Truinject Corp. v. Nestle Skin Health, S.A., et al

Filing 250

REPORT AND RECOMMENDATIONS re 215 Motion to Dismiss for Failure to State a Claim Pursuant to Fed. R. Civ. P. 12(b)(6) filed by Galderma Laboratories L.P., Galderma S.A., SHDS, Inc. Please note that when filing Objections pursuant to Fed eral Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. (*Objections to R&R due by 9/11/2020). Signed by Judge Jennifer L. Hall on 8/28/2020. (ceg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
TRUINJECT CORP.,
Plaintiff,
v.
GALDERMA, S.A., GALDERMA
LABORATORIES, L.P., and SHDS, INC. (f/k/a
Nestlé Skin Health, Inc.),
Defendants.

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C.A. No. 19-592-LPS-JLH

REPORT AND RECOMMENDATION
Presently pending before the Court is a partial motion to dismiss filed by Defendants
Galderma, S.A., Galderma Laboratories, L.P., and SHDS, Inc. (D.I. 215.) As announced at the
hearing on August 21, 2020, I recommend GRANTING Defendants’ request to dismiss Count VIII
and DENYING Defendants’ request to dismiss Count XVI of Plaintiff Truinject Corp.’s Second
Amended Complaint. My Report and Recommendation was announced from the bench at the
conclusion of the hearing as follows:
This is my report and recommendation on Defendants’
motion to dismiss Counts VIII and XVI of the Second Amended
Complaint (“SAC”). I will not be issuing a separate written report,
but I will issue an R&R that incorporates by reference my ruling
today.
I want to emphasize again before I get into the ruling that
while I’m not issuing a written opinion, we have followed a full
process for making the decisions that I’m about to state. I reviewed
the second amended complaint and the attached exhibits. I reviewed
the parties’ briefing on the motion to dismiss and accompanying
declaration and exhibit, and we heard lengthy oral argument today.
All of the submissions and the arguments have been carefully
considered.
For the reasons I will state, I recommend that Defendants’
motion be GRANTED-IN-PART and DENIED-IN-PART.

This is my third Report and Recommendation on motions to
dismiss filed by various defendants in this matter. Rather than
reviewing the entire procedural history of this action, I refer the
interested reader to my prior Reports, and Chief Judge Stark’s orders
adopting them. 1 I will only give an abbreviated version here.
This case was filed by Plaintiff Truinject on October 12,
2018. (D.I. 1.) Truinject filed a First Amended Complaint on May
29, 2019. (D.I. 112.) The First Amended Complaint alleged twentyfive counts, including claims of patent infringement, fraud, breach
of contract, breach of the implied covenant of good faith and fair
dealing, misappropriation of trade secrets, tortious interference, and
other claims against Nestlé Skin Health, S.A., Nestlé Skin Health,
Inc., Galderma, S.A., Galderma Laboratories, L.P., and a number of
individuals. (Id.)
Each of the defendants filed motions to dismiss. Consistent
with my recommendation, the Court dismissed Nestlé Skin Health,
S.A. for lack of personal jurisdiction. (D.I. 169, 193.) Also
consistent with my recommendation, the Court granted the
remaining defendants’ motions to dismiss the fraud claims, the
claims for breach of the implied covenant of good faith and fair
dealing, and the tortious interference claims. In accordance with my
recommendation, the Court also dismissed the contract claims
against some, but not all, of the defendants. I recommended, and
the Court adopted my recommendation, to deny the defendants’
motion to dismiss a trade dress claim and a claim of unfair
competition under California Business and Professional Code
§ 17200. (D.I. 178, 193.) The Court granted Truinject leave to
amend to cure the deficiencies.
On April 30, 2020, Truinject filed a corrected Second
Amended Complaint. (D.I. 204.) The SAC contains thirteen counts,
but they are numbered I to XVI. The SAC names three Defendants:
Galderma, S.A., Galderma Labs., L.P., and Nestlé Skin Health, Inc.
Nestlé Skin Health, Inc. is now known as SHDS, Inc. The counts
labeled I-III and VI are breach of contract claims. Count VIII
alleges tortious interference with contractual and prospective
contractual relations. Count VIII originally listed all three corporate
Defendants, but Truinject stipulated to the dismissal of Count VIII
as to SHDS, Inc. on May 27, 2020. (D.I. 213.)
1

See D.I. 169, 178, 193; Truinject v. Nestlé Skin Health, S.A., No. 19-592, 2019 WL
6828984 (D. Del. Dec. 13, 2019); id., 2020 WL 70981 (D. Del. Jan. 7, 2020); id., 2020 WL
1322872 (D. Del. Mar. 20, 2020).
2

Counts IX-XI allege patent infringement. Counts XII-XV
allege trade secret misappropriation, trade dress infringement, a
violation of the Delaware Uniform Trade Secret Act, and a violation
of Delaware’s Deceptive Trade Practice Act, respectively.
Finally, Count XVI alleges a violation of California
Business and Professional Code § 17200 against all three
Defendants.
On May 28, 2020, the Galderma Defendants moved to
dismiss Count VIII, the tortious interference count, and all three
Defendants moved to dismiss Count XVI, the California unfair
competition count. (D.I. 215.)
The SAC is 170 pages and contains 682 paragraphs.
Because the pending motion only relates to two counts, I’ll
summarize the facts relevant to those two counts. I refer the reader
to my prior Reports and Recommendations for further details
regarding this dispute. Because this is a motion to dismiss, I take as
true Truinject’s allegations in the SAC.
Truinject was founded by Gabrielle Rios. She started the
company to solve the problem of inadequate training of medical
professionals who perform facial injections of dermal fillers or
neurotoxins, such as Botox. (D.I. 204 (“SAC”) ¶¶ 1-3, 5, 7, 30-33,
96-99, 123.)
Truinject developed and patented a training platform that
provides real-time feedback to doctors as they practice injections.
(Id. ¶¶ 33-38, 100.) The device, called “Kate,” “is an injection
training device that has a human head model connected to a syringe
with a fiber optic tip and a screen that allows the user to see the
location, the angle, and the depth of a needle relative to a statistical
human anatomy model and can warn a user before performing an
improper training injection. The syringe delivers a simulated dose
of neurotoxin/dermal filler and harvests data on the user feedback
on his or her injection technique. The data is used to help a provider
improve his or her training technique and to certify that a provider
has mastered neurotoxin or dermal filler injections.” (Id. ¶ 8; see
also id. ¶¶ 100-01.)
According to the SAC, Truinject also developed “an
augmented reality device that superimposes vascular and muscular
structures, nerves and other anatomical features over Kate so that a
medical provider can see the anatomy” while they practice injecting.
3

(Id. ¶ 9.) Truinject also developed and patented an accompanying
interactive tablet application that allows medical providers to see the
underlying human anatomy while they practice. (Id. ¶ 10.)
During the development process, Truinject negotiated with
third-party vendors and contractors to work on specific components
of Kate. (Id. ¶ 126.) One vendor that Truinject approached was
BioDigital. (Id. ¶ 126.) According to the SAC, “BioDigital calls
itself the ‘World’s First Human Visualization Platform’ that
provides ‘interactive 3D’ visualization of anatomy, diseases and
treatments.” (Id. ¶ 127.)
Truinject approached BioDigital in 2014 to request a
proposal to build a computer application to accompany Kate. (Id.
¶ 128.) BioDigital entered into a confidential disclosure agreement
(“CDA”) with Truinject so that Truinject could share its information
with BioDigital. BioDigital provided Truinject with a proposal for
the requested work, but Truinject ultimately selected another vendor
to build the computer application for Kate. (Id. ¶¶ 128-30, 534-37.)
According to the SAC, “[m]edical providers and
pharmaceutical companies expressed excitement about Truinject’s
invention as they learned about it.” (Id. ¶ 39.) Companies such as
“Nestlé Skin Health, S.A., Allergan, Merz, Revance and others
approached Ms. Rios to develop a business relationship and obtain
Truinject’s injection training technology and science.” (Id. ¶ 40.)
In early 2014, a representative from Galderma Labs reached out to
Ms. Rios and indicated interest in Truinject’s technology. (Id. ¶¶ 12,
140.) Over the next several years, Truinject and the Galderma
parties had multiple in-person and telephonic meetings, and they
executed at least three Confidential Disclosure Agreements. (Id.
¶¶ 20, 43; see generally id. ¶¶ 140-217, 258-312.) The CDAs
require the parties to hold each other’s confidential information in
confidence and to use it solely in connection with the business
relationship.
The SAC alleges that, during the parties’ discussions and
meetings, “Galderma Labs and Galderma, S.A. pressured Ms. Rios
and Truinject to cancel meetings Ms. Rios had scheduled with
Galderma’s biggest competitors, like Allergan and Merz. Ms. Rios,
believing that Galderma Labs and Galderma, S.A. were genuine in
their interest, canceled the meetings and signed an exclusive
negotiation agreement with Galderma, S.A.” on November 10,
2014. (Id. ¶ 21; see also id. ¶¶ 19, 80, 163.) Under the 2014 ENA,
Galderma S.A. and its affiliates received a ninety-day exclusive
right to evaluate the technology and negotiate a deal with Truinject.
4

(Id. ¶ 168.) During Galderma’s due diligence, Truinject disclosed
all of its prior dealings with third parties over the course of Kate’s
development, including Truinject’s discussions and CDA with
BioDigital. (Id. ¶ 174.)
The discussions between Truinject and Galderma broke
down in January 2015, and the parties had limited interactions until
2016. (Id. ¶¶ 215, 221-22.) The SAC alleges that, during the 2015
to 2016 period, “Truinject communicated with Allergan and Merz
in an effort to rekindle their interest in Truinject’s technology after
Truinject’s period of CDA-based exclusivity with Galderma Labs,
and its affiliates expired. But nothing came of those efforts.” (Id.
¶ 223.) According to Truinject, “Allergan and Merz stopped being
interested in a deal with Truinject as a direct result of [Defendants’]
2015-2016 disinformation campaign against Truinject.” (Id. ¶ 224.)
That “disinformation campaign” allegedly included the
following:
1.
Defendants’ employees told “the market” that Ms.
Rios and Truinject were difficult to work with and unprofessional.
(Id. ¶ 226.)
2.
Galderma Labs informed its own employees and its
physician consultants at a January 10, 2015 internal meeting that
Truinject was a “no-show” and unprofessional. The SAC alleges
that some of Galderma’s physician consultants also served on
advisory boards for Allergan, Merz and Revance. (Id. ¶ 228.)
3.
A Senior Director at Galderma Labs told “the
market” that Truinject’s technology did not work. (Id.)
4.
In July 2016, a vice president at Galderma Labs told
“a group of prominent skin doctors and other industry stakeholders”
at a dinner that “Truinject’s technology is ‘not ready,’ that Ms. Rios
is difficult to work with and that Ms. Rios doesn’t know how to run
her company.” (Id. ¶ 229.) The SAC alleges that some of the
physicians at the dinner “worked with” Allergan and Merz. (Id.
¶ 230.)
5.
In August 2016, Nestlé employees “bad-mouthed”
Truinject at a business dinner. The dinner attendees included “an
array of doctors and businesspeople with connections to Merz and
Allergan.” (Id. ¶ 231.)

5

6.
Also in August 2016, a Galderma Labs employee
told a group of fellow employees and Galderma physician advisors
that Galderma Labs was building something “far better than what
Truinject has.” Some of those physician advisors also advised
Allergan and Merz. (Id. ¶ 232.)
7.
In December 2016, a Galderma Labs employee told
a colleague that Truinject’s patents won’t “stand up” and that
Truinject’s technology was not otherwise ready to launch into the
market. (Id. ¶ 233.)
8.
At an internal meeting of Galderma Labs and Nestlé
Skin Health, S.A. employees and advisors in March 2017, the CEO
of Nestlé Skin Health said that Truinject was “stupid.” Some of
Defendants’ advisory physicians present at the internal meeting
were also on advisory boards for Allergan, Merz and Revance. (Id.
¶ 234.)
9.
During a May 2018 presentation by Ms. Rios to
Revance, a Revance employee who used to work for Galderma
repeatedly said the technology did not work and the patents were
weak. (Id. ¶ 237.)
10.
Paragraph 678 alleges that Defendants held an
internal meeting to discuss Truinject in April 2018. It goes on to
allege that “Defendants further began a disinformation campaign
against Truinject and its technology, calling Kate a toy, unrealistic
and not focused on improving patient safety.” (Id. ¶ 678; see also id.
¶ 507.) However, the SAC does not allege that any of those
comments were made to anyone external to Defendants.
The SAC alleges that, “Because of what was being said
about Truinject, [Ms. Rios’] reception at Merz and Allergan, who
were previously enthusiastic about doing a deal, was chilled.” (Id.
¶ 227.)
In 2018, Nestlé Skin Health, Inc. (now SHDS, Inc.) launched
their own competing products, named Holly and LucyLive. (Id.
¶ 26.) Holly closely resembles Kate and LucyLive resembles
Truinject’s tablet computing application. (Id.)
The SAC alleges that Defendants contracted with BioDigital
“to develop the screens for Holly,” which contain a virtual anatomy
model that can be used to show the location of the needle as a
provider is injecting into a physical head. (Id. ¶¶ 560-62.) The SAC
further alleges that BioDigital used information it gained from
6

Truinject when developing the product for Defendants. (Id. ¶ 56364.)
According to Truinject, “[a]fter launching, [Defendants] . . .
took credit in trade meetings and at sales presentations for
Truinject’s inventions, falsely passing them off as their own while
simultaneously disparaging Truinject and Ms. Rios to medical
providers and others in the neurotoxin and dermal filler injection
trade.” (Id. ¶ 27.)
That concludes my summary of the factual allegations. My
analysis of those allegations is as follows.
I’m not going to read into the record the standard that
applies to a motion to dismiss under Rule 12(b)(6). I have a standard
that I use in my opinions, for example, in my previous R&R in this
case at D.I. 178, 2 which I incorporate by reference.
The Galderma Defendants move to dismiss Count VIII,
which alleges tortious interference with contractual and prospective
contractual relations. While styled as a single count, Count VIII
encompasses two theories of tortious interference.
Truinject’s first theory is that the Galderma Defendants
tortiously interfered with BioDigital’s CDA with Truinject. “Under
Delaware law, the elements of a claim for tortious interference with
a contract are well established: (1) a contract, (2) about which
defendant knew and (3) an intentional act that is a significant factor

2

See Truinject Corp., 2020 WL 70981, at *7. A defendant may move to dismiss a
complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. “To survive
a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face when the complaint contains
“factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). A possibility of relief is not
enough. Id. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant's
liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’”
Id. (quoting Twombly, 550 U.S. at 557).
In determining the sufficiency of the complaint under the plausibility standard, all “wellpleaded facts” are assumed to be true, but legal conclusions are not. Id. at 679. “[W]hen the
allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic
deficiency should be exposed at the point of minimum expenditure of time and money by the
parties and the court.” Twombly, 550 U.S. at 558 (internal marks omitted).
7

in causing the breach of such contract (4) without justification (5)
which causes injury.” 3
The Galderma Defendants argue that Truinject’s first theory
fails to state a claim of tortious interference. They make four
arguments: (i) Truinject fails to plead an underlying breach of
contract; (ii) if there was a breach, Truinject fails to plead that the
Galderma Defendants engaged in an intentional act that was a
significant factor in causing it; (iii) Truinject fails to plead that any
such action was without justification; and (iv) the claim is
preempted by the Delaware Uniform Trade Secret Act.
I will start with the preemption argument. The Delaware
Uniform Trade Secret Act (the “DUTSA”) provides civil remedies
for the misappropriation of trade secrets. 4 The DUTSA expressly
provides that it “displaces conflicting tort, restitutionary and other
law of this State providing civil remedies for misappropriation of a
trade secret.” 5 To determine whether a tort claim is preempted by
the DUTSA, courts consider whether the claim is “grounded in the
same facts” as a misappropriation of trade secrets claim. 6 The
statute explicitly does not, however, displace “civil remedies . . . not
based upon misappropriation of a trade secret” or “contractual
remedies, whether or not based upon misappropriation of a trade
secret.” 7
As I understand Truinject’s first theory, it is saying that the
Galderma Defendants tortiously interfered with the CDA between
Truinject and BioDigital by causing BioDigital to breach the CDA
and use Truinject’s confidential information to develop Defendants’
requested product. The Delaware Supreme Court has not yet
addressed whether a claim that a defendant tortiously interfered with
a CDA is preempted by the Delaware Uniform Trade Secret Act.
3

Overdrive, Inc. v. Baker & Taylor, Inc., No. 5835-CC, 2011 WL 2448209, at *9 (Del. Ch.
June 17, 2011).
4

6 Del. C. § 2001, et. seq.

5

6 Del. C. § 2007(a).

6

Ethypharm S.A. France v. Bentley Pharm., Inc., 388 F. Supp. 2d 426, 433 (D. Del. 2005)
(quoting Savor, Inc. v. FMR Corp., No. 00C-10-249-JRS, 2001 WL 541484, at *4 (Del. Super. Ct.
Apr. 24, 2001), aff’d, 812 A.2d 894 (Del. 2002)).
7

6 Del. C. § 2007(b)(1),(2); Overdrive, Inc., 2011 WL 2448209, at *4.
8

The Atlantic Medical Specialists case from the Superior Court for
the State of Delaware, cited by Truinject, concluded that such a
claim is not preempted. 8 That case contains a lengthy analysis and
it cites a law review article that says that no preemption under these
circumstances is the majority view. 9 I don’t know whether that’s
true or not, but the cases cited by Defendants do not persuade me
that the Delaware Supreme Court would have a different view.
Accordingly, I’m unpersuaded that Truinject’s first theory of
tortious interference is necessarily preempted.
That said, I agree with the Galderma Defendants that
Truinject’s allegations fail to state a claim of tortious interference
with contractual relations at least for the reason that the SAC fails
to allege an “intentional act” that caused BioDigital to breach its
CDA with Truinject. 10 The SAC alleges that Defendants entered
into a relationship with BioDigital to develop the screens for Holly
and that BioDigital used the information it gained from Truinject in
breach of its CDA with Truinject. But the SAC does not allege that
the CDA between BioDigital and Truinject restricted BioDigital
from contracting with Truinject’s competitors. Nor does the SAC
allege that Defendants took an intentional act to cause BioDigital to
breach its CDA with Truinject, much less facts that would make
such an allegation plausible. For example, there is no allegation that
Defendants ever asked or induced BioDigital to use Truinject’s
information in breach of BioDigital’s CDA.
I also agree with the Galderma Defendants that the
allegations that they breached their own agreements with Truinject
by hiring BioDigital [do not create a plausible inference that the
Galderma Defendants intended to cause a breach] of BioDigital’s
CDA with Truinject. At best, Truinject alleges two breach of
contract claims—one against the Galderma Defendants for breach
of their CDAs and ENA with Truinject, and one against BioDigital
8

See Atl. Med. Specialists, LLC v. Gastroenterology Assocs., P.A., No. CV N15C-06-245
CEB, 2017 WL 1842899, at *15–16 (Del. Super. Ct. Apr. 20, 2017).
9

See id. at 16 n.124 (citing John T. Cross, UTSA Displacement of Other State Law Claims,
33 Hamline L. Rev. 445, 465 (2010)); cf. IDX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581, 586–
87 (7th Cir. 2002).
10

See WaveDivision Holdings, LLC v. Highland Capital Mgmt., L.P., 49 A.3d 1168, 1174
(Del. 2012) (“Delaware courts follow Section 766 of the Restatement (Second) of Torts in
assessing a tortious interference claim.”); Restatement (Second) of Torts § 766 (requiring an
“intentional[] . . . interfer[ence] with the performance of a contract”); id. § 8A cmt. a (“‘Intent,’ as
it is used throughout the Restatement of Torts, has reference to the consequences of an act rather
than the act itself.”).
9

for breach of its CDA. But Truinject has failed to allege that the
Galderma Defendants intentionally induced a breach by BioDigital.
For that reason, I conclude that Truinject fails to state a claim
of tortious interference with contractual relations under its first
theory and I don’t reach Defendants’ other arguments regarding the
first theory.
Truinject’s second theory is that the Galderma Defendants
tortiously interfered with Truinject’s prospective business relations
with Allergan, Merz and Revance. The elements of a claim for
tortious interference with a prospective business relationship are
also well established: “(1) the existence of a valid business
relationship or expectancy; (2) knowledge of the relationship or
expectancy on the part of the interferer; (3) intentional interference
which induces or causes a breach or termination of the relationship
or expectancy; and (4) resulting damages to the party whose
relationship or expectancy has been disrupted.” 11
The Galderma Defendants argue that Truinject has failed to
allege either (i) the existence of a valid business expectancy or (ii)
intentional interference. I agree.
Regarding a valid business expectancy, the factual
allegations in the complaint must “establish some basis of a bona
fide expectancy” of the plaintiff’s relationship with a third
party. 12 Courts have also phrased this as a “reasonable probability
of a business opportunity” with a “party who was prepared to enter
into a business relationship.” 13
Here, the allegations regarding Truinject’s expectation of
doing a deal are conclusory, such as in Paragraph 573: “Truinject
had a reasonable expectation of doing a deal with Allergan, Merz,
and/or Revance.” (SAC ¶ 573.) With respect to Allergan and Merz,
the SAC alleges that Truinject had meetings scheduled with them in
2014 that Truinject canceled because it entered into an exclusive
negotiation agreement with the Galderma Defendants. (Id. ¶¶ 19,
21.) The SAC alleges that after the negotiations with Galderma
11

Enzo Life Scis., Inc. v. Digene Corp., 295 F. Supp. 2d 424, 429 (D. Del. 2003).

12

World Energy Ventures, LLC v. Northwind Gulf Coast LLC, C.A. No. N15C-03-241
WCC, 2015 WL 6772638, at *7 (Del. Super. Ct. Nov. 2, 2015).
13

Agilent Techs., Inc. v. Kirkland, No. CIV.A. 3512-VCS, 2009 WL 119865, at *7 (Del.
Ch. Jan. 20, 2009).
10

broke down in 2015, “Truinject communicated with Allergan and
Merz in an effort to rekindle their interest in Truinject’s technology
after Truinject’s period of CDA-based exclusivity with Galderma
Labs, and its affiliates expired. But nothing came of those efforts.”
(Id. ¶ 223.)
Those allegations do not demonstrate a plausible, bona fide
expectancy of doing a deal with Allergan or Merz. In so holding, I
recognize that Truinject’s theory is that nothing came of its efforts
to “rekindle” the interest of Allergan and Merz because Defendants
were making negative comments about Truinject. For the purposes
of the argument, I assume that is true. But that doesn’t change the
fact that Truinject lacked a bona fide expectation of doing a deal
with Allergan and Merz at the time that Defendants allegedly made
the negative comments. 14
I have considered Truinject’s allegation in Paragraph 256
that it had CDAs with Allergan and Merz in 2015 so that it could
share information about its product (SAC ¶ 256), but I have to
consider that allegation in view of Truinject’s other allegations that
they weren’t ever able to rekindle the interest of Allergan or Merz.
A CDA is not the same level of business dealings as in the cases
cited by Truinject. 15
I also recognize and have considered Truinject’s argument
that whether there is a reasonable business expectancy is largely a
factual issue. However, where there are no facts making such an

14

See Malpiede v. Townson, 780 A.2d 1075, 1099 (Del. 2001) (“We believe that the
probability of the business opportunity must be assessed at the time of the alleged interference.”).
15

See Preston Hollow Capital LLC v. Nuveen LLC, No. 2019-0169-SG, 2020 WL
1814756, at *13-14 (Del. Ch. Apr. 9, 2020) (the alleged relationships included the following:
formalized relationships involving contractual renewals; transactions already in progress at the
time of the interference; discussions involving a dozen potential transactions and statements by a
third-party that the plaintiff was a part of its business plan; and consistent prior dealings); Agilent
Techs., Inc., 2009 WL 119865, at *7-8 (concluding that the detailed factual allegations described
a reasonably likely business relationship with a specific third party, even though the third party
was not identified by name); Soterion Corp. v. Soteria Mezzanine Corp., No. 6158-VCN, 2012
WL 5378251, at *13 (Del. Ch. Oct. 31, 2012) (factual allegations indicated that the plaintiff had
“much more than a ‘mere hope’ or ‘mere perception of a prospective business relationship’”
because the plaintiff had “letters of intent” from third parties who had conducted “extensive due
diligence activities”); World Energy Ventures, LLC, 2015 WL 6772638, at *8 (pleading alleged a
plausible bona fide business expectancy where it specifically named some third parties that had
previously invested in the claimant’s prior ventures).
11

expectancy plausible, dismissing such a claim at the motion to
dismiss stage is appropriate. 16
With respect to Revance, there is no plausible allegation that
it was prepared to enter into a business relationship with Truinject
at the time of the alleged negative comments. Truinject did not
make a pitch presentation to Revance until May 2018, a year after
the alleged negative comments. (SAC ¶ 237.) Moreover, there are
no other non-conclusory allegations concerning a potential business
relationship between Truinject and Revance except for the pitch
presentation, and I conclude that mere allegations of a pitch
presentation are insufficient to plausibly allege a bona fide
expectation of a business relationship, at least in this context. 17
The cases cited by Truinject are inapposite. Those cases
stand for the proposition that a complaint passes muster when it
alleges facts showing that the plaintiff had a reasonable probability
of a business relationship with a specific company. But they do not
stand for the proposition that it is enough to set forth the name of a
particular company accompanied by a conclusory allegation that the
plaintiff had a reasonable expectation of a deal with that company. 18
This is not a case where a business expectancy was reasonable based
on a prior relationship between the plaintiff and a third party.
Rather, the SAC alleges that Truinject was a startup company
seeking to do its first deal with a pharmaceutical company.
Accordingly, I conclude that the SAC fails to plausibly
allege the existence of a valid business expectancy. For that reason
alone, the claim should be dismissed.
However, I also agree with Defendants that the SAC fails to
plausibly allege that the Galderma Defendants engaged in
intentional interference that induced or caused a termination of an
expectancy. According to Truinject, the Galderma Defendants
intentionally interfered with its expectancies by making negative
comments and statements about Rios, Truinject, and their product.
16

See, e.g., Int’l Constr. Prod. LLC v. Caterpillar Inc., No. CV 15-108-RGA, 2020 WL
4584354, at *5 (D. Del. Aug. 10, 2020); Nespresso USA, Inc. v. Ethical Coffee Co. SA, No. 16194-GMS, 2016 WL 11697058, at *1 n.1 (D. Del. Sept. 7, 2016); Sustainable Energy Generation
Grp., LLC v. Photon Energy Projects B.V., No. 8524-VCP, 2014 WL 2433096, at *15 (Del. Ch.
May 30, 2014).
17

See, e.g., supra n.16.

18

See supra n.15.
12

(SAC ¶ 575.) Defendants point out, however, and Truinject does
not dispute, that most of the negative statements alleged in the SAC
were made by Defendants’ employees to other of Defendants’
employees and/or Defendants’ own physician consultants. Truinject
alleges that some of Defendants’ physician consultants also
consulted for Allergan, Merz, and Revance, but there is no
suggestion in the SAC that any of those advisory physicians had any
role in the other companies’ business decisions regarding a potential
deal with Truinject. Frankly, I don’t even understand the relevance
of Truinject’s allegation that, during Truinject’s May 2018 pitch to
Revance, a Revance employee who used to work for Galderma
repeatedly said that the technology did not work and the patents
were weak. (SAC ¶ 237.)
Conspicuously absent from the SAC is any allegation that
any of Defendants’ employees made negative comments to any
employee of Allergan, Merz, or Revance.
Under these
circumstances, I cannot conclude that the SAC plausibly alleges that
Defendants made the comments with the intent to interfere with
Truinject’s expectancies to do deals with Allergan, Merz, and
Revance.
To conclude, the allegations are insufficient to demonstrate
improper, intentional interference with prospective business
relations. Because I conclude that Count VIII should be dismissed
for the reasons discussed, I don’t reach Defendants’ other
arguments.
Defendants also move to dismiss Count XVI, which alleges
that “Defendants’ actions constitute trade dress infringement,
unlawful passing off, breach of contract, and unfair competition, and
as a result they constitute an unlawful business practice in violation
of Cal. Bus. & Prof. Code § 17200.” (SAC ¶ 668.) Truinject also
contends that Defendants violated the Physician Payments Sunshine
Act, constituting an unlawful business practice in violation of
§ 17200.
[Section 17200] defines “unfair competition” as “any
unlawful, unfair or fraudulent business act or practice.” 19
Defendants argue that the unfair competition claims are
preempted to the extent that they are grounded in the same facts as

19

Cal. Bus. & Prof. Code § 17200.
13

the trade secret misappropriation claim. I agree. See, for example,
the Waymo and NetApp cases cited in Defendants’ brief. 20
Truinject nevertheless argues that its § 17200 claim survives
because that claim is also based on the following conduct by
Defendants: (i) alleged commercial disparagement of Truinject (ii)
alleged breaches of contract (iii) alleged violation of the Physician
Payments Sunshine Act and (iv) alleged “passing off.”
“Because section 17200 is written in the disjunctive, a
business practice need only meet one of the three criteria—unlawful,
unfair, or fraudulent—to violate the UCL.” 21 Section 17200’s
“coverage is ‘sweeping, embracing anything that can properly be
called a business practice and that at the same time is forbidden by
law.’” 22 “By proscribing ‘any unlawful’ business practice, Section
17200 borrows violations of other laws and treats them as unlawful
practices that the unfair competition law makes independently
actionable.” 23
Truinject has certainly described some behavior that would
fit under the category of unfair and/or unlawful that is not
duplicative of its trade secrets claim, for example Defendants’
alleged trade dress infringement. And, indeed, Defendants
acknowledged during the hearing today that a § 17200 claim can be
based on trade dress infringement, which is also alleged in the
SAC. 24 So I will let this claim move forward.
Because I’m recommending denying the motion to dismiss
this count, I don’t think it’s necessary to analyze the other asserted
20

Waymo LLC v. Uber Techs., Inc., 256 F. Supp. 3d 1059, 1063 (N.D. Cal. 2017); NetApp,
Inc. v. Nimble Storage, Inc., No. 5:13-CV-05058-LHKHRL, 2015 WL 400251, at *19 (N.D. Cal.
Jan. 29, 2015).
21

Spring Design, Inc. v. Barnesandnoble.com, LLC, No. C 09-05185 JW, 2010 WL
5422556, at *9 (N.D. Cal. Dec. 27, 2010).
22

Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527, 539 (Cal. 1999)
(quoting Rubin v. Green, 847 P.2d 1044, 1052 (Cal. 1993)).
23

Id. (internal marks and citation omitted).

24

Accordingly, this case is not like Alta Devices, cited by Defendants, where disregarding
the allegations concerning trade secret misappropriation left behind insufficient allegations to form
an independent basis for a § 17200 claim. See Alta Devices, Inc. v. LG Elecs., Inc., 343 F. Supp.
3d 868, 888 (N.D. Cal. 2018).
14

bases for the count that Defendants challenge, but I’ll address some
of them briefly. As to the breach of contract argument, I don’t think
even Defendants dispute that a breach of contract claim can
sometimes form the basis of an unfair competition claim under
§ 17200. Although the Ninth Circuit has acknowledged that “a
common law violation such as breach of contract is insufficient” to
state a claim under the “unlawful” prong of the unfair competition
statute, 25 California state courts have recognized that a “breach of
contract may . . . form the predicate for Section 17200 claims,
provided it also constitutes conduct that is ‘unlawful, or unfair, or
fraudulent.’” 26 Courts have also held that the UCL may provide
alternative remedies to a plaintiff. 27
However, to the extent that Truinject’s theory ultimately
rests on the same facts as its trade secret claim, they may be
preempted. If after discovery it turns out that Truinject’s only basis
for the § 17200 claim is grounded in the same facts as its trade
secrets claim, Defendants may re-raise the preemption argument at
summary judgment.
As to the Physician Payments Sunshine Act argument, I have
no idea what Truinject is going for here. Truinject’s answering brief
contends that Defendants failed to disclose to the government that
they gave a free Holly to a particular physician. Truinject argues
that the failure to disclose that transaction violated the Physician
Payments Sunshine Act. But the SAC does not actually allege that
Truinject failed to report that particular transaction. Nor has
Truinject persuasively explained how Defendants’ alleged violation
of a government reporting law caused Truinject to lose sales and
harmed its business reputation. The SAC does not state a § 17200
claim under this theory.

25

See Kulberg v. Washington Mut. Bank, No. 10-CV-1214 W (BLM), 2012 WL 13175872,
at *5 (S.D. Cal. Mar. 14, 2012) (quoting Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d
1035, 1044 (9th Cir. 2010)).
26

See, e.g., Puentes v. Wells Fargo Home Mortg., Inc., 72 Cal. Rptr. 3d 903, 909 (Cal. Ct.
App. 2008) (emphasis in original) (quoting Watson Labs., Inc. v. Rhone-Poulenc Rorer, Inc. 178
F.Supp.2d 1099, 1117, fn. 12 (C.D. Cal. 2001)); see also Stewart v. Screen Gems-EMI Music, Inc.,
81 F. Supp. 3d 938, 967 (N.D. Cal. 2015) (“[A] plaintiff may bring a UCL claim even where it
overlaps with a concurrently brought breach of contract and breach of the implied covenant of
good faith and fair dealing claim.”)
27

See, e.g., Aerojet Rocketdyne, Inc. v. Glob. Aerospace, Inc., No. 2:17-CV-01515-KJMAC, 2020 WL 3893395, at *4 (E.D. Cal. July 10, 2020).
15

As to the “passing off” allegation, the SAC has not alleged
passing off. Passing off occurs when a producer misrepresents his
own goods or services as someone else’s. 28 . . . . “‘Reverse passing
off,’ as its name implies, is the opposite: The producer misrepresents
someone else’s goods or services as his own.” 29 Passing off and
reverse passing off refer to the good itself, not the idea behind it.
There is no allegation that Defendants ever took Truinject’s
injection training platform, that is Kate itself, and passed it off to
consumers as its own Holly product. If Truinject is arguing that
Defendants copied its invention, that’s a patent infringement claim
not a passing off claim. If what Truinject is really pressing is a
§ 17200 claim based on its trade dress claim, as stated above, such
a claim may move forward. 30
For the reasons stated, I recommend that the Court deny
Defendants’ motion to dismiss Count XVI because Truinject has
stated at least one plausible theory in support of a violation of
§ 17200. However, I reject Truinject’s other theories to the extent
that they rely on trade secret misappropriation, violation of the
Physician Payments Sunshine Act, and passing off.
Finally, Defendants ask for Count VIII to be dismissed with
prejudice; however, I’m not convinced on this record that
amendment would necessarily be futile so I recommend giving
Truinject one last chance to try to plead a tortious interference
claim. 31 That concludes my R&R.
This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(1)(B),(C),
Federal Rule of Civil Procedure 72(b)(1), and District of Delaware Local Rule 72.1. Any
objections to the Report and Recommendation shall be filed within fourteen days and limited to
28

Bank of the West v. Superior Court, 833 P.2d 545, 551 (Cal. 1992); cf. OTR Wheel Eng’g,
Inc. v. W. Worldwide Servs., Inc., 897 F.3d 1008, 1016 (9th Cir. 2018) (quoting Dastar Corp. v.
Twentieth Century Fox Film Corp., 539 U.S. 23, 27 n.1 (2003)).
29

OTR Wheel, 897 F.3d at 1016 (quoting Dastar, 539 U.S. at 27 n.1).

30

See Toyo Tire & Rubber Co. v. CIA Wheel Grp., No. 15-0246 DOC, 2016 WL 6138416,
at *7 (C.D. Cal. May 6, 2016) (“Because the Court finds Plaintiffs state a valid trade dress
infringement claim, the [§ 17200] UCL claim also stands.”).
31

See Alston v. Parker, 363 F.3d 229, 235-36 (3d Cir. 2004) (holding that leave to amend
should be granted “unless a curative amendment would be inequitable, futile, or untimely”).
16

ten pages. Any response shall be filed within fourteen days thereafter and limited to ten pages.
The failure of a party to object to legal conclusions may result in the loss of the right to de novo
review in the district court.
The parties are directed to the Court’s “Standing Order for Objections Filed Under Fed. R.
Civ. P. 72,” dated October 9, 2013, a copy of which can be found on the Court’s website.

Dated: August 28, 2020

___________________________________
The Honorable Jennifer L. Hall
United States Magistrate Judge

17