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

Background

Roche Molecular Systems, Inc. and Roche Sequencing Solutions, Inc. sued three former consultants and the company they founded, Foresight Diagnostics Inc. The complaint alleges that the former consultants, including David Kurtz, misappropriated Roche trade secrets involving methods for detecting and monitoring certain cancers and developed competing technology.

Kurtz moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not plausibly state a claim for relief. The court also granted Kurtz’s unopposed request to take judicial notice of identified patent applications and a patent.

Trade-Secret Claims

Kurtz argued that Roche’s trade-secret claims were time-barred and that Roche failed to identify its trade secrets adequately. The court denied the motion as to Count 1, brought under the federal Defend Trade Secrets Act, and Count 2, brought under the California Uniform Trade Secrets Act. The court relied on the reasoning in its concurrently issued order concerning Foresight’s motion to dismiss, which found at the pleading stage that the claims were not time-barred and that Roche described the alleged trade secrets with sufficient particularity.

Breach-of-Contract Claim

Roche alleged that Kurtz violated a Proprietary Information and Invention Agreement. According to Roche, the agreement required Kurtz to protect Roche’s trade secrets, obtain consent before accepting outside employment related to Roche’s area of interest, and disclose and assign inventions related to Roche’s business.

Roche alleged that Kurtz breached the agreement by failing to disclose and assign inventions claimed in patent applications covering PhasED-Seq, using and disclosing Roche trade secrets in patent applications, and joining Foresight without Roche’s knowledge or approval.

Kurtz argued that Roche had not adequately alleged that it performed its payment obligations under the agreement. He also submitted an employment services agreement containing payment terms. The court declined to use that document to resolve a factual dispute at the pleading stage and held that Roche stated a plausible breach-of-contract claim. The court therefore denied the motion as to Count 4.

Implied-Covenant Claim

Roche also alleged that Kurtz breached the implied covenant of good faith and fair dealing. The court explained that this covenant requires contracting parties to avoid conduct that unfairly frustrates the agreement’s purposes and deprives the other party of expected benefits. A claim based only on the same conduct and damages as a contract claim is duplicative unless it alleges something beyond the contract breach.

The court found that Roche’s implied-covenant allegations repeated its breach-of-contract allegations. Roche did not identify a separate conscious and deliberate act by Kurtz that thwarted the agreement’s purpose. The court therefore granted the motion as to Count 6 and dismissed that claim with leave to amend. The opinion’s opening disposition describes the Count 6 dismissal as granted without prejudice; its conclusion states that the motion was granted with leave to amend.

Disposition

The order states that Kurtz’s motion was granted in part and denied in part. It was granted as to Count 6 and denied as to Counts 1, 2, and 4. Under the parties’ agreement, Roche was also granted leave to amend Count 2 to consolidate its state-law trade-secret claims. Roche was ordered to file an amended complaint and a redlined comparison within fourteen days.