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

Background

Roche Molecular Systems, Inc. and Roche Sequencing Solutions, Inc. sued three former consultants—Maximilian Diehn, Arash A. Alizadeh, and David Kurtz—and Foresight Diagnostics Inc. The opinion states that the Doctors founded Foresight in 2020 while working for Roche. Roche alleged that they misappropriated trade secrets concerning methods for detecting and monitoring certain cancers and developed competing technology with Stanford, which licensed technology to Foresight.

The Board of Trustees of the Leland Stanford Junior University moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss Roche’s first amended complaint. Under that rule, a court dismisses a claim when the complaint does not allege enough facts to make the requested relief plausible. The court generally accepts well-pleaded factual allegations as true at this stage but does not accept unsupported legal conclusions. The court also explained that dismissal under this rule ordinarily allows amendment unless the defect could not be cured by additional facts.

Trade-secret claims

Stanford argued that Roche’s trade-secret claims were time-barred, failed to identify trade secrets, and did not adequately allege misappropriation by Stanford. The court denied the motion to the extent it relied on the time-bar and trade-secret-identification arguments, referring to its related order addressing Foresight’s motion.

The court nevertheless held that Roche had not plausibly alleged that Stanford misappropriated Roche’s trade secrets. Roche relied on Stanford’s public statement that PhasED-Seq built on CAPP-Seq, as well as allegations that Stanford employees, including the Doctors, knew that fifteen disputed patent applications disclosed inventions based on Roche-owned technology. The court found that the public statement could not plausibly be understood as an acknowledgment that Stanford knew PhasED-Seq had been developed using Roche’s trade secrets, particularly because Roche also alleged that some aspects of CAPP-Seq were publicly known.

The court also found Roche’s allegations about Stanford’s knowledge too general and conclusory. Roche argued that the Doctors’ knowledge should be attributed to Stanford, but the court concluded that Roche had not supplied enough facts to support that theory. It therefore dismissed Counts 1 and 2—the federal Defend Trade Secrets Act claim and the California Uniform Trade Secrets Act claim—as to Stanford, without prejudice, and granted leave to amend.

Declaratory-judgment claim

Count 10 sought a declaration that Roche owned, or at least co-owned, the disputed patent applications. The court held that Roche plausibly alleged an actual controversy over ownership involving Roche, Stanford, and Foresight. It therefore denied Stanford’s request to dismiss Count 10.

Stanford also argued that earlier patent-assignment agreements prevented Roche from proving ownership. The court did not resolve that argument because the agreements Stanford relied on were not properly before the court. The amended complaint did not refer to those agreements extensively enough for the court to treat them as part of the complaint, and Stanford had not properly requested judicial notice of them for this motion. The court therefore did not decide the substantive ownership issue.

Disposition

The court granted Stanford’s motion without prejudice as to Counts 1 and 2 and denied the motion as to Count 10. Roche received leave to amend Counts 1 and 2 and was ordered to file an amended complaint within fourteen days, along with a redlined comparison to the original complaint.

The order’s opening paragraph says the motion was also granted without prejudice as to Count 8, the California Unfair Competition Law claim. The conclusion instead states that Count 8 would be withdrawn under the parties’ agreement. This creates an internal inconsistency in the order’s description of Count 8, although the conclusion identifies withdrawal as the action to be taken.