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Theravectys SA v. Immune Design Corp

Court of Chancery of Delaware

October 31, 2014

Theravectys SA
v.
Immune Design Corp

Submitted: October 28, 2014

Dear Counsel:

Non-Party Novasep Inc. ("Novasep US") has moved for a protective order pursuant to Court of Chancery Rule 26(c). Its motion arises in the context of litigation between Plaintiff Theravectys SA ("TVS")[1] and Defendant Immune Design Corporation ("IDC"). TVS's claims against IDC derive from Henogen SA's ("Henogen") manufacture of antiviral vectors for IDC, in violation of a services contract between Henogen and TVS.[2] TVS alleges tortious interference, unfair competition, misappropriation of trade secrets, and unjust enrichment, and seeks to establish that IDC knowingly induced Henogen to breach its contract with TVS and/or that IDC intentionally used TVS's confidential and proprietary information.

In its efforts to establish its case, TVS served Novasep US, a corporate affiliate of Henogen, with discovery requests. Novasep U.S. and Henogen, neither of which is a party to this litigation, share a corporate parent, Novasep Holdings S.A.S. ("Novasep S.A.S."), which is headquartered in France. Novasep U.S. is based in Pennsylvania and serves as the American sales and marketing force for its foreign affiliates, including Henogen. Based in Belgium, Henogen is a contract manufacturing organization specializing in the development and production of biomolecules for third parties. Novasep U.S. markets Henogen's services to American clients, but generally ceases its interaction with a client after the client signs an initial contract with Henogen.

Novasep US's involvement in the events underlying the TVS-IDC litigation was limited to marketing communications with IDC before IDC and Henogen entered into the Master Agreement for Development & Manufacturing Services on April 27, 2012 (the "Manufacturing Agreement"). After the Manufacturing Agreement was signed, all products created for IDC were manufactured, tested, and shipped to IDC by Henogen.

I. TVS'S DISCOVERY REQUESTS

Novasep U.S. objects to TVS's requests for documents related to (i) the manufacture and testing of the lentiviral vectors for IDC, (ii) the shipment of those vectors to IDC, (iii) the negotiation and formation of the Manufacturing Agreement, (iv) the litigation between TVS and IDC, and (v) Novasep US's corporate structure and relationships with its affiliates.

Novasep U.S. argues that documents related to the manufacture, testing, and shipment of the lentiviral vectors (the "Foreign Affiliate Documents") are outside of its possession, custody, or control. It was not involved in these processes and the Foreign Affiliate Documents are possessed and controlled by Henogen and Novasep US's other European affiliates.

Novasep U.S. contends that even if it controlled the Foreign Affiliate Documents, French and Belgian laws prevent their production. Further, Novasep U.S. argues that none of the categories of documents that it resists producing is relevant to TVS's claims, and their production would be unduly burdensome.

As explained below, TVS has not established Novasep US's control over the Foreign Affiliate Documents or any documents related to agreements between Henogen and IDC to cooperate with respect to litigating against TVS. Accordingly, Novasep U.S. need not produce those documents. However, to the extent that Novasep U.S. controls documents responsive to TVS's remaining requests, Novasep U.S. will produce them.

A. There is Insufficient Evidence That Novasep U.S. Controls the Foreign Affiliate Documents

Court of Chancery Rule 34(a) provides that a party may only request documents "which are in the possession, custody or control of the party upon whom the request is served."[3] The Foreign Affiliate Documents are not in Novasep US's possession or custody. However, TVS argues that Novasep U.S. has "control" over those documents.

"In the Rule 34 context, [c]ontrol has been defined to include the legal right to obtain the documents requested upon demand. Thus, the key inquiry is whether the company has the power, unaided by the court, to force production of the documents."[4] Both state and federal courts in Delaware "decline[] to apply a broader definition of 'control' that would also include an inquiry into the practical ability of the subpoenaed party to obtain documents."[5] Separate corporate identities are generally respected "except in rare circumstances justifying the application of the alter ego doctrine to pierce the corporate veil of the subsidiary."[6] The alter ego doctrine typically only applies when the use of "the corporate form in and of itself operates to serve some fraud or injustice."[7]

The strongest pieces of evidence supporting an application of the alter ego doctrine are (i) the Mutual Confidential Disclosure Agreement between IDC and Novasep US, signed January 9, 2012 (the "CDA"), and (ii) the Cooperation Agreement between Henogen (and its group companies) and IDC, ...


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