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Oakwood Laboratories, LLC v. Thanoo

United States District Court, D. New Jersey

November 28, 2017

OAKWOOD LABORATORIES, LLC., Plaintiff,
v.
DR. BAGAVATHIKANUN THANOO, et al, Defendants.

          MEMORANDUM AND ORDER

          PETER G. SHERIDAN, U.S.D.J.

         This matter comes before this Court on Defendant's motion to Dismiss Plaintiff's Complaint. [ECF No. 22].

         FACTS AND PROCEDURAL HISTORY

         Defendants, Auribindo Pharma U.S.A., Inc. (“Aurobindo USA”), Aurobindo Pharma Ltd. (“Aurobindo Pharma”), and Auromedics Pharma LLC (“Auromedics”) are generic drug manufacturers that make generic drugs and drugs products, or copies of what are typically brand-name drugs. (Compl. ECF No.1 ¶¶39-40).

         Plaintiff, Oakwood Laboratories LLC (“Oakwood”) also makes generic drugs and drug products. (Id. at 16). Defendant, Bagavathikanun Thanoo (“Thanoo”) formerly worked as a Vice President of Product Development at Oakwood. (Id. at ¶24). He was first hired by Oakwood in 1997 as a Senior Scientist. As a condition of his employment, Oakwood required Thanoo to sign both an Invention Agreement (“Invention Agreement”) and a Non-Disclosure Statement Agreement (“Non-Disclosure agreement”). (Compl. 20; ECF No.1-1 and 1-2). As part of the agreement, Thanoo consented to

promptly disclose to Oakwood Laboratories, L.L.C., through its President or other duly authorized designee, all invention and improvements, whether then believed or later found to be patentable or not, made or conceived solely by [Thanoo], or jointly with another or other within the whole term of his employment by Oakwood Laboratories, L.L.C., and for twenty-four months (24) after the termination of such employment, which relates to or are useful in the business, research, investigations, products, machines, and all lawful interests and activities of Oakwood Laboratories, L. L.C.

[ECF No.1.1 pg. 1, ¶2].

         Also pursuant to the agreement, Thanoo agreed to preserve all of Oakwood's secret and confidential information. (Compl. ¶21; Id.). Similarly, Thanoo also signed a Non-Disclosure Agreement prohibiting him from disclosing or using at any time Oakwood's confidential information and proprietary information (Id. ¶22; ECF No. 1-2). In his role as Vice President of Product Development and his prior position as Senior Scientist, Plaintiff supports that Thanoo designed or directly supervised the design of the Oakwood products. Thanoo also directly designed Oakwood's microsphere systems technology, including the design, research, and development of a new leuprolide injection product that relies on microsphere technology (“Leuprolide Project”) that Oakwood began developing in 2013, during Thanoo's employment. (Compl. ¶24).

         In October and November 2013, Mr. Ramnan, General Manager of Sales and Marketing at Aurobindo USA and Aurobindo Chief Executive Officer, Mr. Govindarajan, met with Mark Smith, Oakwood's Chief Executive Officer, to discuss a business venture in which Aurobindo USA would sell active pharmaceutical ingredients (“API”) to Oakwood for its Leuprolide Project. (Compl. ¶¶26-29). On November 29, 2013, Aurobindo executed a Confidentiality Agreement between it, Auromedics, another U.S. subsidiary of Aurobindo based in New Jersey, and Oakwood. Pursuant to the agreement the parties allegedly decided not to disclose or use any confidential information, including trade secrets, shared by the parties while discussing the Leuprolide Project (Compl. ¶31; ECF No. 1-3, 2).

         On December 3, 2013, Oakwood sent the fully executed Confidentiality Agreement to Aurobindo and Auromedics, along with Oakwood's confidential information and trade secrets. (Compl. ¶32). Ultimately, Aurobindo told Oakwood that it was not interested in pursuing the Leuprolide Project with Oakwood due to financial considerations. (Compl. ¶37).

         In April 2014, Thanoo resigned from Oakwood and was hired as Vice President of R&D Injectable with Aurobindo USA. (Compl. ¶34-36). Upon resigning, Thanoo informally told another Oakwood employee that he would be working for Aurobindo. However, aside from that conversation, he has not notified Oakwood of any inventions or improvements which he, solely, or jointly with others, has developed that are related to or useful to Oakwood's research, investigations, products, machines after his resignation, as required by the Inventions Agreement he executed when his employment at Oakwood began. (Id. at ¶45).

         On July 12, 2017, Oakwood filed a Complaint against Dr. Thanoo for misappropriation of Oakwood's trade secrets and confidential information in violation of the Defend Trade Secrets Act (DTSA) and the New Jersey Trade Secrets Act (NJTSA). (Id. at ¶¶39-66).

         In the Complaint, Plaintiff alleges that in late 2016, Oakwood learned -- from a published transcript of an investor call with Mr. Govindarajan -- that Aurobindo had been developing “four peptide based microsphere products which have around $3 billion top line.” (Id. at ¶41). Oakwood subsequently learned that Aurobindo has been working on the microsphere system technology since at least February 2016, and that Aurobindo expected to bring the product to the market in 2017. (Id.). Plaintiff alleges that Defendants are developing or have developed a product substantially similar to Oakwood's Leuprolide Project without Oakwood's consent and knowledge. (Id. at ¶42). Plaintiff further contends that Defendants could not have developed this product without Thanoo's assistance and his use of Oakwood's confidential information and trade secrets in violation of his non-disclosure agreement. (Id.) Additionally, Defendants could not develop this product without the confidential information and trade secrets that Oakwood disclosed to them as part of the discussions related to their potential business venture. (Id. at ¶43).

         Plaintiff explains in the Complaint,

Oakwood has devoted extensive time, money, and other resources to the research design, and development of the Oakwood Products it manufactures, including the design, development, and testing of various injectable drugs, the design, development, and testing of microsphere systems technologies, the design and development of various research processes, the design and development of various manufacturing processes, contractual arrangements with customers, the identities of contact persons with customers and suppliers, batch record formats and content, standard operating procedures, drug master files, freeze dry cycles and development, product development lists, formation development research, validation methods, validation data and reports, and new drug application (“NDA”) filings, planned filings, and associated data.

(Compl. ¶17). The Complaint further asserts in paragraph 18 that “[t]he design, development, and testing processes, the research processes, the quality assurance and compliance processes, and the manufacturing processes for the ...


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