Janssen loses bid to seize servers, laptops and phones from China company
US Court of Appeals dismisses appeal due to a ‘lack of jurisdiction’ | Dispute against Jiangsu Hengrui Pharmaceuticals began as a patent suit but the discovery process prompted trade secret claims.
The US Court of Appeals for the Third Circuit has rejected an appeal by Janssen (now Johnson & Johnson Innovative Medicine), in a case that evolved from first being a patent dispute.
Janssen appealed after a New Jersey district court refused to grant its ex parte seizure application against two rivals whom it had sued for alleged patent infringement.
In a precedential opinion of October 17, but made public on October 26, the Appeals Court concluded that it dismissed Janssen’s appeal due to a “lack of jurisdiction”.
Janssen, along with Spanish company PharmaMar, sued US-founded eVenus Pharmaceuticals Laboratories and its Chinese parent company Jiangsu Hengrui Pharmaceuticals in 2020 for alleged patent infringement of its cancer drug trabectedin.
The plaintiffs, collectively Janssen, claim that they spent ten years and more than half a billion dollars developing a stable, injectable version of trabectedin.
“They documented how to produce the drug for treatment on a commercial scale and patented some of the processes,” summarised the Court of Appeals.
“They kept their data, specifications, and methods for manufacturing the drug confidential, information which they consider to be trade secrets.”
Contentious discovery
The resulting drug product was trademarked and sold as Yondelis, approved by the US Food and Drug Administration (FDA) in 2015 for use in certain cancer patients.
Two years later, competitors Jiangsu and eVenus sought FDA approval to sell a generic version of Yondelis, prompting Janssen to sue the pair for patent infringement.
During the discovery process, Janssen obtained documents that led them to believe that Hengrui and eVenus had misappropriated their trade secrets. Janssen subsequently filed a separate trade secrets lawsuit against their rivals in April 2022.
“The parties had a series of contentious discovery disputes in the patent case and the trade secrets case, and Janssen became convinced that Hengrui and eVenus had spoliated evidence,” wrote Circuit Judge Arianna Freeman.
Ex parte seizure
Janssen filed an ex parte seizure application under the Defend Trade Secrets Act (DTSA), which provides that “the court may, upon ex parte application but only in extraordinary circumstances, issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”
Janssen asked the US District Court for the District of New Jersey to seize eVenus’s network servers and stored data, the laptops and mobile phones of three current employees, and the laptop of one former employee.
The District Court denied this after concluding that Janssen had failed to adequately prove it had met five of the eight DTSA factors.
The court found that Janssen had not shown that eVenus was in actual possession of the property at issue, or that eVenus’s property was present at the location of the proposed seizure when questioned about whether eVenus occupied the space.
The court also found an insufficient showing of immediate and irreparable harm, or an immediate concern for spoliation.
Balance of harm
“Given that Janssen sought seizure of property that would sweep in “all [eVenus’s] company information”, “not limited in any way to the matters at issue in this case,” the District Court found that the balance of harm weighed against granting the seizure,” wrote Judge Freeman.
Janssen appealed, contending that the Appeals Court has jurisdiction to review the order denying its ex parte seizure application. It argued that the District Court’s order was immediately appealable because the denial of a DTSA ex parte seizure is the denial of a functional injunction.
“They also assert,” added Judge Freeman, “that we have jurisdiction over DTSA ex parte seizure rulings for the same reasons that we have jurisdiction over Trademark Counterfeiting Act of 1984 (Lanham Act) ex parte seizure rulings.
“We are not persuaded and conclude that we lack jurisdiction under § 1292(a)(1). And because no other statute provides us jurisdiction, we will dismiss this appeal.”
The patent dispute between the parties, which involves various co-defendants, remains open.
Counsel for Janssen in the trade secrets complaint are Roy Englert, Shikha Garg, Lisa Kobialka, Irena Royzman, Daniel Sugarman and Christine Willgoos at Kramer Levin. Also Peter Harvey at Patterson Belknap.
Counsel for the defendants are Clifton Elgarten, Ali Tehrani and James Stronski at Crowell & Moring. Also Arnold Calmann and Katherine Escanlar at Saiber.
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