Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-02513/USCOURTS-casd-3_14-cv-02513-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

– 1 – 14cv2513

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MEDICINOVA, INC.,

Plaintiff,

Case No. 14-cv-2513L(KSC)

ORDER GRANTING MOTION 

TO DISMISS WITHOUT 

PREJUDICE [ECF NO. 3] 

v.

GENZYME CORPORATION,

Defendant.

Pending before the Court is Defendant’s fully briefed motion to dismiss for 

failure to state a claim under FED. R. CIV. P. 12(b)(6). The Court finds this motion 

suitable for determination on the papers submitted and without oral argument. See

Civ. L.R. 7.1(d.1). For the following reasons, the Court GRANTS the motion

WITHOUT PREJUDICE.

//

//

//

//

//

//

Case 3:14-cv-02513-JLS-KSC Document 9 Filed 08/19/15 PageID.<pageID> Page 1 of 7
– 2 – 14cv2513

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I. BACKGROUND 

According to the Complaint, on December 19, 2005, Defendant Genzyme 

Corporation (“Genzyme”) entered into a written Assignment Agreement with 

Avigen, Inc. (“Agreement”). (Compl. ¶¶ 3, 6, ECF No. 1.) Under the Agreement, 

Genzyme acquired gene therapy intellectual property, research, and developmental 

programs. (Id. ¶ 7.) Avigen received “consideration up front and was eligible for 

specified milestone payments should certain events and/or conditions be met in the 

future.” (Id.)

The gene therapy technology included “recombinant adeno-associated viral 

vectors, also knowns as AAV vectors, as well as a portfolio of patents referred to as 

‘Gene Therapy Patents’ under the Assignment Agreement. . .” (Id. ¶ 8.) AAV vectors 

are used to transfer genes into targeted cells to potentially treat diseases. (Id. ¶ 9.) 

Pursuant to the agreement, Genzyme agreed to make a milestone payment when the 

first patient “is dosed or treated in a Phase I clinical study with a product that is 

covered by a claim of the Gene Therapy Patents. . .” (Id. ¶ 10.) 

On December 18, 2009, Avigen, Inc. merged with Plaintiff Medicinova 

(“Medicinova”), which assumed all rights under the Agreement, including rights to 

subsequent milestone payments. (Id. ¶ 11.) In March 2014, Genzyme informed 

MediciNova that it was conducting a Phase 1 clinical trial of a gene therapy product 

named AAV-sFLT, and explained that all patients had already been dosed with AAVsFLT. (Id. ¶ 12.) The “AAV vector technology being used by Genzyme in AAVsFLT is covered by at least one claim of one or more U.S. Gene Therapy Patents 

under the Assignment Agreement.” (Id. ¶ 13.) Accordingly, Genzyme was to pay 

MediciNova $1,000,000 as a milestone payment, which it has not yet paid. (Id. ¶ 

14.)

On October 21, 2014, MediciNova filed the instant Complaint for breach of 

contract and breach of the covenant of good faith and fair dealing. On February 3, 

2015, Genzyme filed the instant motion to dismiss. (MTD, ECF No. 3.) 

Case 3:14-cv-02513-JLS-KSC Document 9 Filed 08/19/15 PageID.<pageID> Page 2 of 7
– 3 – 14cv2513

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

II. LEGAL STANDARD 

Motion to Dismiss for Failure to State a Claim 

The court must dismiss a cause of action for failure to state a claim upon which 

relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 

12(b)(6) tests the legal sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 

732 (9th Cir. 2001). The court must accept all allegations of material fact as true and 

construe them in light most favorable to the nonmoving party. Cedars-Sinai Med. 

Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). 

Material allegations, even if doubtful in fact, are assumed to be true. Bell Atl. Corp. 

v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not “necessarily 

assume the truth of legal conclusions merely because they are cast in the form of 

factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 

(9th Cir. 2003) (internal quotation marks omitted). In fact, the court does not need 

to accept any legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not 

need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of 

his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic 

recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 

555 (internal citations omitted). Instead, the allegations in the complaint “must be 

enough to raise a right to relief above the speculative level.” Id. Thus, “[t]o survive 

a motion to dismiss, a complaint must contain sufficient factual matter, accepted as 

true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 

(citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff 

pleads factual content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not 

akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that 

a defendant has acted unlawfully.” Id. A complaint may be dismissed as a matter of 

law either for lack of a cognizable legal theory or for insufficient facts under a 

Case 3:14-cv-02513-JLS-KSC Document 9 Filed 08/19/15 PageID.<pageID> Page 3 of 7
– 4 – 14cv2513

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th 

Cir. 1984).

Generally, courts may not consider material outside the complaint when ruling 

on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 

1542, 1555 n.19 (9th Cir. 1990). However, documents specifically identified in the 

complaint whose authenticity is not questioned by parties may also be considered. 

Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superseded by statutes on 

other grounds). Moreover, the court may consider the full text of those documents, 

even when the complaint quotes only selected portions. Id. It may also consider 

material properly subject to judicial notice without converting the motion into one 

for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

III. DISCUSSION

A. Breach of Contract Claim 

Genzyme moves to dismiss MediciNova’s breach of contract claim on a 

number of grounds. First, it suggests that the allegations are conclusory and therefore 

insufficient under Iqbal and Twombly. (MTD 6.) Second, Genzyme argues that 

MediciNova’s claims based on “information and belief” are improper. (Id. at 7.) 

Third, Genzyme maintains that the allegations are insufficient because they fail to 

point out which of the Gene Therapy Patents in the Agreement cover AAV-sFLT. 

(Id. at 7-8.) 

All of Genzyme’s arguments boil down to one issue: whether or not 

MediciNova has sufficiently identified which “Gene Therapy Patents” are at issue in 

this case. MediciNova’s breach of contract claims hinge on the following allegation:

MediciNova is informed and believes that the AAV vector technology 

being used by Genzyme in the AAV-sFLT is covered by at least one 

claim of one or more U.S. Gene Therapy Patents under the Assignment 

Agreement. As a result, Genzyme was required to pay a $1,000,000 

milestone under Schedule 3.2 (Part E) of the Assignment Agreement 

when the first patient was dosed with AAV-sFLT.

Case 3:14-cv-02513-JLS-KSC Document 9 Filed 08/19/15 PageID.<pageID> Page 4 of 7
– 5 – 14cv2513

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(Compl. ¶ 13.) This allegation is supported by MediciNova’s allegation that 

Genzyme “failed to fulfill all of their obligations, including . . . their obligation to 

timely notify MediciNova about the commencement of the AAV-sFLT clinical trial 

and to timely pay the $1,000,000 first milestone.” (Compl. ¶ 20.) In some 

circumstances, such allegations would be sufficient to state a breach of contract 

claim. However, due to the complexity of the Agreement and the breadth of the 

definition of “Gene Therapy Patents” therein, these allegations are insufficient.

As Genzyme points out, and MediciNova does not dispute, the term “Gene 

Therapy Patents” covers more than 246 worldwide patent applications and 5 U.S 

granted patents. (MTD 8.) Simply claiming that the clinical trials of AAV-sFLT are 

covered by the “Gene Therapy Patents,” without more, does not put Genzyme on 

notice as to which “Gene Therapy Patents” are at issue here. MediciNova’s 

Complaint is devoid of any facts which support its claim that the AVV-sFLT trials 

are covered by the Assignment Agreement, and is therefore insufficient.

Further, MediciNova’s allegations based on “information and belief” are 

inappropriate as plead. Under Rule 8, “[p]leading on information and belief is a 

desirable and essential expedient when matters that are necessary to complete the 

statement of a claim are not within the knowledge of the plaintiff but he [or she] has 

sufficient data to justify interposing an allegation on the subject.” 5 Charles Alan 

Wright & Arthur R. Miller, Federal Practice and Procedure § 1224 (2d ed.1990). 

“However, pleading on information and belief is not an appropriate form of pleading 

if the matter is within the personal knowledge of the pleader or ‘presumptively’ 

within his knowledge, unless he rebuts that presumption.” Id.

Here, whether or not AVV-sFLT is covered by the “Gene Therapy Patents” is 

presumptively within the knowledge of MediciNova. MediciNova is familiar with 

the Agreement, and knows what every single patent under the “Gene Therapy Patent” 

umbrella is. This fact, paired with MediciNova’s detailed allegations about AAV 

vector technology and that AAV-sFLT is covered by the “Gene Therapy Patents,” 

Case 3:14-cv-02513-JLS-KSC Document 9 Filed 08/19/15 PageID.<pageID> Page 5 of 7
– 6 – 14cv2513

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

means that MediciNova must either know, or be able to determine via review of the 

relevant patents, which patents cover the clinical trial use in question. As such, 

MediciNova cannot rely on “information and belief” allegations. That being said, if 

MediciNova can add allegations to the Complaint that rebut the presumption that 

such information is within its knowledge, MediciNova may rely on “information and 

belief” allegations.

In light of the foregoing, the Court GRANTS the motion to dismiss the breach 

of contract claim WITH LEAVE TO AMEND.

B. Breach of the Covenant of Good Faith and Fair Dealing

Genzyme next moves to dismiss MediciNova’s good faith claims because they 

are coextensive with the breach of contract claim. (MTD 9.) MediciNova admits 

that the two claims are based on identical facts, but argues that both claims are 

appropriate because breach of distinct contractual obligations may be properly plead 

as separate counts. (Opp’n 9-10.)

Because the good faith and fair dealing claim is admittedly based on the same 

factual allegations as the deficient breach of contract claim, it is also DISMISSED 

WITH LEAVE TO AMEND. The Court notes that MediciNova may bring a breach 

of contract claim and a breach of the covenant of good faith and fair dealing based 

on the same underlying facts, as each cause of action, properly stated, asserts that 

Genzyme violated a different contractual obligation. See Digerati Holdings, LLC v. 

Young Money Entm’t, LLC, 194 Cal. App. 4th 873, 885 (2011). 

//

//

//

//

//

//

//

Case 3:14-cv-02513-JLS-KSC Document 9 Filed 08/19/15 PageID.<pageID> Page 6 of 7
– 7 – 14cv2513

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IV. CONCLUSION & ORDER

The Court GRANTS motion to dismiss WITH LEAVE TO AMEND, as 

specified above. Plaintiff shall file its amended Complaint on or before August 28, 

2015.

IT IS SO ORDERED.

DATED: August 19, 2015

M. James Lorenz

United States District Judge

Case 3:14-cv-02513-JLS-KSC Document 9 Filed 08/19/15 PageID.<pageID> Page 7 of 7