John Hancock Life Insurance Co. v. Abbott Laboratories

SELYA, Circuit Judge.,

The development of new drugs is a costly, time-consuming, and highly speculative enterprise. In an effort to hedge their bets, drug companies sometimes opt to share the risks and rewards of product development with outside 'investors. This appeal introduces us to that high-stakes world. The outcome turns primarily on a contract provision that the parties disparately view as a liquidated damages provision (and, thus, enforceable) or a penalty (and, thus, unenforceable). A sum well in excess of $30,000,000 hangs in the balance.

Following a lengthy bench trial, the district…