Court Enters Preliminary Injunction Against JHL In Biosimilar Trade Secrets Case

As we previously reported, in October 2018, Genentech brought claims against Taiwan-based biosimilar developer JHL Biotech, Inc. and individual defendants for trade secret misappropriation, computer fraud, breach of contract, and other claims.  The alleged trade secrets relate to several of Genentech’s products: Rituxan® (rituximab), Herceptin® (trastuzumab), Avastin® (bevacizumab), and Pulmozyme® (dornase alfa).  In particular, Genentech alleged that the defendants misappropriated trade secrets related to manufacturing and development of these biologics to advance their competing biosimilar products.

On November 5, 2018, Genentech filed a preliminary injunction motion seeking, among other things, an order enjoining JHL and the individual defendants from using Genentech’s trade secrets and compelling the defendants to return all of Genentech’s confidential information.  On January 4, 2019, the defendants filed several motions to dismiss JHL for lack of personal jurisdiction, to dismiss the trade secret claims and others under FRCP 12(b)(6), and to stay the case pending resolution of the concurrent criminal action.

On March 5, 2019, Judge Alsup issued a single decision on these motions.  The court granted in part and denied in part defendants’ motions to dismiss and stay, granted Genentech’s request for provisional relief, and set a $50 million bond for Genentech.

Specifically, the court issued the following rulings on defendants’ motions:

  • Denied JHL’s motion to dismiss for lack of personal jurisdiction;
  • Granted in part and denied in part individual defendants’ FRCP 12(b)(6) motion to dismiss for failure to adequately plead the trade secret misappropriation claims;
  • Granted individual defendants’ motion to dismiss conspiracy to misappropriate trade secret claims with prejudice;
  • Granted motion to dismiss Genentech’s common law claims against some defendants for intentional interference with contractual relations and aiding and abetting breach of duty of loyalty based on statute of limitations, with leave to amend;
  • Granted motion to dismiss Genentech’s claim against one defendant for breach of duty of loyalty with prejudice;
  • Denied JHL’s motion brought under FRCP 12(b)(6) to dismiss the computer fraud claims; and
  • Granted individual defendants’ motion to stay the case so that Genentech may not take discovery from any individual defendant, but denied the request for a stay as to JHL.

 

As to Genentech’s request for provisional relief, Judge Alsup held that “Genentech has established all four Winter factors as to its trade secret misappropriation claims and that certain provisional relief is warranted.”  Id. at 23.  Specifically, the Court held that the following provisional relief will be entered upon Genentech’s payment of a $50 million bond:

  1. Defendants are enjoined from using or disclosing any of the Genentech documents in Genentech’s Statement Regarding Trade Secrets (“Genentech trade secrets”);
  2. Defendants cannot offer to sell, market, commercialize, or sell products made with the benefit or use of any of the Genentech trade secrets;
  3. Within 21 days of Genentech posting the bond, defendants shall preserve and return to Genentech (or the court) all copies, excerpts, and summaries of the Genentech trade secrets;
  4. Within 42 days of Genentech’s posting of bond, the JHL defendants must: (a) conduct an investigation and identify all individuals and entities to whom defendants disclosed any information within the Genentech trade secrets; (b) provide a detailed accounting whether the protocols, methods, and/or processes adopted by JHL “track any information contained” in the Genentech trade secrets; and (c)  prepare a log identifying if certain defendants “may have mentioned any Genentech confidential, proprietary, or trade secret information to any officer, director, employee, agent, supplier, or consultant of the JHL Defendants.”  Id. at 37-38.

 

The Court stated that the order “allows all work towards regulatory approvals to continue” but that none of the Genentech trade secrets may be disclosed to “any regulatory authority, hospital, or any other person or entity involved in the regulatory approval process without JHL’s first obtaining the Court’s permission.”  Id. at 38.  The Court also ordered Genentech to provide an accounting “explaining the extent to which the [Genentech trade secrets] have been disclosed by Genentech — including (1) all persons and/or entities (e.g., vendors, regulatory agencies, hospitals) to whom Genentech has disclosed any of the aforementioned documents and whether those persons and/or entities were subject to a non-disclosure agreement, and (2) all articles, presentations, patents, emails, or any other similar publication by Genentech that disclosed to a third party any of the aforementioned documents or any significant portion contained therein.”  Id. at 29.

Stay tuned for more developments on this case.

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