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Perlan Therapeutics, Inc. v. Superior Court of San Diego County

November 4, 2009

PERLAN THERAPEUTICS, INC., PETITIONER,
v.
THE SUPERIOR COURT OF SAN DIEGO COUNTY, RESPONDENT;
NEXBIO, INC., ET AL., REAL PARTIES IN INTEREST.



Original proceedings; petition for a writ of mandate/prohibition to challenge an order of the Superior Court of San Diego County, Joan Marie Lewis, Judge. Petition denied. (Super. Ct. No. GIC871276).

The opinion of the court was delivered by: Ikola, J.

CERTIFIED FOR PUBLICATION

OPINION

Code of Civil Procedure section 2019.210*fn1 requires a plaintiff suing for misappropriation of its trade secrets to identify with "reasonable particularity" the purported trade secrets which allegedly have been misappropriated "before commencing discovery relating to the trade secret[s.]" The court below concluded plaintiff Perlan Therapeutics, Inc.‟s effort to meet this obligation fell short, and therefore granted defendants‟ motion for protective order precluding Perlan from pursuing discovery relating to its claimed trade secrets until it provided a sufficient identification. Perlan asks this court to issue a writ of mandate or prohibition to the trial court, directing it to accept Perlan‟s trade secret identification statement as sufficient and to allow Perlan to commence discovery.

We deny Perlan‟s petition. Two recent cases make clear that trial courts can require too much particularity in a trade secret statement and thereby abuse their discretion under section 2019.210. (See Brescia v. Angelin (2009) 172 Cal.App.4th 133 (Brescia); Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, 833-834 (Advanced Modular).) We publish this opinion to emphasize that trial courts still have broad discretion under section 2019.210. The court in this case applied the correct legal standard to Perlan‟s trade secret identification statement and there is a basis in the record to support the court‟s conclusion that the statement was not reasonably particular under the circumstances presented. We therefore will not provide the extraordinary relief requested by Perlan.

FACTS

The allegations in this case follow a familiar pattern - alleged misappropriation of trade secrets by former employees. According to the second amended complaint, defendant Mang Yu incorporated Perlan in 1997 to develop "protein-based therapeutics for the treatment of diseases caused by viral infection and diagnostic products to detect viral infection." Yu and his wife, defendant Fang Fang, served as directors and officers of Perlan for varying periods of time. Perlan developed an "anti-viral protein-based therapeutic" known as "ColdSolTM, a daily nasal spray for the prevention and treatment of the common cold."

Yu resigned from Perlan on or about June 1, 2001. Defendant NexBio, Inc. was incorporated on or about August 19, 2002. A statement filed by NexBio with the California Secretary of State in December 2002 indicated Yu was the chief executive officer of NexBio and both Yu and Fang served as directors of NexBio. Fang resigned from Perlan on or about May 16, 2003. Both Fang and Yu are currently directors and officers of NexBio. NexBio has succeeded in obtaining more than $50 million in grants to fund its research into protein therapies for influenza. Perlan claims NexBio was "secretly" formed by Yu and Fang "to wrongfully exploit and misappropriate the Perlan technology, inventions, and other proprietary information they converted and misappropriated from Perlan."

Perlan‟s second amended complaint includes 12 causes of action, but each claim for relief is at least in part based on the allegation that defendants misappropriated Perlan‟s trade secrets.*fn2 Defendants successfully moved for a protective order precluding discovery following Perlan‟s initial attempt to provide a section 2019.210 trade secret disclosure statement. Perlan amended its statement, and this petition pertains to the sufficiency of Perlan‟s amended trade secret statement.

Perlan's Amended Trade Secret Statement*fn3

Perlan begins its amended trade secret statement with a full page of text consisting of a "preliminary statement" and "general objections." This material, similar in appearance to the boilerplate reservations of right and objections often appearing in written discovery responses, makes no attempt to comply with section 2019.210.

The remainder of Perlan‟s amended trade secret statement consists of four pages of text. Much of the text simply repeats the narrative available in the publicly filed second amended complaint and provides additional technical detail that is nonetheless publicly available. For instance, the statement leads off with the following paragraph: "On or about December 2001, while [Fang] was an officer and director of Perlan, another senior scientist working at Perlan, Dr. Catherine Charles, developed a protein-based therapeutic that includes a heparin binding peptide to prevent and treat respiratory tract viral infections (hereinafter referred to as the "Charles Invention‟). Heparin binding peptide is a short segment of protein that preferentially attaches to heparin sulfate, a type of glycosaminoglycan that is ubiquitously present on cell membrane as well as on the surface of respiratory epithelium. The Charles Invention constituted part of Perlan‟s intellectual property and trade secret information. (The Charles Invention disclosure statement was previously produced by Perlan and bates labeled as PER017920-017973)."*fn4

The next three paragraphs provide details about the Charles Invention and related processes that were not included in the second amended complaint. The paragraphs refer to multimerization, peptides, glycosaminoglycan, and reagents, and give general descriptions of how various processes would be used to attain the therapeutic goal of the invention (fighting viral infections). Despite the highly technical language used, it is apparent that this description does not provide specific identifications of the peptides or reagents used in the process. Further, the description references approximately 50 additional documents relating to the Charles Invention.

The next paragraph shifts to a different alleged technology involving the use of "sialidase" and certain proteins in a flu treatment; the gist of the narrative is that Fang conceived of this idea while still working at Perlan but hid her work from Perlan before leaving Perlan to join NexBio. There is additional technical detail provided, which is labeled a "novel idea" in the statement. The next paragraph proceeds to argue that Perlan (and not NexBio) conceived of the idea involving sialidase, and references 76 pages of dense prose, which purportedly establishes this fact. In the following paragraph, Perlan argues that its scientific consultant confirmed the novelty of this idea by reviewing published articles in the field. In short, Perlan seems to argue that because articles about the processes were published in 2005 and 2006, the idea must have been novel in 2003 when Fang left Perlan.*fn5 The statement then discusses the available evidence concerning the merits of Perlan‟s contentions, referencing an additional 125 pages of NexBio‟s grant and patent applications.

The statement concludes with the following paragraph: "As described [above], the Charles Invention, Perlan‟s Protein Multimerization Process, and Perlan‟s unique idea [concerning sialidase], and all related research, development, advancements, improvements and processes related thereto, constitute trade secrets owned by Perlan, now being developed in various forms by Defendants."

Defendants' Motion for Protective Order

Following receipt of Perlan‟s amended trade secret statement, defendants again moved for a protective order prohibiting Perlan from conducting discovery until it complied with its obligation to identify its purported trade secrets with reasonable particularity. Defendants‟ motion argued Perlan had not remedied the shortcomings of its initial trade secret statement: "the Amended Statement remains a non-committal collection of loosely worded conclusory allegations, mainly referring to the Charles Invention." To wit, defendants criticized the references in the statement to proteins, peptides, sialidase, domains, and multimerization as lacking a clear explication how the particular substances and processes at issue were used in Perlan‟s particular alleged trade secret(s).

Defendants also pointed to the use of the word "included" in Perlan‟s description of the Charles Invention (i.e., the Charles Invention "included the concept of combining a multimerization peptide with a therapeutic peptide/domain"). Such language, according to defendants, suggests Perlan is only referring to general concepts involved in the Charles Invention but not providing a reasonably particular description of the Charles Invention itself. Moreover, defendants highlighted Perlan‟s continued reference to "all related research, development advancements, improvements and processes related thereto" as insufficient to meet the "reasonably particular" standard of section 2019.210.

Finally, defendants claimed the alleged trade secrets, such as they could be discerned, were not distinguished by Perlan from matters generally known in the scientific field in which Perlan and NexBio operate. Defendants claimed the "failure to specify the certain proteins or peptides at issue and to describe their combination leaves the Amended Statement too general to state a trade secret technology." Defendants submitted several scientific journal articles that were published prior to Fang‟s departure from Perlan, including one published in the May 2003 issue of Antimicrobial Agents and Chemotherapy that included Charles (as the lead author), Fang, and other Perlan employees as authors. The article, entitled "Prevention of Human Rhinovirus Infection by Multivalent Fab Molecules Directed against ICAM-1," discussed Perlan‟s development of a "technology for improving avidity by making bivalent, trivalent, or tetravalent recombinant polypeptides. We designed tripartite proteins consisting of the Fab fragment of an antibody fused with a hinge derived from human immunoglobulin D that was further linked to polymerization domains derived from human coiled-coil proteins." This article appears, in part at least, to publicly disclose the Charles Invention.

Perlan, of course, opposed defendants‟ motion. Perlan claimed its amended statement "identifies at least eight (8) trade secrets[] that, in combination with one another, form the trade secrets misappropriated by Defendants. The Amended Statement describes how the combination of the trade secrets distinguish them from matters within the general knowledge of persons within the field." Perlan also decried the lack of evidentiary submissions by defendants (other than their attorney‟s declaration) to support the contention that Perlan‟s statement was vague and unintelligible.

Perlan submitted expert declarations from Dr. Joseph Chuang and Dr. Catherine Charles (inventor of the Charles Invention) to assist in its argument that the statement provided reasonably particular descriptions of trade secrets. The Chuang declaration first summarized the trade secret statement. Chuang then opined the statement "identifies the following eight trade secrets: (1) the Charles Invention, (2) Perlan‟s Protein Multimerization Process, (3) Perlan‟s novel idea [regarding sialidase and the flu], and (4) all related research, (5) development, (6) advancements, (7) improvements and (8) processes related thereto." Chuang claims the idea regarding sialidase was "novel," reasoning that scientific articles were published in 2005 and 2006 discussing this approach, and articles "are only accepted for publication if the idea, methods, and ...


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