Del. Chancery Court Tosses $300M Biotech Lawsuit as Untimely
Tamika Montgomery-Reeves
The Delaware Court of Chancery has dismissed a potentially $300 million lawsuit against one of Europe's largest research organizations, finding that a former partner waited too long to press claims that the company had tried to steal its trade secrets.
Vice Chancellor Tamika Montgomery-Reeves said Monday that Newark-based biotech firm iBio Inc. had filed its suit against Fraunhofer-Gesellschaft zur Förderung der Angewandten Forschung outside of the three-year statute of limitations. In an 18-page memorandum opinion, Montgomery-Reeves said that iBio was aware of its claims against FhG, a German nonprofit in the field of applied research, as early as June 2014, but waited until last November to file its complaint.
The dispute centered on multiple agreements between the companies to develop plant-based technology for biopharmaceuticals and who ultimately controlled a groundbreaking method for using plants to fight diseases at reduced costs.
iBio, which is now headquartered in New York, said in its complaint that it owned all rights to the technology FhG had developed for it when the two firms were working collaboratively in the Delaware Technology Park incubator in Newark. According to iBio, FhG helped its American subsidiary to breach its contract with iBio and peddle the work to other firms.
In its lawsuit, iBio valued the technology at $100 million and said it would seek treble damages for FhG's alleged interference with its business. FhG moved to dismiss the suit last December, arguing that the that iBio had failed to sufficiently lay out its claims.
On Monday, Montgomery-Reeves found that there was basis for iBio's suit, but she ruled that the claims were filed too late. In her opinion, Montgomery-Reeves looked to similar litigation iBio had filed to conclude that iBio knew about FhG's role in the alleged conspiracy "no later than" October 2014. The complaint was filed Nov. 3, 2014.
"iBio’s Complaint reveals that iBio had either actual knowledge or was on inquiry notice of its claims more than three years before it filed the present action," she wrote.
iBio had argued that it wasn't put on notice of any wrongdoing until early November 2014, and FhG had worked up until that point to hide its involvement in the alleged scheme.
However, Montgomery-Reeves said iBio had enough facts at its disposal to begin investigating FhG as early as June 2014.
"iBio’s complaint shows that although iBio may not have known the full extent of FUSA’s breaches of its contracts with iBio or FhG’s involvement in the breaches, iBio had at least inquiry notice that FhG had a role in FUSA’s breaches," she said.
Attorneys for FhG was not immediately available to comment Monday afternoon.
Mark Premo-Hopkins, who represented iBio, said his team was "disappointed, but the decision doesn't undermine our central mission" to recover the losses to iBio's business.
iBio has a separate case against FhG's American subsidiary still pending in Chancery Court. That case is also assigned to Montgomery-Reeves.
iBio was represented by Reed S. Oslan, Mark Premo-Hopkins, Britt Cramer and Allison McDonald of Kirkland & Ellis in Chicago and Inbal Hasbani and Kyla Jackson of the firm's New York Office. David E. Ross and Eric D. Selden of Ross, Aronstam & Moritz in Wilmington acted as local counsel.
FhG was represented by M. Duncan Grant, Christopher B. Chuff, James H. S. Levine and Ellis E. Herington of Pepper Hamilton in Wilmington.
The case was captioned iBio v. Fraunhofer-Gesellschaft zur Förderung der Angewandten Forschung.
