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UCB Manufacturing, Inc. v. Tris Pharma, Inc.

Superior Court of New Jersey, Appellate Division

August 27, 2013

UCB MANUFACTURING, INC., Plaintiff-Appellant,
v.
TRIS PHARMA, INC. and YU-HSING TU, Defendants-Respondents, and PAR PHARMACEUTICAL, INC. and PAR PHARMACEUTICAL COMPANIES, INC., Defendants.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 8, 2013

On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. C-0200-10.

Ha Kung Wong (Fitzpatrick, Cella, Harper & Scinto) of the New York bar, admitted pro hac vice, argued the cause for appellant (Graham Curtin, and Mr. Wong, attorneys; Thomas R. Curtin, on the brief).

Charles A. Weiss (Holland & Knight, L.L.P.) of the New York bar, admitted pro hac vice, argued the cause for respondents (Riker Danzig Scherer Hyland & Perretti, L.L.P., and Mr. Weiss, attorneys; Joshua S. Bratspies, on the brief).

Before Judges Ashrafi, Espinosa and Guadagno.

PER CURIAM

Plaintiff UCB Manufacturing, Inc. appeals from summary judgment in the Chancery Division dismissing its claims for breach of contract and unfair competition. Plaintiff alleges that defendant Yu-Hsing Tu, its former employee, breached his employment agreement by disclosing plaintiff's confidential information to his current employer, defendant Tris Pharma, Inc. Plaintiff alleges that the confidential information was used by Tu and Tris Pharma to develop a generic cough medicine that is the bio-equivalent of plaintiff's formerly-patented product Tussionex®.

The Chancery Division concluded that all the confidential information alleged to have been divulged was in the public domain and not entitled to protection under Tu's confidentiality agreement. Applying New York law, the court further concluded that Tu's agreement was unenforceable with respect to any of the alleged categories of confidential information identified by plaintiff.

Plaintiff contends on appeal that the trial court made erroneous factual findings regarding the confidential information, prematurely granted summary judgment when discovery was incomplete, and improperly relied on its own credibility findings favorable to defendants that resulted from an evidentiary hearing on whether a preliminary injunction should be granted to plaintiff.

We affirm the summary judgment. Even if plaintiff is correct that disputed issues of fact existed regarding the availability of some of the alleged confidential information in the public domain, and even if the Chancery judge erred procedurally in relying on his own earlier credibility findings, the pertinent New York law supports the judge's ultimate conclusion that Tu's agreement is unenforceable as plaintiff now seeks to enforce it.

I.

A.

Plaintiff filed a verified complaint in October 2010 against Tu, Tris Pharma, and two other corporate entities, [1]asserting claims for misappropriation of trade secrets, breach of contract, and unfair competition. The complaint alleged that Tu is now a vice-president of Tris Pharma for research and development. He had previously worked for companies that were predecessors of plaintiff UCB, and had been involved in the manufacture of Tussionex while so employed. Plaintiff held patents for Tussionex, the latest of which expired in 2005.

The complaint alleged that Tu had executed a confidentiality agreement, and that Tu and Tris Pharma had engaged in unfair competition by using trade secrets and confidential information of UCB to develop and market a product "that directly competes with Tussionex." Plaintiff sought declaratory and injunctive relief and "[d]ivestment or disgorgement of the benefit by which defendants have been unjustly enriched." The complaint did not include a demand for trial by jury.

The Chancery judge initially denied plaintiff's application for temporary restraints and scheduled a plenary hearing to consider a preliminary injunction. The judge also ordered expedited discovery and directed Tris Pharma to produce documents relating to its manufacturing process for the disputed product. The preliminary injunction hearing was held on five days in December 2010.

The hearing focused on plaintiff's claim of misappropriation of its trade secrets. Much of the testimony concerned a comparison of the competing products and of the manufacturing processes of Tris Pharma and plaintiff. On December 23, 2010, the Chancery judge issued a written decision denying a preliminary injunction to plaintiff. As part of that decision, the judge found credible the testimony of Tu and that of the owner and CEO of Tris Pharma, Ketan Mehta. In sum, they testified they had not used any trade secrets or confidential information in their development and manufacturing of Tris Pharma's generic cough medicine.

One month after prevailing at the preliminary injunction hearing, defendants moved for summary judgment dismissing plaintiff's complaint in its entirety. At that time, plaintiff decided to abandon voluntarily the count of its complaint alleging misappropriation of its trade secrets. It cross-moved for leave to file an amended complaint, which would omit that claim and contain a demand for trial by a jury for plaintiff's claims of breach of contract and unfair competition.

Defendants' summary judgment motion was argued in February 2011. The judge concluded at that time that further discovery should be permitted. He carried the motions and directed plaintiff to provide him with specified information regarding the alleged confidential information in dispute. Plaintiff provided the information under seal, describing three highly technical areas of allegedly confidential information that it alleged Tu and Tris Pharma had used in their development of the generic medication.

On April 26, 2011, the parties again appeared before the judge on defendants' summary judgment motion. At the end of their arguments, the judge directed the attorneys to submit simultaneous briefs addressing issues raised at the oral argument. On May 31, 2011, the judge entered an order granting defendants' motion for summary judgment, and on June 8, 2011, he issued a written opinion explaining the reasons for his decision. In the opinion, the judge relied in part on his prior credibility findings in favor of defendants.

Plaintiff filed a timely notice ...


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