Gensetix, Inc. v. Baylor Coll. of Med.

• Decision Date: 31 December 2020
• Docket Number: NO. 14-19-00488-CV,14-19-00488-CV
• Parties: GENSETIX, INC., Appellant v. BAYLOR COLLEGE OF MEDICINE, Diakonos Research, Ltd., and William K. Decker, Appellees
• Court: Texas Court of Appeals

616 S.W.3d 630

GENSETIX, INC., Appellant

v.BAYLOR COLLEGE OF MEDICINE, Diakonos Research, Ltd., and William K. Decker, Appellees

NO. 14-19-00488-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinions filed December 31, 2020

PLURALITY OPINION

Jerry Zimmerer, Justice

Appellant Gensetix, Inc. appeals from the trial court's order dismissing its claims against appellees Baylor College of Medicine ("BCM"), Diakonos Research, Ltd., and William K. Decker (collectively "the Decker Parties"). The trial court dismissed Gensetix's claims pursuant to the Texas Citizens Participation Act ("TCPA"). See Tex. Civ. Prac. & Rem. Code Ann. § 27.001, et. seq. In three issues on appeal Gensetix argues (1) the TCPA does not apply to its claims; (2) if the TCPA applies Gensetix established by clear and specific evidence a prima facie case for each element of the claims in question; and (3) the TCPA is unconstitutional. We conclude that the TCPA applies to Gensetix's claims and that Gensetix failed to establish by clear and specific evidence a prima facie case for each element of its claims. We further conclude that the fee-shifting provisions of the TCPA do not violate the Texas Constitution or the First and Fourteenth Amendments to the United States Constitution. We affirm the trial court's dismissal of Gensetix's claims.

BACKGROUND

Plaintiff Gensetix alleged that Defendant Dr. William Decker invented methods of modifying patients' immune systems to kill cancer

cells during Decker's employment at The University of Texas MD Anderson Cancer Center ("UT"). UT retained title to the patents as Decker's employer. According to Gensetix's original petition, the live pleading at the time of dismissal, UT granted Alex Mirrow, a non-party to this litigation, an exclusive license to commercialize the patented method invented by Decker. Mirrow subsequently assigned his rights in the licensed method to Gensetix. The parties referred to this assignment of rights as the "UT-Gensetix License."

Gensetix alleged that although Decker left UT and retained no rights in the patents, he continued to practice the patented technology at BCM. Gensetix alleged that it contacted Decker and BCM seeking to assert its patent rights and to acquire any intellectual property rights Decker and BCM claimed to own based on improvements or new discoveries from their use of the patented methods. Gensetix alleged that BCM was receptive to the idea of assigning these rights; accordingly, Gensetix sought financial backing from Fannin Innovation.

BCM eventually assigned rights for any developments allegedly based on the patented methods to Diakonos. Diakonos offered to sublicense the patents from Gensetix, but Gensetix declined.

I. Gensetix's Claims

Gensetix filed the present suit naming Decker, Diakonos, and BCM as defendants and asserting the following claims against Decker:

Breach of contract–non-disclosure agreement . Gensetix alleged that it entered into a non-disclosure agreement with Decker, which, according to Gensetix's pleading, prevented Decker from disclosing any Gensetix confidential information to third parties. Gensetix alleged that Decker disclosed confidential information to Dan Faust of Diakonos and that Faust used the confidential information to negotiate with BCM for rights to intellectual property arising from Decker's lab at BCM. Gensetix alleged that it suffered harm from Decker's action because Diakonos was "developing commercial treatments for the benefit of Diakonos, Decker, and BCM instead of for the benefit of Gensetix and UT." Gensetix further alleged it suffered damages "in the form of additional out-of-pocket costs, lost intellectual property licenses, lost revenue, and lost goodwill."

Breach of contract–cooperation agreement . Gensetix alleged that it, as part of a "handshake agreement," paid Decker in exchange for Decker's promise to "commercialize the technology on behalf of Gensetix." Gensetix alleged that Decker's breach caused it significant harm because it could not reap the benefits of the "UT-Gensetix License."

Promissory Estoppel . Gensetix alleged that in reliance on the "handshake agreement" Gensetix paid Decker to "develop a commercial product and ‘refrain [ ] from any activities that might not be in [Gensetix's] best interests[.]’ " As damages Gensetix alleged it suffered out-of-pocket expenses paid in reliance on Decker's promises.

Tortious interference–Gensetix/BCM deal . Gensetix alleged that Decker interfered with Gensetix's reasonable expectation of developing a business relationship with Fannin Innovation. Gensetix further alleged that Decker interfered with Gensetix's ability to profit from Decker's work at BCM. Gensetix alleged damages in the form of "out-of-pocket costs, lost revenue, and goodwill."

Gensetix asserted the following claims against Decker, Diakonos, and BCM:

Tortious interference with UT-Gensetix License . Gensetix alleged it had a licensing agreement with UT to license Decker's intellectual property and that BCM and Diakonos interfered with that prospective business relationship. Gensetix alleged damages in the form of "making it more expensive, burdensome, and difficult for Gensetix to perform its existing contract with UT[.]"

Civil conspiracy . Gensetix alleged that Decker, Diakonos, and BCM conspired to interfere with Gensetix's contract with UT.

II. Motions to Dismiss

Decker, Diakonos, and BCM answered and filed motions to dismiss Gensetix's claims under the TCPA, alleging that (1) Gensetix's claims were based on, related to, or were in response to their exercise of the right to association, petition, or to free speech; and (2) Gensetix had not and could not establish by clear and specific evidence a prima facie case for each essential element of its claims.

In Decker's motion he alleged that Gensetix's action implicated his right to free speech and right of association as defined by the TCPA. Decker argued that Gensetix's central allegation was that Decker pursued commercialization of his inventions with Diakonos and BCM rather than Gensetix.

In BCM's motion it alleged that Gensetix's action implicated its right to petition the United States Patent Office in addition to its right of association, and right to free speech as defined by the TCPA. BCM further argued that Gensetix could not establish by clear and specific evidence a prima facie case of tortious interference because Gensetix had not pleaded any facts to support that BCM willfully and intentionally interfered with a contract or that any interference proximately caused Gensetix's injuries. BCM further argued that Gensetix's civil conspiracy claim failed for the same reasons. Diakonos joined both Decker and BCM's motions.

III. Gensetix's Response

Gensetix responded to the motions to dismiss arguing that (1) no defendant had shown that Gensetix's action implicated its rights to petition, association, or free speech under the TCPA; and (2) Gensetix had established a prima facie case for each of its claims. In support of its response Gensetix attached the declaration of Rita Mousa, manager of Gensetix.

In Mousa's declaration she averred that UT executed a license agreement with Mirrow granting Mirrow rights in certain patents involving cancer

treatment arising from Decker's research. Mirrow subsequently assigned those rights to Gensetix. Gensetix entered into negotiations with BCM about funding, licensing, and eventually bringing to market additional intellectual property largely based on Decker's ongoing research. Mousa stated that, anticipating an agreement with BCM, Gensetix began discussions with outside entities with which it might partner for funding and investment in that development. One of the entities was Fannin Innovation. According to Mousa, Decker encouraged her to meet with Dan Faust of Diakonos and to consider Diakonos as a funding partner.

Mousa learned that Diakonos had obtained a copy of the UT-Gensetix License, which was subject to strict confidentiality provisions. Fannin Innovation subsequently withdrew from consideration of the partnership with Gensetix, citing, according to Mousa, Decker's unwillingness to enter into the partnership. Gensetix entered into a non-disclosure and confidentiality agreement with Decker, a copy of which was attached to Mousa's affidavit.

According to Mousa, Decker agreed that he would cooperate with Gensetix in continuing to develop his research and "bring it to market" under the UT-Gensetix License as well as under any potential agreement that Gensetix made with BCM. Gensetix agreed to provide funding for such efforts in what "Decker referred to as a ‘handshake agreement.’ " With regard to the "handshake agreement" with Decker, Mousa attached email exchanges between the two. In the first email from Decker to Mousa, Decker explained that he did not have control over BCM's pursuit of patents or licensing agreements. In the second email, Mousa referred to an email allegedly sent by Decker with a subject line of "handshake agreement." No email with the subject line, "handshake agreement" was attached to Gensetix's response.

Mousa also attached a copy of an email from BCM notifying her that BCM had decided to withdraw its interest in licensing Decker's technologies to Gensetix. Mousa later learned that BCM had partnered with Diakonos to further develop and license Decker's research.

After a hearing, without stating its reasons, the trial court granted the motions to dismiss. After receiving evidence of attorneys' fees, the trial court entered final judgments of dismissal and awarded attorneys' fees to the Decker Parties. Gensetix appeals those judgments.

ANALYSIS

In three issues Gensetix argues (1) the trial court erred in determining that the TCPA applies to its claims; (2) the trial court erred in determining that Gensetix failed to establish by clear and specific evidence a prima facie case for each element of its claims; and (3) the fee-shifting provisions of the TCPA are unconstitutional under both the United...