Perlan Therapeutics, Inc. v. Superior Court (NexBio, Inc.)
Date: Nov 05, 2009
Source: ( click here to go to the source)
The Fourth Appellate District denied a petition for writ of mandate. The court held that the record supported a trial court's finding that a plaintiff alleging the misappropriation of trade secrets failed to provide a sufficient description of those trade secrets to be allowed to proceed with discovery.
Perlan Therapeutics, Inc. sued NexBio, Inc., alleging the misappropriation of trade secrets by a former Perlan officer.
NexBio moved for a protective order prohibiting Perlan from conducting discovery until it complied with its obligation to identify its purported trade secrets with reasonable particularity. NexBio' motion argued Perlan's trade secret statement was "a non-committal collection of loosely worded conclusory allegations." NexBio argued that the statement did little more than reference an invention by Perlan scientist Dr. Catherine Charle. The so-called "Charles Invention" was a protein-based therapeutic that included a heparin binding peptide to prevent and treat respiratory tract viral infections. According to Perlan, the Charles Invention constituted part of Perlan's intellectual property and trade secret information, along with Perlan's "Protein Multimerization Process," and another unique idea developed by Perlan and involving the substance sialidase. NexBio criticized Perlan's references to proteins, peptides, sialidase, domains, and multimerization as lacking a clear explication how the particular substances and processes at issue were used in Perlan's particular alleged trade secret(s).
NexBio also argued that the alleged trade secrets, such as they could be discerned, were not distinguished by Perlan from matters generally known in the scientific field in which Perlan and NexBio operated. NexBio claimed the "failure to specify the certain proteins or peptides at issue and to describe their combination" left the amended statement too general to state a trade secret technology.
Perlan opposed, arguing that its statement identified "at least eight (8) trade secrets" that, in combination with one another, formed the trade secrets misappropriated by NexBio.
The trial court granted NexBio's motion for protective order, concluding Perlan failed to demonstrate that the purported trade secrets were not generally known to the public or to other persons who could obtain economic value from their disclosure or use. The court also found the statement to be vague, finding that it failed to identify clearly the trade secrets at issue.
The court of appeal denied Perlan's petition for writ of mandate and/or prohibition, holding the trial court did not abuse its discretion in granting NexBio's motion.
Code Civ. Proc. §2019.210, the court explained, requires a plaintiff suing for misappropriation of its trade secrets to identify with "reasonable particularity" the purported trade secrets which allegedly have been misappropriated before commencing discovery relating to the trade secrets. Among other things, §2019.210 dissuades the filing of meritless trade secret complaints and prevents plaintiffs from using the discovery process as a means to obtain a defendant's trade secrets. It also assists the trial court in framing the appropriate scope of discovery and in determining whether a plaintiff's discovery requests fall within that scope. Finally, it enables the defendant to effectively defend against charges of trade secret misappropriation.
Here, the record indicated that Perlan had the ability, but not the inclination, to provide clearer, more specific information about at least one of its alleged trade secrets. Further, although Perlan lacked any particular information beyond three purported trade secrets, Perlan wished to reserve the right to unilaterally amend its identification, without leave of the trial court, so it could broaden its lawsuit to include claims it hoped to develop in discovery.
The court was guided in its analysis by Brescia v. Angelin (2009) 172 Cal.App.4th 133 and Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826. Both courts caution against requiring too much particularity in a trade secret statement.
Looking to the record, the court found the trial court here did not err in finding insufficient Perlan's efforts to particularize its trade secrets and distinguish them from publicly available information. Perlan's trade secret statement was not succinct. It contained pages of "surplusage" (objections, qualifications, explanations, allegations), and it referenced hundreds of pages of documents. Further, despite the fact that Perlan appeared to be pursuing a claim for misappropriation of several trade secrets, it failed to identify the trade secrets at issue. Perlan was not entitled to include broad, "catch-all" language as a tactic to preserve an unrestricted, unilateral right to subsequently amend its trade secret statement. If Perlan did not know what its own trade secrets were, it had no basis for suggesting NexBio misappropriated them. Nor was Perlan entitled to hide its trade secrets in "plain sight" by including surplusage and voluminous attachments in its trade secret statement.
Source: ( click here to go to the source)
Featured firm in this article: Perlan Therapeutics Inc of San Diego, CA
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Perlan Therapeutics, Inc. sued NexBio, Inc., alleging the misappropriation of trade secrets by a former Perlan officer.
NexBio moved for a protective order prohibiting Perlan from conducting discovery until it complied with its obligation to identify its purported trade secrets with reasonable particularity. NexBio' motion argued Perlan's trade secret statement was "a non-committal collection of loosely worded conclusory allegations." NexBio argued that the statement did little more than reference an invention by Perlan scientist Dr. Catherine Charle. The so-called "Charles Invention" was a protein-based therapeutic that included a heparin binding peptide to prevent and treat respiratory tract viral infections. According to Perlan, the Charles Invention constituted part of Perlan's intellectual property and trade secret information, along with Perlan's "Protein Multimerization Process," and another unique idea developed by Perlan and involving the substance sialidase. NexBio criticized Perlan's references to proteins, peptides, sialidase, domains, and multimerization as lacking a clear explication how the particular substances and processes at issue were used in Perlan's particular alleged trade secret(s).
NexBio also argued that the alleged trade secrets, such as they could be discerned, were not distinguished by Perlan from matters generally known in the scientific field in which Perlan and NexBio operated. NexBio claimed the "failure to specify the certain proteins or peptides at issue and to describe their combination" left the amended statement too general to state a trade secret technology.
Perlan opposed, arguing that its statement identified "at least eight (8) trade secrets" that, in combination with one another, formed the trade secrets misappropriated by NexBio.
The trial court granted NexBio's motion for protective order, concluding Perlan failed to demonstrate that the purported trade secrets were not generally known to the public or to other persons who could obtain economic value from their disclosure or use. The court also found the statement to be vague, finding that it failed to identify clearly the trade secrets at issue.
The court of appeal denied Perlan's petition for writ of mandate and/or prohibition, holding the trial court did not abuse its discretion in granting NexBio's motion.
Code Civ. Proc. §2019.210, the court explained, requires a plaintiff suing for misappropriation of its trade secrets to identify with "reasonable particularity" the purported trade secrets which allegedly have been misappropriated before commencing discovery relating to the trade secrets. Among other things, §2019.210 dissuades the filing of meritless trade secret complaints and prevents plaintiffs from using the discovery process as a means to obtain a defendant's trade secrets. It also assists the trial court in framing the appropriate scope of discovery and in determining whether a plaintiff's discovery requests fall within that scope. Finally, it enables the defendant to effectively defend against charges of trade secret misappropriation.
Here, the record indicated that Perlan had the ability, but not the inclination, to provide clearer, more specific information about at least one of its alleged trade secrets. Further, although Perlan lacked any particular information beyond three purported trade secrets, Perlan wished to reserve the right to unilaterally amend its identification, without leave of the trial court, so it could broaden its lawsuit to include claims it hoped to develop in discovery.
The court was guided in its analysis by Brescia v. Angelin (2009) 172 Cal.App.4th 133 and Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826. Both courts caution against requiring too much particularity in a trade secret statement.
Looking to the record, the court found the trial court here did not err in finding insufficient Perlan's efforts to particularize its trade secrets and distinguish them from publicly available information. Perlan's trade secret statement was not succinct. It contained pages of "surplusage" (objections, qualifications, explanations, allegations), and it referenced hundreds of pages of documents. Further, despite the fact that Perlan appeared to be pursuing a claim for misappropriation of several trade secrets, it failed to identify the trade secrets at issue. Perlan was not entitled to include broad, "catch-all" language as a tactic to preserve an unrestricted, unilateral right to subsequently amend its trade secret statement. If Perlan did not know what its own trade secrets were, it had no basis for suggesting NexBio misappropriated them. Nor was Perlan entitled to hide its trade secrets in "plain sight" by including surplusage and voluminous attachments in its trade secret statement.
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