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Reckitt Benckiser Inc. and v. Tris Pharma

February 28, 2011

RECKITT BENCKISER INC. AND
UCB MANUFACTURING, INC. PLAINTIFFS,
v.
TRIS PHARMA, INC. AND YU-HSING TU, DEFENDANTS.



The opinion of the court was delivered by: Wolfson, United States District Judge:

NOT FOR PUBLICATION [55]

OPINION

Presently before the Court is a Motion by Defendants Tris Pharma, Inc. ("Tris") and YuHsing Tu ("Dr. Tu")(collectively referred to as "Defendants") to Dismiss Counts II through V of the Amended Complaint. The underlying action arises out of, inter alia, the alleged infringement of U.S. Patent No. 5,980,882 ("the '882 patent") based on Tris' submission of an Abbreviated New Drug Application ("ANDA") to market a generic version of Delsym ®, an over-the-counter cough syrup manufactured by Reckitt Benckiser, Inc. ("Reckitt") and allegedly covered by the '882 patent owned by UCB Manufacturing, Inc. ("UCB"). The instant motion concerns the non-patent Counts contained in Reckitt and UCB's (collectively "Plaintiffs") Amended Complaint -- specifically, Count II (Trade Secret Misappropriation), Count III (Unfair Competition), Count IV (Breach of Contract) and Count V (Tortious Interference with Business Expectations). For the reasons that follow, Defendants' Motion to Dismiss is DENIED in part and GRANTED in part. Specifically, the Court will dismiss Count IV, Plaintiffs' breach of contract claim, without prejudice and deny the motion to dismiss Counts II, III and V.

I. BACKGROUND

In addressing Defendants' Motion to Dismiss, this Court must accept as true the allegations contained in the Complaint. See Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir.2003); Dayhoff, Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1301 (3d Cir.1996). Thus, the facts recited herein are taken from the Amended Complaint and do not represent this Court's factual findings.

Plaintiffs manufacture and hold an approved new drug application ("NDA") for Delsym® 7, an over-the-counter cough syrup that contains the active ingredient dextromethorphan polistirex. Compl. ¶ 10. Delsym® is approved by the FDA to relieve coughing due to throat and bronchial irritation that occurs with the common cold. Id. ¶ 10. In or around 2009, Defendant Tris submitted to the FDA an ANDA seeking approval to manufacture, use and sell a generic version of Delsym®. Id. ¶ 14.

Defendant Dr. Tu is currently the Vice President of Research and Development for Tris. Id. ¶ 30. Prior to working at Tris, Dr. Tu spent approximately ten (10) years working in the Research and Development department for predecessors of Plaintiff UCB. In that capacity, Dr. Tu worked directly on the formulations of Delsym ®, including the present formulation. Id. ¶ 31. Dr. Tu's employment was allegedly subject to several employment and confidentiality agreements pursuant to which, Dr. Tu agreed, in relevant part, not to disclose any secret or confidential information during or after the termination of his employment with UCB. Id. ¶¶ 32,33, 34,35,42, 43, 52, 53, 54. Despite the existence of these agreements, and his awareness of the confidential nature of his work, Plaintiffs allege that when Dr. Tu left UCB to join Tris, Dr. Tu disclosed and utilized confidential information gained at UCB to develop the generic version of Delsym® that is the subject of Tris' ANDA. Id. ¶¶ 36, 37, 45. As a result of the alleged disclosure and use of Plaintiffs' trade secrets and confidential information, UCB alleges that it has suffered harm. Id. ¶¶ 38, 39, 48, 49, 56, 57, 63.

II. STANDARD OF REVIEW

When reviewing a motion to dismiss, courts "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir.2008) (citation and quotations omitted). In Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007), the Supreme Court clarified the 12(b)(6) standard. Specifically, the Court "retired" the language contained in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 561 (quoting Conley, 355 U.S. at 45-46). Instead, the factual allegations set forth in a complaint "must be enough to raise a right to relief above the speculative level." Id. at 555. As the Third Circuit has stated, "[t]he Supreme Court's Twombly formulation of the pleading standard can be summed up thus: 'stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest 'the required element. This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of 'the necessary element'." Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 556).

In affirming that Twombly standards apply to all motions to dismiss, the Supreme Court recently explained the following principles. "First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949 (2009); Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir.2009). "Second, only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 1950. The plausibility standard requires that "the plaintiff plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged" and demands "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S.Ct. At 1949 (quoting Twombly, 550 U.S. at 556). Ultimately, "a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Fowler, 578 F.3d at 211. In evaluating a motion to dismiss, a court may consider only the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the complainant's claims are based upon these documents. Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

III. DISCUSSION

A. Trade Secret Misappropriation Claim (Count II)

In Count II of the Complaint, Plaintiffs claim that Defendants misappropriated trade secrets comprising "the Delsym ® manufacturing process, Delsym ® formulations, and other private information concerning Delsym ® and related research and development." Compl. ¶ 26. Specifically, as discussed above, Plaintiffs allege that during Dr. Tu's tenure at UCB, Dr. Tu worked on the formulation of Delsym ®, including the present formulation, and that although Tu was allegedly a party to confidentiality agreements concerning his work on Delsym ®, when Tu left UCB to work for Tris, he disclosed Plaintiffs' trade secrets to Tris. Compl. ¶¶ 31-35. Moreover, Plaintiffs allege that Defendants acquired and used these trade secrets in "the development and formulation of the dextromethorphan polistirex extended release suspension that is the subject of ANDA No. 91-135." Id. ¶ 35.

To prevail on a claim for the misappropriation of a trade secret under New Jersey law, a plaintiff must establish that: "(1) a trade secret exists; (2) the information comprising the trade secret was communicated in confidence by plaintiff to the employee; (3) the secret information was disclosed by that employee and in breach of that confidence; (4) the secret information was acquired by a competitor with knowledge of the employee's breach of confidence; (5) the secret information was used by the competitor to the detriment of plaintiff; and (6) the ...


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