Submitted: January 14, 2015
P. Clarkson Collins, Jr., Esquire, Jason C. Jowers, Esquire, and Albert J. Carroll, Esquire of Morris James LLP, Wilmington, Delaware, and Steven B. Feirson, Esquire, Diane Siegel Danoff, Esquire, and David A. Kotler, Esquire of Dechert LLP, Philadelphia, Pennsylvania, Attorneys for Plaintiff.
Todd C. Schiltz, Esquire of Drinker Biddle & Reath LLP, Wilmington, Delaware, and Steven F. Barley, Esquire, Steven P. Hollman, Esquire, Scott R. Haiber, Esquire, and Marc A. Marinaccio, Esquire of Hogan Lovells U.S. LLP, Baltimore, Maryland, Attorneys for Defendant.
NOBLE, Vice Chancellor
Plaintiff Theravectys SA ("TVS") and Defendant Immune Design Corp. ("IDC") are two biotechnology companies, each of which has conducted clinical trials of lentiviral vector vaccines in humans. Both companies used a common manufacturer to produce many of their lentiviral vectors despite the fact that TVS's contract, which was entered into first, contained an exclusivity provision restricting the manufacturer's work for third parties and confidentiality provisions protecting TVS's confidential information. TVS asserts claims of tortious interference with contractual relations and misappropriation of trade secrets against IDC. It seeks a preliminary injunction halting IDC's continuing use of its allegedly ill-gotten gains. IDC defends, in part, that it had no knowledge of the manufacturer's obligations to TVS and that it never received any TVS trade secret.
A. TVS Contracts with Henogen
TVS is a privately-held biotechnology company based in Paris, France. The company specializes in the development of a new generation of therapeutic vaccines based on lentiviral vector ("LV") technology. Lentiviruses are infectious agents that can serve as instruments, i.e., vectors, to deliver genes into cells. They are "adept at gene delivery because they can cross the intact membrane of the nucleus of the target cell and thus infect both dividing and nondividing cells."LVs are used for both gene therapy and vaccination. "For vaccination, lentiviruses are used to introduce an antigen . . . to activate a patient's immune response to fight the associated disease . . . ." Currently, most LVs are developed for application to cells outside the body. While LVs developed for application to cells inside the body, i.e., in vivo, are a promising technology, no such LV has been approved as a licensed drug.
On October 7, 2010, TVS entered into a Services Agreement (the "TVS-Henogen Agreement") with Belgian contract manufacturing organization ("CMO"), Henogen SA ("Henogen"). TVS selected Henogen to produce LVs intended for in vivo use because of Henogen's fully cGMP-capable facility,  its experience manufacturing LVs, and its convenient European location. TVS negotiated (despite Henogen's reluctance) for an exclusivity provision (the "Exclusivity Provision") that provided:
For the whole duration of this Agreement, and for a one (1) year period following its termination or expiration, Henogen undertakes to inform TVS of any request made by any third party to Henogen to participate in any way to the manufacturing process of a vaccine based on lentiviral DNA Flap vectors. Henogen shall then decline such third party's request if TVS-at its discretion-asks Henogen to decline it.
TVS bargained for the Exclusivity Provision, in addition to confidentiality provisions, to protect its "knowledge, know-how, and related trade secrets, " which would necessarily be transferred under the TVS-Henogen Agreement. Further, during the course of their collaboration, Henogen would develop additional valuable confidential information properly belonging to TVS.
In December 2012, TVS initiated a Phase I clinical trial to test its LV vaccines in HIV patients, becoming the first company to launch clinical trials using in vivo LV vaccines. TVS, as a spin-off from the Pasteur Institute, a French nonprofit famous for groundbreaking HIV research, decided to focus on HIV applications. It anticipated that proving the safety and efficacy of its technology with HIV would attract investors, collaborators, and licensing opportunities, allowing it to expand into other product candidates, such as treatments for cancer. TVS has since completed its Phase I trial and reported results.
As a result of its partnership with Henogen, TVS became the first company to develop a bio-production process for the cGMP manufacture of LV vaccines.
B. IDC Contracts with Henogen
IDC is a public biotechnology company headquartered in Seattle, Washington, focused on developing therapeutic vaccines to treat cancers and infectious diseases. In late 2011, IDC began searching for a CMO to produce in vivo LVs for its own clinical trials, which would focus on a form of cancer. While IDC had already developed its own LV technology, it needed a CMO with adequate facilities to produce cGMP compliant LVs in sufficient volume for a clinical trial.
In early 2012, IDC chose Henogen as its CMO after an apparently comprehensive selection process. Among other desirable qualities, Henogen had previously manufactured cGMP LVs for well-known companies.
IDC's contract with Henogen provided in part:
3.3.3[Henogen] is free to supply to IDC the [Henogen] Confidential Information and all other information to be supplied by [Henogen] to IDC under this Master Agreement, and, [Henogen] has the legal right to grant IDC the rights set forth in Section 10 of this Master Agreement;
3.3.4to [Henogen's] best knowledge, at the Effective Date, the use by [Henogen] of [Henogen] Intellectual Property in accordance with the terms of this Master Agreement and in performance of the Work hereunder (including without limitation the manufacture of the Product), do not infringe any intellectual property rights or industrial property rights of any third party and do not involve the wrongful use of any trade secret or confidential information . . . .
Henogen also "warrant[ed] that no Intellectual Property rights whatsoever owned by any third parties or techniques, know-how or materials that [sic] [would] be used by [Henogen] in the performance of [Henogen's] activities . . . ."
C. TVS Learns of the IDC-Henogen Contract
When TVS learned that Henogen was manufacturing LVs for IDC, in apparent breach of the TVS-Henogen Agreement, it demanded that Henogen cease production. When Henogen refused, TVS moved for an ex parte preliminary injunction in the Commercial Court of Charleroi in Belgium. An injunction was granted on September 10, 2013, temporarily enjoining Henogen from performing further work for IDC or shipping its product. The next day, IDC learned of this development, and it subsequently voluntarily intervened in the Belgian litigation to support Henogen's position. The injunction was ultimately lifted effective October 22, 2013.
Also in October, Henogen sued TVS in the Commercial Court of Paris (the "French Court"), seeking a declaration that the Exclusivity Provision was invalid. TVS filed counterclaims against Henogen, seeking, in part, an injunction to prevent Henogen from shipping IDC's LVs. IDC was aware of these proceedings, although the scope of its involvement is disputed.
In January and February 2014, while the French litigation was ongoing, Henogen agreed to produce an additional batch of LVs for IDC and to transfer the technology involved in making IDC's LVs to a new manufacturer "with reasonable promptness." IDC and Henogen agreed to cooperate and assist each other in relation to litigation with TVS. IDC also demanded assurances from Henogen that it would perform under the contract.
On March 7, 2014, the French Court held a hearing on TVS and Henogen's dispute. Between this hearing and the French Court's ultimate ruling, Henogen shipped LVs to IDC, at IDC's request. IDC wanted to ensure that it received this material before the French Court could rule against Henogen. On April 11, 2014, the French Court upheld the validity of the Exclusivity Provision and enjoined Henogen from performing further work for IDC.
In May 2014, IDC initiated its own clinical trials, testing its in vivo LV vaccines in patients with locally advanced, relapsed, or metastatic cancer. IDC used the LVs that Henogen had produced for those trials. While IDC no longer works with Henogen, it has a new LV manufacturer, which ...