2 Pharma Connect, LLC v. Mission Pharmacal Company

Background

(RC) 2 Pharma Connect, LLC sued Mission Pharmacal Company concerning the development of a generic version of docosanol 10% cream. The parties had entered into a nondisclosure agreement and a Proposal Agreement. The Proposal Agreement covered development work, stability testing, third-party studies, preparation of an abbreviated new drug application, and eventual commercialization.

The parties later disagreed over a proposed Technology Transfer Agreement. (RC) 2 sought changes involving patent and technology rights, including a royalty-free license for certain technology. Mission rejected those changes and said it would continue working with (RC) 2 only under Mission’s proposed terms. The project nevertheless continued, and (RC) 2 became concerned that Mission would not complete required stability testing and other work. After Mission did not provide the confirmation that (RC) 2 requested by December 22, 2021, (RC) 2 sued.

Claims and Motion

The amended complaint asserted three claims:

Mission moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the amended complaint for failure to state a legally sufficient claim. It alternatively moved under Rule 12(f) to strike portions of the complaint. (RC) 2 also moved for permission to file a further reply, and it sought temporary restraining orders concerning Mission’s performance.

Court’s Analysis

For a Rule 12(b)(6) motion, the court accepts well-pleaded factual allegations as true but does not accept bare legal conclusions. The complaint must allege enough facts to make liability plausible rather than merely possible.

For Count 1, the court held that (RC) 2 had not alleged facts plausibly showing that Mission breached the nondisclosure agreement. Mission’s refusal to grant an exclusive license to its technology did not itself violate an existing agreement. The court also found that the refusal did not plausibly show that Mission was using (RC) 2’s confidential information to manufacture or sell the product for third parties. The complaint did not identify facts showing that Mission had used the confidential information in violation of the nondisclosure agreement.

For Count 2, the court held that (RC) 2 did not identify a specific provision of the Proposal Agreement that Mission had breached. The complaint alleged uncertainty about whether Mission would complete stability testing, but it did not allege that Mission had actually failed to perform a required test or had performed one late. The court also held that the Proposal Agreement did not require Mission to respond by December 22, 2021 to (RC) 2’s unilateral demand for written confirmation. Mission’s failure to provide that confirmation by the requested deadline therefore was not a contractual breach.

The court further stated that allegations raised only in briefing—concerning in-scope testing, preparation of the abbreviated new drug application, and communications through outside counsel—could not cure omissions in the complaint. The court also rejected reliance on the doctrine allowing a party in some circumstances to demand adequate assurance of future performance. Among other reasons, the court found that the complaint did not allege that the requested response time was reasonable and that Mission later confirmed it was conducting the stability testing and intended to fulfill its contractual obligations.

For Count 3, (RC) 2 did not defend the claim in its opposition and stated at oral argument that it was no longer pursuing an anticipatory-repudiation claim. The court therefore deemed that claim abandoned.

Disposition

The court granted Mission’s motion to dismiss without prejudice. It gave (RC) 2 two weeks to file an amended complaint and stated that the case would be closed if no amended complaint was filed. The court denied as moot the application for a temporary restraining order. It also denied the motion for leave to file a further reply. The opinion directed the Clerk of Court to close the docket entries for Mission’s dismissal motion, (RC) 2’s further-reply motion, and the temporary-restraining-order application.