Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-05027/USCOURTS-cand-4_05-cv-05027-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

TERCICA, INC.,

Plaintiff,

 v.

INSMED INCORPORATED,

Defendant. _________________________________

No. C 05-5027 SBA

ORDER

[Docket Nos. 17, 23, 26, 31] 

This matter comes before the Court on Defendant Insmed Incorporated's ("Defendant") Motion

to Dismiss the First Amended Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(2),

12(b)(3), and 12(b)(6) and to Strike Portions of the First Amended Complaint Pursuant to Federal Rule

of Civil Procedure 12(f); Plaintiff Tercica, Inc.'s ("Plaintiff") Request for Judicial Notice; Defendant's

Opposition and Objections to Plaintiff's Request for Judicial Notice and Evidentiary Objections; and

Defendant's Objections to Plaintiff's Two Supplemental Declarations. Having read and considered the

arguments presented by the parties in the papers submitted to the Court, the Court finds this matter

appropriate for resolution without a hearing. The Court hereby GRANTS Defendant's Motion to

Dismiss for lack of personal jurisdiction and DISMISSES the First Amended Complaint without leave

to amend. The Court also GRANTS IN PART AND DENIES IN PART Plaintiff's Request for Judicial

Notice, SUSTAINS IN PART AND OVERRULES IN PART Defendant's Opposition and Objections

to Plaintiff's Request for Judicial Notice and Evidentiary Objections, and SUSTAINS IN PART AND

OVERRULES IN PART Defendant's Objections to Plaintiff's Two Supplemental Declarations. 

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Except as otherwise noted, the following facts are taken from the First Amended Complaint

("FAC"). 

2

BACKGROUND

A. Factual Background1

Plaintiff Tercica, Inc. ("Plaintiff" or "Tercica") and Defendant Insmed Incorporated ("Defendant"

or "Insmed") are competitors in the drug market for the treatment of growth failure in children. FAC

at ¶ 1. 

At some point prior to the commencement of this litigation, Tercica acquired the exclusive rights

to develop, commercialize, and manufacture IncrelexTM ("Increlex") from Genentech, Inc. FAC at ¶ 11.

Increlex is composed of recombinant insulin-like growth factor-1 ("IGF-1") and is sometimes referred

to as "free IGF" or "free rhIGF." Id. at ¶ 14. On August 30, 2005, Increlex received approval from the

Food and Drug Administration ("FDA") as an "orphan-designated drug" for the long-term treatment of

growth failure in children with severe Primary insulin-like growth factor-1 deficiency ("Primary IGFD")

or children with growth hormone gene deletion who have developed neutralizing antibodies to growth

hormone. Id. Increlex is the only FDA approved free rhGIF or rhIGF-1 product. Id. at ¶ 22. FDA

approval was granted despite the fact that Insmed had filed a Citizen's Petition with the FDA requesting

that the FDA deny Tercica's new drug application on the grounds that Increlex was unsafe. Id. at ¶ 23.

The FDA specifically found that Insmed's arguments were unpersuasive and that Tercica had

"adequately demonstrated that Increlex is safe and effective under the conditions of use described in its

labeling." Id. at ¶ 23. After Tercica received FDA approval, it began commercializing Increlex. Id. at

¶ 12. Since that time, at least one physician has prescribed Increlex. Id. 

On September 27, 2005, the FDA issued Insmed an "Approvable Letter" pursuant to 21 C.F.R.

314.110 with respect to Insmed's drug, iPlexTM ("iPlex"). Id. at ¶ 15. iPlex is composed of recombinant

human IGF-1 and IGF binding protein 3 (rhIGF-I/rhIGFBP-3 complex) and is sometimes referred to as

"bound IGF," the "complex," or the "combination." Id. at ¶ 14. The FDA set December 12, 2005 as the

action date on the iPlex new drug application ("NDA"). Id. at ¶ 15. 

On September 28, 2005, during an investor conference call, Insmed stated that "in our matched

comparison with that IGF-1 study, we have seen about a two-fold higher incidence of serious adverse

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events with the free IGF-1 treatment that we have with iPlex . . . ." FAC at ¶ 24(A). This statement

was later made available as a "webcast" on Insmed's website. Id.

Also on September 28, 2005, Lazard Capital Markets published an article stating that "[d]uring

a call th[at] morning, Insmed's chief scientific officer spoke of a twofold increase in serious adverse

events with free IGF01 (essentially Increlex) versus iPlex and expects a press release on the iPlex data

in the next few days detailing results from an oral presentation given at The Joint Endocrine

Society/Lawson Wilkins Pediatric Endocrinology Society (ESPE/LWPES) meeting last weekend in

Lyon, France." Id. at Ex. 4. 

In a September 29, 2005 press release, Insmed further stated:

A matched safety comparison was performed on this [iPlex] study with a

similar, prospectively-designed, published clinical study of free rhIGF-1

(manufactured by Pharmacia Inc.) in children with Severe Primary IGF-1

deficiency. A two-fold higher incidence of serious adverse events (SAE's)

occurred in the free IGF-1 study as compared with the SomatoKine study over

a similar time frame.

Id. at ¶ 24(G). Additionally, the company stated that iPlex had "demonstrated a superior safety profile

in children with Severe Primary IGF-1 deficiency, especially regarding the number of hypoglycemic

events and the severity of those events." Id. at ¶ 24(H). 

On October 1, 2005, an article was published in the Richmond Times Dispatch stating that

"Insmed had fought to block approval of Tercica['s] competing drug, Increlex, which is identical to a

natural hormone produced by the body that is used in growth and metabolism." Id. at Ex. 5. The article

further reported that "unlike Tercica, Insmed has bound the hormone to protein, which the company says

is safer and will keep the drug in the blood longer." Id. 

On October 19, 2005, Insmed's Chief Business Officer, Phillip Young ("Young"), attended a BIO

InvestorForum in San Francisco, California. Id. at ¶ 19; Allan Decl. at ¶ 15. During the conference,

Young displayed a table that compared iPlex with free IGF and indicated that free IGF had no "Safety

Profile." Id. at ¶¶ 18, 19. Insmed also stated that "physiological replacement of IGF-1 requires BP-3

for safe and effective administration" and that "if you are going to replace IGF, it requires [IGF]BP-III

for the safe administration of IGF." Id. at ¶¶ 24(C), (E). Further, the company stated that "[t]here have

been companies over the last 20 years that have worked to develop IGF therapy . . . But the problem that

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all these companies are running into is that there has been a significant negative side effect profile

associated with administering free IGF. We believe we can mitigate that and we have shown that we

can mitigate that by the complex of IFG-I and [IGF]BP-II together." Id. at ¶ 24(D). 

On November 7, 2005, Young participated in a teleconference at the Rodman & Renshaw 7th

Annual Healthcare Conference. Id. at ¶ 17. During the conference, Young displayed the same chart

comparing iPlex with free IGF. Id. at ¶ 18. Additionally, Young stated that Insmed had "discovered"

that "physiological replacement of IGF-1 requires BP-3 for safe and effective administration." Id. at

¶ 20(A). Young further stated that "there has been some consistently observable side effects associated

with IGF as a single protein in administration that had not been commonly seen or seen as frequently

with iPlex, the complex." Id. at ¶ 20(B). Young also presented a slide, which stated that "[s]everal

companies have attempted to develop an IGF-1 Therapy, [including] . . . Genentech [and] Tercica . . .

Previous IGF-1 clinical programs all demonstrate an unacceptable safety profile." Id. at ¶ 21. 

On November 29, 2005, Young attended the Lazard Capital investor conference and again

presented the chart comparing iPlex with free IGF. Id. at ¶ 19. During that investor conference, Insmed

explained the import of the chart as follows:

This is a graph, which demonstrates the differences when iPlex, IGF/BP3

complex is administered to diabetic patients. Now this is not a head to head

study. This is just designed to optically give you an impression of the benefit

of delivering IGF therapy via iPlex or the combination of IGF and BP3. As you

can see the well-known side effects for [free]-IGF documented in studies from

numerous companies, peripheral edema, facial edema, jaw pain and

[arthrelgia], are far more prevalent when IGF is delivered as a single protein or

[sic] [than] when IGF is delivered as a complex as we do with iPlex.

Id. at ¶ 24(B). Insmed further stated that "previous studies [of] [free]-IGF or IGF by itself the clinical

programs have demonstrated severe shortfalls in the safety profile. We believe that contributing BP3

and IGF together allows for better presentation of IGF in a very safe environment for delivering it once

a day." Id. at ¶ 24(F). Additionally, Insmed stated that "we believe we have a safety profile that is

superior to free IGF." Id. at ¶ 24(I). 

On December 12, 2005, Insmed announced that the FDA had approved iPLex. Id. at ¶ 29. On

December 13, 2005, during a call with investors, which was later made available through the company's

website, Insmed's officers declared: "[T]he major difference here is th[e] fact that our drug can be given

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Only one employee, Andreas Sommer, Ph.D. ("Sommer"), resides in California. Id. at ¶ 13;

Supp. Allan Decl. at ¶ 3. Sommer is the former President and Chief Executive Officer of Celtrix

Pharmaceuticals, Inc., Insmed's wholly-owned subsidiary. Supp. Allan Decl. at ¶ 3. Sommer joined

Insmed as a Principal Scientist in August 2000. Id. His personal residence is Danville, California. Id. 

4

Geoffrey Allan, Ph.D. ("Allan") is the President and Chief Executive Officer of Insmed. Allan

Decl. at ¶ 1. The Allan Declaration was submitted in support of Defendant's Motion to Dismiss.

5

once a day and we don't have to specifically time it around food intake." Id. at ¶ 29. The company

further stated that "[o]nce a day without meal restrictions in a very important component to this product

[iPlex]." Id. Despite these representations, the iPlex Patient Information sheet instructs parents to

"[s]kip your child's dose of IPLEXTM if your child cannot or will not eat for any reason at the time of

the injections . . . It is important that your child eat well and not skip meals while taking IPLEXTM." Id.

at ¶ 29, Ex. 1. Similarly, the Package Insert warns that: 

Patients and/or other caregivers should be instructed in the safe administration

of IPLEXTM. Because of the possibility of hypoglycemia, patients using

IPLEXTM should be on a regular, balanced diet. IPLEXTM should be

administered at the same time every day. IPLEXTM should not be administered

if the patient cannot or will not eat or when a meal is omitted.

Id. at ¶ 29, Ex. 2. 

The Package insert also warns that "[e]fficacy beyond one year of treatment has not been

established." Id. at ¶ 30, Ex. 2. Nevertheless, Insmed's President and CEO Geoffrey Allan has stated

that Increlex "is a long term treatment for growth." Id. at ¶ 30 (emphasis added). 

B. Jurisdictional Allegations

Tercica is a Delaware corporation with its principle place of business in Brisbane, California.

FAC at ¶ 5. Insmed is a Virginia corporation with its principle place of business in Glen Allen,

Virginia. FAC at ¶ 6. Insmed has approximately 80 employees, most of whom are located in Virginia

and Colorado.3

 Allan Decl.4 at ¶ 13. Insmed does not maintain an office in California, does not have

a telephone number in California, does not maintain any records or company files in California, does

not maintain a bank account in California or accept checks drawn on a California bank, and is not

registered to do business here. Allan Decl. at ¶¶ 8, 11. Additionally, Insmed has not paid any income

taxes in California, does not own any real property in California, does not have an agent for service of

process in California, and does not have any registered agents living in California. Id. at ¶¶ 8, 10, 13.

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At no time relevant to this action has Insmed either sold iPlex or other products or services to California

consumers, or even solicited sales of iPlex or other products or services in California. Id. at ¶ 9.

Further, Insmed has not endorsed or sponsored any print, television, or radio advertisements in

California. Id. at ¶ 12. In fact, Insmed maintains a single, passive website. Allan Decl. at ¶ 14. 

California consumers are unable to purchase products from Insmed, because Insmed does not

sell any products anywhere in the United States. Id. at ¶ 14. No statement on Insmed's website is

directed to, or specifically intended for, California consumers. Id. The press releases and investor

conference "webcasts" are located in the "Investor Relations" section of Insmed's website, and are

directed to existing and prospective investors. Id. at ¶ 14. 

Only two Insmed employees attended the BIO InvestorForum 2005 at the Palace Hotel in San

Francisco, California on October 19-20, 2005. Id. at ¶ 15. Insmed did not offer any products for sale

or make any sales at the BIO InvestorForum 2005. Id. In addition to attending the conference, Insmed's

Chief Business Officer, Young, gave a twenty-minute presentation on the status of Insmed. Id. This

presentation was one of more than 190 company presentations given at the conference. Id.

C. Procedural History

On December 6, 2005, Plaintiff Tercica filed a complaint against Defendant Insmed in this Court

for alleged violations of: (1) California Business & Professions Code §§ 17500 et seq. (False

Advertising); (2) California Business & Professions Code §§ 17200 et seq. (Unfair Competition); and

(3) the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) (False Advertising). 

On December 15, 2006, Plaintiff filed the instant First Amended Complaint. In the First

Amended Complaint, Plaintiff asserts the same causes of action against Defendant for: (1) violations

of California Business & Professions Code §§ 17500 et seq. (False Advertising); (2) violations of

California Business & Professions Code §§ 17200 et seq. (Unfair Competition); and (3) violations of

the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) (False Advertising). In the First Amended Complaint,

Tercica contends that the statements Insmed has made regarding the safety of Increx are false,

misleading, and deceptive because: (1) Insmed has not conducted a controlled, "head-to-head" clinical

trial of the safety of iPlex and Increlex and therefore has no basis to make comparative claims regarding

the safety of its own product; (2) Tercica's drug was studied in 71 subjects for a mean duration of 3.9

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years, whereas Insmed's drug was studied by in only 25 patients for only 9 to 12 months, thus the tests

or studies that Insmed has conducted are not reliable and do not support Insmed's statements; (3) iPlex

is not, itself, "safe," as a number of undisclosed severe asymptomatic episodes of hypoglycemia, as well

as hepatomegaly, adenoid hypertrophy, papilledema, and tonsillar hypertrophy, were observed during

the clinical trial. FAC at ¶¶ 26-28. Tercica also alleges that Insmed has made false and misleading

statements regarding the safety of Increlex because it has represented that Increlex can be taken once

a day without food when, in fact, the Package Insert instructs that Increlex "should not be administered

if the patient cannot or will not eat or when a meal is omitted." Id. at ¶ 29. Further, Tercica alleges that

Insmed has mislead the public by stating that Increlex is a "long term treatment for growth" when its

clinical trial data is only for a limited period of time and the Package Insert specifically states that

"[e]fficacy beyond one year of treatment has not been established." Id. at ¶ 30. 

The First Amended Complaint states that this Court has personal jurisdiction over Insmed

because: (1) "the false and misleading statements made by officers of Insmed in the State of California

. . . have caused injury and damage to Tercica, which has its principal place of business in California";

(2) the "deceptive statements made by Insmed's officers outside of California . . . were deliberately

calculated to cause, and . . . have caused, injury and damage to Tercica in California" and "were

purposefully and voluntarily directed towards California in an effort to entice investors and confuse

consumers located in California." FAC at ¶ 9. The First Amended Complaint also states that venue is

proper in this District because "the acts complained of occurred and are occurring in this District, and

have caused damage to Tercica in this District." Id. at ¶ 10. 

On January 13, 2006, Defendant filed the instant Motion to Dismiss the First Amended

Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6) and to Strike

Portions of the First Amended Complaint Pursuant to Federal Rule of Civil Procedure 12(f).

On February 7, 2006, Plaintiff filed its Opposition to Defendant's Motion to Dismiss and a

Request for Judicial Notice. On the same day, Plaintiff also filed the Declaration of Jennifer Olson (the

"Olson Declaration") and the Declaration of Christine Rivera (the "Rivera Declaration").

On February 14, 2006, Defendant filed its Reply, as well as its Objections to the Olson

Declaration, the Rivera Declaration, and the Request for Judicial Notice. Also on February 14, 2006,

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Plaintiff filed a Supplemental Declaration of Jennifer Olson (the "Supplemental Olson Declaration").

On March 13, 2006, Plaintiff filed the Second Supplemental Declaration of Jennifer Olson (the

"Second Supplemental Olson Declaration"). 

On March 16, 2006, Defendant filed its Objections to Plaintiff's Two Supplemental Declarations.

LEGAL STANDARD

A. Personal Jurisdiction

Federal Rule of Civil Procedure 12(b)(2) provides the district court with the authority to dismiss

an action for lack of personal jurisdiction. Data Disc, Inc. v. Systems Tech. Assoc., Inc., 557 F.2d 1280,

1285 (9th Cir. 1977). In order to withstand a motion to dismiss for lack of personal jurisdiction in the

initial stages of litigation, the plaintiff need only "make, through [his] pleadings and affidavits, a prima

facie showing of the jurisdictional facts." Myers v. Bennett Law Offices, 238 F.3d 1068, 1071 (9th Cir.

2001). "That is, the plaintiff need only demonstrate facts that if true would support jurisdiction over the

defendant." Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). In ruling on a Rule 12(b)(2)

motion, the pleadings are to be viewed in a light most favorable to plaintiff and all doubts are to be

resolved in his favor. See Caruth v. International Psychoanalytical Ass'n, 59 F.3d 126, 128 n.1 (9th Cir.

1995).

There are two types of personal jurisdiction: general and specific. Reebok International, Ltd.

v. McLaughlin, 49 F.3d 1387, 1391 (9th Cir.), cert. denied, 516 U.S. 908 (1995). The presence of either

general or specific jurisdiction will sustain the exercise of personal jurisdiction over a defendant. Rano

v. SIPA Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993). General jurisdiction exists where it is established

that the defendant has "continuous and systematic contacts with the forum that the exercise of

jurisdiction does not offend traditional notions of fair play and substantial justice." Id. (citation

omitted). 

As to specific jurisdiction, there are two components that must be fulfilled. Ziegler v. Indian

River County, 64 F.3d 470, 473 (9th Cir. 1995). First, the exercise of personal jurisdiction must comport

with the forum state's long arm statute. Id. Second, the exercise of personal jurisdiction must satisfy

the constitutional requirement of due process. Id. As to the first inquiry, California's long-arm statute,

California Code of Civil Procedure § 410.10, provides for personal jurisdiction to the full extent allowed

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by the requirements of due process. Id. As such, "the question is whether exercising jurisdiction over

defendants would offend due process." Id.

The Ninth Circuit has set forth a three-part test to determine whether a district court's exercise

of specific jurisdiction comports with due process:

(1) the nonresident defendant must do some act or consummate some transaction with the

forum or perform some transaction with the forum by which he purposely avails himself

of the privilege of conducting activities in the forum, thereby invoking the benefits and

protections; 

(2) the claim must be one which arises out of or results from the defendant's forum-related

activities; and 

(3) the exercise of jurisdiction must be reasonable.

Ballard, 65 F.3d at 1498. 

The plaintiff bears the burden of meeting this test. Haisten v. Grass Valley Medical

Reimbursement Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986). In the event that the plaintiff makes

a prima facie showing of purposeful availment and forum related activities, "a presumption of

reasonableness" arises, which the defendant bears the burden of overcoming. Id.

The purposeful availment test focuses on whether a "defendant's conduct and connection with

the forum state are such that he should reasonably anticipate being haled into court there." World Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The focus on the defendant's affirmative

conduct is designed to ensure that the defendant is not haled into court as a result of "random, fortuitous

or attenuated contacts." Gray & Co. v. Firstenberg Machinery Co., 913 F.2d 758, 760 (9th Cir. 1990).

"Purposeful availment analysis examines whether the defendant's contacts with the forum are

attributable to his own actions or are solely the actions of plaintiff." Sinatra v. National Enquirer, 854

F.2d 1191, 1195 (9th Cir. 1988). 

B. Venue

In general, 28 U.S.C. § 1391(b) provides that:

A civil action wherein jurisdiction is not founded solely on diversity of

citizenship may, except as otherwise provided by law, be brought only in (1)

a judicial district where any defendant resides, if all defendants reside in the

same State, (2) a judicial district in which a substantial part of the events or

omissions giving rise to the claim occurred, or a substantial part of property

that is the subject of the action is situated, or (3) a judicial district in which any

defendant may be found, if there is no district in which the action may

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otherwise be brought.

28 U.S.C. § 1391(b). If an action is filed in the wrong venue, 28 U.S.C. § 1406 provides that the district

court may "dismiss, or if it be in the interests of justice, transfer such case to any district or division in

which it could have been brought." 28 U.S.C. § 1406. 

C. Dismissal for Failure to State a Claim

Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss should be granted if it

appears beyond a reasonable doubt that the plaintiff "can prove no set of facts in support of his claim

which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). For purposes of such

a motion, the complaint is construed in a light most favorable to the plaintiff and all properly pleaded

factual allegations are taken as true. Jenkins v. McKeithen, 395 U.S. 411, 421 (1969); Everest &

Jennings, Inc. v. American Motorists Ins. Co., 23 F.3d 226, 228 (9th Cir. 1994). All reasonable

inferences are to be drawn in favor of the plaintiff. Jacobson v. Hughes Aircraft, 105 F.3d 1288, 1296

(9th Cir. 1997).

The court does not accept as true unreasonable inferences or conclusory allegations cast in the

form of factual allegations. Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981); See

Miranda v. Clark County, Nev., 279 F.3d 1102, 1106 (9th Cir. 2002) ("[C]onclusory allegations of law

and unwarranted inferences will not defeat a motion to dismiss for failure to state a claim."); Sprewell

v. Golden State Warriors, 266 F.3d 1187 (9th Cir. 2001); McGlinchy v. Shell Chem Co., 845 F.2d 802,

810 (9th Cir. 1988) ("[C]onclusory allegations without more are insufficient to defeat a motion to

dismiss for failure to state a claim.").

When a complaint is dismissed for failure to state a claim, "leave to amend should be granted

unless the court determines that the allegation of other facts consistent with the challenged pleading

could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d

1393, 1401 (9th Cir. 1986). The Court should consider factors such as "the presence or absence of

undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments,

undue prejudice to the opposing party and futility of the proposed amendment." Moore v. Kayport

Package Express, 885 F.2d 531, 538 (9th Cir. 1989). Of these factors, prejudice to the opposing party

is the most important. See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (citing

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Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-31 (1971)). Leave to amend is

properly denied "where the amendment would be futile." DeSoto v. Yellow Freight Sys., Inc., 957 F.2d

655, 658 (9th Cir. 1992).

D. Motion to Strike

Under Federal Rule of Civil Procedure 12(f), a court may strike a pleading or any portion of a

pleading that is "redundant, impertinent, or scandalous." Fed. R. Civ. P. 12(f). Motions to strike are

disfavored, and the remedy of striking a pleading should generally be used only when necessary to

discourage parties from raising allegations that are completely unrelated to the relevant claims and when

the interests of justice so require. Augustus v. Board of Pub. Instruction, 306 F.2d 862, 868 (5th

Cir.1962). 

ANALYSIS

I. Extra-Pleading Materials

As a preliminary matter, before the Court can address the substance of Defendant's Motion to

Dismiss and to Strike, the Court must rule on the admissibility of the extra-pleading materials that have

been submitted to the Court in support of, and in opposition to, the Motion. When adjudicating a motion

to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(2), a court may consider evidence

outside of the pleadings, including affidavits submitted by the parties. Doe v. Unocal Corp., 248 F.3d

915, 922 (9th Cir. 2001). When adjudicating a motion to dismiss brought pursuant to Federal Rule of

Civil Procedure 12(b)(6), however, the Court's consideration of extra-pleading materials is more limited.

Normally, the Court cannot consider matters outside of the pleading without converting the motion into

a motion for summary judgment. See Fed. R. Civ. P. 12(b)(6). The Ninth Circuit has determined,

however, that a district court may consider documents alleged in a complaint and essential to a plaintiff's

allegations. See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994); Steckman v. Hart Brewing, Inc.

143 F.3d 1293, 1295 (9th Cir. 1998). Additionally, a court may take judicial notice of documents on

which allegations in the complaint necessarily rely, even if not expressly referenced in the complaint,

provided that the authenticity of those documents is not in dispute. In re Autodesk, Inc. Sec. Litig., 132

F. Supp. 2d 833, 837-38 (N.D. Cal. 2000). 

In support of its Motion, Defendant has submitted: (1) the Declaration of Geoffrey Allan, Ph.D.

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Defendant contends that the letter is being submitted to show that Insmed was "warned" that

a Lanham Act case would be subject to a motion to dismiss. However, this is irrelevant to the legal

issues that are currently before the Court. 

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Defendant objects to Plaintiff's Request for Judicial Notice with respect to Exhibits 4, 6, and

7. 

12

("Allan Declaration"); (2) a letter from legal counsel for Insmed to legal counsel for Tercica, dated

November 9, 2005 (the "November 9, 2005 Letter"); and (3) the Supplemental Declaration of Geoffrey

Allan, Ph.D. ("Supplemental Allan Declaration"). Both the Allan Declaration and the Supplemental

Allan Declaration are submitted in support of Defendant's 12(b)(2) motion and therefore may be

considered by the Court. However, the Court notes that Plaintiff has requested that the Court strike the

first two sentences of paragraph 3 and the second and third sentences of paragraph 15 of the Allan

Declaration as inadmissible hearsay, and Defendant has not opposed this request. Nevertheless, the

Court has not relied on these portions of the Allan Declaration in order to make its jurisdictional

determination. Accordingly, the request to strike is DENIED AS MOOT. 

The Court has also disregarded the November 9, 2005 Letter attached to the Motion to Dismiss.

This letter consists of further attorney argument in support of Defendant's Motion and is not properly

considered "evidence."5

In opposition to Defendant's Motion to Dismiss and to Strike, Plaintiff requests that the Court

take judicial notice of the following documents pursuant to Federal Rule of Evidence 2016

:

(1) Insmed's Form 10-K for the period ending December 31, 2003, filed with the

Securities and Exchange Commission ("SEC") on March 12, 2004 (Exhibit 1);

(2) Civil Docket for Genentech, Inc. et al. v. Insmed Incorporated, et al., Case No

C 04-05429 CW, filed in the U.S. District Court, Northern District of California

(Exhibit 2); 

(3) Insmed's Form S-3, filed with the SEC on February 3, 2006 (Exhibit 3);

(4) Declaration of Kenneth M. Attie M.D. in support of Defendants' Opposition to

Plaintiffs' Motion for Preliminary Injunction, filed in Genentech, Inc. et al. v.

Insmed Incorporated, et al., Case No C 04-0549 CW, U.S. District Court,

Northern District of California (Exhibit 4);

(5) Celtrix Pharmaceuticals, Inc.'s 1997 Annual Report (Exhibit 5);

(6) Declaration of Kevin Tully in Support of Insmed Incorporated's Motion to

Dismiss the First Amended Complaint or, in the alternative, for Summary

Judgment, filed in Genentech, Inc. et al. v. Insmed Incorporated, et al., Case No

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To the extent that Plaintiff seeks also to have the Court consider Exhibit 1 for this purpose, see

Opp. at 7, the Request is DENIED. Exhibit 1 has only been considered to the extent that it pertains to

Plaintiff's jurisdictional allegations. 

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C 04-05429 CW, in the U.S. District Court, Northern District of California

(Exhibit 6);

(7) Plaintiff's Opposition to Insmed Incorporated's Motion to Dismiss the First

Amended Complaint or, in the alternative, for Summary Judgment, Partial

Dismissal or Partial Summary Judgment, filed in Genentech, Inc. et al. v. Insmed

Incorporated, et al., Case No C 04-05429 CW, in the U.S. District Court,

Northern District of California (Exhibit 7).

Plaintiff seeks to have Exhibits 1 and 5 admitted to show the relationship between Celtrix and

Insmed, in support of its jurisdictional allegations. The Court may consider these documents for this

limited purpose and therefore the Request for Judicial Notice is GRANTED as to Exhibits 1 and 5.

Plaintiff also seeks to have Exhibit 2, which is the docket sheet for Genentech, Inc. et al. v. Insmed

Incorporated, et al., Case No C 04-0549 CW, admitted to support its jurisdictional allegations. The

Court may take judicial notice of this document for its legal effect, which is the fact that Insmed is

currently a defendant in an unrelated lawsuit in the Northern District of California. See Neilson v. Union

Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1113 (C.D. Cal. 2003). Since this is the basis for Plaintiff's

Request for Judicial Notice, the Request for Judicial Notice is GRANTED IN PART. However,

Plaintiff seeks to have Exhibits 6 and 7 to the Request for Judicial Notice, which are the Declaration of

Kevin Tully and Plaintiff's Opposition to Insmed Incorporated's Motion to Dismiss the First Amended

Complaint, both filed in Genentech, Inc. et al. v. Insmed Incorporated, et al., considered for the truth

of the matters asserted therein. However, Rule 201 does not permit the Court to take judicial notice of

these documents for the truth of the matters asserted therein. Accordingly, the Court hereby DENIES

Plaintiff's request with respect to Exhibits 6 and 7. 

Plaintiff also seeks to have the Court consider Exhibit 3, which is Insmed's Form S-3, as part of

Tercica's opposition to Defendant's Rule 12(b)(6) motion. Exhibit 3 is not part of the First Amended

Complaint and the First Amended Complaint does not necessarily rely on it. As such, the Request for

Judicial Notice is DENIED.7

 Similarly, the Court DENIES Plaintiff's Request that the Court take

judicial notice of Exhibit 4 in order to prove that Kenneth Attie, Insmed's Chief Medical Officer, was

formerly a consultant to Tercica. This evidence is irrelevant to the Court's determination of the instant

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Motion and is not part of the allegations of the First Amended Complaint. Plaintiff's decision to submit

this evidence to the Court was inappropriate and Exhibit 4 has therefore been disregarded. 

Plaintiff has also submitted: (1) the Rivera Declaration; (2) the Olson Declaration; (3) the

Supplemental Olson Declaration; and (4) the Second Supplemental Olson Declaration. Defendant

objects to the Court's consideration of any of these filings in connection with Defendant's Rule 12(b)(6)

motion. Turning to the Rivera Declaration first, it is quite apparent that paragraph 5 of the Rivera

Declaration should not be considered by the Court. This paragraph of the Rivera Declaration lacks

foundation, consists entirely of hearsay information supplied by a representative of Tercica, and is, for

the most part, intended to bolster the allegations contained in the First Amended Complaint in order to

save it from dismissal under Rule 12(b)(6). However, two paragraphs of the Rivera Declaration, i.e.

paragraphs 3 and 4, do pertain to Plaintiff's jurisdictional allegations. See, e.g., Opp. at 22.

Accordingly, Defendant's objection to the Rivera Declaration is SUSTAINED IN PART and

OVERRULED IN PART. The Court has considered paragraphs 3 and 4 of the Rivera Declaration for

the limited purpose of determining jurisdiction, but has disregarded the remaining allegations contained

therein. 

Defendant's objections to the Olson Declaration, the Supplemental Olson Declaration, and the

Second Supplemental Declaration are also SUSTAINED IN PART and OVERRULED IN PART. The

Court notes that the following documents are attached to the Olson Declaration: (a) a copy of a January

3, 2006 Tercica press release (Exhibit 1); (b) a copy of a December 12, 2005 Insmed press release

(Exhibit 2); (c) a copy of the California Secretary of State web page concerning Celtrix (Exhibit 3); (d)

a copy of Insmed's March 17, 2005 press release (Exhibit 4); (e) a copy of Insmed's April 20, 2005 press

release (Exhibit 5); (f) a copy of a letter dated November 11, 2005 from Kenneth Attie to Sally

Radovick, MD (Exhibit 6A); (g) a copy of Insmed slides entitled "rhGF-I/rhGFBP-3" (Exhibit 6B); (h)

a copy of Insmed slides entitled "Treatment with rhIGF-I" (Exhibit 6C); (i) a copy of an email dated

November 15, 2005 from Sally Radovick to others (Exhibit 6D); (j) a copy of a letter dated January 10,

2006 from Kenneth Attie to Leslie Soyka, MD (Exhibit 7); (k) a copy of an Insmed "Corporate Fact

Sheet" (Exhibit 8); (l) a copy of a September 19, 2005 Insmed press release (Exhibit 9); (m) a copy of

a Yahoo Finance web page showing the stock price range of Insmed stock from August 30, 2005 to

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Plaintiff also contends that Exhibits 6A, 6D and 7 may be considered as part of the Court's

jurisdictional analysis. However, these letters and emails were not directly sent by Insmed to anyone

in California and are therefore irrelevant to the analysis. Since these letters are also not alleged in the

First Amended Complaint, they have not been considered by the Court in its determination of the Rule

12(b)(6) motion. Moreover, Plaintiff has not sufficiently authenticated Exhibits 6B and 6C and/or

shown that they are the same slides referenced in the First Amended Complaint. As such, the Court

SUSTAINS Defendant's objections to Exhibits 6A, 6B, 6C, 6D, and 7.

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September 1, 2005 (Exhibit 10); (n) a copy of a Yahoo Finance web page showing the stock price range

of Tercica stock from December 11, 2005 to December 13, 2005 (Exhibit 11); (o) a copy of a transcript

of Insmed's Investor Update Conference Call held on September 28, 2005 (Exhibit 12); (p) a copy of

a September 29, 2005 Insmed press release (Exhibit 13); (q) a copy of a transcript from the October 19,

2005 BIO InvestorForum (Exhibit 14); (r) a copry of a June 10, 2005 Insmed press release (Exhibit 14);

(s) a copy of a web page from Insmed's website entitled "Product Pipeline" (Exhibit 15); (t) a copy of

a September 27, 2005 Insmed press release (Exhibit 16). 

Out of all of the documents attached to the Olson Declaration, only Exhibits 3, 4, and 5 pertain

to Plaintiff's jurisdictional allegations. Therefore, those documents have been considered by the Court

as establishing the following: (1) that Celtrix is a Delaware corporation located in Virginia, registered

to do business in California, with an agent for service of process in California; and (2) that Insmed is

affiliated with two clinical trials being conducted by the University of California, San Francisco.8

However, Defendant's objection to the submission of Exhibits 3, 4, and 5 in connection with the Rule

12(b)(6) motion is SUSTAINED as these documents cannot be used to supplement the First Amended

Complaint. 

Plaintiff seeks to submit Exhibits 2, 8, 9, 10, 11, 15, 16, and 17 in order to introduce new facts

that are not part of the First Amended Complaint. This is improper and Defendant's objections are

therefore SUSTAINED. Further, Exhibits 1, 7 to the Olson Declaration are documents that were

generated after the First Amended Complaint were filed and are therefore neither documents referenced

in the First Amended Complaint nor documents upon which the First Amended Complaint necessarily

relies. As such, they have also been disregarded by the Court and Defendant's objections are therefore

SUSTAINED. However, Exhibits 12, 13, and 14 are specifically referenced in the First Amended

Complaint and therefore may be considered by the Court. Accordingly, the Court hereby OVERRULES

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Defendant's objections to Exhibits 12, 13, and 14. 

Additionally, the Court finds that the document attached to the Supplemental Olson Declaration,

which is a copy of a letter from Kenneth Attie to Pinchas Cohen, MD of UCLA, is of questionable

relevance, due to the fact that it is dated January 10, 2006 – which, again, post-dates the filing of the

First Amended Complaint. Further, Plaintiff submitted this document after Insmed filed its Reply brief

and without first seeking leave of Court. Since Plaintiff submits this document in connection with its

Opposition to the Rule 12(b)(2) motion, however, and explains that it did not have access to the

document until after its Opposition was filed, the Court has considered the document for the limited

purpose of determining personal jurisdiction. In contrast, the documents attached to the Second

Supplemental Olson Declaration are directed toward the merits of Plaintiff's First Amended Complaint

and Plaintiff provides no valid explanation as to why these documents – which are dated 2003, 2004,

and 2005, respectively – were submitted to the Court in such an untimely fashion. The Court therefore

SUSTAINS Defendant's objections to the Second Supplemental Olson Declaration and has declined to

consider any of the documents attached to it. 

II. Motion to Dismiss for Lack of Personal Jurisdiction

With respect to the Motion to Dismiss, the Court shall first address Defendant's request to

dismiss for lack of personal jurisdiction, which is brought pursuant to Federal Rule of Civil Procedure

12(b)(2). In the First Amended Complaint, Plaintiff contends that the Court has personal jurisdiction

over Insmed because: (1) Insmed made several false and misleading statements at an investor forum

located in San Francisco, California on October 19, 2005; and (2) Insmed made several other allegedly

false and misleading statements outside of California that were calculated to damage Tercica in

California. 

A. General Jurisdiction

At the outset, the Court notes that Plaintiff has not met its "high" burden of establishing that this

Court has general jurisdiction over Insmed. Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir.

1986). First, Plaintiff utterly fails to address the fact that Insmed: (1) is a Virginia corporation; (2) has

its principle place of business in Virginia; (3) does not maintain an office in California; (4) does not

have a telephone number in California; (5) does not maintain any records or company files in California;

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A "passive" website is one that cannot be used to make purchases. See Bancroft & Masters, Inc.

v. Augusta National Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). 

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(6) does not maintain a bank account in California or accept checks drawn on a California bank; (7) is

not registered to do business in California; (8) has not paid any income taxes in California; (9) does not

own any real property in California; (10) does not have an agent for service of process in California;

(11) does not have any registered agents living in California; (12) has not sold iPlex or any other

products or services to California consumers; (13) has not solicited sales of iPlex or other products or

services in California; (14) has not endorsed or sponsored any print, television, or radio advertisements

in California; and (15) maintains a single, passive9 website. See Bancroft & Masters, Inc. v. Augusta

Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (noting that factors to be taken into consideration in

determining whether general jurisdiction exists are whether the defendant makes sales, solicits or

engaged in business in the state, serves the state's markets, designates an agent for service of process,

holds a license, or is incorporated there). 

Instead, Plaintiff contends that general jurisdiction is established because: (1) Insmed

"consented" to personal jurisdiction in another lawsuit in California; (2) Insmed purportedly mailed

advertisements to some California physicians and attended a conference in California; (3) Insmed is

participating in two clinical trials in California; and (4) Insmed has a subsidiary registered to do business

in California. Plaintiff does not cite any legal authorities in support of its position that these factors are

sufficient to establish a prima facie case of general jurisdiction. In fact, the relevant authorities make

clear that they are not. 

In Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482 (9th Cir. 1993), the Ninth Circuit

expressly rejected the argument that personal jurisdiction could be established merely because a

defendant had consented to jurisdiction in California in an unrelated case and had filed its own,

unrelated lawsuit in California. Id. at 1490. Indeed, it is clear from Core-Vent that unrelated litigation

in a forum state is a not controlling factor in, or even relevant to, the general jurisdictional analysis. Id.

 

Further, the Company's mailings to physicians and the single event of attending a two-day

investor conference in San Francisco are not the type of "continuous and systemic" or "substantial"

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10The Court does not find this letter to be relevant evidence, as the date of the letter is January

2006, which post-dates the filing of the First Amended Complaint. 

11Plaintiff argues that Celtrix is "central to the iPlexTM drug which is the subject of this lawsuit's

allegations" because: (1) Celtrix conducted the original research and development of iPlex, then known

as Somatokine, over six years ago, and (2) Insmed used the research and test data generated and

compiled by Celtrix in its filings with the FDA seeking approval for iPlex. Plaintiff does not produce

any authorities, however, showing that the initial research activities of a wholly-owned subsidiary,

which took place over half a decade ago, and which no longer occur in the forum state, constitute

continuous and systemic contacts with the forum state. 

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activities that support a finding of general jurisdiction. See id. at 1490 (finding that the attendance of

five medical conferences in the forum state over the course of four years was insufficient to establish

general jurisdiction); see also Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1331 (9th Cir. 1984)

(declining to find general jurisdiction even in light of allegations that defendant had solicited a

distributorship agreement in the forum state, had visited the forum state a number of times, had

purchased spare parts in the forum state, and had sent letters and telexes, and made telephone calls to

the forum state). This is true even in light of Plaintiff's belated evidence that Insmed mailed a letter

directly to a physician in California.10 See Supp. Olson Decl. at Ex. 18.

Additionally, while Plaintiff places great weight on the fact that Insmed "is conducting two

major ongoing clinical trials in this District," Plaintiff does not cite any support for its assertion that this

factor supports a finding of general jurisdiction. In fact, the authorities that have addressed this precise

issue have held that the mere participation in a clinical trial in the forum state is not a sufficient basis

for finding general jurisdiction. See, e.g., Surgical Laser Tech., Inc. v. C.R. Bard, Inc., 921 F. Supp. 281

(E.D. Pa. 1996); Gallant v. Trustees of Columbia University in the City of New York, 111 F. Supp. 2d

638, 642 (E.D. Pa. 2000). Further, Insmed has produced evidence that the trials are being conducted

by the University of California, San Francisco, not Insmed. Supp. Allan Decl. at ¶¶ 5, 7. 

Plaintiff's reliance on the fact that Insmed's subsidiary, Celtrix, is located in California is equally

unavailing.11 First and foremost, Plaintiff's statement that Celtrix is a California corporation located in

California is flatly contradicted by its own evidence showing that Celtrix is a Delaware corporation with

its principle place of business in Glen Allen, Virginia. See Olson Decl. at Ex. E. In fact, according to

the Supplemental Allan Declaration, since a short time after its acquisition by Insmed in 2000, Celtrix

has owned no real property in California and has neither sold nor solicited sales of iPlex or other

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12Whether Celtrix is, in fact, the alter ego of Insmed is another element that must be established

by Plaintiff before this Court can assume general jurisdiction over Insmed. The Ninth Circuit and the

United States Supreme Court have both acknowledged that the mere "existence of a relationship

between a parent company and its subsidiaries is not sufficient to establish personal jurisdiction over

the parent on the basis of the subsidiary's minimum contacts with the forum." Doe v. Unocal, 248 F.3d

915, 925 (9th Cir. 2001); Keetan v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984); Church of

Scientology v. Adams, 584 F.2d 893, 897 (9th Cir. 1978) ("Even in cases where the contacts of a parent

or subsidiary corporation are sufficient to subject it to personal jurisdiction, we recognize that the

activities of one related corporation are irrelevant to the issue of jurisdiction over the other, so long as

a separation between the corporations has been maintained.") (citing Uston v. Grand Resorts, Inc., 564

F.2d 1217, 1218 (9th Cir. 1977)). Indeed, it is well established that the requirements of International

Shoe must be met as to each defendant over which the forum state is attempting to exercise personal

jurisdiction. Rush v. Savchuk, 444 U.S. 320, 332 (1980). Here, although Insmed disputes whether

Plaintiff can establish that Celtrix is the "alter ego" of Insmed, it appears from Insmed's own evidence

that the two corporations are sufficiently merged. For example, Insmed's CEO has stated that Celtrix

is a wholly-owned subsidiary of Insmed and is otherwise a "non-functioning corporation." Id. at ¶¶ 2,

4. Accordingly, the Court has assumed, for the purposes of this Motion, that Celtrix is the alter ego of

Insmed. As such, Plaintiff's request for further discovery on this subject is DENIED AS MOOT. 

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products in California. Supp. Allan Decl. at ¶ 4. Further, Celtrix has paid no income taxes in California

since that time, maintains no bank accounts in California, does not conduct any business in California,

does not maintain any offices or facilities in California, and does not have any employees located there.

Id. Additionally, since 2000, Celtrix has not endorsed or sponsored any print, television, or radio

advertisements in California. Id. Accordingly, even assuming arguendo that Plaintiff has established

that Celtrix is the alter ego of Insmed, Plaintiff still has not met the heavy burden of establishing general

jurisdiction.12 

B. Specific Jurisdiction

Plaintiff has also failed to establish specific jurisdiction. As the party bearing the burden of

proof on specific jurisdiction, Plaintiff must show that each element of the following three-part test is

satisfied:

(1) that Insmed has committed some act or consummated some transaction with the forum

or performed some transaction with the forum by which it purposely availed itself of the

privilege of conducting activities in the forum, thereby invoking the benefits and

protections; 

(2) that the claim is one that arises out of or results from the Insmed's forum-related

activities; and 

(3) that the exercise of jurisdiction is reasonable.

Ballard, 65 F.3d at 1498. Haisten, 784 F.2d at 1397. Only in the event that Plaintiff can make a prima

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13In the event that jurisdiction is not established, Plaintiff has requested that the Court stay this

Motion and allow Plaintiff to conduct additional discovery. The decision as to whether to allow further

discovery is committed to the sound discretion of the district court. Data Disc, Inc. v. Systems Techn.

Assoc., Inc., 557 F.2d 1280, 1285 n.1 (9th Cir. 1977). Here, however, the relevant facts are not

controverted and Plaintiff has not identified any specific discovery that it believes would aid the Court

in its jurisdictional determination. Indeed, as set forth below, the area where Plaintiff is most sorely

lacking is any showing that Defendant's activities were purposefully directed toward a Californian entity

in a way that was intended to, and did, cause substantial harm to Tercica in California. The Court

presumes that Plaintiff is the entity with access to the information pertaining to the "brunt of the harm,"

and therefore DENIES Plaintiff's request for further discovery.

14Again, Plaintiff also attempts to rely on the fact that Insmed is affiliated with two clinical trials

in California, has an employee who resides in California, is involved in litigation in California, has a

subsidiary registered to do business in California, and has purportedly communicated with a physician

in California regarding the potential sales of its product. Even construing Plaintiff's evidence in the light

most favorable to it, it is clear that these contacts are not related to the instant action. First, Plaintiff's

own evidence makes it quite apparent that the clinical trials are not related to this action, which pertains

to competition over a drug for the treatment of growth failure in children. See Olson Decl. at Ex. 4

(clinical trial of IGF-1 for the treatment of prostate cancer); and Ex. 5 (clinical trial of IGF-1 for the

treatment of HIV-associated Lipodystrophy). Second, Plaintiff has not alleged or otherwise shown that

the sole employee located in California, Sommer, made, or is responsible for, the allegedly false and

misleading statements. Third, Plaintiff has not shown that the Genentech litigation is sufficiently related

to Insmed's purportedly false and/or misleading statements concerning iPlex or Increlex. Fourth, as

already discussed, it is also clear from the uncontroverted evidence that Celtrix is no longer located in

California and has not been since 2000, which is five years prior to the time the allegedly false and

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facie showing of purposeful availment and forum related activities does "a presumption of

reasonableness" arise. Id.13

As to the first element of purposeful availment, Plaintiff must show that the contacts Insmed

made with California created a "substantial connection" with the state. In other words, Plaintiff must

show that Insmed deliberately engaged in significant activities within California or created "continuing

obligations" between it and residents of California, manifestly availing itself of the privilege of

conducting business here. Sher v. Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990). A limited contact with

California – if it did not invoke the benefit of acting on or consummating transactions with California

– does not suffice. Casualty Assur. Risk Ins. Brokerage Co. v. Dillon, 976 F.2d 596, 600 (9th Cir.

1992). As to the second element, the Ninth Circuit typically employs a "but for" test, i.e. "a claim arises

out of the forum-related activities if it would not have happened but for the forum-related activities."

Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 271-72 (9th Cir. 1995). 

Here, as to Insmed's relevant forum-related activities, Plaintiff has shown only that Insmed

attended a two-day investor conference in San Francisco, California.14 However, Plaintiff has not

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misleading statements were made. Finally, the letter sent by Insmed to a physician at UCLA cannot be

considered in establishing personal jurisdiction because it post-dates the allegations in the First

Amended Complaint. See Farmers Ins. Exch. v. Portage LaPrarie Mut. Ins. Co., 907 F.2d 911, 913 (9th

Cir. 1990) ("Only contacts occurring prior to the event causing the litigation may be considered").

Moreover, the letter that Plaintiff has produced does not contain any of the allegedly false and

misleading statements identified in the First Amended Complaint. See Supp. Olson Decl. at Ex. 18. In

fact, the letter does not mention free IGF or Increlex, does not state that iPlex is for "long term

treatment," fully discloses the meal restrictions related to iPlex, and mentions certain side effects

identified during the clinical trial of iPlex. See id. 

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effectively shown that Insmed's twenty minute presentation at the October 19, 2005 BIO InvestorForum

was significant or created a "continuing obligation" with any residents of the state of California,

particularly since it is undisputed that Defendant was one of 190 companies attending the conference,

did not offer any products for sale, and did not make any sales at the conference. See Allan Decl. at ¶

15. 

Nor does Plaintiff's case fall within the "effects" test established in Calder v. Jones, 465 U.S.

783, 789 (1986). In Calder, the United States Supreme Court held that personal jurisdiction could be

established over a non-resident defendant if: (1) the defendant committed an intentional act; (2)

expressly aimed at the forum state; (3) causing harm that the defendant knows is likely to be suffered

in the forum state. Id.; Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 803 (9th Cir. 2004).

Here, although Plaintiff meets the first element of the three-part "effects" test, in that the alleged conduct

is intentional, Plaintiff has not shown that the allegedly false and misleading statements were expressly

aimed at California or have caused harm that Insmed knew was likely to be suffered in California. See,

e.g., Pharmastem Therapeutics, Inc. v. Cord Blood Registry, Inc., 2005 WL 88998 (N.D. Cal. 2005)

(Whyte, J.) (declining to find the posting of allegedly false and misleading statements concerning a

competitor on a company's website sufficient to satisfy the "express aiming" requirement of Calder).

First, unlike Calder, the purportedly false and misleading statements do not directly refer to Tercica or

Tercica's product, Increlex. Compare with Calder, 465 U.S. at 788-89 (noting that the allegedly libelous

story concerned the California activities of a California resident, . . . was drawn from California sources,

and the brunt of the harm, in terms both of respondent's emotional distress and the injury to her

professional reputation, was suffered in California). Here, while Tercica is a Delaware corporation

located in California, Plaintiff has not established that the "brunt" of the harm will be suffered in

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15Defendant states only that it need not address the reasonableness factor when a prima facie case

of purposeful availment and forum-related activities has not been made. Plaintiff, on the other hand,

argues in a very cursory fashion that jurisdiction in California is reasonable because: (1) Insmed is

already engaged in litigation in California; (2) California has a significant interest in providing legal

redress for its residents when California statutes are at issue; and (3) Tercica has a "strong interest" in

litigating here. As set forth above, Plaintiff omits a great deal of the relevant considerations that do not

weigh in its favor. 

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California. See Core-Vent Corp., 11 F.3d at 1486 (noting that a "corporation does not suffer harm in

the same sense that an individual does."). Indeed, Plaintiff's own evidence merely establishes that only

90 of the 500 (or roughly 20%) of the pediatric endocrinologists who treat children afflicted with short

stature are located in California. Rivera Decl. at ¶ 3. Plaintiff also admits that it estimates that only

15% to 20% of Tercica's expected revenue from Increlex may come from patients and physicians located

in California. Id. at ¶ 4. 

Plaintiff's reliance on Tobin v. Astra Pharm. Prods., Inc., 993 F.2d 528 (6th Cir. 1993) is also

misplaced. Contrary to Plaintiff's assertion, the Sixth Circuit did not find, in Tobin, that "the defendant

had purposefully availed itself of the privilege of conducting business in all states by seeking FDA

approval." See Opp. at 21 (emphasis in original). Instead, the Sixth Circuit premised its jurisdictional

finding on the fact that "during the same time as the FDA approval process, [the defendant] sought out

and negotiated a licensing agreement . . . to distribute the drug throughout . . . the United States of

America" rather than a distribution agreement related solely to New England or specific states. Tobin,

993 F.2d at 543 (emphasis added) (internal quotations omitted). Indeed, the Sixth Circuit repeatedly

noted that the defendant "could not deny that by licensing Astra to distribute ritodrine in all fifty states

it employed the distribution system that brought ritodrine to [the forum state]." Id. at 544. There is no

such evidence here. In fact, Defendant's February 3, 2006 S-3 filing, which Plaintiff introduced as

evidence supporting personal jurisdiction, specifically states that – as of the end of 2005 – Insmed had

not yet entered into any licensing or distribution agreements or begun any efforts to sell or distribute

iPlex and had absolutely "no experience" in that area. See Pl's RJN at Ex. 3 at p. 11. 

Finally, while neither party has squarely addressed the "reasonableness" of asserting personal

jurisdiction over Insmed in this forum in great detail,15 it is a factor that the Court must consider. See

Core-Vent Corp., 11 F.3d at 1487; FDIC v. British-American Ins. Co., Ltd., 828 F.2d 1439, 1442 (9th

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16Another factor that is typically considered – the extent of conflict with the sovereignty of the

defendant's state – is not relevant here. Core-Vent Corp., 11 F.3d at 1487-88. 

17The fact that Defendant is already defending against an unrelated lawsuit filed by Tercica in

this state does not make jurisdiction any more reasonable, especially since the instant lawsuit is nearly

two years behind the one currently pending before Judge Wilken and Plaintiff has made no showing that

the same witnesses or evidence are involved.

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Cir. 1987) (declining to decide if the defendant had purposefully availed itself of the forum state in light

of the conclusion that the exercise of jurisdiction would be unreasonable). At the outset, the Court notes

that the presumption of reasonableness arises only if Plaintiff makes a prima facie showing of purposeful

availment and forum-related activities, which it has not. Further, as to the factors that directly bear on

the reasonableness of this forum, these do not, on balance, favor a California forum. The relevant

factors to be considered are: (1) the extent of the defendant's purposeful interjection into the forum state

affairs; (2) the burden on the defendant of defending in the forum; (3) the forum state's interest in

adjudicating the dispute; (4) the most efficient judicial resolution of the controversy; (5) the importance

of the forum to the plaintiff's interest in convenient and effective relief; and (6) the existence of an

alternative forum.16 Core-Vent Corp., 11 F.3d at 1487-88. 

Here, the extent of the purposeful interjection into the forum state – i.e. the attendance of one

investor conference in San Francisco – is extremely attenuated and, as such, does not favor a finding

of reasonableness. See Ins. Co. of North America v. Marina Salina Cruz, 649 F.2d 1266, 1271 (9th Cir.

1981) ("The smaller the element of purposeful interjection, the less is jurisdiction to be anticipated and

the less reasonable is its exercise"). The second element also does not support jurisdiction in California.

While the Ninth Circuit has noted that "[t]he burden of litigating in a foreign forum has become less

significant as a result of advances in communication and transportation," it has also noted that "the law

of personal jurisdiction is asymmetrical" and where, as here, "the defendant has done little to reach out

to the forum state, the burden of defending itself in a foreign forum militates against exercising

jurisdiction." FDIC, 828 F.2d at 1443 (internal quotations omitted).17 As to California's interest in

adjudicating this lawsuit, this factor neither favors nor weighs against retaining jurisdiction here.

Significantly, while Tercica is located in California, it is not a California corporation. See Core-Vent

Corp., 11 F.3d at 1489 (finding strong interest due to the fact that plaintiff was a California corporation

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located in California). Further, while there are California state law claims asserted in this case, both

parties concede that they are largely duplicative of the federal Lanham Act claim. As to the efficiency

of a California forum, it is not clear that the witnesses and evidence are likely to be located in California.

In fact, since the First Amended Complaint focuses solely on the activities of Insmed, it may be

presumed that most of the relevant witnesses and evidence are located in Virginia, where Insmed is

located. Further, although Tercica states that it has a "strong" interest in litigating here, it has not

provided any specific reasons as to why its interests in a California forum are so strong. Finally, it is

beyond dispute that an alternate forum exists in the Eastern District of Virginia. Accordingly, when all

of the relevant factors are considered, the Court concludes that asserting personal jurisdiction over

Insmed in California is not reasonable. 

For all of the aforementioned reasons, the Court finds that Plaintiff has not established that

specific jurisdiction is proper and Defendant's Rule 12(b)(2) motion is therefore GRANTED. This case

is DISMISSED for lack of jurisdiction. 

III. Motion to Dismiss for Lack of Venue

The Court also alternatively GRANTS Defendant's Rule 12(b)(3) motion. In general, 28 U.S.C.

§ 1391(b) provides that venue is proper: (1) in the judicial district where any defendant resides, if all

defendants reside in the same state, (2) in the judicial district in which a substantial part of the events

or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the

action is situated, or (3) in the judicial district in which any defendant may be found, if there is no

district in which the action may otherwise be brought. 28 U.S.C. § 1391(b)(1)-(3). Here, it is clear that

Defendant is located in the Eastern District of Virginia, not California. Further, Plaintiff has not shown

that a substantial part of the events giving rise to its claims occurred in California. In fact, a great deal

of the purportedly false or misleading statements were issued from the Company's headquarters in

Virginia or elsewhere outside of California. See FAC at ¶¶ 17, 20, 24. Accordingly, the case is

DISMISSED on this basis as well. 

III. Rule 12(b)(6) Motion to Dismiss

Further, even if the Court were not granting Defendant's 12(b)(2) and 12(b)(3) motions, the

Court finds that the First Amended Complaint should also be DISMISSED for failure to state a claim.

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18Other than the fact that Defendant points out that Plaintiff has not identified any law allegedly

violated by Insmed in support of its California Business & Professions Code § 17200 claim other than

a violation of the Lanham Act, neither party separately analyzes the California statutory causes of action

and it appears that both concede that these cause of action must be dismissed if the Lanham Act claim

is dismissed. See Denbicare USA, Inc. v. Toys "R" Us, Inc., 84 F.3d 1143, 1152-53 (9th Cir. 1996). 

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Here, Insmed moves to dismiss Plaintiff's First Amended Complaint on the grounds that it fails to state

a claim under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), and therefore also fails to state a claim under

California Business & Professions Code §§ 17500 et seq. or California Business & Professions Code

§§ 17200 et seq.

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A. Lanham Act

Insmed first contends that the First Amended Complaint is deficient under the Lanham Act

because: (1) the investor communications identified in the First Amended Complaint do not constitute

"commercial advertising or promotion"; and (2) the investor communications were made at a time when

the parties were not in commercial competition with each other. Insmed further contends that Plaintiff

lacks standing to sue under the Landham Act because Tercica is not Insmed's competitor and because

the two companies were not actually engaged in commercial competition at the time the First Amended

Complaint was filed. Since standing is a jurisdictional issue, it shall be addressed first. 

1. Standing

Section 43(a) of the Lanham Act prohibits the use of false designations of origin, false

descriptions, and false representations in the advertising and sale of goods and services. Jack Russell

Terrier Network of Northern California v. AKC, 407 F.3d 1027, 1036 (9th Cir. 2005). The express

purpose of the Lanham Act is to protect commercial parties against unfair competition. Waits v. Frito

Lay, Inc., 978 F.2d 1093, 1108 (9th Cir. 1992). To establish standing pursuant to the "false advertising"

prong of Section 43(a) of the Lanham Act, a plaintiff must allege: (1) a commercial injury based upon

a misrepresentation about a product, and (2) that the injury is "competitive" or harmful to the plaintiff's

ability to compete with that defendant. Jack Russell Terrier Network, 407 F.3d at 1036. 

In arguing that Plaintiff does not have standing to pursue a cause of action against it pursuant

to the Lanham Act, Defendant primarily relies on the holdings of PDK Labs., Inc. v. Friendlander, 103

F.3d 1105 (2d Cir. 1997) and AlphaMed Pharm. Corp. v. Arriva Pharm., Inc., 391 F. Supp. 2d 1148

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19PDK was filed as a declaratory judgment action and thus the relevant inquiry was whether the

defendant would have standing. 

20Specifically, Plaintiff has alleged that: (1) Tercica received FDA approval for Increlex on

August 30,2005; (2) after Tercica received FDA approval, it began commercializing Increlex; (3) at least

one physician has prescribed Increlex; (4) Insmed received an "Approvable Letter" from the FDA on

September 27, 2005, setting December 12, 2005 as the action date for Insmed's new drug application;(5)

Insmed made the allegedly false and misleading statements after receiving the "Approvable Letter"; and

(6) the FDA approved iPlex on or about December 12, 2005. See FAC at ¶¶ 11-16, 29. 

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(S.D. Fla. 2005). These cases do not support Defendant's position. For example, while Defendant is

correct that PDK Labs. and AlphaMed are factually analogous to the instant case, in that both cases

involve disputes between pharmaceutical companies or individuals over prospective pharmaceutical

products, there is a critical difference between the instant case and PDK Labs. and AlphaMed.

Specifically, in PDK Labs., the Second Circuit found that the plaintiff and defendant were not

competitors because the defendant's19 "hopes of eventually obtaining FDA approval and selling a retail

weight loss product [we]re too remote . . to confer standing." PDK Labs., 103 F.3d at 112. Indeed, in

PDK Labs., the Second Circuit and the district court both noted that it was "unclear when (if ever) [the

defendant would] have an FDA-approved marketable consumer product," given that the defendant, an

individual, had admitted that he would need to conduct further studies and product testing that would

"cost a minimum of $1,500,000.00." Id. Similarly, in AlphaMed, the district court declined to find

standing because the plaintiff had merely alleged that it held a patent to the relevant technology but had

not alleged that it had sought FDA approval for the pharmaceutical product in question or that product

distribution was imminent. AlphaMed, 391 F. Supp. 2d at 1162-63. 

Critically, neither PDK Labs. or AlphaMed – or any other case cited by Defendant – foreclose

the possibility that a pharmaceutical company plaintiff could have standing to sue under the Lanham

Act where, as here, FDA approval has been obtained and product distribution is likely imminent.20 In

fact, the Second Circuit in PDK Labs. expressly acknowledged that standing may be established in such

instances. PDK Labs., 103 F.3d at 1112 (noting that a "future 'potential for a commercial or competitive

injury' can establish standing"). Accordingly, the Court declines to dismiss the First Amended

Complaint for lack of standing. 

2. Failure to State a Claim

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However, the Court GRANTS Defendant's Motion to Dismiss based on Defendant's argument

that Plaintiff has failed to state a claim. Defendant moves to dismiss the First Amended Complaint on

the grounds that the allegedly false and misleading statements, which consisted solely of

communications to existing and potential investors, do not constitute "false advertising" under the

Lanham Act. In the Ninth Circuit, a claim under the Lanham Act requires: (1) that the defendant made

a false statement of fact in a commercial advertisement about its own or another's product; (2) that the

advertisement actually deceived or had the tendency to deceive a substantial segment of its audience;

(3) that the deception was material in that it was likely to influence the purchasing decision; (4) that the

defendant caused its falsely advertised goods to enter interstate commerce; and (5) that the plaintiff had

been or was likely to be injured as a result of the foregoing either by direct diversion or sales from itself

to the defendant or by the lessening of the goodwill which its products enjoy. See Rice v. Fox

Broadcasting Company, 330 F.3d 1170, 1180 (9th Cir. 2003). Although the Lanham Act does not itself

define the terms "advertising" or "promotion," the Ninth Circuit has held that allegedly false or

misleading statements constitute "advertising" or "promotion" when they are: (1) commercial speech,

(2) by a defendant who is in commercial competition with the plaintiff; (3) for the purpose of

influencing consumers to buy defendant's goods or services; and (4) sufficiently disseminated to the

relevant purchasing public to constitute "advertising" or "promotion" within that industry. Coastal

Abstract Service, Inc. v. First American Title Ins. Co., 173 F.3d 725, 735 (9th Cir. 1999).

Here, Defendant is correct that all of the false and misleading statements identified in the First

Amended Complaint are alleged to have been made to existing or potential investors of Insmed, not

consumers. For example, the First Amended Complaint alleges that the misrepresentations were

communicated between September and December 2005: (1) during "webcast" conferences or

teleconferences with potential investors; (2) in "webcast" conference calls with existing Insmed

investors; and (3) in a press release posted on the "Investor Relations" section of Insmed's website.

There are no allegations, however, that any actual or potential consumer attended any of these

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21Although Plaintiff attempts to rectify the deficiencies in the First Amended Complaint by

inundating the Court with over 330 pages of extra-pleading materials, Plaintiff cannot escape the fact

that the First Amended Complaint does not provide any factual basis for the Court's consideration of

these materials. Thus, Plaintiff's evidentiary submissions only bear on whether Plaintiff could possibly

amend the First Amended Complaint in order to meet the required pleading standard; they do not,

however, save the First Amended Complaint from dismissal. 

22Instead, Plaintiff relies on a September 28, 2005 article by Lazard Capital Markets. Lazard

Capital Markets is third party, unrelated to Insmed, and Plaintiff has not presented any authorities

showing that Plaintiff can be held liable for such third-party statements.

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conferences or participated in any investor conference calls.21 Plaintiff also fails to allege sufficient

facts showing that these communications were made "for the purpose of influencing consumers to buy

defendant's goods or services." Additionally, Plaintiff has not alleged any facts showing that any

consumers specifically associated Plaintiff's references to "free IGF" with Plaintiff's actual product.22

The absence of these relevant allegations makes the First Amended Complaint subject to dismissal under

12(b)(6). See, e.g., Sigma Dynamics, Inc. v. E. Piphany, Inc., 2004 WL 264 8370 (N.D. Cal. 2004)

("Statements made during an earnings conference call primarily to influence investors that may have

an incidental effect of promoting goods to customers are not within the reach of the Lanham Act.").

Accordingly, Defendant's Rule 12(b)(6) motion is also GRANTED. Due to the Court's rulings on

Defendant's Motion to Dismiss, Defendant's Motion to Strike is hereby DENIED AS MOOT. 

CONCLUSION

IT IS HEREBY ORDERED THAT Plaintiff's Request for Judicial Notice [Docket No. 23] is

GRANTED IN PART AND DENIED IN PART.

IT IS FURTHER ORDERED THAT Defendant's Opposition and Objections to Plaintiff's

Request for Judicial Notice and Evidentiary Objections [Docket No. 26] are SUSTAINED IN PART

AND OVERRULED IN PART.

IT IS FURTHER ORDERED THAT Defendant's Objections to Plaintiff's Two Supplemental

Declarations [Docket No. 31] are SUSTAINED IN PART AND OVERRULED IN PART. 

IT IS FURTHER ORDERED THAT Defendant's Motion to Dismiss the First Amended

Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6) [Docket No.

17] is GRANTED. The First Amended Complaint is DISMISSED WITHOUT LEAVE TO AMEND.

This case is hereby DISMISSED for lack of personal jurisdiction and the clerk is therefore directed to

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close the file and to terminate any pending matters, including the June 14, 2006 Case Management

Conference, which is VACATED. Defendant's Motion to Strike Portions of the First Amended

Complaint Pursuant to Federal Rule of Civil Procedure 12(f) is DENIED AS MOOT. 

IT IS SO ORDERED.

_______________________________ Dated: 6/9/06 SAUNDRA BROWN ARMSTRONG

United States District Judge

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