In its written opinion, the appellate panel examined the definition of “product” in the licensing contract. The agreement described a product as a pharmaceutical produced through a specific yeast-based expression system. Because the contract definitions referenced each other and described the relationship using similar wording, the court concluded they should be interpreted consistently.
The judges ruled that the phrase “produced by” should not be broadly interpreted to include drugs where the biological process was only part of the manufacturing chain. The panel found that although the Pichia yeast system may influence the production process, it did not directly determine the composition of the final insulin medications at issue.
The court also emphasized that alternative wording could have been used in the contract if the parties intended to extend royalty obligations to pharmaceuticals developed using related manufacturing tools. The judges stated that broader language such as “used in production” or “useful in development” was absent from the agreement.
