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Truinject Corp. v. Nestle Skin Health, S.A.

United States District Court, D. Delaware

January 7, 2020

TRUINJECT CORP., Plaintiff,
v.
NESTLÉ SKIN HEALTH, S.A., GALDERMA, S.A., GALDERMA LABORATORIES, L.P., NESTLÉ SKIN HEALTH, INC., JOHN ROGERS, STUART RAETZMAN, SCOTT MCCREA, ALISA LASK and TIPHANY LOPEZ, Defendants.

          REPORT AND RECOMMENDATION

          THE HONORABLE JENNIFER L. HALL UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Truinject Corp. (“Plaintiff” or “Truinject”) filed this suit against Nestlé Skin Health, S.A., Galderma, S.A., Galderma Laboratories, L.P. (“Galderma Labs”), Nestlé Skin Health, Inc. (collectively, “Corporate Defendants”), John Rogers, Stuart Raetzman, Scott McCrea, Alisa Lask, and Tiphany Lopez (collectively, “Individual Defendants”), alleging breach of contract, fraud, patent infringement, trade secret misappropriation, and other related claims. (D.I. 112.)

         Truinject alleges that it developed a training platform to teach medical professionals the proper technique for facial injections of neurotoxins (e.g., Botox) and dermal fillers (e.g., collagen). The platform includes a lifelike model of a human head, a syringe, and a computer interface that allows the user to see the location of the syringe needle in the model. Truinject is the assignee of multiple patents covering its technology.

         Beginning in 2014, Truinject and some of the Corporate Defendants (who are all related) discussed potential business deals relating to Truinject's technology. These discussions continued for several years, but a deal was never consummated. Instead, some of the Corporate Defendants developed and launched their own competing injection training platform. The heart of Truinject's case is its allegation that Defendants misrepresented their interest in a business deal with Truinject in order to induce it to disclose its confidential information and trade secrets, which Defendants then used to develop a competing and infringing product.

         Defendants filed five separate motions to dismiss. Nestlé Skin Health, S.A. moved to dismiss all claims against it for lack of personal jurisdiction under Rule 12(b)(2) or, in the alternative, for failure to state a claim under Rule 12(b)(6). In the remaining four motions, at least one defendant moved to dismiss each of the following counts for failure to state a claim under Rule 12(b)(6): Count I (breach of contract); Count II (breach of the implied covenant of good faith and fair dealing); Count IV (breach of the implied covenant); Count V (breach of contract); Count VI (breach of the implied covenant); Count VII (breach of contract); Count VIII (breach of the implied covenant); Count IX (breach of contract); Count X (breach of the implied covenant); Count XI (tortious interference); Count XVI (trade dress infringement); Count XIX (fraud); Count XX (fraud); Count XXI (fraud); Count XXII (fraud); Count XXIII (aiding and abetting); Count XXIV (fraud); and Count XXV (unfair competition).

         On December 13, 2019, I issued a Report and Recommendation in which I recommended granting Nestlé Skin Health, S.A.'s motion to dismiss for lack of personal jurisdiction. (D.I. 169.) This Report and Recommendation resolves the remaining motions. For the reasons set forth below, I recommend that Galderma, S.A.'s and Galderma Labs' motion to dismiss be GRANTED-IN-PART and DENIED-IN-PART, that Nestlé Skin Health, Inc.'s motion be GRANTED-IN-PART and DENIED-IN-PART, and that the Individual Defendants' motions be GRANTED. I further recommend that Truinject be granted leave to amend its complaint to address the deficiencies within 21 days.

         I. BACKGROUND[1]

         Facial injections of neurotoxins and dermal fillers are becoming increasingly popular and create billions of dollars in revenue. (D.I. 112 ¶ 1.) Unfortunately, complications can occur and may include blindness, vision impairment, stroke, cheek rot, drooping eyelids, and misshapen facial features. (Id. ¶¶ 2-4, 48.) Many complications stem from inadequate training of the doctors who perform the injections. (Id. ¶ 5.) Before the technology at issue in this case, doctors learned to inject by practicing on either cadavers or live patients. (Id. ¶¶ 73-74.)

         The founder of Truinject, Gabrielle Rios, recognized that inadequate training contributed to complications, and she conceived of a solution: “a sophisticated injection training platform, a virtual and augmented reality training system, and an interactive training application on tablets, all of which allow providers to refine their technique by repeatedly performing injections and receiving immediate feedback, all without exposing patients to the complications of bad injections.” (Id. ¶¶ 6-10, 47-49.) Truinject subsequently developed technology “consisting] of an injectable, anatomically correct simulated face model, ” referred to as “Kate, ” and a smart syringe that allows medical professionals to practice injections. (Id. ¶ 51.) Truinject also developed an accompanying virtual and augmented reality platform and an interactive iPad app (collectively, the “Truinject Platform”), which aid in teaching the proper injection technique. (Id. ¶¶ 10-11, 51-52, 71.) Truinject holds at least three United States Patents protecting the Truinject Platform: U.S. Patent No. 9, 792, 836 (“ʼ836 patent”), U.S. Patent No. 10, 290, 231 (“ʼ231 patent”), and U.S. Patent No. 10, 290, 232 (“ʼ232 patent”). (Id. ¶¶ 53, 57, 60.)

         After hearing about the Truinject Platform, several companies, including Defendant Galderma Labs, “approached Truinject to develop a business relationship for the technology and science.” (Id. ¶ 15.) Galderma Labs is an indirect subsidiary of Defendant Nestlé Skin Health, S.A., a Swiss corporation. (D.I. 112 ¶ 34; D.I. 161.) Galderma, S.A. is a wholly-owned subsidiary of Defendant Nestlé Skin Health, S.A. (D.I. 112 ¶ 31; D.I. 161.) Defendant Nestlé Skin Health, Inc. is a Delaware corporation and is a wholly-owned subsidiary of Nestlé Skin Health, S.A. (D.I. 112 ¶ 33; D.I. 161.)

         In early 2014, an executive at Galderma Labs, Elizabeth Bentley, told Rios that Galderma Labs was interested in a potential partnership with Truinject. (D.I. 112 ¶ 90.) Bentley introduced Rios, via email, to several other employees of Galderma Labs, and they scheduled a phone meeting for September 5, 2014. (Id. ¶¶ 91-92.) Several executives participated on behalf of Galderma Labs, including Per Lango and Defendant Alisa Lask. (Id. ¶ 92.)

         After the phone meeting, Galderma Labs arranged for Truinject to give a presentation on the Truinject Platform at Galderma Labs' headquarters in Texas. (Id. ¶ 17.) During the October 21, 2014 presentation, Truinject demonstrated Kate's functionality. (Id. ¶ 93.) Numerous employees from Galderma Labs “or affiliate[s]” attended the presentation, including Defendant Dr. John Rogers (“Rogers”). (Id. ¶¶ 94-95.) Lask asked Truinject to send its presentation slides to Rogers. (Id. ¶ 96.) Rogers also sent an email to Rios, stating that his job responsibility at Galderma[2] “will be do [sic] develop and shape the educational platforms for training physicians on injection technique” and that what Truinject was developing was “very much to [his] heart [sic].” (Id. ¶ 103.)

         After the presentation, Lango expressed interest on behalf of Galderma Labs in buying global rights to Truinject's technology, and he requested a period of exclusivity during the due diligence process. (Id. ¶ 97.) The next day, on October 22, 2014, Rios, Lango, and Defendant Scott McCrea, Director of Business Development for Galderma Labs, had a call to further discuss a potential business relationship. (Id. ¶ 107.)

         Galderma Labs and Truinject subsequently signed a Confidential Disclosure Agreement (“2014 CDA”). (Id. ¶ 98, Ex. 4.) The preamble to the CDA states that it is “made this 23rd day of October, 2014 . . ., between GALDERMA LABORATORIES, L.P., a Texas limited partnership, . . . and its Affiliates (“Galderma”) and TRUINJECT MEDICAL CORP ..... ” (Id., Ex. 4 at 1.) The 2014 CDA does not define “Affiliates.” The agreement contemplates that the parties would exchange confidential information in connection with a “possible business or collaborative opportunity with regard to Truinject's proprietary technology.” (Id.) In Paragraph 2.0, the parties agree “to hold in confidence and not publish or disclose the other's Confidential Information” and to use it “solely in connection with the Business Relationship and for no other use or purpose whatsoever.” (Id.) Paragraph 9.2 provides that the state and federal courts in Delaware will “have exclusive jurisdiction to resolve any claim or matter arising out of or in connection to” the agreement. (Id., Ex. 4 at 2.)

         Rios signed the 2014 CDA on behalf of “TruInject Medical Corp.” on October 27, 2014. (Id., Ex. 4 at 3.) Quintin Cassady, Vice President of Galderma Labs, signed on behalf of “Galderma Laboratories, L.P.” on October 29, 2014. (Id.) The 2014 CDA contains no signature block (or signature) for any “affiliates” of Galderma Labs. (Id.) Relying on the 2014 CDA, Truinject “provided [] Defendants with access to trade secrets and confidential information, including the names of vendors and information about Kate.” (Id. ¶ 102.)

         On October 28, 2014, McCrea told Rios that a partnership with Truinject would result in a global deal that would benefit both companies. (Id. ¶ 108.) McCrea also discussed entering into an exclusivity arrangement with Truinject during the due diligence process. (Id. ¶¶ 108-109.) He asked Rios to cancel all pending meetings that Truinject had scheduled with other interested potential partners. (Id.) Truinject refused to cancel previously scheduled meetings. (Id. ¶ 110.)

         McCrea called Rios again on November 5, 2014 and emphasized the need for an exclusivity agreement. (Id. ¶ 111.) He also discouraged Rios from working with Defendants' competitors, who, according to McCrea, would steal Truinject's technology. (Id. ¶ 111.) During the call, McCrea promised that his company would not steal the technology and that they were serious about a deal. (Id.) Relying on McCrea's representations, Truinject canceled its scheduled meetings with Defendants' competitors. (Id. ¶ 112.)

         On November 6, 2014, during an industry conference in San Diego, Truinject and several of the Corporate Defendants' employees had a private meeting. (Id. ¶ 113.) In attendance was Nestlé Skin Health, Inc.'s CEO, Didier Leclerqc. During the meeting, Truinject gave a live demonstration of Kate and allowed the attendees to simulate injections. (Id.) Leclerqc also took the syringe apart and examined it. (Id. ¶ 114.)

         On November 10, 2014, Galderma, S.A. and Truinject signed an Exclusive Negotiation Agreement (“2014 ENA”), with an effective date of November 5, 2014. (Id. ¶ 116.) Under the 2014 ENA, Galderma S.A. and its affiliates received a ninety-day exclusive right to evaluate the technology and negotiate a deal with Truinject. (Id. ¶ 117, Ex. 5 at 1.) The ENA also imposes certain restrictions and obligations on Galderma, S.A. For example, Paragraph 3 provides that in exchange for the receipt of Truinject's confidential information, for a period of nine months “Galderma shall not, and shall not cause its Representatives, to directly or indirectly: (i) enter the market with any product or system that is substantially similar in functionality as the Truinject System” or “(ii) engage in development of any Alternative Systems.” (D.I. 112, Ex. 5 at 2.) Paragraph 5 requires each party to hold any information it receives from the other in the “strictest confidence.” (Id.) Rios signed the 2014 ENA on behalf of “TRUINJECT MEDICAL CORP.” (Id., Ex. 5 at 3.) Christian Matton, Vice-President and Corporate General Counsel, signed on behalf of “GALDERMA S.A.” (Id.)

         Another meeting was scheduled for December 16, 2014. (Id. ¶ 133.) McCrea told Rios that the meeting “would allow Galderma to take a huge step forward towards being able to present plans about Galderma's proposed uses for the Truinject Platform.” (Id. ¶ 138.) In reliance on McCrea's expression of continued interest, Truinject gave another full presentation and demonstration of the Truinject Platform at the December 16 meeting. (Id. ¶ 140.) Following the presentation, Galderma Labs told Truinject that it was interested in acquiring exclusive global rights to the Truinject technology for a term of 100 years in exchange for a $50 million upfront payment and lifetime royalties. (Id.) Lango told Rios that “partnering with ‘Uncle Nestlé' would ‘catapult her' and Truinject into the global market.” (Id. ¶ 140.) McCrea and Brant Schofield, Vice President of New Business at Galderma S.A., told Rios that “her children and her children's children would be taken care of for life.” (Id. ¶ 141.) Rios subsequently received an email from a Galderma Labs' Vice President in which he expressed his appreciation and stated that they would move forward with the deal process discussed at the meeting. (Id. ¶ 143.)

         On December 21, 2014, McCrea called Rios to discuss including Truinject in a January 10, 2015 meeting with Galderma's Key Opinion Leader Advisory Board. (Id. ¶ 147.) McCrea told Rios that this would be the “final due diligence meeting between Galderma and Truinject.” (Id.) In a December 22, 2014 email, McCrea outlined the agenda for the meeting. (Id. ¶ 149.) Truinject believed that the proposed agenda “went beyond the due diligence and collaborative effort” promised by McCrea, and Truinject responded with its own terms. (Id. ¶¶ 150-151.) When Galderma Labs and McCrea refused to modify the proposed agenda, Truinject declined to move forward with the January 10 meeting. (Id. ¶¶ 154-156.)

         After that, deal discussions broke down and the parties had limited interactions until 2016. (Id. ¶¶ 163-169.) In the meantime, according to the Amended Complaint, Defendants began developing a similar technology to compete with Truinject's Platform. (Id. ¶ 168.)

         In early 2016, Galderma, S.A.'s CEO, Defendant Stuart Raetzman, “contacted Truinject expressing a renewed interest in Truinject's technology.” (Id. ¶ 173.) Galderma Labs and Truinject subsequently signed another Confidential Disclosure Agreement (“2016 CDA”). (Id. ¶ 175, Ex. 6.) The preamble to the CDA states that it is “made this 18th day of February, 2016 . . ., between GALDERMA LABORATORIES, L.P., a Texas limited partnership, . . . and its Affiliates (“Galderma”) and TRUINJECT MEDICAL CORP ..... ” (Id., Ex. 6 at 1.) Like the 2014 CDA, the 2016 CDA does not define “Affiliates.” In Paragraph 2.0, the parties agree “to hold in confidence and not publish or disclose the other's Confidential Information” and to use it “solely in connection with the Business Relationship and for no other use or purpose whatsoever.” (Id.) Paragraph 9.2 provides that the state and federal courts in Delaware will “have exclusive jurisdiction to resolve any claim or matter arising out of or in connection to” the agreement. (Id., Ex. 6 at 2.) Rios signed the 2016 CDA on behalf of “TruInject Medical Corp.” on February 18, 2016. (Id., Ex. 6 at 3.) Quintin Cassady, Vice President of Galderma Labs, signed on behalf of “Galderma Laboratories, L.P.” on February 23, 2016. (Id.) The 2016 CDA contains no signature block (or signature) for any “affiliates” of Galderma Labs. (Id.)

         After the CDA was executed, Raetzman scheduled a meeting for February 19, 2016 to discuss a potential deal. (Id. ¶ 180.) In attendance were Rios, another representative from Truinject, Raetzman, Galderma Labs' McCrea, and Pierre Streit, CFO of Nestlé Skin Health, S.A. (Id. ¶ 181.) Truinject gave a presentation and a demonstration of Kate. (Id. ¶ 180.) The attendees also discussed “the value drivers and benefits” of a partnership and business and marketing plans. (Id.)

         Truinject met with Raetzman, McCrea, and Streit again on March 5, 2016. (Id. ¶ 182.) Raetzman expressed interest in a global license of Truinject's technology. (Id.) Raetzman also stated that Defendant Rogers' review of the technology would be the “final step” in the due diligence process. (Id. ¶ 183.) Raetzman further stated that Defendants “did not have the core competency to recreate what Truinject had done.” (Id.)

         There was another call on April 18, 2016. (Id. ¶ 191.) Rogers was present on the call. (Id.) During the call, Galderma “advised Truinject that their due diligence would need to include a firsthand interactive demonstration of Kate and that Rogers would need to attend and inject on Kate.” (Id.) Between May and December 2016, Rogers and others asked Truinject for updates related to its development of the technology. (Id. ¶¶ 194-199.)

         During the same time period, two Galderma Labs drug sales representatives, Defendant Tiphany Lopez and Chad Tisckos, [3] contacted Truinject in relation to the SHIELD program, which allowed the top sales associates to pitch potential business or investment opportunities. (Id. ¶ 200.) Truinject provided them with confidential information about Kate and the Truinject Platform. (Id. ¶¶ 202-203.) Tisckos signed a Confidential Disclosure Agreement at Truinject's offices that required him, Lopez, and at least one of the Corporate Defendants (the Amended Complaint doesn't specify which) to use Truinject's confidential information “only for the Purpose of the Agreement” and to “hold the disclosure of Confidential Information in confidence.” (Id. ¶ 204.) Lopez subsequently pitched Truinject to the SHIELD program. (Id. ¶ 242.)

         On February 7, 2017, Rogers visited the Truinject facilities to conduct a comprehensive review of the Truinject Platform, the “final” step in the due diligence process. (Id. ¶ 208.) Rios told Rogers that he must sign a non-disclosure agreement “due to possible exposure to confidential information, technology currently being developed, and Truinject's trade secrets.” (Id. ¶ 209.) Rogers called counsel for advice and then signed the agreement (“2017 CDA”). (Id. ¶¶ 211-13.) The preamble to the 2017 CDA states that the parties to the agreement are “Galderma and Truinject Medical Corp.” (Id., Ex. 7.) “Galderma” is not defined. The 2017 CDA sets forth confidentiality obligations and requires that confidential information be used solely for purpose of the agreement. (Id., Ex. 7 ¶ 3.) It further provides that the agreement “shall be governed by the laws of the State of California.” (Id., Ex. 7 ¶ 14.)

         After signing the 2017 CDA, Rogers spent an hour and a half testing the Truinject Platform. (Id. ¶¶ 215-219.) After his visit, communications from Defendants to Truinject ceased. (Id. ¶¶ 220-223.) Despite Truinject's efforts to reach out and move forward with a potential deal, Truinject heard nothing further from Defendants. (Id.)

         In Spring 2018, over a year after Rogers' visit, Truinject learned that Nestlé Skin Health, Inc. had introduced its own injection training simulator platform, named “Holly.” (Id. ¶¶ 226-227.) Nestlé Skin Health, Inc. conducted public demonstrations of Holly as early as March 2018 and subsequently demonstrated it worldwide. (Id. ¶¶ 236, 240.) On April 30, 2018, Nestlé Skin Health, Inc. debuted its LucyLive program, an augmented and virtual reality program that accompanied Holly. (Id. ¶ 244.) Following the Holly and LucyLive launches, physicians, industry executives, and other providers called and emailed Rios to congratulate her, mistakenly believing that Holly/LucyLive was Truinject's Kate platform. (Id. ¶ 246.)

         Truinject filed its original Complaint in the Central District of California on October 12, 2018. (D.I. 1.) On December 14, 2018, Galderma Labs moved to dismiss for lack of venue and failure to state a claim (D.I. 34) and, on December 18, 2018, moved to transfer the case to the District of Delaware (D.I. 39). Individual Defendants Lopez, McCrea, and Lask filed motions to dismiss (D.I. 54, 57, 59) and joined Galderma Labs' motion to transfer (D.I. 73). On March 11, 2019, Defendants Galderma, S.A., Nestlé Skin Health, S.A., and Stuart Raetzman also moved to dismiss Truinject's Complaint (D.I. 92, 93) but did not join the motion to transfer. On March 28, 2019, the district court in the Central District of California granted Galderma Labs' motion to transfer and transferred the action in its entirety to the District of Delaware. (D.I. 101.)

         On May 29, 2019, Truinject filed an Amended Complaint in this Court. (D.I. 112.) The Amended Complaint contains twenty-five counts:

• Count I - breach of contract (2017 CDA) against Galderma Labs, Galderma, S.A., Nestlé Skin Health, Inc., and Nestlé Skin Health, S.A.;
• Count II - breach of the implied covenant of good faith and fair dealing (the “implied covenant”) (2017 CDA) against Galderma Labs and Galderma, S.A.;
• Count III - breach of contract (2014 ENA) against Galderma, S.A.;
• Count IV - breach of the implied covenant (2014 ENA) against Galderma Labs and Galderma, S.A.;
• Count V - breach of contract (2014 CDA) against Galderma Labs, Galderma, S.A., Nestlé Skin Health, Inc., and Nestlé Skin Health, S.A.;
• Count VI - breach of the implied covenant (2014 CDA) against Galderma Labs, Galderma, S.A., Nestlé Skin Health, Inc., and Nestlé Skin Health, S.A.;
• Count VII - breach of contract (2016 CDA) against Galderma Labs, Galderma, S.A., Nestlé Skin Health, Inc., and Nestlé Skin Health, S.A.;
• Count VIII - breach of the implied covenant (2016 CDA) against Galderma Labs, Galderma, S.A., Nestlé Skin Health, Inc., and Nestlé Skin Health, S.A.;
• Count IX - breach of contract (2017 CDA) against Defendant Rogers;
• Count X - breach of the implied covenant (2017 CDA) against Defendant Rogers;
• Count XI - tortious interference with contractual and prospective contractual relations against Galderma Labs and Galderma, S.A.;
Count XII - patent infringement ('836 patent) against Nestlé Skin Health, Inc.;
• Count XIII - patent infringement ('231 patent) against Nestlé Skin Health, Inc.;
• Count XIV - patent infringement ('232 patent) against Nestlé Skin Health, Inc.;
• Count XV - trade secret misappropriation under the Defend Trade Secret Act (18 U.S.C. § 1836) against Galderma Labs, Galderma, S.A., Nestlé Skin Health, Inc., and Nestlé Skin Health, S.A.;
• Count XVI - trade dress infringement (15 U.S.C. § 1125) against Nestlé Skin Health, Inc.;
• Count XVII - violation of Delaware Uniform Trade Secret Act (6 Del. C. §§ 2001-2009) against Galderma Labs, Galderma, S.A., Nestlé Skin Health, Inc., and Nestlé Skin Health, S.A.;
• Count XVIII - violation of Delaware's Deceptive Trade Practices Act (6 Del. C. §§ 2531-2536) against Galderma Labs, Galderma, S.A., Nestlé Skin ...

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