On December 1, 2023, in Global Discovery Biosciences Corp. v. Harrington, et al., No. 2022-1132, a Vice Chancellor of the Delaware Court of Chancery ruled on the balance of a motion to dismiss brought back in June 2023 by two former CEOs-Dr. Harrington and Mr. Nuñez (together, “Defendants”)-who were accused of stealing Global Discovery Biosciences Corp.’s (“Global”) trade secrets and other company assets.

The lawsuit stems from Dr. Harrington’s formation of Global with a large investment from a seed investor in 2014. The purpose of the company purportedly was to monetize a testing procedure called “PULS,” which could identify early heart disease in patients. A dispute allegedly broke out in 2016 between Dr. Harrington and the investor as to who owned the controlling interest in Global. Apparently believing he was going to lose that dispute, Dr. Harrington allegedly transferred Global’s assets, including PULS-related testing data and proprietary algorithms, to other entities within his control, one of which was being led by Nuñez. Once Global’s assets were plundered, Dr. Harrington purportedly forced Global to file a fraudulent bankruptcy.     

In the ensuing Chancery Court suit, Global asserted eleven causes of action, including a trade secrets misappropriation claim under the Delaware Uniform Trade Secrets Act (“DUTSA”). Defendants moved to dismiss several of these causes of action based on two theories: the individual causes of action, including under DUTSA, failed to state a claim; and assuming the DUTSA claim survived, it preempted all or part of the remaining common law claims. 

With respect to the DUTSA claim, Defendants argued that the claim should be dismissed because Global identified the trade secrets at issue as the “information behind PULS,” which was allegedly insufficient. The Chancery Court found in an August 2023 bench ruling that the trade secrets misappropriation claim was sufficiently pled, and it rejected Defendants’ preemption argument without prejudice. The court, however, requested supplemental briefing regarding, among others, Global’s claims of usurpation of corporate opportunity and breach of fiduciary duty. These claims were the subject of the Chancery Court’s most recent opinion, where the court granted in part and denied in part the remainder of Defendants’ motion to dismiss. In short, the court found that Global’s claims of usurpation of corporate opportunity and breach of fiduciary duty could proceed because the former was sufficiently pled, and the latter was not collaterally estopped from being litigated in the Chancery Court action. This lawsuit underscores the value of trade secrets to a business’s overall intellectual property portfolio, while highlighting that disputes involving trade secrets often involve complex factual scenarios where cross-disciplinary legal expertise is needed. Stay tuned for further developments in this case, including whether the court rules definitively on the DUTSA preemption issue.

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Photo of Michelle M. Ovanesian Michelle M. Ovanesian

Michelle Ovanesian is an associate in the Litigation Department, where she focuses on intellectual property and life sciences. Michelle has worked on a range of matters in federal district courts, including serving on the successful trial team in the Amgen Inc. v. Sanofi

Michelle Ovanesian is an associate in the Litigation Department, where she focuses on intellectual property and life sciences. Michelle has worked on a range of matters in federal district courts, including serving on the successful trial team in the Amgen Inc. v. Sanofi remand jury trial in the District of Delaware.

In addition to intellectual property and life sciences, Michelle’s practice has encompassed a variety of other legal matters, including privacy and cybersecurity, and bankruptcy litigation. Most recently, Michelle was part of the litigation team that represented the Financial Oversight and Management Board in the Commonwealth of Puerto Rico’s bankruptcy proceedings.

Michelle maintains an active pro bono practice, with a focus on immigration law and civil rights. As part of her pro bono work, Michelle has filed an amicus brief in state court supporting the constitutionality of executive orders.

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.