Invado Pharmaceuticals LLC v. Forward Science Distribution LLC et al

Filing 27

OPINION AND ORDER. For the reasons stated in the accompanying Opinion and Order, the Court denies Forward Science's motion to dismiss 16 . Signed by the Honorable Sara L. Ellis on 10/16/2018:Mailed notice(rj, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
INVADO PHARMACEUTICALS, INC.,
Plaintiff,
v.
FORWARD SCIENCE DISTRIBUTION
LLC, FORWARD SCIENCE LLC,
FORWARD SCIENCE HOLDING INC.,
and FORWARD SCIENCE
TECHNOLOGIES LLC, and
JANE DOES No. 1–10,
Defendants.

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No. 18 C 2515
Judge Sara L. Ellis

OPINION AND ORDER
This case arises out of an unsuccessful business relationship between Plaintiff Invado
Pharmaceuticals, Inc. (“Invado”) and Defendants Forward Science Distribution LLC, Forward
Science LLC, Forward Science Holding Inc., and Forward Science Technologies LLC
(collectively, “Forward Science”). The parties signed a confidentiality agreement during
negotiations for a potential business arrangement, and Invado then shared with Forward Science
confidential information and trade secrets regarding two of its pharmaceutical products. No
actual business relationship emerged, but Forward Science later brought two new pharmaceutical
products to market similar to Invado’s products. Invado has now sued Forward Science for
breach of contract and violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1831 et
seq. 1 Forward Science moves to dismiss these claims. Because Invado has adequately pleaded
its breach of contract and DTSA claims, the Court denies Forward Science’s motion.
In addition to its breach of contract and DTSA claims, Invado brings claims against Forward Science for
trademark infringement and trademark dress infringement, as well as federal and Illinois common law
claims of unfair competition. Forward Science does not address these claims in its motion to dismiss.
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BACKGROUND 2
Invado is a New York company that developed two oral treatment pharmaceutical
products, NeutraCaine® and NetraSal®. Invado owned the registrations for both trademarks in
October 2014 when it began discussing a potential business relationship with Forward Science.
The Forward Science entities are organized in the state of Texas and solicit sales in Illinois.
The parties had an initial meeting via telephone on October 8, 2014 to discuss the
possibility of Forward Science working as an independent sales agent for Invado. They
subsequently signed a confidentiality agreement (the “Agreement”) in which Forward Science
agreed that it would use confidential information disclosed by Invado only for purposes of
exploring a business relationship. Invado and Forward Science met in November 2014, and
Invado disclosed proprietary and confidential details regarding its NeutraSal and NeutraCaine
business models, including information related to manufacturing, distribution, pricing strategies,
sales and industry relationships, and market sales data. The parties ultimately did not form a
business relationship and went their separate ways.
On August 25, 2015, Forward Science’s president made a 510(k) medical device filing
with the Food and Drug Administration (“FDA”) for SalivaMAX. The filing stated that
NeutraSal was one of the predicate devices for SalivaMAX and that SalivaMAX was the
substantial equivalent of NeutraCaine. In 2017, Forward Science announced another product for
oral pain relief called SalivaCAINE. Prior to 2015, Forward Science did not manufacture or sell

Invado also seeks damages from unknown defendants—Jane Does 1–10, who allegedly shared
confidential information with Forward Science—for breach of contract and DTSA violations.
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The facts in the background section are taken from Invado’s complaint and are presumed true for the
purpose of resolving Forward Science’s motion to dismiss. See Virnich v. Vorwalrd, 664 F.3d 206, 212
(7th Cir. 2011); Local 15, Int’l Bhd. Of Elec. Workers, AFL-CIO v. Exelon Corp., 495 F.3d 779, 782 (7th
Cir. 2007).

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products in the same market as Invado, other than through a subsidiary known as OralID, which
sold oral disease screening products.
Invado asserts that Forward Science used Invado’s confidential information in bringing
SalivaMAX and SalivaCAINE to market, in violation of the Agreement and the DTSA. Invado
also claims that Forward Science acquired additional trade secrets and confidential information
about Invado’s products from unknown defendants who previously worked at Invado (Jane Does
1–10).
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not
its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir.
1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all wellpleaded facts in the plaintiff’s complaint and draws all reasonable inferences from those facts in
the plaintiff’s favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive
a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a
claim’s basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct.
1937, 173 L. Ed. 2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.
Ct. 1955, 167 L. Ed. 2d 929 (2007). “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.” Iqbal, 556 U.S. at 678.

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ANALYSIS
I.

Breach of Contract
Forward Science argues that the Court should dismiss Invado’s breach of contract claim

because Invado did not allege sufficient facts to show a breach of the Agreement and because
Invado failed to allege facts to show damages.
The Agreement is governed by Texas law. 3 Under Texas law, a breach of contract claim
requires: “(1) a valid contract; (2) the plaintiff performed or tendered performance; (3) the
defendant breached the contract; and (4) the plaintiff was damaged as a result of the breach.”
Brooks v. Excellence Mortg., Ltd., 486 S.W.3d 29, 36 (Tex. App. 2015).
Invado sufficiently alleged a breach of contract because its complaint contains sufficient
factual information to state a plausible claim for relief. See Wilson v. Career Educ. Corp., 729
F.3d 665, 676 (7th Cir. 2013) (“At the pleading stage, [a plaintiff] must simply allege a plausible
breach of contract theory.”). Although the “allegations are scattered” throughout the complaint,
Invado put Forward Science on notice for the basis of its breach of contract claim. Brechbill v.
Home Invest LLC, No. 17-cv-7313, 2018 WL 4384297, at * 8 (N.D. Ill. Sept. 14, 2018); see also
Axiom Ins. Managers Agency, LLC v. Indemnity Ins. Corp., No. 11 C 2051, 2011 WL 3876947,
at *12 (N.D. Ill. Sept. 1, 2011) (“A plaintiff need not plead all the specific details underlying an
alleged breach of contract to state a claim.”). Invado alleges that Forward Science “agreed in
writing that . . . neither party would use any Confidential Information” other than in connection
with its evaluation of the potential business relationship. Doc. 1 ¶ 37. Invado further asserts that
“Forward Science through its actions stated herein breached the [Agreement]” because it “used

The Agreement contains a choice of law clause providing that the Agreement “will be governed by and
construed in accordance with the laws of the State of Texas.” Doc. 1 Ex. 1 ¶ 6. The parties do not
dispute the validity of the choice of law provision.

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Invado’s confidential information and trade secrets . . . to launch competing products into a
market in which Forward Science had no previous presence.” Doc. 1 ¶¶ 18, 41. Unlike in
Officemax, Inc. v. NHS Human Servs., Inc., where the specific facts that the plaintiff pleaded did
not support its claim that the defendant breached their contract, Invado has pleaded specific facts
here that would constitute a breach of the Agreement. No. 1:16 C 9111, 2017 WL 1022078, at
*3 (N.D. Ill. Mar. 15, 2017). If, as alleged, Forward Science used the confidential information
provided pursuant to the Agreement to develop SalivaMAX and SalivaCAINE, that would
constitute a breach of the Agreement. Invado has pleaded sufficient facts to support the breach
element of its breach of contract claim.
Invado has also pleaded sufficient facts to support the damages element of its breach of
contract claim. “[A]ll that is necessary to state a claim for breach of contract, under notice
pleadings requirements, is to allege the existence of damages.” Hanover Ins. Grp. v. Singles
Roofing Co., No. 10 C 611, 2012 WL 2368328, at *4 (N.D. Ill. June 21, 2012). Invado’s
complaint asserts that Forward Science “caus[ed] damage to Invado” when it used Invado’s
confidential product information to create rival products. The Court can also infer the type of
damage that Forward Science’s breach caused; a party would clearly be damaged by another
party using its trade secrets and confidential product information to create products that rival the
initial products. However, that inference is unnecessary, because Invado specifically states in its
complaint that the breach “is likely to cause confusion in the marketplace, takes unfair advantage
and makes unfair use of confidential information and trade secrets shared by Invado about its
product and business research and development without compensation to or authorization by
Invado and fosters unfair competition in the highly competitive marketplace of medical devices
and pharmaceuticals.” Doc. 1 ¶ 1. This same explanation of damages can be found in the cease

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and desist letter that Invado initially sent Forward Science, attached as an exhibit to the
complaint. Doc. 1 Ex. 2. Invado has alleged sufficient facts to put Forward Science on notice of
the breach of contract claim against them and render Invado’s right to relief plausible.
Because Invado sufficiently alleged a plausible claim, the Court denies Forward
Science’s motion to dismiss Invado’s breach of contract claim.
II.

Violation of the Defend Trade Secrets Act
Forward Science also argues that the Court should dismiss Invado’s DTSA claim for

failure to allege a violation after the enactment of the statute and failure to state a claim.
The DTSA took effect on May 11, 2016 and only covers acts occurring “on or after the
date of the enactment of this Act.” Molon Motor & Coil Corp. v. Nidec Motor Corp., No. 16 C
03545, 2017 WL 1954531, at *8 (N.D. Ill. May 11, 2017). To state a claim for a violation of the
DTSA, Invado must allege that Forward Science misappropriated a trade secret. 18 U.S.C.
§ 1836(b)(1) (“An owner of a trade secret that is misappropriated may bring a civil action under
this subsection.”). “The DTSA defines a trade secret as a variety of business related information
that the owner of which has taken reasonable measures to keep secret and from which the owner
derives economic value from that information not being generally known or readily ascertainable
by others who could gain an economic advantage from that information.” Prominence Advisors,
Inc. v. Dalton, No. 17 C 4369, 2017 WL 6988661, at *3 (N.D. Ill. Dec. 18, 2017).
Misappropriation under the DTSA includes the “disclosure or use of a trade secret of another
without express or implied consent” under certain conditions. 18 U.S.C. § 1839(5)(B).
Forward Science first argues that the conduct Invado alleges violated the DTSA occurred
in 2014, well before the statute became effective. A close reading of the complaint reveals that
this is simply incorrect. To state a plausible claim for relief under the DTSA, the plaintiff must

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allege a prohibited act occurring after May 11, 2016. Adams Arms, LLC v. Unified Weapons
Sys., Inc., No. 8:16-cv-1503-T-33AEP, 2016 WL 5391394, at *6 (M.D. Fla. Sept. 27, 2016).
Although Invado alleges that it revealed its trade secrets and confidential information to Forward
Science in 2014, it alleges that Forward Science misappropriated that information at a later date.
According to the complaint, Forward Science did not introduce SalivaCAINE until 2017. Doc. 1
¶ 14. Forward Science responded to Invado’s cease and desist letter on April 3, 2017, stating its
intention to continue selling the two products. Id. ¶ 16. Further, Forward Science filed for
“federal trademark registration of the Principal Register of the USPTO for the SalivaMAX
mark” on September 12, 2017. Id. ¶ 17. If, as Invado claims, Forward Science misappropriated
Invado’s trade secrets in the process of developing and selling SalivaMAX and SalivaCAINE,
the violations that Invado has alleged continued past May 11, 2016.
Forward Science also argues that Invado did not sufficiently identify the trade secrets that
it alleges Forward Science misappropriated. For a DTSA claim to survive a motion to dismiss, a
complaint need only identify the alleged trade secret in a general sense. See, e.g., Wells Lamont
Indus. Grp. LLC v. Richard Mendoza & Radians, Inc., No. 17 C 1136, 2017 WL 3235682, at *3
(N.D. Ill. July 31, 2017) (finding that the allegation that defendant “was exposed to confidential
information such as customer account information, product summaries, pricing sheets, product
prototypes, product designs, and detailed sales reports” was sufficient to survive a motion to
dismiss); Mission Measurement Corp. v. Blackbaud, Inc., 216 F. Supp. 3d 915, 920–21 (N.D. Ill.
2016) (holding that an allegation generally referencing business models, business plans, and
product development plans was sufficient). Invado sufficiently alleges the existence of a trade
secret by identifying its “trade secrets and confidential business practices, including but not
limited to proprietary and confidential information regarding Invado’s manufacturing,

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distribution, pricing strategies, sales and industry relationships, and other business proprietary
information not generally known to the public.” Doc. 1 ¶ 1. Trade secret allegations are
adequate “in instances where the information and the efforts to maintain its confidentiality are
described in general terms.” Mission Measurement, 216 F. Supp. 3d. at 920 (internal quotation
marks omitted).
Finally, Forward Science contends that Invado has not specified how Forward Science
misused Invado’s trade secrets. Again, “[a]ll that is required at this stage of proceedings is an
allegation that [the defendant] misappropriated [plaintiff’s] trade secrets sufficient to put the
defense on notice as to the nature of the claim.” Aggreko, LLC v. Barreto, No. 1:16-cv-353,
2017 WL 963170, at *2 (D. N.D. Mar. 13, 2017). Invado alleges that Forward Science misused
its trade secrets by using them to develop and sell two new rival products. Doc. 1 ¶¶ 46–47.
This is sufficient to state a plausible claim at this stage in proceedings, and so the Court denies
Forward Science’s motion to dismiss Invado’s DTSA claim.
CONCLUSION
For the foregoing reasons, the Court denies Forward Science’s motion to dismiss [16].

Dated: October 16, 2018

______________________
SARA L. ELLIS
United States District Judge

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