Ltd. v.

Zenith Radio Corp., 475 U.S. 574, 586 (1986); rather, “[a] genuine issue exists when
the evidence is such that a reasonable jury could find for the non-movant,” Buscaglia
v. United States, 25 F.3d 530, 534 (7th Cir. 1994). When reviewing the record we must
draw all reasonable inferences in favor of the non-movant; however, “we are not
required to draw every conceivable inference from the record—only those inferences that

are reasonable.” Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir. 1991),

When parties file cross motions for summary judgment, each motion must be
assessed independently, and denial of one does not necessitate the grant of the other.
Heder v. City of Two Rivers, 149 F. Supp. 2d 677, 683 (E.D. Wis. 200 1). Rather, each
motion evidences only that the movant believes it is entitled to judgment as a matter of
law on the issues within its motion and that trial is the appropriate course of action if
the court disagrees with that assessment. Miller v. LeSea Broadcasting, Inc., 87 F.3d

224, 230 (7th Cir. 1996). With these principles in mind, we turn to the parties’ motions.

-4-


Because we conclude that Cook’s arrangement with ACS exceeded the scope of
its rights under the Angiotech Agreement, Boston is entitled to summary judgment that
Cook has violated Boston’s rights under the Angiotech Agreement. Cook’s cross-
motion to the contrary is correspondingly denied.

CONCLUSION
Based on the foregoing analysis, we grant Boston’s cross-motion for summary

judgment and deny Cook’s cross-motion for summary judgment.

Cpe Ore P loceree

Charles P. Kocoras
United States District Judge

Dated: June 26, 2002

~17-


distribution activities are restricted by the lack of a textual grant of a tight to have the
Licensed Applications distributed.

At the outset, we note that the overall structure of the Angiotech Agreement
clearly evinces an intent that only Cook and Boston are to be players in the paclitaxel
business. The license Angiotech granted is exclusive to Cook and Boston, meaning that
Angiotech cannot later license the same rights to other parties. Angiotech Agreement,
{| 2.1. In addition, the plain language of the Angiotech Agreement states that the rights
granted to Cook and Boston are to be coextensive and the exercise thereof is subject to
the rights of the other. Id. There is no room in this set-up for another party to be
introduced, except with unanimous consent of all parties. Id., { 11.7. Despite this
overwhelming tenor of exclusivity, Cook now insists that it can add ACS to the mix
pursuant to its rights to sell or distribute Licensed Applications.

The Right to Sell

Cook first relies on its right to sell, arguing that the transaction with ACS
includes a sale of the Licensed Applications to ACS. According to Cook, any activity
ACS engages in after the purported sale is outside the reach of the patent and
consequently the license rights by operation of the patent exhaustion doctrine, which
provides that a patent holder’s rights (and thus a licensee’s) are protected only up until
the product is first sold by an authorized party. See ULSI, 995 F.2d at 1568. Sales
subsequent to the first sale do not implicate the patent or license rights. Id, In other

words, a license to sell is really a license to make a first sale. In support of the propriety

-9-


the contract. Id., 11.7. Any breach by Cook would therefore directly impact Boston’s
rights under the Angiotech Agreement. Boston also satisfies the second and third
elements: the actions that would cause the injury to Boston’s rights of exclusivity are
directly traceable to Cook’s action in entering into the ACS Agreements, anda decision
in favor of Boston that Cook’s actions are impermissible under the Angiotech
Agreement will prevent any encroachment on Boston’s exclusive ri ights to engage in the
licensed activities, thereby redressing Boston’s injury. Thus, Boston has standing to
pursue its action that Cook has breached the Angiotech Agreement and in so doing, has
violated Boston’s coexclusive license rights. We turn to an examination of the
respective agreements.
The Angiotech and ACS Agreements

The Angiotech Agreement licenses patented paclitaxel technology to Cook and
Boston. Disputes surrounding patent licenses are not run-of-the-mill contract cases;
these agreements have unique attributes that set them apart from other contractual
arrangements. At the time a patent is issued, the patent holder has all the rights to the
patent that are granted by statute. 35 U.S.C. § 100 et seq. Through the license, the
patent holder (the licensor) grants certain rights to another party (the licensee), which
amount to an agreement not to sue the licensee for the activities described within the
license. Munters Corp. v. Burgess Indus., Inc., 194 US.P.Q. 146, 153 (S.D.N.Y. 1977).
Without the license, the activities in which the licensee engages would constitute patent

infringement. Public_Varieties of Mississippi, Inc. v. Sun Valley Seed Co., 14

-6-


DISCUSSION

Although the complaint in this case includes counts that are not based on breach
of contract, the motions at issue both center on whether the Angiotech Agreement
allowed Cook to enter into the ACS Agreements. Boston argues that the latter
Agreements constitute an assignment of Cook’s rights to distribute and sell the Licensed
Applications as well as an improper delegation of Cook’s responsibility for obtaining
regulatory approval. Cook insists that its arrangement with ACS is a valid and
permissible exercise of its licensing rights and claims that Boston has no standing to
bring any claim against Cook arising out of the terms of the Angiotech Agreement.
Because Boston cannot bring any action without standing to do so, we examine that
issue at the outset.
Boston’s Standing

To have standing to sue, a party must show three things: (1) injury in fact; (2) a
causal connection between the injury and the actions of the defendant; and (3) a
likelihood that a favorable decision will redress the injury. Lujan v. Defenders of
Wildlife, 112 S. Ct. 2130, 2136 (1992). Boston clearly has standing to proceed in an

action predicated on a contract to which it was aparty. Bortv. Parker, 42 P.3d 980, 987

(Wash. App. Ct. 2002). Cook’s rights under the Angiotech Agreement are subject to
the rights granted to Boston. Angiotech Agreement, § 2.1. Additionally, Cook and
Boston are in contractual privity to an agreement that, among other things, requires

permission of each of them and Angiotech before the transfer of any of its rights under

-5-


Technology.’ Because ACS does not have access to the Angiotech Technology, Cook
insists that there is no violation of the license. This view of the license’s coverage is
entirely too narrow. It disregards the fact that the language of the Angiotech Agreement
explicitly provides not only that Cook and Boston will be the only parties practicing the
Angiotech Technology but also that they are the sole parties who can make, have made,
use, distribute, or sell Licensed Applications. Involved here are the distribution and sale
of products that qualify as Licensed Applications, activities clearly within the ambit of
the license in the Angiotech Agreement. Cook’s contention that it cannot be in breach
of the Angiotech Agreement because ACS is not the party who applies the paclitaxel
is therefore without merit.

In arguing their respective positions on breach of the Angiotech Agreement, both
parties attest that the Angiotech Agreement is unambiguous, but each offers a different
interpretation of its language. Cook insists that the Angiotech Agreement grants it an
unrestricted right to sell the Licensed Applications to whomever it pleases and an
unrestricted right to distribute those Applications to parties who are not ultimate users
of the product but who intend to distribute the product via resale. Boston, on the other
hand, disputes that Cook’s rights are unrestricted, claiming instead that they are subject

to Boston’s coextensive rights under the license. Boston also points out that Cook’s

?This argument rings somewhat hollow in light of 2.2 of the Component
Supply Agreement, which states that six months after the effective date of the ACS
Agreements, Cook shall consider providing ACS with the knowledge necessary for
ACS to itself coat the stent products, i.e., to allow ACS to practice the Angiotech
Technology.

-8-


‘Mimute Order Form (06/97)

United States District Court, Northern District of Tlinois

ay

soe Magis Judge Charles P. Kocoras “tan ised Judge

CASE NUMBER 01 C 9479 DATE 6/26/2002

CASE Cook Incorporated vs. Boston Scientific Corp.

TITLE

Un the following box (a) indicate the party filing the motion, eg. plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nanure
MotTIon: of the motion being presented.]
DOCKET ENTRY:
qd) im Filed motion of [ use listing in “Motion” box above.]
(2) aq Brief in support of motion due
(3) a Answer brief to motion due__. Reply to answer brief. duel.
(4) o Ruling/Hearingon___setfor____at.
(5) oO Status hearing[held/continued to] [set for/re-set forlon____setfor__— at.
(6) Oo Pretrial conference[held/continued to] [set for/re-set forlon______set for at _
(7) im Trial[set for/re-set for]on___at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to ____at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
CUFRCP4(m) (General Rule 21 CIFRCP41(a)(1) CO FRCP41(a)(2),

(do) «xf [Other docket entry) ENTER MEMORANDUM OPINION: We grant Boston’s cross-motion

for summary judgment and deny Cook’s cross-motion for summary judgment.

[For further detail see order attached to the original minute order.]

No notices required, advised in open court.
No notices required.

Notices mailed by judge’s staff.

Notified counsel by telephone.

Dooketing to mail notices.

Mail AO 450 form.

Copy to judse/magistrate judge.

we

ruber of notices :
JUN 2 6 2002
date dockets
LUND LOWISIC SA oss ints
eERR)

SCT

J

date msiled notice

courtroom
deputy’s
initials

62:2 Hd 32 HA 20
UL Uapidantdeived in

central,Clerk’s Office

‘naling deputy initials

fa Pit
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finished methomy] to Carbide. The trial court initially determined that the arrangement
was a valid exercise of Shell’s rights under the du Pont license, but the Delaware
Supreme Court disagreed, concluding that the combined exercise of “have made” and
“sell” rights with the same third party acting as both manufacturer and ultimate
purchaser amounted to a sublicense, specifically prohibited by the license terms.

Despite Cook’s protestations to the contrary and language included within the
ACS agreements, it is clear that the five agreements are not separate, independent
contracts but five pieces of one whole.*> The law of contract interpretation requires,
then, that the contract must be considered as an integrated whole and its specific
enumerations of rights and obligations be read in a harmonious and complementary
manner. Boyd v. Davis, 897 P.2d 1239, 1241 (Wash. 1995). Cook saw fit to enter into
at least five separate contracts with the same party on the same day, with substantial
overlap, which in some aspects expands to complete duplication of subject matter. To
act in this way is, at the least, intriguing and, at the most, a transparent attempt to draft
around the limitations clearly expressed within the Angiotech Agreement.

Although the pass-through nature of the ACS deal is more skillfully hidden than

was the case in du Pont, the arrangement is no less of a sham. The ACS Agreements

assign Cook’s right to make the first authorized sale of the Licensed Applications to

ACS in direct contravention of the Angiotech Agreement. These five agreements, like

*For example, both the Component Supply and Paclitaxel Distribution
Agreements nonsensically purport to be the entire agreement of the parties with respect
to the distribution and supply of Cook coronary paclitaxel coated stent systems.

-11-


of the ACS Agreements, Cook asserts that its arrangement with ACS is nothing more
than a sale to a third party, who will later resell the product to other purchasers.
Because the license allows Cook to sell the Licensed Applications incorporating the
Angiotech Technology, Cook claims that the patent exhaustion doctrine operates to
place any subsequent sale by ACS outside the reach of the license, making ACS free to
dispose of the products as it pleases without running afoul of the license rights.. See,
e.g., Intel Corp. v. ULSI Sys. Tech., Inc., 995 F.2d 1566, 1568 (Fed. Cir. 1993); Lisle
Corp. v. Edwards, 777 F.2d 693, 695 (Fed. Cir. 1985).

Boston avers that the ACS deal is not an actual sale but rather is akin to the
“pass-through” arrangement found to be an impermissible de facto sublicense in EI, du

Pont de Nemours & Co. v. Shell Oil Co., 498 A.2d 1108 (Del. 1985). In du Pont, du
Pont licensed certain technology to Shell Oil Company (“Shell”) that allowed Shell to

“make, have made, use and sell for use and resale” an insecticide called methomyl. A
third party, Union Carbide Agricultural Corporation (“Carbide”), also sought a license
for methomyl from du Pont, but du Pont chose not to grant a license to Carbide.
Carbide then struck a deal with Shell whereby Carbide would place an order with Shell
for the methomy] it required. Carbide would then manufacture the methomyl it had
ordered from Shell under Shell’s rights to have the methomy! made. As soon as the
methomy! was produced, Carbide simultaneously bought it from Shell under Shell’s
right to sell the compound for use. The process was documented in two separate

agreements, one covering the “have made” aspect and one detailing the “sale” of the

-10-


U.S.P.Q.2d 2055, 2057 (N.D. Miss. 1990). Because of the nature of patent rights and
licenses, a patent license is personal to the licensee and allows only the activities
enumerated within the license to the exclusion of any activity not specified. PPG

Industries, Inc. v. Guardian Industries Corp., 597 F.2d 1090, 1093 (6th Cir. 1979). In

other words, silence as to a particular activity implicitly prohibits the licensee from
engaging in that activity. See, e.g., Unarco Industries, Inc. v. Kelley Co., 465 F.2d
1303, 1306 (7th Cir. 1972) (assignability); Ozyagcilar v. Davis, 221 US.P.Q. 1064,
1070 (D.S.C. 1983) (divisibility and sublicensing). Any right not specifically granted
by the licensor remains with the licensor, and the rights granted in the license cannot
expand beyond the boundaries delineated in the agreement.

Unlike the majority of cases that call for construction of a patent license, this case
does not involve a claim of infringement brought by a licensor. Angiotech is not a party
to this action, alleging that ACS’s activities infringing its patent rights; the litigation
involves only the two licensees fighting over whether Cook has breached the license.
However, the underlying rules must still apply even if a party other than the patent
holder seeks relief; the extent of the license rights cannot change based on who is
bringing suit.

Initially, Cook casts its relationship with ACS as permissible under the license
because Cook is the sole party practicing the patented invention. Cook argues that the
license encompasses only the technology and know-how associated with making

paclitaxel and coating stents with it; in other words, it involves only the Angiotech

-7-


enumerated patents that the other party holds. Each agreement purports to be an
integrated whole, independent of the others. Upon learning of Cook’s arrangement with
ACS, Boston sent a letter to Cook and issued a press release, indicating its belief that
the Cook-ACS association was in violation of the Angiotech Agreement.

Cook filed suit, seeking a declaratory judgment that they are not in breach of the
Angiotech Agreement, as well as asserting violations of both the Sherman Act and the
Lanham Act based on the notice letter and the press release. Boston answered the
complaint and asserted two counterclaims, one for breach of contract and one for breach
of the implied covenant of good faith and fair dealing. Certain counts of the complaint
and counterclaim were dismissed on February 28, 2002. The parties have now filed
cross-motions for summary judgment on the breach of contract claims.

LEGAL STANDARD

Summary judgment is appropriate only if there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P.
56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). In seeking a grant
of summary judgment the moving party must identify “those Portions of ‘the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any’ which it beliéves demonstrate the absence of a genuine issue of

1One additional event in the procedural history of this case deserves mention.
In the process of discovery for the instant motions, Cook turned over privileged
documents to Boston. The ensuing motion to have the documents returned was denied,
but none of the contents of those documents had any effect on this decision.

-3-


terms “sell” and “distribute.” The only way to keep these terms from being redundant
is to construe the agreement as providing that only licensed parties can act as “merchant
middlemen” between manufacturer and retailers or commercial users of the finished

product. Otherwise, there would be no need to include the separate term “distribute.”

Cook disputes that du Pont should control in this case, relying instead on a line
of cases that deal with so-called foundry arrangements, in which a licensed party
manufactures a patented product for a nonlicensed party. Cyrix Corp. v. Intel Corp., 77
F.3d 1381 (Fed. Cir. 1996), ULSI, 995 F.2d 1566 , Intel Corp. v. U.S. Int’] Trade
Comm’n, 946 F.2d 821 (Fed. Cir. 1991). These cases are inapposite for one very
important reason. In each case where a foundry arrangement was upheld, the licensee
was exercising a right specifically granted within the respective licenses: the right to
have the licensed product made. Here, Cook in essence argues that it is using ACS as
its distribution foundry, but the Angiotech Agreement does not allow Cook to have the
Licensed Applications distributed for it by a third party.

The terms of the Angiotech Agreement therefore show that the parties intended

to preclude any nonlicensed party from distributing the Licensed Applications.* The

‘This conclusion is buttressed by the overall structure of the agreement,
discussed above, which restricts Angiotech from licensing the rights granted to Cook
and Boston to any other party and makes each licensee’s rights subject to those of the
other licensee. See Tanner Electric Coop. v. Puget Sound Power & Light Co., 911
P.2d 1301, 1310 (Wash. 1996) (stating that individual contractual provisions must be
analyzed in light of their context within the entire agreement). This indicates that the
signatories contemplated that only these three parties would engage in the activities
described in the agreement.

-14-


steps forming part of an integrated whole, are nothing more than a sham. As such, its
actions cannot be countenanced.
Regulatory Approval

Finally, we turn to the issue of whether Cook has delegated its responsibility for
obtaining regulatory approval for the Licensed Applications to ACS. Unlike the
preceding two questions, this answer is very straightforward. Under the PCS
Development Agreement, ACS is to obtain regulatory approval for investigational
products. PCS Development Agreement, 4 3.3. ACS prepares an investigational plan
for the clinical trials of the coronary stent systems and assumes all responsibility
associated with that plan. Id., 45.2, 5.3. Cook attends no meetings with regulatory
bodies unless ACS requests that it do so. Id., 4, 5.3. ACS sponsors the studies and
supplies its name as applicant. ACS is to obtain all necessary approvals and acts as the
holder of all regulatory approvals obtained. Lastly, the choice whether to submit an
application for premarket approval is solely within ACS’s discretion. Cook’s statement
that it remains ultimately responsible for obtaining regulatory approval is blatantly
contradicted by the language of the Development Agreement. Its involvement in the
process is minimal, and the control and unfettered discretion of ACS is immediately
apparent from the language of this agreement. In the face of the plain wording of the
PCS Development Agreement, we conclude that Cook unlawfully assigned to ACS its

responsibility to obtain regulatory approval for the Licensed Applications.

-16-


to its Affiliates to use, manufacture, have manufactured, distribute and sell, the
Angiotech Technology...for use in the Licensed Applications.” Licensed Applications
include stent products and endoluminal delivery devices, such as stent grafts and
balloons, that incorporate the Angiotech Technology. Each licensee is responsible for
obtaining necessary regulatory approval for the Licensed Applications they produce.
In addition, none of the parties could assign their rights or obligations under the
agreement without the prior written consent of the other two.

Ina series of contracts, all entered into on August 16, 2001, Cook executed five
agreements with Advanced Cardiovascular Systems, Inc. (“ACS”): a Paclitaxel Coated
Stent (“PCS”) Distribution Agreement, a Component Supply Agreement, a PCS
Development Agreement, a Stent Delivery System Distribution Agreement, and a
Cross-License Agreement. The PCS Distribution Agreement focuses on a commercial
relationship wherein ACS acts as the exclusive distributor for coronary paclitaxel-
coated stents manufactured by Cook. The Component Supply Agreement covers the
supply of certain components of the Cook coronary stents by ACS. The PCS
Development Agreement details the process through which the parties will collaborate
to test, conduct clinical trials, and obtain appropriate regulatory approval for the
products to be made and distributed under the previous two agreements. The Stent
Delivery System Distribution Agreement describes an arrangement wherein Cook will
act as a nonexclusive distributor for stent delivery systems manufactured by ACS.

Finally, the Cross License Agreement grants license rights to Cook and ACS in certain

-2-


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
COOK INCORPORATED,
Plaintiff,
VS. 01 C 9479

BOSTON SCIENTIFIC CORPORATION,

Defendant.

wwe SS SS WL

MEMORANDUM OPINION

CHARLES P. KOCORAS, District Judge:

This matter comes before the court on the parties’ cross-motions for summary
judgment. For the reasons set forth below, the motion of Plaintiff Cook, Inc. (“Cook”)
is denied and the motion of Defendant Boston Scientific Corporation (“Boston”) is
granted.

BACKGROUND

In 1997, a Canadian corporation called Angiotech entered into an exclusive
licensing agreement (“the Angiotech Agreement”) with Cook and Boston. The subject
of the license was certain patent rights to an invention that allows expandable metal
tubes called stents to be coated with medication to increase their treatment
effectiveness. The agreement granted worldwide coexclusiveri ghts to Cook and Boston

to “use, manufacture, have manufactured, distribute and sell, and to grant sublicenses

qd


the two contracts in du Pont, combine into an attempt to circumvent the restrictions of
the original license from Angiotech. To find them unoffending to the Angiotech
Agreement would enable Cook to do unilaterally what the three original parties agreed
could only be done with the consent of all parties to the Angiotech Agreement: a grant
to another entity of rights given solely to Boston and Cook.

Like the two agreements in du Pont, the Component Supply and Paclitaxel

Distribution Agreements are two sides of the same coin, split up to create the illusion
of an exercise of license rights. Cook and ACS deliberately divided this stage of the
ACHIEVE production process to make it appear that the first sale of the finished
product is to ACS, but when the two agreements are read together, it is evident that
Cook and ACS are joint participants in the process of generating the final ACHIEVE
stent product, and the first authorized sale of that product, which is a Licensed
Application under the Angiotech Agreement, is done by ACS, not Cook. The
arrangement embodied in the two agreements therefore represents an impermissible
assignment of Cook’s right to make the first sale of the Licensed Application.
The Right to Distribute

As an alternative ground, Cook contends that its right to distribute Licensed
Applications allowed the type of arrangement it entered with ACS; it argues that the
fact that ACS will also distribute the Licensed Application is immaterial.

If the Angiotech Agreement included only the right to sell, without separate

mention of the right to distribute, Cook would stand on firmer ground. Where a license

-12-


terms of the licensing agreement allow Cook to exercise its distribution rights only
through itself or its affiliates. The agreement with ACS purports to allow ACS to
distribute the licensed applications, ie., to serve as a middleman between the
manufacturer, Cook, and the ultimate user of the Licensed Applications. However,
Angiotech, the patent holder, gave the right to engage in that activity only to Cook and
Boston. For ACS to step into Cook’s shoes and distribute the licensed applications
therefore does not involve an exercise of Cook’s ri ights under the license; rather it would
necessitate a grant of those rights to ACS, which could only take the form of a
prohibited assignment.

There is no mention within the Angiotech Agreement of a right to have the
licensed products distributed by a third party. Silence of a license with respect to a
specific activity is construed as an implied prohibition with respect to that activity. In
addition, not only is there no express provision authorizing Cook to distribute through
a third party, its contractual relationship with ACS would negate Boston’s co-exclusive
right to distribute the Licensed Applications. Additionally, viewing the grants of rights
given by Cook to ACS collectively, its conduct would make a mockery of the
exclusivity of the rights only it and Boston were endowed with by Angiotech. What
Cook has attempted to do here is to grant a de facto sublicense to ACS or assign to it
substantial rights it enjoys under the Angiotech Agreement. These attempts are neither
authorized, permitted, nor lawful. Cook’s attempts to separate various functions

between it and ACS, and create a separate contract for each in an attempt to isolate

-15-