Source: http://medpdffinder.com/p/patentek.com1.html
Timestamp: 2017-03-28 06:08:41
Document Index: 710175103

Matched Legal Cases: ['§ 325', '§ 325', '§ 325', '§ 325', '§ 325', '§ 325', 'art\n0105880']

Wyeth brought an action against Natural Biologics, Inc. and Natural Biologics,
LLC (“Natural Biologics”) for misappropriation of a trade secret, in violation of the
Minnesota Uniform Trade Secrets Act, Minnesota Statute sections 325C.01 – .08
(“MUTSA”). Wyeth alleged that Natural Biologics illegally acquired Wyeth’s trade
secret process for producing bulk natural conjugated estrogens used in the
development of Premarin, the only hormone replacement therapy drug on the market
derived from a natural source.2 In an order dated September 12, 2003, the district
court3 found that Natural Biologics misappropriated Wyeth’s trade secret process, and
permanently enjoined Natural Biologics from using or disclosing any information it
obtained related to Wyeth’s process. Natural Biologics appeals, asserting that: (1)
Wyeth failed to protect the secrecy of its trade secret, (2) Wyeth is barred by the
three-year statute of limitations period under Minnesota Statute section 325C.06 from
raising its trade secret misappropriation claim, and (3) the district court abused its
discretion by permanently enjoining Natural Biologics from using the
misappropriated trade secret. We affirm the district court.
Wyeth manufactures and sells Premarin, which is prescribed for the treatment
of symptoms associated with menopause. Premarin has been on the market since
1942 without any natural generic substitute. Wyeth manufactures natural conjugated
estrogens at its Brandon, Manitoba facility using a process called the Brandon
Natural Biologics, founded by David Saveraid, manufactures natural
conjugated estrogens. In 1991, Saveraid began to explore manufacturing conjugated
estrogens, and over a decade later, in March 2002, Natural Biologics entered into an
agreement with Barr Laboratories, Inc., under which Barr agreed to purchase material
from Natural Biologics and convert the material into a tablet to sell as a generic form
of Premarin, pending FDA approval. Natural Biologics claims to have independently
developed its extraction process through review of Wyeth’s expired patents, scientific
literature, and Wyeth’s Brandon Facility waste manifests, which reveal the names and
volumes of chemicals used at the Brandon Facility. Saveraid also collaborated with
2The key ingredient for Premarin is made by extracting conjugated estrogens
from pregnant mare urine (“PMU”).
3The Honorable Joan N. Ericksen, United States District Judge for the District
scientists and pharmaceutical companies to develop Natural Biologics’s process. In
October 1994, Saveraid began communication with former Wyeth chemist Dr.
Douglas Irvine, and within a year, Natural Biologics’s extraction process yielded
We review the district court’s findings of fact for clear error. Vekamaf
Holland B.V. v. Pipe Benders, Inc., 696 F.2d 608, 610 (8th Cir. 1982). We must first
decide whether the district court erred in holding that Wyeth’s Brandon Process is a
trade secret. Under MUTSA, a trade secret is information that: (1) is not generally
known or readily ascertainable, (2) has value as a result of its secrecy, and (3) is the
subject of reasonable efforts under the circumstances to protect its secrecy. Minn.
Natural Biologics apparently concedes that the Brandon Process is not
generally known or readily ascertainable, and that it has value as a result of its
secrecy. It contends, however, that Wyeth failed to adequately secure its trade secret
in many ways: non-Wyeth employees toured the Brandon Facility without having
signed confidentiality agreements; there were no posted signs inside the facility
indicating that the Brandon Process information was confidential; unmarked4
Brandon Process documents were left on the manufacturing floor and unsecured in
Wyeth’s Brandon Facility; not all Wyeth employees or vendors involved in the
Brandon Process signed confidentiality agreements; Wyeth identified chemicals used
in the extraction process in two newsletters; unmarked documents were sent to third
parties; and Wyeth allegedly failed to follow its own security policies.
4Documents not identified as trade secrets or as confidential are considered
The district court held that the Brandon Process is a trade secret, and that
Wyeth had implemented reasonable efforts to maintain the secrecy of the Brandon
Process. The court noted that no one had previously duplicated the Brandon Process,
and found it unlikely that Natural Biologics had succeeded in doing so legally. The
Based on the lack of repeated losses of confidential informationregarding the Brandon Process and Wyeth’s use of physical security,limited access to confidential information, employee training, documentcontrol, and oral and written understandings of confidentiality, the Courtconcludes that Wyeth subjected the Brandon Process to efforts that arereasonable under the circumstances to maintain its secrecy.
Eye Tech., Inc., 828 F.2d 452, 455 (8th Cir. 1987) (“Only reasonable efforts, not all
conceivable efforts, are required to protect the confidentiality of putative trade
secrets.”); Lasermaster Corp. v. Sentinel Imaging, 931 F. Supp. 628; 635 (D. Minn.
1996) (noting“absolute secrecy” is not required to maintain trade secret’s confidential
The existence of a trade secret is not negated merely because anemployee or other person has acquired the trade secret without expressor specific notice that it is a trade secret if, under all the circumstances,the employee or other person knows or has reason to know that theowner intends or expects the secrecy of the type of informationcomprising the trade secret to be maintained.
Minn. Stat. § 325C.01, subd. 5. Having considered the totality of the circumstances,
we hold the court below did not clearly err in finding that Wyeth took appropriate
steps to maintain the secrecy of the Brandon Process. We next consider whether Natural Biologics misappropriated the Brandon
Process. A defendant is liable for misappropriation of a trade secret if the defendant
has acquired the trade secret through improper means. Minn. Stat. § 325C.01,
subd. 3. In some instances, the secret is so unique that the emergence of a similar,
slightly altered product gives rise to an inference of misappropriation. See Pioneer
Hi-Bred Int’l v. Holden Foundation Seeds, Inc., 35 F.3d 1226, 1239-40 (8th Cir.
1994) (interpreting similar Iowa state trade secret law). David Saveraid engaged in communications with Dr. Irvine from October 1994
through early 1996. Saveraid’s subsequent attempts to conceal such communications,
Natural Biologics’s financial motives for copying the Brandon Process, Saveraid’s
questionable ability to develop an extraction process identical to the Brandon
Process,5 the similarity between the Brandon Process and Natural Biologics’s process,
and the absence of a credible record of how Natural Biologics developed its
extraction process, support the district court’s conclusion that Natural Biologics
acquired Wyeth’s trade secret through improper means. Although Natural Biologics
may have devoted its own resources and ingenuity to the development of an
extraction process, this is irrelevant because Natural Biologics also engaged in illegal
conduct by misappropriating Wyeth’s trade secret. Concluding that the district
court’s holding that Natural Biologics misappropriated the Brandon Process was not
clearly erroneous, we affirm on this matter. Natural Biologics next asserts that Wyeth’s misappropriation claim is barred
by MUTSA’s statute of limitations. “An action for misappropriation must be brought
5Saveraid devoted most of his professional life to agricultural sales and had no
prior work experience in chemistry. We agree with the district court that he “was notqualified to independently develop a process that is the same as the BrandonProcess.” (Order at 19-20.) within three years after the misappropriation is discovered or by the exercise of
reasonable diligence should have been discovered.” Minn. Stat. § 325C.06 (2000).
Natural Biologics argues that Wyeth should have discovered its claim before
November 17, 1995, more than three years prior to the commencement of the action.
It asserts that Wyeth received a brochure from Natural Biologics in August 1994
announcing that Natural Biologics was in possession of a trade secret for the estrogen
extraction process. In September 1994, Dr. Michael Dey, vice president and general
manager of a generic subsidiary of Wyeth, ESI Pharma, called David Saveraid about
Natural Biologics’s products, and in December 1994, Saveraid left Dr. Dey a voice
message regarding natural conjugated estrogen supply, the pilot manufacture of
material, and whether Wyeth might be interested in Natural Biologics’s supply.
Natural Biologics asserts that had Wyeth been diligent, and had it accepted Saveraid’s
offer to supply material, or even requested a product sample from Natural Biologics,
it would have had enough evidence of misappropriation to file a lawsuit by September
The district court found that before November 17, 1995, Wyeth had only four
sources of information about Natural Biologics: (1) the Natural Biologics marketing
brochure; (2) Dr. Dey’s telephone conversation with David Saveraid; (3) the
previously mentioned voice message to Dr. Dey; and (4) Ken Saveraid’s6 telephone
contact with the Brandon plant’s field supervisor, Ross Chambers. Assuming that the
misappropriation took place sometime in 1995, after Saveraid had been in
communication with Dr. Irvine and had altered Natural Biologics’s extraction process
according to those conversations, the misappropriation had not occurred when Wyeth
received the brochure in 1994 or when Dr. Dey and Saveraid spoke in late 1994.
Furthermore, the court determined that Wyeth regarded the brochure as an
6Ken Saveraid is David Saveraid’s father. Throughout the opinion, “Saveraid”
announcement of a PMU collection business that could compete in the bulk natural
conjugated estrogens market, not an announcement that Natural Biologics had
With regard to the last two sources of information related to Natural
Biologics’s activities, Wyeth argues that Saveraid’s December 1994 telephone
message to Dr. Dey revealed nothing about Natural Biologics’s extraction process,
and that in Ken Saveraid’s conversation with Chambers in September 1995, he
mentioned Natural Biologics’s use of the “Chicago Process” method of extraction,
which could have been an entirely independent process. The record does not suggest
that prior to November 17, 1995, Wyeth knew or should have known facts sufficient
to support a lawsuit against Natural Biologics for trade secret misappropriation.
We hold that the district court did not clearly err in concluding that Wyeth had
no knowledge of any misappropriation prior to November 17, 1995, and that its claim
was therefore not barred. The Natural Biologics brochure had been drafted and sent
before Saveraid’s first contact with Dr. Irvine, and presumably before the
misappropriation had occurred. The brochure did not reveal that Natural Biologics
had misappropriated the Brandon Process. In September 1994, when Dr. Dey and
Saveraid spoke on the telephone, the court determined that Saveraid had not disclosed
any information about the process Natural Biologics was using at the time.
Furthermore, that conversation occurred prior to Saveraid’s contact with Dr. Irvine,
and therefore also before the misappropriation had occurred. The court concluded
that the voice message to Dr. Dey and phone call to Chambers could not have alerted
the Wyeth employees to Natural Biologics’s misappropriation of the Brandon
Process. Wyeth knew nothing about how Natural Biologics had developed its
extraction process, or who had assisted the company in developing the process.
Additionally, product samples were unavailable before November 17, 1995, and
Wyeth thus could not have confirmed any suspicions that Natural Biologics had
misappropriated its trade secret. We therefore affirm the district court on this matter
Misappropriation of a trade secret constitutes irreparable harm that, under
certain circumstances, warrants injunctive relief to prevent the misappropriator from
selling or manufacturing the product embodying the secret. Minn. Stat. § 325C.02.
We review the court’s grant of injunctive relief for an abuse of discretion. See FDIC
v. Bell, 106 F.3d 258, 262-63 (8th Cir. 1997). At oral argument Natural Biologics asserted its right to oppose Wyeth’s request
for equitable relief. In paragraph 23 of its Conclusions of Law, the district court held
that because Natural Biologics concealed its misappropriation of the Brandon
Process, it has unclean hands, and was therefore not entitled to the equitable defenses
of laches, unclean hands, waiver, or estoppel. The doctrine of “unclean hands” bars
a party who acted inequitably from obtaining equitable relief. Heidbreder v. Carton,
645 N.W.2d 355, 371 (Minn. 2002); Gully v. Gully, 599 N.W.2d 814, 825 (Minn.
1999). However, the party with unclean hands is not barred from opposing a request
for equitable relief by the other side. Heidbreder, 645 N.W.2d at 371.7 Natural
Biologics is entitled to oppose Wyeth’s request for a permanent injunction.
Natural Biologics asserts that the district court abused its discretion by issuing
a permanent injunction against all activity related to the development of natural
7Heidbreder involves a paternity action in which the biological mother
allegedly promised she would not place her unborn child for adoption, and thenrescinded that promise after she moved to an undisclosed location. The biologicalfather invoked the doctrine of estoppel, and claimed the mother could not opposeequitable relief because of her unclean hands. The court held otherwise, finding themother’s unclean hands irrelevant to the father’s request for equitable relief.
conjugated estrogens. It concedes that temporary injunctions may be appropriate for
a reasonable period of time to eliminate commercial advantage from the
misappropriation, see Minn. Stat. § 325C.02(a), but claims that a permanent
injunction imposes unnecessary hardship against it. An injunction for trade secret
misappropriation, it argues, should continue only for the approximate period of time
it would take a legitimate competitor, either by independent development or reverse
engineering, to develop a successful product or process without the use of plaintiff’s
trade secret. See Cherne Indus., Inc. v. Grounds & Assocs., Inc., 278 N.W.2d 81, 93
The district court held that the misappropriation would cause Wyeth irreparable
harm in the form of loss of market share, physician relationships, and control over the
trade secret unless an injunction issued against Natural Biologics. It issued an
injunction against Natural Biologics because:
Natural Biologics attempted to conceal its misappropriation of theBrandon Process by destroying evidence, giving false testimony, andimproperly redacting evidence[.] [T]he Court concludes that NaturalBiologics cannot be trusted to avoid using the misappropriated processand cannot be trusted to obey an Order that permits them to exercise anydiscretion. Accordingly, the Court concludes that the scope of theinjunction requested by Wyeth is appropriate.
(Order at 52.) The district court reasoned that a permanent injunction was appropriate
because “[i]n its decades-long history, nobody has legitimately replicated the Brandon
Process despite its value.” Id. at 52-53. Having thoroughly considered Natural
Biologics’s conduct and arguments, we hold that the district court did not abuse its
discretion in issuing a permanent injunction against Natural Biologics.8
8We note, however, that MUTSA contemplates that under certain
circumstances, Natural Biologics may move for termination of the injunction. Minn.Stat. § 325C.02(a).
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