September 26, 2023. The United States through the U.S. Department of Justice on behalf of the Department of Veterans Affairs (VA) has entered into a settlement agreement with Yale University and Dr. John Krystal to resolve both False Claims Act and common law allegations. Yale and Dr. Krystal have agreed to pay $1,507,743.67 for allegedly failing to disclose certain patents and withholding royalties owed to the VA for inventions made by Dr. Krystal when he was an employee for both institutions. Dr. Krystal works part time at Yale in multiple positions, notably, as a Professor of Psychiatry, Neuroscience, and Psychology, and is the Chair of the Department of Psychiatry in Yale’s Medical School. Concurrently, he is a part time employee at the VA as a clinical psychiatrist at the VA Medical Center in West Haven, Connecticut.
In March 2006 Dr. Krystal and other co-inventors applied for patents relating to their research on using ketamine intranasally to treat depression and suicidal ideation, allegedly disclosing VA funding on the applications. The U.S. Patent and Trademark Office (PTO) issues three patents, and Dr. Krystal assigned his interests in them to Yale. In February 2015, Yale and Dr. Krystal started receiving royalties from these ketamine patents. According to the Settlement Agreement, Yale and the VA are parties to a Cooperative Technology Administration Agreement (CTAA) agreement that states each must disclose to the other all “Joint Inventions.” This includes “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.” Dr. Krystal’s patents fall under this agreement. Additionally, the VA requires employees to disclose their inventions to the VA so that they can determine if it is entitled to any ownership of that invention.
The United States alleged that neither Yale nor Dr. Krystal alerted the VA to these patents until 2017, and never shared the royalty payments—which amounted to more than $3 million. In December 2017, a fellow VA employee reminded Dr. Krystal to share his invention with the agency, prompting him to submit the required disclosure of the ketamine patents. When the VA issued a determination that it was entitled to ownership interest, Dr. Krystal appealed, and subsequently lost. Even still, Dr. Krystal and Yale allegedly submitted documents to the PTO as late as June 2019 without an acknowledgement of the VA’s support.
The Principal Deputy Assistant Attorney General pointed out the central issue of the case, stating, “Universities and their professors must properly disclose and share royalties on inventions they discover while working for the government … The department will ensure that those who benefit from government funding and resources properly compensate the taxpayers.” When Yale and Dr. Krystal were allegedly withholding royalties from the VA, not only were they ripping off the agency, but also American taxpayers.
In addition to the over $1.5 million payment, the resulting settlement led to Dr. Krystal agreeing to forego any entitlement to share in the settlement paid to the VA and a separate agreement between the VA, Yale, and Dr. Krystal under which the offending parties agreed to share future royalties from the ketamine patents. This resolves all allegations brought forth in the suit.
While there was no whistleblower in this case, the government relies on them to prevent events such as this ketamine patent issue and other government program fraud from occurring, or to rectify them faster. Failing to disclose patents when working with government agencies not only robs them of their intellectual property but robs American taxpayers of their hard-earned money.
If you would like to report fraud against government programs—through patents or by other means—you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva was the Senior Counsel for Health Care Fraud. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Renée at [email protected] (tel.: 202-417-3664) or contact Eva Gunasekera at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.