Bluestar Genomics v. Song

Background

Bluestar Genomics and Dr. Chunxiao Song entered a consulting agreement on October 1, 2016. The agreement required Dr. Song to provide work to Bluestar in exchange for equity and cash compensation and to assign Bluestar rights in work product created under the agreement, including intellectual-property rights. During the agreement’s term, Dr. Song developed the 5mC technology and the TAPS technique, which facilitate cancer detection.

Bluestar sued Dr. Song and the Ludwig Institute for Cancer Research on June 11, 2021, alleging claims based on Dr. Song’s breach of the consulting agreement. The court had previously dismissed the claims against Ludwig for lack of personal jurisdiction but found that Dr. Song was subject to personal jurisdiction. Dr. Song then moved for judgment on the pleadings and sought a stay.

Conversion Claim

Dr. Song argued that Bluestar’s conversion claim was barred by California’s three-year statute of limitations. The court explained that the limitations period begins when the plaintiff is on actual or constructive notice of interference with its ownership or right to possess the property.

The court rejected Dr. Song’s argument that unpublished provisional patent applications gave Bluestar constructive notice in January or April 2018. The court found, however, that Bluestar had actual notice of competing ownership claims in February 2018, when it negotiated with Ludwig to obtain rights to the TAPS and 5mC technologies. Because Bluestar filed suit more than three years after that notice, the court held that the conversion claim was untimely and granted the motion for judgment on the pleadings as to that claim.

Whether Ludwig Was a Required Party

Dr. Song argued that Ludwig was a necessary and indispensable party under Federal Rule of Civil Procedure 19 because Ludwig was the ultimate assignee of the disputed technologies and the case could affect Ludwig’s rights.

The court disagreed. It found that Bluestar’s breach-of-contract and breach-of-the-implied-covenant claims could be resolved without deciding who owned the patents or whether the assignment was valid. Bluestar’s remaining requested relief was damages for those contract claims; Bluestar abandoned its request for declaratory relief at the hearing. The court concluded that damages could provide complete relief and that proceeding without Ludwig would not create a risk of inconsistent obligations for Dr. Song. The court therefore denied the motion for judgment on the pleadings in all other respects.

Other Disposition

The court denied Dr. Song’s motion to stay as moot. It ordered Bluestar to file an amended complaint by January 12, 2024, removing requests for declaratory relief and a determination of ownership rights.