Comentis Inc. v. Purdue Research Found.

• Decision Date: 25 January 2011
• Docket Number: No. 4:09 CV 82 PPS.,4:09 CV 82 PPS.
• Citation: 765 F.Supp.2d 1092
• Parties: COMENTIS, INC., Plaintiff,v.PURDUE RESEARCH FOUNDATION, Arun K. Ghosh, Defendants.
• Court: U.S. District Court — Northern District of Indiana

765 F.Supp.2d 1092

COMENTIS, INC., Plaintiff,

v.PURDUE RESEARCH FOUNDATION, Arun K. Ghosh, Defendants.

No. 4:09 CV 82 PPS.

United States District Court, N.D. Indiana, Hammond Division.

Jan. 25, 2011.

Douglas R. Chartier PHV, Eric C. Pai PHV, Eric S. Walters PHV, Morrison & Foerster LLP, Palo Alto, CA, James W. Riley, Jr., Riley Bennett & Egloff LLP, Indianapolis, IN, for Plaintiff.Heather L. Emenhiser, William P. Kealey, Stuart & Branigin LLP, Lafayette, IN, Daniel J. Lueders, Woodard Emhardt Moriarty McNett & Henry LLP, Indianapolis, IN, for Defendants.

OPINION AND ORDER

PHILIP P. SIMON, Chief Judge.

This case involves allegations that a Purdue University chemistry professor, Dr. Arun Ghosh, and the Purdue Research Foundation engaged in wholesale misconduct, including fraud, in how they handled certain trade secrets entrusted in the professor by CoMentis, Inc., a company to whom the professor provided consulting services. CoMentis' sprawling complaint against Purdue and Ghosh asserts ten counts, including breach of written and oral contracts, promissory estoppel, trade secret misappropriation, fraud, constructive fraud, and unjust enrichment. Presently before me is Purdue Research Foundation's Motion for Judgment on the Pleadings [DE 50], and Ghosh's Motion to Dismiss, or in the Alternative, Motion for a More Definite Statement [DE 53]. For the following reasons, Purdue's motion is GRANTED in part and DENIED in part, and Ghosh's motion is GRANTED, but CoMentis will be given an opportunity to file an amended complaint on some of the counts to attempt to cure the deficiencies in its complaint pointed out in this order.

FACTUAL AND PROCEDURAL BACKGROUND

As usual, I'll start with the facts as alleged in the complaint, which I accept as true at this point in the case. CoMentis is a small biotechnology company focused on developing drugs to cure Alzheimer's disease . [DE 48 ¶ 6.] Arun Ghosh co-founded CoMentis's predecessor company, and he now serves as a paid consultant to CoMentis, helping it research and develop potential drug candidates. [ Id. ¶¶ 7, 9.] Ghosh is also a scientist and chemistry professor at Purdue University. [ Id. ¶ 8.] As an employee of Purdue, Ghosh must assign his right, title, and interest in any intellectual property he develops to Purdue or Defendant Purdue Research Foundation, a non-profit corporation that manages and licenses Purdue's intellectual property (for simplicity sake, I will refer to both Purdue and Purdue Research Foundation as “Purdue”). [ Id.] As a result of Ghosh's obligations to Purdue, CoMentis entered separate written agreements with Ghosh and Purdue governing CoMentis's rights to Ghosh's work.

Ghosh and CoMentis's relationship is governed by a Consulting Agreement. Pursuant to the agreement, CoMentis pays Ghosh for advice regarding compounds and structures CoMentis is developing for potential drug candidates. [ Id. ¶ 9.] In addition to providing advice, Ghosh may use CoMentis's confidential information to develop intellectual property of his own. [ Id. ¶ 11.] But under the Consulting Agreement, if Ghosh develops intellectual property using CoMentis's confidential information, CoMentis has certain rights to the work, including the exclusive option to license the resulting intellectual property. [ Id.] In addition, Ghosh must promptly notify CoMentis about any work he develops pursuant to the agreement and help CoMentis perfect its right, title, and interest in the intellectual property. [ Id.] The agreement also states that Ghosh may not use or disclose CoMentis's confidential information, trade secrets, inventions, or intellectual property except in performing his duties for CoMentis. [ Id. ¶ 10.]

Purdue is not a signatory to the Consulting Agreement, however, CoMentis and Purdue entered into a License Agreement relating to the Consulting Agreement. [ Id. ¶ 13.] The License Agreement grants CoMentis an exclusive license to Purdue's rights in patents and patent applications developed by Ghosh under the Consulting Agreement. [ Id.] It also sets forth a list of “Licensed Patents” to which CoMentis has been granted an exclusive license under the agreement, and Purdue and CoMentis must update the list with any other patents or patent applications developed under the Consulting Agreement. [ Id.] In essence, the Consulting Agreement and the License Agreement work together to ensure that CoMentis has the right to intellectual property that Ghosh develops using CoMentis's confidential information.

Pursuant to these agreements, CoMentis gave Ghosh confidential information and intellectual property relating to potential drug candidates, including compounds and structures from a class of compounds known as pyrrolidines. [ Id. ¶ 14.] But “[i]n or about February 2009,” CoMentis claims that Ghosh told CoMentis employee Geoff Bilcer that he had been performing his own work on these chemical compounds that were independent of his consulting work with CoMentis. [ Id. ¶ 16.] In addition, Ghosh told CoMentis he had filed his own patent applications directed to these chemical compounds and structures. [ Id.] Indeed, CoMentis subsequently learned about two patent applications—one filed in October 2008, the other in May 2009—relating to pyrrolidine compounds both of which named Ghosh as the sole inventor. [ Id. ¶ 17.] Not surprisingly, this raised eyebrows at CoMentis. For a period of time, CoMentis was unaware of what were in the patent applications because they were unavailable. But during that time, both Ghosh and Purdue maintained that the patent applications were developed by Ghosh independent of the Consulting Agreement and outside the scope of the Consulting and License Agreements. [ Id. ¶ 18.]

As a result, in May 2009, Purdue and CoMentis began negotiating a new license agreement that would cover the pyrrolidine patent applications. [ Id. ¶ 20.] Purdue and CoMentis negotiated the terms of the license agreement from May to October 2009 and “eventually reached agreement on its material terms.” [ Id. ¶ 21.] On October 2, 2009, Purdue proposed that the parties enter a “Binding Letter of Intent” to memorialize the agreement. [ Id. ¶ 22.] A few days later, the parties signed and executed a Binding Letter of Intent (“Binding LOI”), which stated: “for and in consideration of the mutual covenants and the premises herein contained, the Parties, intending to be legally bound, hereby agree ... to make all reasonable efforts to execute no later than October 25, 2009, a license agreement which contains the material financial and economic terms set forth in, and is in a form substantially similar to, the draft pyrollidine [sic] license agreement,” which was attached to the Binding LOI. [ Id. ¶¶ 23–24.] But after extending the execution date to November 6, 2010, Purdue refused to execute the final license agreement. [ Id. ¶¶ 26–29.] So, on November 13, 2009, CoMentis filed this suit against Purdue for breaching the Binding LOI. [ Id. ¶ 29.]

While the parties haggled over the legal effect of the Binding LOI, an international patent application, which claimed “priority benefit to the two earlier pyrrolidine patent applications,” became publicly available on April 15, 2010. [ Id. ¶ 31.] Then on June 10, 2010, another international patent application filed by Purdue became publicly available. [ Id. ¶ 32.] According to CoMentis, these applications were derived from confidential information that CoMentis disclosed in confidence to Ghosh under the Consulting Agreement. [ Id. ¶ 33.] CoMentis claims it did not know the contents of these patent applications—or that they were derived from CoMentis's confidential information—until they become publicly available. [ Id. ¶¶ 19, 30.]

As a result, on July 13, 2010, CoMentis filed the Second Amended Complaint against Purdue and Ghosh asserting ten separate counts, including: declaratory relief against Purdue (Count One); breach of contract against Ghosh (Count Two); breach of contract against Purdue (Count Three); breach of an oral contract or, alternatively, breach of an implied in fact contract against Purdue (Count Four); promissory estoppel against Purdue (Count Five); trade secret misappropriation against Purdue and Ghosh (Count Six); fraud against Ghosh (Count Seven); constructive fraud against Ghosh (Count Eight); unjust enrichment against Purdue (Count Nine); and breach of the Binding LOI against Purdue (Count Ten). In these motions, Purdue moves for judgment on the pleadings under Fed.R.Civ.P. 12(c) with respect to Count Four (and Count One as it relates to Count Four), Count Five, Count Six, Count Nine, and Count Ten, and Ghosh moves to dismiss Counts Seven and Eight under Fed.R.Civ.P. 12(b)(6).

DISCUSSION

A motion for judgment on the pleadings under Rule 12(c) is evaluated under the same standard as a Rule 12(b)(6) motion to dismiss. See Guise v. BWM Mortgage, LLC, 377 F.3d 795, 798 (7th Cir.2004). The only difference between the motions is that a party can move for judgment on the pleadings after both the complaint and the answer are filed. See Fed.R.Civ.P. 12(c). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that it plausible on its face.” Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). Determining whether a complaint states a plausible claim for relief requires me to draw on my judicial experience and common sense. Id. at 1950. And although at this stage I must accept all allegations as true and draw all reasonable inferences in the complainant's favor, I don't need to accept threadbare legal conclusions supported by mere conclusory statements. Id.

I. Purdue's Motion for Judgment on the PleadingsA. Breach of Contract (Count Four) and Promissory Estoppel (Count Five)

Purdue moves for dismissal of Counts Four and Five of the Second Amended Complaint. In Count Four, CoMentis alleges that Purdue breached the parties'...