Roche Molecular Systems, Inc. v. Foresight Diagnostics Inc.

Background

Roche Molecular Systems, Inc. and Roche Sequencing Solutions, Inc. sued Foresight Diagnostics Inc., Stanford University, and several individuals. The case concerns alleged misappropriation of Roche’s trade secrets involving CAPP-Seq and related technology for detecting and monitoring cancer. Roche alleged that three former consultants—Maximilian Diehn, Arash A. Alizadeh, and David Kurtz—accessed Roche’s trade secrets while working with Roche, helped found Foresight, and used the information to develop competing technology called PhasED-Seq.

Roche’s amended complaint asserted federal and state trade-secret claims, contract-related claims, unfair-competition claims, and a claim seeking a declaration that Roche owns or co-owns fifteen disputed patent applications. Foresight moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not state a legally sufficient claim.

The Court’s Analysis

Foresight argued that Roche’s trade-secret claims were barred by the applicable three-year limitations period. Foresight relied principally on a 2020 Nature article, arguing that the article put Roche on notice of the alleged misuse. Roche responded that the article disclosed only general information and did not reveal that Roche’s trade secrets were being used to develop PhasED-Seq.

The court found Roche’s position plausible. It noted that some aspects of CAPP-Seq had already been public and that the 2020 article did not mention PhasED-Seq. The court therefore concluded that the amended complaint did not establish at the pleading stage that the article gave Roche actual or inquiry notice of misappropriation. The court also declined to resolve factual disputes about the alleged use of Roche’s trade secrets.

The court further held that Roche described its alleged trade secrets with enough detail to distinguish them from general knowledge. Roche identified improvements and algorithms connected to CAPP-Seq and related technology and supported its allegations with numerous exhibits. The court also found that Roche plausibly alleged Foresight’s direct or indirect involvement through the Doctors, including allegations that Foresight was founded while the Doctors were working for Roche and that its competing technology was built on Roche’s proprietary technology.

Foresight argued that a patent license from Stanford undermined Roche’s misappropriation theory. The court acknowledged that the patent-related allegation might create some ambiguity, but held that Roche’s other allegations were sufficient to state a plausible claim.

As to the declaratory-judgment claim, Roche alleged that the Doctors had assigned inventions disclosed in the disputed patent applications to Roche, while Stanford claimed ownership. The court found that these allegations showed a substantial controversy between parties with opposing legal interests. The court declined to treat Stanford’s patent-ownership policies as part of the complaint because Roche had not referred to them extensively and Foresight offered them to dispute the complaint’s factual allegations.

Ruling

Judge Eumi K. Lee granted Foresight’s motion without prejudice as to Count 3, the Delaware Uniform Trade Secrets Act claim; Count 8, the California Unfair Competition Law claim; and Count 9, the Delaware common-law unfair-competition claim. The parties had agreed that Roche could amend the state trade-secret allegations to proceed under the California Uniform Trade Secrets Act and could withdraw Counts 8 and 9, while reserving the right to seek permission to amend those claims if discovery revealed additional facts.

The court denied the motion as to Count 1, the federal Defend Trade Secrets Act claim; Count 2, the California Uniform Trade Secrets Act claim; and Count 10, the declaratory-judgment claim concerning ownership of the disputed patent applications. In all other respects, the motion was denied. Roche was ordered to file an amended complaint and a redlined comparison within fourteen days.