Stemcell Technologies Canada Inc. v. StemExpress, LLC

Background

STEMCELL Technologies Canada Inc. and StemExpress, LLC previously had a business relationship under which StemExpress supplied cell products to STEMCELL. Their contract included confidentiality provisions. After the relationship ended, the parties sued each other, including over alleged contract breaches and alleged theft of trade secrets. StemExpress claimed that STEMCELL obtained access to its trade secrets during quality audits and misappropriated them to start a competing business called Canventa.

The dispute addressed StemExpress’s responses to STEMCELL’s Interrogatories Nos. 1 and 2, 4 through 6, and 9 through 11. These questions generally sought StemExpress’s contentions about its trade secrets and confidential information. STEMCELL moved to compel further responses and requested attorney’s fees. StemExpress requested a protective order and sanctions.

Discovery Ruling

The court found the interrogatory responses insufficient and granted STEMCELL’s motion to compel further responses. For Interrogatories Nos. 1 and 2, the court found that StemExpress’s lengthy answers did not adequately explain what its trade secrets were, how they differed from public information, or how they differed from information generally known in the industry.

For Interrogatory No. 4, the court ordered StemExpress to identify all entities, including customers, to which it had disclosed its trade secrets. For Interrogatory No. 5, the court required responses specific to each trade secret explaining how the information derived independent economic value from not being generally known. The court also found that StemExpress’s response to Interrogatory No. 6 focused on what STEMCELL might have wanted to use rather than facts showing that STEMCELL actually used the alleged trade secrets.

The court found the response to Interrogatory No. 9 similarly inadequate because it did not adequately identify confidential information that was not a trade secret. It also ordered StemExpress to respond to Interrogatories Nos. 10 and 11, which sought information about customers who bought specified cell products. The responses generally had to cover 2014 through 2020, including the period involving open orders, rather than only 2014 through 2018.

For the interrogatories other than Nos. 4, 10, and 11, the court allowed an additional full-day deposition of StemExpress under Federal Rule of Civil Procedure 30(b)(6), which permits an organization to designate a witness to testify about specified topics. The court said that whether StemExpress’s information was legally protectable was a merits issue for summary judgment or trial, while the purpose of the discovery was to clarify the issues.

Fees, Sanctions, and Disposition

The court denied STEMCELL’s request for attorney’s fees. It stated that sanctions against STEMCELL were not warranted. The court resolved the dispute in ECF No. 123 and stated that the motion at ECF No. 147 was moot. The order did not decide the parties’ underlying trade-secret or contract claims.