IP Law Daily, TRADE SECRETS—W.D. Wash.: Indian pharma company accused of stealing COVID-19 vaccine technology must stay in suit, for now, (Aug 2, 2022)

By Donielle Tigay Stutland, J.D.

Jurisdictional discovery needed to decide if Emcure Pharmaceuticals has sufficient U.S. contacts to face HDT Bio Corp’s trade secrets suit.

A Washington district court denied a motion to dismiss by an Indian company accused of stealing trade secrets from a US vaccine manufacturer for lack of personal jurisdiction. HDT Bio Corp. filed suit in March 2022 alleging that an Indian company that manufactures generic drugs, Emcure Pharmaceuticals, Ltd., and its subsidiary Gennova Biopharmaceuticals Ltd. stole proprietary trade secrets related to HDT’s proprietary COVID-19 vaccine. HDT also alleges in its complaint that Emcure credited Gennova with developing the vaccine in public offering filings. Emcure and Genova, both based in India, sought to dismiss the complaint alleging a lack of jurisdiction, or in the alternative, the Indian companies requested a stay of the proceedings pending international arbitration. The court determined that more discovery is needed to ascertain whether the entities and their principals have sufficient contacts for jurisdiction and denied the motion to dismiss (HDT Bio Corp. v. Emcure Pharmaceuticals, Ltd., July 29, 2022, Robart, J.).

Background. HDT filed suit against Emcure, which lauds itself as India’s largest generic drug manufacturer in March 2022, alleging that its subsidiary Gennova stole proprietary trade secrets in connection with HDT’s COVID-19 vaccine. HDT describes its mRNA vaccine against COVID-19 as “safer, cheaper, more portable, and likely more effective than the mRNA vaccines on the market.” The parties initially worked together, brought together by a relationship of a doctor who was a principal of Gennova, Dr. Singh, and a doctor developing the vaccine for HDT. The relationship began as “a partnership to bring HDT’s then-incipient COVID-19 vaccine to market in India.” The parties entered into an Exclusive License Agreement (“License Agreement”) and Gennova, a subsidiary of Emcure received “a limited license to use HDT’s technology,” consisting of its COVID-19 vaccine and delivery platform, “to develop and sell a COVID-19 vaccine in India.”

Early on in their relationship, Emcure and Gennova credited HDT with developing the vaccine. However, HDT alleged that in summer of 2021, “Emcure and Gennova began to take aggressive steps to steal HDT’s intellectual property and to claim it as their own,” including by “clandestinely fil[ing] two Indian patent applications that claim HDT’s inventions.” Additionally, Emcure filed a prospectus “in preparation for” its initial public offering of Emcure stock, in which it touted its “successful development of an mRNA COVID-19 vaccine,” however, it made no mention of HDT.

HDT brought suit against Gennova’s parent company, Emcure, alleging that it misappropriated HDT’s trade secrets in violation of the Defense of Trade Secrets Act (“DTSA”), and Washington Uniform Trade Secrets Act (“WUTSA”). Gennova and Emcure sought to dismiss the claims on grounds that the court lacks personal jurisdiction over it; HDT has failed to state a claim; and that dismissal is warranted under the doctrine of forum non conveniens. In the alternative, Emcure requested a stay in the proceedings, pending resolution of the ongoing arbitration between HDT and Gennova in the London Court of International Arbitration (“LCIA”).

Jurisdiction. The first analyzed the claim alleging a lack of jurisdiction. HDT argued that the court has personal jurisdiction over Emcure by one of three ways: (1) Gennova’s minimum contacts with Washington can be imputed to Emcure; (2) Dr. Singh’s minimum contacts with Washington can be imputed to Emcure; and (3) independent of any imputation, Emcure itself made minimum contacts with Washington and the United States. Some facts that it relied on to argue that there were minimum contacts include numerous visits of Dr. Singh to HDT’s offices and labs as the parties began their initial partnership together.

The court noted that it appeared that Emcure conceded that Gennova and Dr. Singh have sufficient case-related, minimum contacts with Washington such that the court could exercise personal jurisdiction over them. The court indicated that the parties’ dispute centered on whether Gennova and/or Dr. Singh’s jurisdictional contacts can be imputed to Emcure under an agency theory. At issue are whether Dr. Singh and Gennova acted on behalf and at the direction of Emcure during the relevant period; the nature of Dr. Singh’s relationship with Emcure, including whether he was an Emcure Director during the relevant period; and whether Emcure has, and exercises, the right to control Gennova.

The court found that at this point in the litigation it was too early to determine whether Dr. Singh and Gennova’s minimum contacts could be imputed to Emcure. The court concluded that it would be in the parties and court’s interest to conduct jurisdictional discovery before deciding on Emcure’s motion to dismiss. The court ordered the parties to conduct jurisdictional discovery.

The Case is No. 2:22-cv-00334-JLR.

Attorneys: Dana Berkowitz (Stris & Maher LLP) for HDT Bio Corp. Christopher Cody Wilcoxson (Blank Rome, PA) for Emcure Pharmaceuticals Ltd.

Companies: HDT Bio Corp.; Emcure Pharmaceuticals, Ltd.; Gennova Biopharmaceuticals Ltd.

Cases: Covid19 Patent TradeSecrets WashingtonNews