Houser v. Feldman

569 F.Supp.3d 216

Steven HOUSER, Plaintiff,

v.Arthur FELDMAN and Temple University, Defendants.

CIVIL ACTION NO. 21-0676

United States District Court, E.D. Pennsylvania.

Filed October 27, 2021

Courtney A. Keaveney, David M. Burkholder, Wisler Pearlstine, LLP, Blue Bell, PA, Nicole D. Galli, ND Galli Law LLC, Philadelphia, PA, for Plaintiff.

Michael J. Fortunato, Rachael Luken Carp, Rubin Fortunato & Harbison PC, Paoli, PA, for Defendant Arthur Feldman.

Carolyn Anne Pellegrini, Darius C. Gambino, James A. Keller, Saul Ewing Arnstein & Lehr, LLP, Philadelphia, PA, for Defendant Temple University.

OPINION

WENDY BEETLESTONE, District Judge

Once colleagues, now adversaries, this litigation stems from Defendant Dr. Arthur Feldman's allegedly unauthorized use of Plaintiff Dr. Steven Houser's trade secrets for his own work and the involvement in Feldman's alleged acts by the two doctor's employer, Defendant Temple University ("Temple"). The parties have jointly stipulated to limit the scope of the Motions to Dismiss to Plaintiff's trade secret misappropriation claims under the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836(b), as this Court's jurisdiction rises and falls on the viability of this claim. For the following reasons, Defendants’ Motions to Dismiss are granted in part and denied in part.

I. FACTUAL ALLEGATIONS¹

Since at least 2015, Houser and members of his laboratory ("lab members") at the Temple University School of Medicine have studied heart failure. One of Houser's projects pertains to "changes in cardiac structure and function" following a heart attack. As part of this research, Houser and his lab members developed a large animal model, here, a pig (the "Pig Model"), to study heart failure and test novel cell and drug therapies for the treatment of the failing heart. In short, Houser and his lab members induced heart attacks in pigs then re-opened the blocked arteries after ninety minutes. They then took tissue samples from these models (the "Pig Samples"), conducted tests, and collected data pertaining to heart function (the "Pig Data"). Houser alleges that, together, the Pig Model, the Pig Samples and the Pig Data (the "Pig Materials") constitute his trade secrets. Houser's research and testing on the Pig Model held "broad clinical significance" for the development of human treatments and therapies because large animal models, like the Pig Model, closely mimic conditions in humans.

Houser alleges that his Pig Materials were not public and that he took measures, including data security and coding protocols recommended by the National Institute of Health ("NIH"), to keep them secure. To wit, the Pig Data was only available in two places: (1) on the password-protected lab computer of Thomas Sharp, one of the graduate students working in Houser's lab; and, (2) on a portable hard drive which Houser kept locked in his office. The Pig Data was coded so that the connection between the data and a specific animal was not readily intelligible. The coded records were separately maintained by the manager of Dr. Houser's lab "in a locked and secure manner." Similarly, the Pig Samples were kept in a secured freezer which was accessible only to Houser and his lab members, organized in coded boxes decipherable only to Houser and his lab members.

Tests performed on large animal models, such as the Pig Model, have "broad clinical significance" because these models share more similarities with human patients than do small animal models, like mice models. Because of their similarities to humans, large animal models are necessary precursors to the development of potential treatments and therapies. According to the Complaint, Houser's Pig Model was an especially useful analog because it was designed to closely mimic the timing between human heart attacks and their subsequent treatment in a hospital. The Pig Model thus represented a "gold standard" for a researcher seeking to understand the behavior of the human heart following a heart attack.

At the same time Houser was conducting tests on his Pig Model, his colleague Feldman was studying the relationship between heart failure and levels of a molecule known as "BAG3" on a mouse model. Feldman did not have a large animal model to conduct his BAG3 research but was aware that Houser had developed such a model for his own research and was also aware of its significance. This is where the story takes a turn for the worse. Rather than develop his own large animal model, Feldman told Houser's graduate student, Sharp, that Houser had authorized Feldman to use the Pig Data and Pig Samples for his BAG3 research and would in fact be a collaborator on forthcoming papers at some point in 2014-15. Under the mistaken impression that he was acting on Houser's request, Sharp provided Feldman with summary figures from the Pig Data and Pig Samples (the "Stolen Pig Materials"). Feldman then conducted his own testing on these materials and used the Stolen Pig Materials to publish a paper in 2015. The paper included the Pig Data and additional data derived from the Pig Samples.

In reality, Houser had not permitted Feldman to use the Stolen Pig Materials and only learned of Feldman's actions in 2017. After he became aware of Feldman's alleged use, in or around February 2017, Houser reported Feldman to Temple. One week after Houser's complaint, Temple offered him an apology from Feldman. Houser believed that the matter was resolved, and that Feldman would no longer use the Stolen Pig Materials.

In late 2019, Houser began to suspect that Feldman had filed patents which included the Stolen Pig Materials. Houser asked Temple to look into the matter, but Temple told him he would have to wait until the close of an unrelated investigation involving Houser's academic papers. On November 17, 2020, Houser learned that Temple and Feldman had jointly filed two U.S. patent applications and three foreign patent applications between 2015 and 2020, all of which include the Stolen Pig Materials. None of the five patents have yet issued and Houser alleges that Temple and Feldman are still relying upon the Stolen Pig Materials to prosecute them. Houser further alleges that Feldman's company, Renovacor, is using the Stolen Pig Materials to develop treatments for heart failure using BAG3, and that the Stolen Pig Materials were also integral to Renovacor's ongoing efforts to obtain private equity financing, and to a merger between Renovacor and Chardan Healthcare Acquisition Corporation in 2021.

II. STANDARD OF REVIEW

In this Circuit, the sufficiency of Houser's trade secret misappropriation claim under the DTSA proceeds in three steps. First, "the court must take not[e] of the elements a plaintiff must plead to state a claim." Santiago v. Warminster Twp. , 629 F.3d 121, 130 (3d Cir. 2010) (alteration in the original) (internal quotations omitted). Second, the Court must "peel away those allegations that are no more than conclusions and thus not entitled to the assumption of truth." Bistrian v. Levi , 696 F.3d 352, 365 (3d Cir. 2012). As part of this step, "rote recitals of the elements of a cause of action, legal conclusions, and mere conclusory statements" are disregarded. James v. City of Wilkes-Barre , 700 F.3d 675, 679 (3d Cir. 2012).

Lastly, "[w]hen there are well-pleaded factual allegations, we assume their veracity, in addition to assuming the veracity of all reasonable inferences that can be drawn from those allegations, and, construing the allegations and reasonable inferences in a light most favorable to the [plaintiff], we determine whether they plausibly give rise to relief." Oakwood Labs. LLC v. Thanoo , 999 F.3d 892, 904 (3d Cir. 2021) (alteration in the original) (internal citations and quotations omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal citations and quotations omitted). To be clear, the relevant question is not whether the claimant "will ultimately prevail ... but whether [the] complaint [is] sufficient to cross the federal court's threshold." Skinner v. Switzer , 562 U.S. 521, 531, 131 S.Ct. 1289, 179 L.Ed.2d 233 (2011) (internal citations and quotations omitted).

III. DISCUSSION

To state a claim under the DTSA, a plaintiff must allege: "(1) the existence of a trade secret, defined generally as information with independent economic value that the owner has taken reasonable measures to keep secret; (2) that ‘is related to a product or service used in, or intended for use in, interstate or foreign commerce’; and (3) the misappropriation of that trade secret, defined broadly as the knowing improper acquisition, or use or disclosure of the secret." Oakwood Labs. , 999 F.3d at 905 (quoting 18 U.S.C. §§ 1836-39). To plead the first element, the existence of a trade secret, a plaintiff must first "sufficiently identify the information it claims as a trade secret and allege facts supporting the assertion that the information is indeed protectable as such." Id. Courts will consider whether the owner of the information "has taken reasonable measures to keep ... [it] secret" and whether the "information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information[.]" Id. (alterations in the original) (quoting § 1839(3) ).

Defendants raise several challenges against Houser's claims under the DTSA, namely: (1) Houser's claims are barred by the DTSA's 3-year statute of limitations period; (2) Houser lacks standing to bring his claim under the DTSA because pursuant to Temple's "Invention Policy" he does not own the Pig Materials, and because Feldman's publication of the Stolen Pig Materials...