HotSpot Therapeutics, Inc. v. Nurix Therapeutics, Inc.

Background

Nurix and Macroceutics entered into a collaboration agreement in September 2015 and exchanged confidential information, including information Nurix alleged was protected trade-secret information. In 2018, Macroceutics and HotSpot began a collaboration, and in August 2019 HotSpot acquired Macroceutics. The agreement applied to HotSpot as Macroceutics’ successor in interest.

HotSpot filed an action seeking declarations that it had not misappropriated trade secrets under federal or California law and had not breached the agreement. Nurix responded with counterclaims against HotSpot and Kenneth G. Carson. After an earlier dismissal order, Nurix amended three counterclaims: breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic relations, and intentional interference with performance of a contract.

Motions to Seal

The court granted the parties’ administrative motions to seal specified portions of HotSpot’s motion to dismiss, Nurix’s opposition, and HotSpot’s reply. The sealed portions described the collaboration agreement. The court found compelling reasons to seal the information and concluded that the requests were narrowly tailored.

Motion to Dismiss

The court applied Federal Rule of Civil Procedure 12(b)(6), which tests whether a pleading states a legally sufficient claim. The court accepted well-pleaded factual allegations as true for purposes of the motion and viewed them in the light most favorable to Nurix.

Implied Covenant of Good Faith and Fair Dealing

The court granted HotSpot’s motion to dismiss this counterclaim and granted Nurix leave to amend. The court concluded that the allegations described the same alleged conduct as Nurix’s breach-of-contract claim, making the implied-covenant claim duplicative. The court also concluded that Nurix’s alternative theory would improperly add obligations beyond those contained in the agreement. Although Nurix referred to HotSpot’s alleged bad faith, the court found that the pleaded facts appeared to allege only a contract breach. The court stated that a claim could be permissible if Nurix had facts showing that HotSpot acted in bad faith to frustrate the actual benefits of the agreement.

Intentional Interference with Prospective Economic Relations

The court granted HotSpot’s motion to dismiss this counterclaim and granted Nurix leave to amend. California’s Uniform Trade Secrets Act, or CUTSA, displaces civil claims based on the same core facts as trade-secret misappropriation. The court found that some of Nurix’s allegations relied on alleged misuse of Nurix’s DNATag software and therefore could not support an independent interference claim, even if the information ultimately did not qualify as a trade secret.

The court also considered allegations involving the agreement and collaboration that were independent of trade secrets or confidential information. It concluded that those remaining allegations did not plausibly identify an independently wrongful act, which is required for this type of interference claim. The court noted that the amended pleading did not clearly identify any independently wrongful conduct beyond alleged trade-secret misappropriation.

Intentional Interference with Performance of a Contract

The court denied HotSpot’s motion to dismiss this counterclaim. It held that the claim was not, at the pleading stage, displaced by CUTSA because Nurix alleged some interference with the agreement independent of trade-secret misappropriation. Unlike the prospective-economic-relations claim, this claim did not require an independently wrongful act beyond the interference with the contract itself.

The court also concluded that Nurix plausibly alleged that HotSpot interfered before HotSpot acquired Macroceutics and became a successor to the agreement. The court therefore did not dismiss the claim on the ground that HotSpot was a party to the contract. The court declined to consider HotSpot’s argument that Nurix sought the same economic loss under both contract and tort theories because HotSpot raised that argument for the first time in its reply brief.

Disposition

The court granted the parties’ administrative motions to seal, granted in part and denied in part HotSpot’s motion to dismiss Nurix’s counterclaims, and granted Nurix leave to amend. Nurix had 21 days from the date of the order to file amended counterclaims. Judge Thomas S. Hixson signed the order.