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Becton v. Cytek Biosciences Inc.

United States District Court, N.D. California

July 17, 2019

BECTON, DICKINSON AND COMPANY, Plaintiff,
v.
CYTEK BIOSCIENCES INC., et al., Defendants.

          ORDER GRANTING MOTION TO DISMISS; AFFORDING LEAVE TO AMEND Re: Dkt. No. 116

          Maxine M. Chesney United States District Judge.

         Before the Court is plaintiff/counterdefendant Becton, Dickinson and Company's (“BD”) motion, filed April 5, 2019, to dismiss the First Cause of Action asserted against it in defendant/counterclaimant Cytek Biosciences, Inc.'s (“Cytek”) First Amended Counterclaims (“FACC”). Cytek has filed opposition, to which BD has replied.

         Having read and considered the papers filed in support of and in opposition to the motion, the Court rules as follows.[1]

         BACKGROUND

         Cytek is a company that “provide[s] . . . flow cytometry products and services in the United States.” (See FACC ¶ 2.)[2] BD is a company that, Cytek alleges, “dominates more than half the United States market for flow cytometers” (see id. ¶ 2) and “markets a number of different reagents” (see id. ¶ 21).[3] Cytek further alleges that BD “has 100% of the global market for . . . UV reagents” (see id. ¶ 47), which are “designed to interact specifically with UV light” in flow cytometers (see id. ¶ 22).

         In June 2017, Cytek “release[d] . . . the Cytek AuroraTM (‘Aurora') cytometer” (see id. ¶ 14), a cytometer that, according to Cytek, “depart[s] from the traditional cytometer designs that BD and others have employed for decades” (see id.) and “provides superior or equal performance to the BD FACSymphony for half the cost” (see id. ¶ 48).[4]

         Cytek alleges that, “[j]ust months after the Aurora's release, ” one of its customers “relayed” that “a BD executive threatened that BD would no longer supply the customer with the critical reagents for its BD cytometers if the [customer] purchased an Aurora from Cytek.” (See id. ¶ 18.) Cytek further alleges that “[a] major U.S. cancer treatment center that was in discussions for the purchase of [an] Aurora reported to Cytek sales personnel that BD was holding hostage a reagent that is available only from BD, ” and that “[a]nother cancer research center in the U.S. has also reported to Cytek sales personnel that, despite interest, it could not engage in the evaluation or purchase of a Cytek Aurora flow cytometer because it feared losing access to necessary BD reagents.” (See id. ¶ 19)

         Moreover, Cytek alleges, BD “requir[ed] its employees - including certain Individual Defendants[5] - to enter into employee agreements” (see id. ¶ 50), which contained “an assignment, or ‘holdover,' provision that requires former employees to assign all ‘right, title, and interest in any Innovation relating to Confidential Information arising because of [their] employment with [BD], conceived or made by [them] . . . at any time for a period of one (1) year after employment” (see id. ¶ 51 (alterations in original) (emphasis omitted)).

         Based on the above, Cytek asserts against BD (1) a claim for injunctive relief under California Business and Professions Code § 17200, California's Unfair Competition Law (“UCL”) (First Cause of Action); and (2) a claim for declaratory relief under 28 U.S.C. § 2201 (Second Cause of Action).

         LEGAL STANDARD

         Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure “can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). Rule 8(a)(2), however, “requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief.'” See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)(2)). Consequently, “a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations.” See id. Nonetheless, “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” See id. (internal quotation, citation, and alteration omitted).

         In analyzing a motion to dismiss, a district court must accept as true all material allegations in the complaint, and construe them in the light most favorable to the nonmoving party. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). “To survive a motion to dismiss, a complaint must contain sufficient factual material, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “Factual allegations must be enough to raise a right to relief above the speculative level[.]” Twombly, 550 U.S. at 555. Courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” See Iqbal, 556 U.S. at 678 (internal quotation and citation omitted).

         DISCUSSION

         By order filed February 14, 2019, the Court granted BD's motion to dismiss the First Cause of Action as alleged in Cytek's initial Counterclaims (“ICC”). As set forth in said order, the Court found the claim was subject to dismissal because Cytek had not pled sufficient facts to state a claim under the UCL's “unfair” or “unlawful” prongs, and because Cytek had not adequately alleged entitlement to injunctive relief.

         By the instant motion, BD seeks an order dismissing the First Cause of Action as alleged in the FACC, by which claim Cytek again asserts it is entitled to injunctive relief based on BD's alleged violations under the “unfair” and “unlawful” prongs of the UCL.

         A. The “Unfair” Prong

         A violation under the “unfair” prong of the UCL occurs when a competitor engages in “conduct that threatens an incipient violation of antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” See Cel-Tech Comm'ns, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 187 (1999).

         In asserting BD's conduct falls under the “unfair” prong, Cytek relies on a tying arrangement theory. In particular, Cytek alleges BD has threatened to “t[ie] . . . the sale of its UV reagents . . . to its customers' refusal to purchase competing Cytek machines” (see FACC ¶ 48), and thereby engaged in conduct that “threatens an incipient violation of” section 3 of the Clayton Act, 15 U.S.C. § 14, as well ...


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