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Oakwood Laboratories, LLC v. Thanoo

United States District Court, D. New Jersey

June 12, 2018

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

          MEMORANDUM AND ORDER

          PETER G. SHERIDAN, UNITED STATES DISTRICT JUDGE

         This matter comes before this Court on Defendant's motion to Dismiss Plaintiffs Amended Complaint. [ECF No. 37] and Plaintiffs Notice to strike the Declaration of Michael A. Sitzman [ECF No. 4l].[1] As a preliminary matter, the Court will not consider the declaration and attachments submitted by Mr. Sitzman in deciding this motion to dismiss. When deciding a motion to dismiss a court may, but it is not bound to, take judicial notice of appropriate facts without converting the motion into one for summary judgment. Clements v. Sanofi-Aventis, __ U.S. __, Inc., 111 F.Supp.3d 586, 596, (D.N.J. 2015). Here, the Court finds taking judicial notice of the proposed documents, for the reasons sought by Defendants, to be inappropriate. Accordingly, Plaintiffs motion to strike Michael A. Sitzman's declaration (ECF No. 41) is granted.

         I.

         On July 12, 2017, Plaintiff filed a complaint against Defendant for misappropriation of trade secrets and confidential information in violation of the Defend Trade Secret Act (DTSA) and the New Jersey Trade Secrets Act (NJTSA). Upon Defendant's unilateral motion to dismiss, on November 28, 2017, the complaint was dismissed pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim, specifically for Plaintiffs failure to allege with sufficient specificity that there was misappropriation of trade secrets by Defendant. [ECF No. 34]. The Court also granted Plaintiffs motion to strike Sitzman's declaration [ECF No. 32]. On December 28, 2017, Plaintiff filed the First Amended Complaint where Plaintiff sets forth facts as explained below. [ECF No. 35].

         Defendants, Aurobindo 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. (First Amended Complaint, "FAC" ECF No. 35, ¶35).[2]

         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 and is now employed with Aurobindo USA. (Id. at ¶ 17, ¶23). He was first hired by Oakwood on November 24, 1997 as a Senior Scientist. As a condition of his employment, Oakwood required Thanoo to sign both an Invention Agreement and a Non-Disclosure Statement. (Id. ¶23). As part of the Invention 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. 35, ¶24].

         Also pursuant to the agreement, Thanoo agreed to preserve all of Oakwood's secret and confidential information. (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. ¶25). Specifically, the Non-Disclosure Agreement stated in part,

I understand and acknowledge my obligation to refrain from disclosing Oakwood Laboratories' confidential and proprietary information and to refrain from using it for the benefits of any other person or entity without the permission of Oakwood Laboratories. I understand that my obligation results from the nature of my employment and the circumstances of disclosure, and will remain even after termination of my employment relationship.

[Id. 25].

         The non-disclosure agreement does not restrict Thanoo from working for a competitor of Oakwood, but rather it only seeks to prevent Thanoo from disclosing or using Oakwood's confidential and proprietary information. (Id. ¶26). Plaintiff avers that the trade secrets Thanoo acquired during his employment with Oakwood include Oakwood's product formulations, product designs and ingredients, manufacturing process, testing procedures and protocols, quality control procedures, and process design controls. (Id. ¶28). Plaintiff asserts that, in his role as Vice President and Senior Scientist, Thanoo was principally responsible for the development of the Oakwood Products, including designing or directly supervising the design of Oakwood's microsphere systems technology as well as other injectable drug delivery system, and coordinating the research, development and testing of such Oakwood Products. Thanoo also designed Oakwood's microsphere system technology, including the design, research and development of leuprolide and octreotide sustained released products that rely on microsphere technology. ("Microsphere Project")[3] (Id. ¶28).

         Plaintiff alleges that Thanoo directed the Microsphere Project which required Oakwood to design numerous formulations based on a number of variables that were determined after extensive trial and error testing. (Id. ¶29). Among these, the testing included: (1) the type of polymer selected, including ratio of lactide to glycolide, and type of end group used; (2) molecular weight and inherent viscosity of the polymer; (3) ration of drug to polymer, both targeted and achieved; (4) type of process used to form microspheres; (5) mixing speeds used in the process; (6) types and quantities of solvents used in the process; (7) flow rates used in the process; and (8) processing times and holding times for various solutions and suspensions of microspheres. Oakwood asserts that such information is not generally known to public and were useful in the development of microsphere technology. (Id. ¶29).

         Plaintiff avers that Thanoo knew, possessed, or had access to all of this information and data when he joined Aurobindo. (Id. ¶3O). Oakwood employed reasonable efforts to maintain the secrecy of its confidential research and development, manufacturing, business and financial information.

         By way of background, 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. ¶¶36). Specifically, on November 18, 2013, Mr. Govindarajan visited Oakwood's headquarters where he met with Smith, to discuss Aurobindo's and Aurobindo USA's capabilities. Govindarajan also spoke with Thanoo on this visit. (Id. ¶39) During this visit, Aurobindo informed Oakwood that it had no prior experience with peptide based microsphere products. (Id. ¶40). On November 20, 2013, Govindarajan connected via email with Thanoo and J.V.N. Reddy, vice-president of Aurobindo. (Id. ¶41). On November 29, 2013, Aurobindo executed a Confidentiality Agreement between it, Auromedics, another U.S. subsidiary of Aurobindo based in New Jersey[4], 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 (Id. ¶42).

         On December 3, 2013, Oakwood and Aurobindo entered into the Confidentiality Agreement; and Oakwood sent the Confidentiality Agreement to Aurobindo and Auromedics, along with Oakwood's confidential information and trade secrets. This includes a 27-page memorandum explaining the leuprolide products (the "Leuprolide Memo") (Compl. ¶¶43-44). On December 16, 2013, representatives from Oakwood, including Thanoo, Aurobindo and AuroMedics engaged in a conference call to discuss the Leuprolide Products. (Id. ΒΆ46). On ...


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