Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Incyte Corp. v. Flexus Biosciences, Inc.

Superior Court of Delaware

November 1, 2017



          Submitted: October 11, 2017

          Michael P. Kelly, Esq., Andrew S. Dupre, Esq. (Argued), J. Wylie Donald, Esq. (Argued), David A. Schlier, Esq., McCarter & English, LLP, Attorneys for Plaintiff Incyte Corporation

          Jonathan A. Patchen, Esq. (Argued), Max B. Twine, Esq., Taylor & Patchen, LLP, Attorneys for Defendants Terry Rosen and Juan Jaen

          James F. Hurst, Esq., Patricia A. Carson, Esq. (Argued), Daniel Forchheimer, Esq., Ashley Borom, Esq., Kirkland & Ellis LLP, Attorneys for Defendant Flexus Biosciences, Inc.

          Gregory V. Varallo, Esq., C. Malcolm Cochran, IV, Esq., Katharine Lester Mowery, Esq., Richards, Layton & Finger, P.A., Attorneys for All Defendants.




         This is a trade secret misappropriation case. Plaintiff Incyte Corporation ("Incyte") and Defendant Flexus Biosciences, Inc. ("Flexus"), are competing biopharmaceutical companies specializing in the development and production of cancer treatment drugs. At the time of the alleged misconduct, Defendant Terry Rosen ("Dr. Rosen") was Flexus's CEO, and Defendant Juan Jaen ("Dr. Jaen"), was Flexus's President and Head of Research and Development.[1] Incyte alleges that the Defendants induced a former Incyte employee, Jordan Fridman ("Dr. Fridman"), to divulge Incyte's confidential clinical data that showed that the inhibition of the IDO-1 enzyme could form the basis of an effective, safe cancer treatment. Incyte alleges this misappropriation of Incyte's clinical data directly led to Bristol-Meyers Squibb's ("BMS") subsequent $1.25 billion acquisition of Flexus.

         In its original complaint, filed September, 42015, Incyte alleged misappropriation of trade secrets, tortious interference with contract, unjust enrichment, conspiracy, and aiding and abetting. By Memorandum Opinion, dated April 19, 2016, this Court dismissed the tortious interference with contract and aiding and abetting claims because of lack of subject matter jurisdiction.[2] This Court held the two claims arose out of and related directly to a confidentiality agreement between Incyte and Dr. Fridman that contained an arbitration clause.[3]The remaining claims did not relate to the confidentiality agreement and were not dismissed. The Court also held Dr. Fridman was neither a necessary nor indispensable party to the remaining claims, and allowed the case to proceed in his absence.[4]

         That ruling, however, was not the final word on the claims that will be brought to trial. In the two motions now pending before the Court, the Defendants seek dismissal of two more causes of action, while Incyte seeks to supplement its existing claims and add a new one. The Defendants request a partial judgment on the pleadings, arguing that the Delaware Uniform Trade Secrets Act ("DUTSA"), [5]displaces Incyte's unjust enrichment and conspiracy claims. In a cross motion to amend its complaint, Incyte requests leave to add to the factual bases for its misappropriation of trade secrets, unjust enrichment, and civil conspiracy claims. It also seeks to add trade libel, a new claim, to its complaint.


         Defendants' Motion for Partial Judgment on the Pleadings

         Standard of Review

         Superior Court Civil Rule 12(c) permits the Court to grant judgment on the pleadings "[a]fter the pleadings are closed but within such time as not to delay the trial."[6] In circumstances where the moving party seeks to dismiss portions of the plaintiffs claims via Rule 12(c), the appropriate standard of review is that of a Rule 12(b)(6) motion to dismiss.[7]

         Therefore, the Court must determine whether the claimant "may recover under any reasonably conceivable set of circumstances susceptible of proof."[8] The Court must accept as true all non-conclusory, well-plead allegations.[9] Every reasonable factual inference will be drawn in favor of the non-moving party.[10] If the claimant may recover under that standard of review, the Court must deny the motion to dismiss.[11]

         Claim Displacement Under DUTSA

         DUTSA "displaces conflicting tort, restitutionary and other law of this State providing civil remedies for misappropriation of a trade secret."[12] DUTSA does not, however, displace contractual or criminal remedies.[13] DUTSA also does not have any effect on "[o]ther civil remedies that are not based upon misappropriation of a trade secret."[14] DUTSA displaces common law causes of action arising under "other law" when the claims are "based on the same alleged wrongful conduct as the trade secret claims."[15]

         The resolution of Defendants' motion turns on whether Incyte's Count III (Unjust Enrichment) and Count IV (Conspiracy) are "based on the same alleged wrongful conduct" as Incyte's trade secret claims.

         Incyte argues that it pleaded its unjust enrichment and conspiracy claims "based in part on conduct different than that which forms the trade secret claim."[16]However, the original complaint contradicts Incyte's position. For its unjust enrichment claim, Incyte pleaded facts explicitly concerning trade secret misappropriation. It stated: "Defendants have enriched themselves by acquiring and using Incyte's trade secrets and confidential information about IDO-1 inhibitors."[17] Incyte similarly invoked trade secrets as the basis of its conspiracy claim when it pleaded "Defendants and Dr. Fridman agreed to work together to misappropriate, and then use for their own benefit, Incyte's valuable trade secrets and confidential information in breach of Dr. Fridman's contractual obligations."[18]The only specific allegation Incyte plausibly points to as having its basis in something other than trade secret misappropriation is its charge that Defendants worked with Dr. Fridman before he left Incyte. However, the paragraph of the original complaint Incyte cites in support of this contention alleged that "Defendants worked with Dr. Fridman to acquire additional confidential information."[19] The Court is unable to ascertain how Dr. Fridman's work product is substantively different from divulging trade secrets. This alleged misconduct does not appear to the Court to differ in any way from that underlying the misappropriation of trade secret claim.

         Because the "factual predicate of Incyte's unjust enrichment and the civil conspiracy claims "mirror the facts alleged to have constituted a misappropriation of trade secrets, "[20] DUTSA displaces both claims as alleged in the original complaint. As a practical matter, unjust enrichment may be considered as part of damages if liability is found, but it does not survive as a standalone claim.

         Therefore, to the extent Incyte's unjust enrichment and civil conspiracy claims are based upon misappropriation of trade secrets, the motion to dismiss those claims is granted on the basis of DUTSA displacement.

         Incyte's Cross-Motion to Amend the Complaint

         Standard of Review

         Incyte's motion to amend its complaint must overcome two obstacles. First, because this Court issued a Case Management Order that stated "[n]o amendment to the pleadings shall be permitted, except upon leave of Court on a showing of good cause, "[21] Incyte must show good cause for the Court to permit the amendment. "[G]ood cause is likely to be found when the moving party has been generally diligent, the need for more time was neither foreseeable nor its fault, and refusing to grant the continuance would create a substantial risk of unfairness to that party."[22]

         Second, the amendment must be permitted under Rule 15. Under Rule 15(a), "[a] party may amend its pleading after a responsive pleading is served by leave of the Court."[23] "[L]eave shall be freely given when justice so requires, " but "should be denied when the proposed amendment would be futile."[24] "A motion for leave to amend a complaint is futile where the amended complaint would be subject to dismissal under Rule 12(b)(6) for failure to state a claim."[25] "Motions to amend are normally granted by the Court unless there is serious prejudice to the opposing party."[26]

         Incyte's Request to Supplement its Trade Secret Claim

         Incyte seeks to amend its complaint to add further factual bases for its misappropriation of trade secret claim. Specifically, it seeks to include alleged facts regarding Defendants' access to a "confidential Investigator's Brochure."

         Incyte has good cause for amending the claim to include these allegations- it did not discover the facts regarding the brochure until April 24, 2017. Given that Defendants raised no explicit arguments in opposition to this amendment, the motion to amend the complaint to include the information related to the confidential brochure is granted.

         Incyte's Request to Supplement its Unjust Enrichment Claim

         Incyte also seeks to amend its complaint to supply further factual bases for its unjust enrichment claim. As discussed above, DUTSA displaces the unjust enrichment claim as alleged in the original complaint insofar as any factual allegations have the same factual basis as the trade secret misappropriation claim. However, Incyte may allege unjust enrichment if its proposed amendments put forth new facts, unrelated to trade secret misappropriation.

         Incyte wishes to incorporate allegations that Dr. Fridman worked for Flexus during his employment at Incyte, claiming damages for "the value of the salary paid by Incyte to Dr. Fridman from the time Dr. Fridman began performing work for Flexus and the value of the bonus paid by Incyte after Dr. Fridman began performing work for Flexus."[27]

         Though DUTSA may not the displace the unjust enrichment claim as alleged in the proposed amended complaint, the Court nonetheless finds that adding this claim would be futile. These "moonlighting" allegations directly relate to the terms of a contract Dr. Fridman signed with Incyte that is subject to mandatory arbitration.

         In reference to "Conflicting Employment and Financial Interests, " Dr. Fridman's contract with Incyte states: "During my employment by the Company, I will devote my best efforts to the interests of the Company. I will inform the Company before: . . . Engaging in other employment, occupation, consulting or other business activity . . . that is in direct competition with the Company."[28] Dr. Fridman's contract also contains an arbitration clause, which states: "I agree that any dispute arising out of, related to or resulting from the employment relationship between me and the Company . . . shall be resolved by final and binding arbitration, except where the law specifically prohibits the use of arbitration as a final and binding remedy."[29]

         This Court previously has dismissed claims in this case that are subject to mandatory arbitration under this contract, because those claims arose "out of and relate[d] directly to the Confidentiality Agreement."[30] The same is true of this claim. Delaware law defines unjust enrichment as "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience."[31] Determining whether Dr. Fridman's alleged moonlighting defied "the fundamental principles of justice, " necessarily would require an examination of his contract with Incyte, which is ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.