Genfit S. A. v. CymaBay Therapeutics

Background

Genfit S.A. alleged that it was developing a Phase 3 clinical trial, called ELATIVE, for a treatment for primary biliary cholangitis. Genfit alleged that Dr. Gideon Hirschfield, who had agreed to serve as the trial’s lead investigator and an adviser, sent CymaBay Therapeutics Inc. an email containing Genfit’s clinical-trial protocol and confidential strategic information. Genfit further alleged that CymaBay shared the information with employees, prepared internal documents referring to it, and disclosed those documents to at least eight service providers involved in designing CymaBay’s own protocol.

Genfit asserted six causes of action: misappropriation of trade secrets under the federal Defend Trade Secrets Act and California’s Uniform Trade Secrets Act; intentional and negligent interference with prospective economic advantage; aiding and abetting breach of fiduciary duty; and violation of California’s Unfair Competition Law. CymaBay moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint lacks a legally viable theory or does not allege enough facts to make the claim plausible.

Trade-secret claims

The court treated the federal and California trade-secret claims together because their elements are substantially similar. A plaintiff must allege that it possessed a trade secret, that the defendant misappropriated it, and that the misappropriation caused or threatened damage. The information must also have been kept secret through reasonable measures and have independent economic value because it was not generally known or readily ascertainable.

In an earlier order, the court had dismissed the trade-secret claims to the extent they were based on alleged trade secrets other than the protocol as a whole. In the second amended complaint, Genfit identified fourteen component parts of the protocol and alleged that each was unique, not publicly available, and valuable to CymaBay’s trial development. The court found that Genfit had changed the wording but not the substance of its earlier theory. It also found that Genfit had not adequately alleged that any individual component, standing alone, had independent economic value. The court therefore dismissed the first and second causes of action to the extent they were based on the component parts, without further leave to amend. The order did not dismiss those causes of action to the extent they were based on the protocol in its entirety.

Interference claims

The court dismissed the third and fourth causes of action, for intentional and negligent interference with prospective economic advantage, without further leave to amend. The court had previously found that Genfit had not adequately alleged that the claimed economic advantage was reasonably probable to occur without CymaBay’s alleged interference or that Genfit would have continued working with Dr. Hirschfield after his alleged disclosure.

Genfit added allegations that it would have continued working with Dr. Hirschfield if CymaBay had deleted and not further disclosed the information. The court declined to consider that allegation because it directly contradicted an allegation in Genfit’s earlier complaint that Genfit and Dr. Hirschfield would have had no choice but to end their relationship after the alleged breach of trust.

The court alternatively held that the alleged future economic benefit remained too speculative. Genfit’s allegations that Dr. Hirschfield and his affiliated institutions could improve the chances of a timely and effective trial and eventual regulatory approval did not establish a reasonably expected economic advantage, because clinical trials can fail at any stage. The court also found that the cost or need to find other investigators and trial sites was not the type of economic interest protected by this tort. Finally, even assuming Genfit had adequately alleged a prospective economic advantage, Genfit—not CymaBay—had decided to end its relationship with Dr. Hirschfield and his affiliates, which did not support the interference claim under the authorities discussed by the court.

Aiding and abetting fiduciary-duty claim

The court dismissed the fifth cause of action, for aiding and abetting breach of fiduciary duty, without further leave to amend. Even assuming Genfit had alleged an ongoing breach by Dr. Hirschfield and substantial assistance or encouragement by CymaBay, the court found that Genfit had not alleged facts showing that Dr. Hirschfield owed Genfit a fiduciary duty.

The court held that the confidentiality and collaboration agreements did not create a fiduciary relationship. Those agreements described Dr. Hirschfield as an independent contractor and disclaimed an employment, agency, partnership, principal-agent, or joint-venture relationship. The court also found that Genfit’s alleged trust in Dr. Hirschfield and his expertise did not, by itself, establish the vulnerability and dependence needed for a fiduciary relationship.

Unfair-competition claim

The court dismissed the sixth cause of action, for violation of California’s Unfair Competition Law, without further leave to amend. Genfit’s claim under the law’s unlawful-practices provision depended on the interference and aiding-and-abetting claims, which the court had dismissed. Genfit also argued that CymaBay’s conduct was unfair because the companies competed in drug development. The court found that Genfit had not alleged an incipient antitrust violation, conduct violating the policy or spirit of antitrust laws, or conduct significantly threatening or harming competition as required for a direct competitor’s unfairness claim.

Disposition

Judge Maxine M. Chesney granted CymaBay’s motion to dismiss. The order dismissed the trade-secret claims only insofar as they were based on individual protocol components, and dismissed the third through sixth causes of action without further leave to amend.