Ck Claridge inc - 5082 Words

9-910-045 MAY 3, 2010 JOHN S. HAMMOND C.K. Claridge, Inc. On a Sunday in mid-September 2009, Christine Schilling was in the office of Ralph Purcell, president of C. K. Claridge, Inc. (CKC). Schilling, recently hired by Purcell, was going over an analysis she had recently prepared and discussed at a meeting in New York with the firm’s intellectual property attorneys. Purcell hoped that by the end of the afternoon, aided by Schilling’s insights, he would be able to establish a course of action that might hasten the final settlement of a patent suit brought against CKC three years earlier by the Tolemite Corporation and its licensee, Barton Research and Development (BARD). The Contenders CKC was founded in Milwaukee, Wisconsin, in 1948 as†¦show more content†¦In 2005, five years after Tolemite had received its patent, a research chemist at CKC had, quite independently, discovered a very similar process for synthesizing Varacil. The CKC researchers, however, had not felt that the new processing techniques could be patented. Thus, no patent search had been initiated and production facilities had simply been converted to the new process. At the time, no one at CKC had suspected the degree to which its new process was similar to the one originated by Tolemite and covered by Tolemite’s process patent. It was with some surprise then that CKC management learned that it was being sued by Tolemite and BARD for patent infringement.1 Varacil Varacil was a chemical substance sold almost exclusively to pharmaceutical manufacturers. Although it appeared in a variety of drug preparations, it represented only a minor fraction of any one drug. The economics of its manufacture (high fixed and low variable costs plus economies of scale), however, suggested that it be made in long, high-volume runs. Thus the major drug companies themselves were not involved in its preparation. Before 2000, Varacil had been processed from naturally occurring organic chemicals found in animal tissue. As a result of the high cost of these natural chemicals, the cost of Varacil itself had been relatively high. With the advent of synthetic Varacil, this situation changed dramatically. Variable costs in