Osiris files $6m trade secrets allegation against MiMedx
Osiris Therapeutics has accused competitor MiMedx of misappropriating trade secrets in a lawsuit filed earlier this week, in which Osiris has demanded more than $6 million in damages.
Osiris filed the complaint at the US District Court for the District of Maryland, Northern Division, on Monday, April 2.
As noted by the lawsuit Osiris and MiMedx are direct competitors in the market for the development of regenerative cellular and tissue-based products used to treat orthopaedic injuries. These products are sold to doctors, hospitals, and clinics.
Osiris entered into an agreement with distributor Stability Biologics in 2013. It said Stability would market and sell two of its products until the end of 2015 and required Stability to protect Osiris’ confidential information, according to the suit.
The two products were Ovation, a bone matrix to support repair, and Grafix, a placental membrane used for wound care.
MiMedx started to discuss acquiring Stability in mid-2015, following which Stability’s sales of Osiris’s products “significantly decreased”, according to Osiris. In January 2016 Stability become a wholly owned subsidiary of MiMedx and Osiris’ confidential information was accessible to MiMedx, the suit claimed.
Osiris alleged that, due to MiMedx’s influence, Stability failed to sell $2.2 million of Osiris’s products that it had acquired prior to the merger.
According to the complaint, the products expired and MiMedx refused to reimburse Osiris for the expired products; Osiris had pre-paid $1.28 million in commissions for the products, which Stability took and was supposed to sell. The products were not sold and the commissions not repaid, Osiris alleged.
In addition, the suit said Osiris’s trade secrets, including customer lists and sales information, were used by MiMedx to improve the sales of MiMedx’s competing products.
Osiris added that MiMedx sold consumers these products instead of the Osiris ones that MiMedx had in stock and had received commissions for.
According to the complaint, in March 2016 MiMedx “instructed” Stability to cease making payments owed to Osiris, as part of the 2013 agreement..As a result of this, plus associated legal costs, Osiris reportedly lost $6.8 million.
MiMedx “improperly gained a competitive advantage” and was unjustly enriched, the suit said. Due to the nature of the circumstances, Osiris said, the damage to sales and reputation cannot be adequately ascertained.
Osiris has requested $2.2 million for the expired products; $1.28 million in prepaid commissions for the expired products; $321,341.21 for legal costs; $3 million in compensatory damages in relation to the payment contract; exemplary damages for misappropriation of trade secrets; and injunctive relief.
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