Yale University and Its Professor Agree to Pay $1.5 Million For Failure to Share Patent Royalties with VA

Yale University and Its Professor Agree to Pay $1.5 Million For Failure to Share Patent Royalties with VA

Yale University and Dr. John Krystal have agreed to pay $1,507,743.67 to resolve False Claims Act and common law allegations that they failed to disclose certain patents and failed to share patent royalties with the Department of Veteran Affairs (VA) for inventions made by Dr. Krystal when he worked for both institutions. The settlement resolves alleged conduct between March 2006 and February 2023.

“Universities and their professors must properly disclose and share royalties on inventions they discover while working for the government,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department will ensure that those who benefit from government funding and resources properly compensate the taxpayers.”

“It is critical that inventions funded with taxpayer money be fully and timely disclosed to the government,” said U.S. Attorney Vanessa Roberts Avery for the District of Connecticut. “This settlement shows our commitment to ensuring that the government is fairly compensated for all taxpayer funded inventions.”

“The VA Office of Inspector General is committed to ensuring the VA is appropriately and fairly compensated for all intellectual property developed through VA-funded research projects,” said Special Agent in Charge Christopher Algieri with the Department of Veterans Affairs Office of Inspector General’s (VA OIG) Northeast Field Office. “The VA OIG thanks the Department of Justice for its efforts to reach this settlement.”

At the time of the inventions, Dr. Krystal was employed part time at Yale in various positions and with various research responsibilities, including as a Professor of Psychiatry, Neuroscience and Psychology, and Chair of the Department of Psychiatry in the Yale School of Medicine. He was also employed part time by the VA as a salaried clinical psychiatrist with research responsibilities at the VA Medical Center located in West Haven, Connecticut.

VA and Yale are parties to an agreement under which Yale and the VA agreed to promptly and in confidence disclose to each other all “Joint Inventions,” which included “any future invention or discovery, which is or may be patentable… in which at least one employee with compensation from the VA and at least one person who has an appointment with Yale is named as a co-inventor.” In addition, VA regulations require all VA employees to promptly disclose their inventions to the VA so the VA can make a determination as to whether it is entitled to ownership.

Beginning in March 2006, Dr. Krystal and four co-inventors applied for several patents related to the use of intranasal ketamine for treatment of depression and suicidal ideation. The patent applications allegedly acknowledged VA funding support. The U.S. Patent and Trademark Office issued three patents. Dr. Krystal assigned his interests in those three patents to Yale.

In February 2015, Yale and Dr. Krystal began receiving royalty payments arising from the three ketamine patents. The United States alleged they never shared these royalty payments, now totaling more than $3 million, with the VA, and did not disclose the patents to the VA until 2017. In September 2017 and then again in January and June 2019, another school (which had been assigned as agent for the ketamine patents), in coordination with Krystal and Yale, allegedly submitted documents to the U.S. Patent and Trademark Office removing the acknowledgement of VA support from the three ketamine patents.

The United States alleged that after a VA employee reminded Dr. Krystal of VA employees’ obligations to disclose inventions to the VA, in December 2017, Dr. Krystal submitted the required disclosure to the VA of the three ketamine patents. The VA then issued a determination that it was entitled to an ownership interest in the patents. Dr. Krystal appealed that determination to the National Institute of Standards and Technology, and the VA prevailed.

The settlement announced today resolves allegations that during the time-period from March 2006, when Dr. Krystal and the other co-inventors filed the first patent application, to Dec. 8, 2017, when Dr. Krystal disclosed the ketamine patents to the VA, Yale and Dr. Krystal knowingly and improperly avoided their obligations to disclose the ketamine patents to the VA and to pay the VA its share of the royalty payments for the patents. The settlement also resolves allegations that from the date that Dr. Krystal disclosed the patents through Feb. 3, Yale and Dr. Krystal were in breach of contract and unjustly enriched by their failure to share the royalty payments. 

As part of this settlement, Dr. Krystal agreed to forego any entitlement to share in the settlement paid to VA, pursuant to rights that he would otherwise have as a VA employee inventor. Simultaneously with this settlement, Yale, Dr. Krystal and the VA also entered into a separate agreement, under which Yale and VA agreed to share future royalties associated with the ketamine patents and assign the patents to the VA.  

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the District of Connecticut and the VA’s Office of General Counsel.

Fraud Section Attorney Jonathan T. Thrope and Assistant U.S. Attorney Richard M. Molot for the District of Connecticut handled this matter.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

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