Logtale, Ltd. v. IKOR, Inc. et al
Filing
35
ORDER by Judge Claudia Wilken GRANTING IN PART AND DENYING IN PART 27 MOTION TO DISMISS COUNTERCLAIMS; DENYING 27 MOTION TO STRIKE; SETTING INITIAL CASE MANAGEMENT CONFERENCE. (ndr, COURT STAFF) (Filed on 12/5/2012)
1
IN THE UNITED STATES DISTRICT COURT
2
FOR THE NORTHERN DISTRICT OF CALIFORNIA
3
4
LOGTALE, LTD.,
5
6
No. C 11-5452 CW
Plaintiff,
v.
7
IKOR, INC., et al.,
8
Defendants.
________________________________
9
United States District Court
For the Northern District of California
10
11
12
AND RELATED COUNTERCLAIMS AND
THIRD-PARTY CLAIMS
________________________________/
ORDER GRANTING IN
PART AND DENYING
IN PART MOTION TO
DISMISS
COUNTERCLAIMS;
DENYING MOTION TO
STRIKE; SETTING
INITIAL CASE
MANAGEMENT
CONFERENCE
Plaintiff and Counterdefendant Logtale, Ltd. moves to dismiss
13
the counterclaims of Defendant and Counterclaimant IKOR, Inc.
14
pursuant to Federal Rule of Civil Procedure 12(b)(6), and moves to
15
strike portions of the counter-complaint pursuant to Rule 12(f).
16
Defendants oppose the motion except as to dismissal of IKOR’s
17
unfair competition claim.
18
Court finds the matter suitable for decision without oral
19
argument.
20
papers filed by the parties, the Court grants the motion to
21
dismiss and grants leave to amend, as more fully set forth below.
The matter is fully briefed and the
Having considered the relevant legal authority and the
22
BACKGROUND
23
The following facts are admitted or alleged in the first
24
amended answer and counterclaim (1AA) to the first amended
25
complaint (1AC).
26
Defendant IKOR, Inc. is a South Dakota corporation in the
27
business of developing bovine-derived oxygen therapeutics and
28
related technologies and is the owner of three U.S. patents
1
related to tetrameric hemoglobin.
2
Canton and Tye are officers and directors of IKOR.
3
1AC ¶¶ 4, 15.
Defendants
1AC ¶¶ 5-6.
On or about October 20, 2006, Logtale and IKOR entered into a
4
Series A Preferred Stock Purchase Agreement (SPA), pursuant to
5
which IKOR sold and issued 1,999,840 shares of its Series A
6
Convertible Stock to Logtale at a purchase price of $2.5002 per
7
share.
8
dollar purchase, Logtale became the majority shareholder of
9
preferred stock in IKOR.
United States District Court
For the Northern District of California
10
1AC ¶ 17 and Ex. 1.
As a result of this five million
1AC ¶ 17.
On or about October 20, 2006, IKOR issued Amended and
11
Restated Articles of Incorporation, pursuant to which Logtale, as
12
the majority shareholder of preferred stock in IKOR, had the right
13
to elect, and did elect, Dr. Norman Wai to serve as a director on
14
the IKOR Board.
15
third-party complaint names Dr. Wai as a third-party defendant,
16
but IKOR has not filed proof that he has been served.
17
1AC ¶¶ 18-19 and Ex. 2.
IKOR’s first amended
Also on or about October 20, 2006, Logtale and Defendants
18
IKOR, Ross and Tye entered into an Investors’ Rights Agreement.
19
1AC ¶ 20 and Ex. 3.
20
Rights Agreement was to induce Logtale to purchase Series A
21
Preferred Stock and invest funds in IKOR pursuant to the Purchase
22
Agreement, as well as to govern Logtale’s rights as an investor in
23
IKOR.
24
Investors’ Rights Agreement were made between IKOR and New World
25
Mobile Holdings Ltd. (New World Mobile), a company incorporated in
26
the Cayman Islands and a subsidiary of New World Development
27
Company Limited (New World Development), a Hong Kong corporation.
28
1AA ¶ 20.
Id.
One of the stated purposes of the Investors’
Defendants allege that the negotiations leading to the
Defendants allege that, at a relatively late stage in
2
1
the negotiations, New World Mobile requested that Logtale be
2
substituted for New World Mobile as the investor.
3
“shelf-corporation” registered in the British Virgin Islands with
4
no operational existence or significant capital at the time of
5
substitution.
6
substitution by Logtale was necessary because the proposed
7
investment in IKOR would cause disclosure difficulties for New
8
World Mobile and New World Development.
9
World Mobile as a third-party defendant but has not filed proof
United States District Court
For the Northern District of California
10
11
1AA ¶ 20.
Logtale was a
The investors explained that
1AA ¶ 20.
IKOR names New
that it has been served.
IKOR alleges that, on or about October 20, 2006, it entered
12
into an Option and License and Manufacturing Agreement (License
13
Agreement) with Logtale.
14
The License Agreement granted Logtale a limited exclusive right to
15
manufacture, sell and distribute certain IKOR biopharmaceuticals
16
in designated territories, essentially Asia, Australia, and New
17
Zealand.
18
agreement was initially contemplated, it was never executed, and
19
IKOR and Logtale have been operating under the terms of the
20
License Agreement since 2006.
21
under the alleged License Agreement are known as Oxygen
22
Therapeutics and related hemoglobin-based biopharmaceuticals.
23
1AA, First Counterclaim ¶ 4.
24
Id.
1AA, First Counterclaim ¶ 1 and Ex. A.
IKOR alleges that, although a more complete
Id.
The drugs licensed to Logtale
IKOR alleges that Logtale created a Hong Kong corporation,
25
New A-IKOR, whose name was later changed to New A Innovation Ltd.
26
1AA, First Counterclaim ¶ 3.
27
manufactures and sells the licensed biopharmaceutical products
28
under the license granted to Logtale by IKOR.
New A Innovation allegedly
3
Id.
New A
1
Innovation is named by IKOR as a third-party defendant but IKOR
2
has not filed proof that it has been served.
3
IKOR cancelled the Logtale licenses in 2010, after having
4
given notice that Logtale was in default for uncured breaches of
5
the License Agreement, including, but not limited to, the
6
marketing and manufacturing of IKOR’s Oxygen Therapeutics and
7
related pharmaceuticals.
8
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1AA, First Counterclaim ¶ 10.
IKOR alleges that Logtale, as well as New A Innovation, New
World Mobile and New World Development acting through Logtale,
United States District Court
For the Northern District of California
10
have breached the License Agreement by, among other things,
11
withholding royalties, failing to comply with auditing and
12
inspection requirements, and misusing IKOR’s proprietary
13
information.
14
1AA, First Counterclaim ¶ 14.
Logtale filed this action on November 9, 2011, and filed an
15
amended complaint on February 13, 2012.
16
seeks injunctive relief and alleges claims against Defendants for
17
breach of contract, breach of fiduciary duties and breach of the
18
implied covenant of good faith and fair dealing.
19
The operative complaint
Defendants filed an answer and counterclaim to the 1AC and
20
third-party complaint on March 23, 2012, then filed the 1AA on May
21
21, 2012.
22
counterclaims against Logtale: (1) breach of the License
23
Agreement, including failure to supply financial and manufacturing
24
information required by the agreement; (2) theft of intellectual
25
property under California’s Uniform Trade Secrets Act; (3) unfair
26
competition by copying IKOR’s drugs without paying royalties; and
27
(4) interference with prospective business opportunity by
28
thwarting IKOR’s efforts to obtain additional financing, in order
In its most recent pleading, IKOR alleges the following
4
1
to drive IKOR into bankruptcy and acquire rights in IKOR’s
2
technology as a preferred shareholder in IKOR’s liquidation.
3
Logtale moves to dismiss IKOR’s counterclaims and to strike
4
certain allegations.
5
for unfair competition fails to state a claim for relief, but
6
otherwise opposes Logtale’s motion to dismiss and motion to
7
strike.
IKOR concedes that the third counterclaim
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9
United States District Court
For the Northern District of California
10
LEGAL STANDARD
I.
Motion to Dismiss
A complaint must contain a “short and plain statement of the
11
claim showing that the pleader is entitled to relief.”
12
Civ. P. 8(a).
13
state a claim, dismissal is appropriate only when the complaint
14
does not give the defendant fair notice of a legally cognizable
15
claim and the grounds on which it rests.
16
Twombly, 550 U.S. 544, 555 (2007).
17
complaint is sufficient to state a claim, the court will take all
18
material allegations as true and construe them in the light most
19
favorable to the plaintiff.
20
896, 898 (9th Cir. 1986).
21
to legal conclusions; “threadbare recitals of the elements of a
22
cause of action, supported by mere conclusory statements,” are not
23
taken as true.
24
(citing Twombly, 550 U.S. at 555).
Fed. R.
On a motion under Rule 12(b)(6) for failure to
Bell Atl. Corp. v.
In considering whether the
NL Indus., Inc. v. Kaplan, 792 F.2d
However, this principle is inapplicable
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
25
When granting a motion to dismiss, the court is generally
26
required to grant the plaintiff leave to amend, even if no request
27
to amend the pleading was made, unless amendment would be futile.
28
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911
5
1
F.2d 242, 246-47 (9th Cir. 1990).
2
amendment would be futile, the court examines whether the
3
complaint could be amended to cure the defect requiring dismissal
4
“without contradicting any of the allegations of [the] original
5
complaint.”
6
Cir. 1990).
7
II.
8
9
In determining whether
Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th
Motion to Strike
Pursuant to Federal Rule of Civil Procedure 12(f), the court
may strike from a pleading “any redundant, immaterial, impertinent
United States District Court
For the Northern District of California
10
or scandalous matter.”
11
avoid spending time and money litigating spurious issues.
12
Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993),
13
rev’d on other grounds, 510 U.S. 517 (1994).
14
if it has no essential or important relationship to the claim for
15
relief plead.
16
and is not necessary to the issues in question in the case.
17
“Superfluous historical allegations are a proper subject of a
18
motion to strike.”
19
they are often used as delaying tactics and because of the limited
20
importance of pleadings in federal practice.
21
922 F. Supp. 1450, 1478 (C.D. Cal. 1996).
22
granted unless it is clear that the matter to be stricken could
23
have no possible bearing on the subject matter of the litigation.
24
Colaprico v. Sun Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D.
25
Cal. 1991).
Id.
The purpose of a Rule 12(f) motion is to
Matter is immaterial
Matter is impertinent if it does not pertain
Id.
Id.
Motions to strike are disfavored because
26
27
28
6
Bureerong v. Uvawas,
They should not be
1
2
3
DISCUSSION
I.
Breach of Contract
The first counterclaim for breach of contract alleges that on
4
or about October 20, 2006, “IKOR and Logtale entered into a[n]
5
Option and Licensing and Manufacturing Agreement,” and that
6
“[a]lthough a more complete agreement was initially contemplated,
7
it was never executed, and thus both IKOR and Logtale have been
8
operating under the terms of the Licensing Agreement since 2006.”
9
1AA, First Counterclaim ¶ 1.
Logtale contends that IKOR fails to
United States District Court
For the Northern District of California
10
allege the existence of a valid License Agreement in support of
11
its breach of contract claim.
12
are not sufficient to state a claim for breach of contract, but
13
IKOR is granted leave to amend the allegations.
As currently plead, the allegations
14
Courts apply general principles of contract interpretation
15
when interpreting the terms and scope of a licensing agreement.
16
Miller v. Glenn Miller Productions, Inc., 454 F.3d 975, 989 (9th
17
Cir. 2006) (citing Mendler v. Winterland Production, Ltd., 207
18
F.3d 1119, 1121 (9th Cir. 2000)).
19
contract interpretation is to give effect to the mutual intent of
20
the parties as it existed at the time of contracting.’”
21
(quoting United States Cellular Invest. Co. of Los Angeles v. GTE
22
Mobilnet, Inc., 281 F.3d 929, 934 (9th Cir. 2002)).
23
“‘The fundamental goal of
Id.
The Option Agreement entered by IKOR (referred to as the
24
Company) and Logtale (referred to as the Grantee) on October 20,
25
2006, states as follows:
26
1. GRANT OF OPTION.
27
1.1 In consideration of the sum of HK$1.00 now
paid by the Grantee to the Company (receipt of
which the Company hereby acknowledges), the Company
28
7
1
2
3
4
5
6
7
8
9
United States District Court
For the Northern District of California
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hereby irrevocably and unconditionally grants to
the Grantee the option (the “Option”) to require
the Company to enter into a license and
manufacturing agreement (the “License and
Manufacturing Agreement”) with the Grantee or any
company as the Grantee may direct, on the principal
terms set out in the Schedule hereto.
1.2 The Option may be exercised by the Grantee
at any time during the period commencing from the
date of this Agreement to the first anniversary
hereof by serving an option notice in the form
attached hereto as Exhibit A (the “Option Notice”)
on the Company upon which the Option shall be
deemed exercised.
1.3 Immediately after the service of the
Option Notice, the Company and the Grantee shall
negotiate diligently and in good faith, and use
their best efforts to enter into the License and
Manufacturing Agreement on the principal terms and
conditions set out in the Schedule attached hereto
within thirty (30) days after such service.
1AA, Ex. A (Docket No. 26-1) at 1.
13
Logtale contends that on the face of the Option Agreement,
14
the parties expressed their intent that the attached License
15
Agreement was a contingent, draft document, and further contends
16
that IKOR has not alleged that the parties ever signed or entered
17
into a written License Agreement.
IKOR responds that the parties
18
treated the License Agreement as binding on them and intended the
19
writing to reflect their agreement.
20
If there is a manifest intention that the agreement is not
21
binding until reduced to a formal writing that is executed by both
22
parties, there is no binding contract until this occurs.
Rennick
23
v. OPTION Care, Inc., 77 F.3d 309, 316 (9th Cir. 1996).
On the
24
other hand, “[w]hen parties intend that an agreement be binding,
25
the fact that a more formal agreement must be prepared and
26
executed does not alter the validity of the agreement.”
Blix St.
27
Records, Inc. v. Cassidy, 191 Cal. App. 4th 39, 48 (2010).
28
8
1
“‘Whether a writing constitutes a final agreement or merely an
2
agreement to make an agreement depends primarily upon the
3
intention of the parties.
4
be determined by a construction of the instrument taken as a
5
whole.’”
6
3d 1555, 1562 (1989) (quoting Smissaert v. Chiodo, 163 Cal. App.
7
2d 827, 830 (1958)).
8
9
In the absence of ambiguity this must
Beck v. American Health Group Intl., Inc., 211 Cal. App.
In support of its contention that the parties’ agreement to
negotiate and execute a license agreement is not a binding
United States District Court
For the Northern District of California
10
contract, Logtale cites Beck, where the court held that a letter
11
drafting “the outline of our future agreement” was “merely an
12
‘agreement to agree’ which cannot be made the basis of a cause of
13
action.”
14
considered the writing to determine the parties’ intention, and
15
held that the language of the letter indicated an intent to
16
forward the letter outlining the terms of the proposed agreement
17
to corporate counsel “for the drafting of a contract,” and to
18
discuss the draft further.
19
court in Beck found that the letter contemplated further
20
negotiations and that no binding agreement would result until a
21
formal contract was drafted by an attorney.
22
and IKOR outlined the proposed “terms and conditions” of their
23
contemplated agreement in greater detail than did the parties in
24
Beck, they nevertheless failed to memorialize their final
25
agreement in writing.
26
face, evidences the parties’ intent to enter into a written
27
license agreement only after engaging in further negotiations.
211 Cal. App. 3d at 1562-63.
There, the court
Beck, 211 Cal. App. 3d at 1563.
1AA, Ex. A.
28
9
Id.
The
Although Logtale
The Option Agreement, on its
1
The Schedule attached to the Option Agreement is entitled
2
“Term Sheet - License and Manufacturing Agreement,” and sets out
3
the principal terms and conditions of the License Agreement.
4
Ex. A at 6.
5
enter into a license and manufacturing agreement “may be
6
exercised” by Logtale by serving notice in the form attached to
7
the Option Agreement, after which the parties would “use their
8
best efforts to enter into the License and Manufacturing Agreement
9
on the principal terms and conditions set out in the Schedule.”
1AA,
The Option Agreement provides that the option to
United States District Court
For the Northern District of California
10
Id. at 1.
11
allege that Logtale exercised the option or otherwise consented to
12
the terms of the written licensing agreement.
13
the parties “have been operating under the terms of the Licensing
14
Agreement since 2006” is insufficient to show the existence of a
15
valid license agreement.
16
may demonstrate that the parties’ actions evidence an agreement.
17
“‘Words are frequently but an imperfect medium to convey thought
18
and intention.
19
and demonstrate by their conduct that they knew what they were
20
talking about the courts should enforce that intent.’”
21
Summary of Cal. Law (10th ed. 2005) Contracts § 749, p. 838.
22
As currently plead, the first counterclaim does not
The allegation that
However, additional factual allegations
When the parties to a contract perform under it
1 Witkin,
IKOR seeks leave to amend its counterclaim, contending that
23
the parties’ correspondence demonstrates that they acted as if
24
there was a licensing agreement between them.
25
letter from Dr. Wai on behalf of Logtale dated August 21, 2009,
26
which acknowledges the validity of the terms of the License
27
Agreement set forth in the schedule to the Option Agreement.
28
10
They refer to a
Opp.
1
at 14.
2
contract claim is dismissed with leave to amend.
3
II.
Because amendment may not be futile, the breach of
Theft of Intellectual Property
4
Logtale seeks dismissal of the second counterclaim for theft
5
of intellectual property.
6
entered into the License Agreement to obtain rights to IKOR’s
7
trade secrets, has failed to pay royalties or otherwise comply
8
with the License Agreement, and has misappropriated IKOR’s
9
technology and trade secrets with the intent to market IKOR’s
That counterclaim alleges that Logtale
United States District Court
For the Northern District of California
10
biopharmaceuticals in markets that IKOR owns, namely the United
11
States and the European Union.
12
21.
13
¶ 17.
14
technology even after IKOR cancelled the alleged License
15
Agreement, and that if Logtale prevails on its argument that there
16
was never a licensing agreement, then Logtale’s use of IKOR’s
17
technology was theft from the very beginning.
18
alleges that Logtale has plotted with the Chinese government and
19
the Chinese military to acquire IKOR’s trade secrets and patents
20
for commercial and military use and competition with IKOR.
21
Second Counterclaim ¶ 22.
22
1AA, Second Counterclaim ¶¶ 17,
IKOR alleges, “At this point, it looks like theft.”
Id.
IKOR contends that Logtale continued to use IKOR’s
IKOR further
1AA,
IKOR seeks relief under the Uniform Trade Secrets Act (UTSA),
23
as adopted in California, Cal. Civ. Code § 3426 et seq.
24
defines a trade secret as
25
26
27
28
The UTSA
information, including a formula, pattern,
compilation, program, device, method, technique, or
process, that:
(1) Derives independent economic value, actual
or potential, from not being generally known to the
11
public or to other persons who can obtain economic
value from its disclosure or use; and
1
2
(2) Is the subject of efforts that are
reasonable under the circumstances to maintain its
secrecy.
3
4
Cal. Civ. Code § 3426.1(d).
5
misappropriation may be enjoined” under this statute.
6
Code § 3426.2(a).
7
8
Cal. Civ.
In Bayer Corp. v. Roche Molecular Sys., Inc., the court
recognized,
9
A corporation misappropriates a trade secret when
(1) it discloses or uses the trade secret of
another without express or implied consent, and
(2) at the time of the disclosure or use, it knew
or had reason to know that its knowledge of the
trade secret was derived from a person who owed a
duty to the entity seeking relief to maintain the
trade secret’s secrecy or limit its use. Cal. Civ.
Code § 3426.1(b)(2)(B)(iii). The Court may order
affirmative acts to protect a trade secret in
appropriate circumstances. Cal. Civ. Code
§ 3426.2(c).
10
United States District Court
For the Northern District of California
“Actual or threatened
11
12
13
14
15
Bayer Corp. v. Roche Molecular Sys., Inc., 72 F. Supp. 2d 1111,
16
1117 (N.D. Cal. 1999).
17
Logtale contends that IKOR has failed to identify with
18
reasonable particularity how its intangible proprietary
19
information is a property interest capable of being converted or
20
stolen.
To identify the trade secrets at issue, IKOR refer to its
21
patent rights, defined in the alleged License Agreement as “[a]ll
22
patents and patent applications of any kind anywhere in the world
23
owned or controlled by IKOR during the term of the Agreement,” and
24
IKOR Know-How, defined as “[a]ny proprietary information, trade
25
secrets, techniques, materials and data owned or controlled by
26
IKOR.”
Opp. at 15; 1AA, Ex. A at 7.
IKOR also refers to an
27
application by third-party defendant New A Innovation for approval
28
12
1
to market an IKOR drug in Europe after IKOR terminated the License
2
Agreement with Logtale, but does not sufficiently identify the
3
drug or IKOR’s ownership interest in it.
A claimant seeking relief for misappropriation of trade
5
secrets “must identify the trade secrets and carry the burden of
6
showing that they exist.”
7
991 F.2d 511, 522 (9th Cir. 1993).
8
describe the subject matter of the trade secret with sufficient
9
particularity to separate it from matters of general knowledge in
10
United States District Court
For the Northern District of California
4
the trade or of special knowledge of those persons . . . skilled
11
in the trade.’”
12
1161, 1164-65 (9th Cir. 1998) (quoting Universal Analytics v.
13
MacNeal-Schwendler Corp., 707 F. Supp. 1170, 1177 (C.D. Cal.
14
1989), aff’d, 914 F.2d 1256 (9th Cir. 1990)).
15
the allegations supporting the second counterclaim fail to
16
identify the alleged trade secrets with sufficient particularity.
17
MAI Sys. Corp. v. Peak Computer, Inc.,
“The plaintiff ‘should
Imax Corp. v. Cinema Technologies, Inc., 152 F.3d
As currently plead,
Under California law, when information “is generally known in
18
the trade and already used by good faith competitors, it is not a
19
protectable trade secret and injunction should not issue.”
20
Paper & Packaging Prods., Inc. v. Kirgan, 183 Cal. App. 3d 1318,
21
1326 (1986).
22
protection for patented IKOR technology.
23
Prods., Inc. v. Marron Carrel, Inc., 674 F.2d 1336, 1342 (9th Cir.
24
1982) (“Matters disclosed in a patent publication destroy any
25
trade secret contained therein.”) (applying Pennsylvania trade
26
secret law).
27
counterclaim for patent infringement but abandoned that claim in
28
the amended answer and counterclaim, and may not revive the trade
Am.
Thus, Defendants may not assert trade secret
See Henry Hope X-Ray
Logtale argues that Defendants initially alleged a
13
1
secret claim as one for patent infringement.
2
address this argument or demonstrate that amendment would not be
3
futile as to its published patents.
4
IKOR patent rights is therefore dismissed without leave to amend.
5
Because amendment may not be futile with respect to protectable
6
trade secrets that are not in the public domain, the counterclaim
7
is dismissed with leave to amend to allege that.
8
III. Interference with Prospective Business Opportunity
9
IKOR fails to
The counterclaim for theft of
IKOR’s fourth counterclaim for relief alleges interference
United States District Court
For the Northern District of California
10
with prospective business opportunity.
11
elements of a tort claim for intentional interference with
12
prospective economic advantage are (1) an economic relationship
13
between the plaintiff and some third party, with the probability
14
of future economic benefit to the plaintiff; (2) the defendant’s
15
knowledge of the relationship; (3) intentional acts on the part of
16
the defendant designed to disrupt the relationship; (4) actual
17
disruption of the relationship; and (5) economic harm to the
18
plaintiff proximately caused by the acts of the defendant.
19
Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153
20
(2003).
21
must plead intentional acts by the defendant that are wrongful
22
apart from the interference itself, and are designed to disrupt
23
the relationship.
24
defendant “engaged in conduct that was wrongful by some legal
25
measure other than the fact of interference itself” such as
26
“conduct that is recognized as anticompetitive under established
27
state and federal positive law.”
28
Sales, U.S.A., Inc., 11 Cal. 4th 376, 393 (1995).
Under California law, the
Korea
To meet the third element, intentional acts, a plaintiff
Id. at 1154.
This requires a showing that the
Della Penna v. Toyota Motor
14
1
The fourth counterclaim alleges that IKOR secured a contract
with the United States Army and with Northwestern University to
3
conduct research in the area of wound healing, and that Logtale
4
tried to interfere and obstruct IKOR’s business.
5
Counterclaim ¶ 39.
6
intentional interference with prospective economic advantage fails
7
to allege that Logtale did anything to interfere with the Army
8
contract.
9
defendants have obtained equipment subject to export controls by
10
United States District Court
For the Northern District of California
2
misrepresenting to the United States Department of Commerce that
11
they have rights to distribute IKOR’s biopharmaceuticals and have
12
thereby jeopardized IKOR’s reputation as a defense contractor.
13
Because IKOR fails to allege actual disruption of a contractual
14
relationship or economic harm that is proximately caused by
15
Logtale, the claim for intentional interference with prospective
16
business opportunity with the Army and Northwestern University is
17
dismissed.
18
elements of the claim; IKOR may not amend the counterclaim to
19
assert new grounds for relief.
1AA, Fourth
Logtale contends that the counterclaim for
IKOR responds that Logtale and the third-party
Leave to amend is granted only to cure the deficient
20
IKOR also contends that Logtale has withheld information
21
necessary for IKOR to meet the Food and Drug Administration’s
22
strict requirements for reporting findings from clinical tests or
23
studies, and has precluded IKOR from making new drug applications
24
in the United States and in Europe.
25
¶¶ 40, 43; Opp. at 17.
26
existence of an economic relationship between IKOR and a third
27
party, intentional acts by Logtale designed to disrupt that
28
relationship, actual disruption of the relationship, or economic
1AA, Fourth Counterclaim
These allegations fail to claim the
15
1
harm proximately caused by the intentional acts.
2
the motion to dismiss, IKOR fails to address any of the specific
3
elements of a claim for intentional interference of prospective
4
business advantage.
5
claim is dismissed with prejudice as to the allegations of
6
interference with IKOR’s new drug applications in the United
7
States and in Europe.
8
9
In response to
Because amendment appears to be futile, this
IKOR also alleges that Logtale has obstructed its attempts to
obtain additional financing for research to complete the testing
United States District Court
For the Northern District of California
10
necessary for new drug applications.
11
¶ 39; Opp. at 18.
12
identify a particular economic relationship between IKOR and some
13
third party, which would probably provide future economic benefit
14
to IKOR.
15
Inc., 42 Cal. App. 4th 507, 522 (1996) (“The law precludes
16
recovery for overly speculative expectancies by initially
17
requiring proof the business relationship contained ‘the
18
probability of future economic benefit to the plaintiff.’”)).
19
IKOR suggests that Logtale and the third-party defendants have
20
been attempting to “drive IKOR into bankruptcy or damage the
21
company,” but fails to plead intentional or unlawful acts designed
22
to disrupt an economic relationship with some third party.
23
LiMandri v. Judkins, 52 Cal. App. 4th 326, 340 (1997) (“‘a
24
plaintiff seeking to recover for an alleged interference with
25
prospective contractual or economic relations must plead and prove
26
as part of its case-in-chief that the defendant not only knowingly
27
interfered with the plaintiff’s expectancy, but engaged in conduct
28
that was wrongful by some legal measure other than the fact of
1AA, Fourth Counterclaim
As currently plead, the counterclaim fails to
See Westside Center Associates v. Safeway Stores 23,
16
See
1
interference itself.’”
2
Sales, U.S.A., Inc., 11 Cal. 4th 376, 393 (1995)) (emphasis in
3
original).
4
disruption of the relationship, or economic harm proximately
5
caused by the intentional acts.
6
futile, the claim is dismissed with leave to amend to cure these
7
defects with respect to the alleged interference with IKOR’s
8
prospective financing.
9
IV.
United States District Court
For the Northern District of California
10
(quoting Della Penna v. Toyota Motor
The allegations also fail to demonstrate actual
Because amendment may not be
Counterclaim for Injunctive Relief
Logtale further seeks dismissal of IKOR’s counterclaim for
11
injunctive relief.
12
counterclaim for injunctive relief.1
13
equitable relief on its other counterclaims.
14
counterclaims are dismissed with leave to amend, Logtale’s motion
15
to dismiss the prayer for injunctive relief is granted with leave
16
to re-allege it if any of the counterclaims are successfully
17
amended.
18
V.
19
IKOR has not alleged an independent
Instead, it simply seeks
Because those
Motion to Strike
Logtale moves to strike allegations that it contends are
20
immaterial to the dispute.
21
allegations to demonstrate their relevance to the counterclaims,
22
with the exception of the allegations related to the abandoned
23
counterclaim for unfair competition, 1AA at 30:24-27.
24
that counterclaim is dismissed, the motion to strike the
25
allegation at page 30, paragraph 34, is denied as moot.
IKOR seeks leave to amend the
Because
Because
26
27
28
1
IKOR alleges a third-party claim for injunctive relief,
but the third-party complaint is not presently before the Court.
17
1
IKOR is granted leave to amend the counterclaims within the
2
limited scope discussed above, Logtale’s motion to strike is
3
denied.
4
5
CONCLUSION
For the foregoing reasons, Logtale’s Motion to Dismiss the
6
Counterclaims is GRANTED, WITH LEAVE TO AMEND as to the first,
7
second and fourth counterclaims for relief.
8
motion to dismiss the third counterclaim for unfair competition is
9
unopposed and granted with prejudice.
(Docket No. 27.)
The
Logtale’s motion to dismiss
United States District Court
For the Northern District of California
10
the counterclaim for injunctive relief is GRANTED with leave to
11
amend and its motion to strike is DENIED.
12
IKOR may file an amended counter-complaint within twenty-one
13
days of the date of this order.
14
respond to the amended counter-complaint twenty-one days
15
thereafter.
16
third-party complaint upon third-party defendants Dr. Wai, New
17
World Mobile, and A Innovation pursuant to Federal Rule of Civil
18
Procedure 4(l) within three days of this Order.
19
Logtale must answer or otherwise
IKOR must also file proof of timely service of its
The initial case management conference will be held on
20
January 16, 2013.
21
management statement by January 9, 2013.
22
The parties must file a revised joint case
IT IS SO ORDERED.
23
24
25
Dated: 12/5/2012
CLAUDIA WILKEN
United States District Judge
26
27
28
18
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