Karin DeMasi Speaks at PLI’s Securities Litigation Program

On April 22, 2020, the Commercial Division of the New York State Supreme Court dismissed a shareholder lawsuit against Cravath client GreenSky, Inc., a financial technology company, and certain officers and directors. The putative securities class action alleged that GreenSky’s offering documents, issued in connection with its initial public offering, contained false and misleading statements relating to its shift away from solar merchants and the resulting impact on transaction fee rates and revenue, in violation of the federal securities laws. The court ruled that GreenSky did not violate its duty to disclose because the Company disclosed its shift away from solar merchants to lower-fee merchants, and that the omission of more specific disclosures about the fees paid by solar merchants was not material, as reasonable investors would have inferred from the offering documents that the new merchants would pay lower fees.

On September 18, 2018, a Delaware jury returned a unanimous verdict in favor of Cravath client DRIT LP (“DRIT”) in a patent licensing dispute with Glaxo Group Limited and Human Genome Sciences, Inc. (“GSK”). The jury found that GSK had breached the implied covenant of good faith and fair dealing when it statutorily disclaimed a U.S. patent covering GSK’s lupus drug, Benlysta® to cut off its obligation to pay royalties to DRIT on U.S. sales of Benlysta®. The case arose out of a 2008 agreement under which GSK agreed to pay Biogen Inc. royalties on sales of Benlysta® in exchange for Biogen’s rights to certain intellectual property covering the medication. In 2012, DRIT, an investment vehicle managed by Cravath client DRI Capital, purchased Biogen’s royalty stream. In April 2015, after making royalty payments to DRIT for three years, GSK voluntarily disclaimed the royalty‑bearing patent and ceased paying royalties to DRIT. The matter was tried for six days before a jury in the Delaware Superior Court.