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

Background

Roche Molecular Systems, Inc. and Roche Sequencing Solutions, Inc. sued three former consultants—Maximilian Diehn, Ash A. Alizadeh, and David Kurtz—and Foresight Diagnostics Inc., a company the consultants founded. Roche alleges that the consultants misappropriated Roche’s trade secrets involving methods for detecting and monitoring certain cancers and developed competing technology with Stanford University.

This order addressed only the motion to dismiss filed by Dr. Diehn and Dr. Alizadeh against Roche’s first amended complaint. A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests whether the complaint alleges enough facts to support a legally plausible claim, accepting well-pleaded factual allegations as true for that stage but not treating legal conclusions as facts.

Trade-secret claims

The defendants argued that Roche’s trade-secret claims were time-barred and that Roche had not identified its trade secrets with enough detail. The court denied the motion on those grounds, relying on its analysis in a concurrently issued order. The court stated that Roche’s allegations and exhibits described the alleged trade secrets with sufficient particularity and that the claims were not time-barred at the pleading stage.

The court granted the motion without prejudice as to Count 3, Roche’s claim under the Delaware Uniform Trade Secrets Act. After the hearing, the parties agreed that Roche could amend the complaint to convert that claim into a claim under the California Uniform Trade Secrets Act and consolidate its state-law trade-secret claims under that statute. The court therefore dismissed Count 3 without prejudice and granted leave to amend.

Breach-of-contract claim

Count 5 alleges that Dr. Diehn and Dr. Alizadeh breached consulting agreements governed by Delaware law. Roche alleges that those agreements required them to protect Roche’s trade secrets, prohibited disclosure of those secrets without Roche’s consent, and required assignment and disclosure to Roche of inventions created in the course of or as a result of their services.

Roche alleges that the defendants breached the agreements by using and disclosing Roche trade secrets in patent applications and by purporting to assign interests in disputed patent applications covering PhasED-Seq to Stanford rather than Roche. The defendants argued that earlier Stanford assignment agreements meant they no longer owned the inventions and therefore could not have breached their Roche agreements.

The court declined to consider those Stanford agreements as incorporated documents at the pleading stage. The amended complaint did not refer to them extensively, and the defendants offered them mainly to dispute Roche’s allegations about the legal effect of the Roche agreements. The court stated that it would not resolve factual disputes at this stage. It denied the motion to dismiss Count 5, while leaving the defendants’ challenge unresolved for later proceedings.

Implied-covenant claim

Count 7 alleges breach of the implied covenant of good faith and fair dealing under Delaware law. The defendants argued that the claim merely repackaged the contract claim and failed for the same reasons. The court rejected that argument because it denied dismissal of Count 5.

The defendants also argued that the implied covenant could not apply because the written contracts addressed the conduct at issue. Roche responded that the defendants’ reliance on the earlier Stanford assignment created a gap in the agreements. The court found Roche’s theory plausible in light of that alleged earlier assignment and denied the motion to dismiss Count 7. The opinion also states that this denial was without prejudice to the defendants raising that argument later in the litigation.

Disposition

Judge Eumi K. Lee granted in part and denied in part the motion of Dr. Diehn and Dr. Alizadeh. The motion was granted without prejudice as to Count 3 and denied as to Counts 1, 5, and 7. Roche was ordered to file an amended complaint consistent with the order within fourteen days and to file a redlined version comparing it with the original complaint. The order was a pleading-stage ruling and did not finally determine liability.