Ethypharm S.A. France v. Bentley Pharmaceuticals, Inc.

388 F. Supp. 2d 426, 62 Fed. R. Serv. 3d 1403, 2005 U.S. Dist. LEXIS 21037, 2005 WL 2335308
District Court, D. Delaware·Decided September 26, 2005·No. 04-1300-SLR·Published·Cited by 33 cases

Opinion

MEMORANDUM OPINION

SUE L. ROBINSON, Chief Judge.

I. INTRODUCTION

On September 27, 2004, plaintiffs Ethyp-harm S.A. France and Ethypharm S.A. Spain filed this suit against defendant Bentley Pharmaceuticals, Inc. alleging fraud, violation of the Delaware Uniform Trade Secret Act (“DUTSA”), unjust enrichment and intentional interference with actual and prospective business relationships. (D.I. 1)

The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332. Pending before the court is defendant’s motion to dismiss for failure to join an indispensable party, pursuant to Fed. Rule Civ. P. 19(a) and (b), and to dismiss counts one, three and four as preempted by the DUT-SA. (D.I. 9)

II. BACKGROUND

Plaintiff Ethypharm S.A. France is a French corporation with its principal office in France. (D.I. 1 at ¶ 27) Plaintiff Ethypharm S.A. Spain is a majority owned subsidiary of Ethypharm S.A. France organized under the laws of Spain with its principal office in Madrid. (D.I. 1 at ¶ 28) Plaintiffs are engaged in developing proprietary drug delivery systems and formulating, clinically testing, registering, manufacturing, marketing and licensing pharmaceutical products based on their drug delivery systems. (Id.) Defendant Bentley Pharmaceuticals, Inc. is a Delaware corporation in the pharmaceutical industry. (D.I. 1 at ¶ 4) Belmac S.A. (“Belmac”) is a wholly-owned Spanish subsidiary of defendant. (D.I. 1 at ¶ 5)

According to plaintiffs, in the early 1990’s, they entered into an arrangement with defendant Bentley “directly and through Bentley’s agent ... Belmac.” (D.I. 1 ¶ 5) According to the arrangement, plaintiffs supplied access to intellectual property and trade secrets regarding the production, manufacture and sale of Ome-prozole and other products. 1 (D.I. at ¶ 6) *429 According to the complaint, in exchange for plaintiffs’ information and machinery, Omeprozole was manufactured exclusively for plaintiffs at Belmac’s facilities in Spain. (D.I. 1 at ¶ 54, 53, 59) Plaintiffs allege this arrangement was negotiated by defendant “directly and through its agent, Belmac.” (D.I. 1 at ¶ 53) Specifically, plaintiffs allege James Murphy, as an officer of defendant, visited Spain and France to meet with plaintiffs’ representatives to discuss the arrangement. (D.I. 1 at ¶ 49) Plaintiffs assert that Belmac entered into the arrangement at defendant’s direction and as part of a unified business strategy developed by defendant. (D.I. 1 at ¶ 63) Plaintiffs assert that “[a]t all times relevant to this complaint, Belmac S.A. has acted as Bentley’s agent with actual and/or apparent authority in its interactions and communications with Ethypharm.” (D.I. 1 at ¶ 63)

In its motion to dismiss, defendant argues the arrangement with plaintiffs was negotiated completely by Belmac and Bel-mac was not acting on defendant’s behalf. (D.I. 10 at 3) According to defendant, at the time of the relationship between Bel-mac and plaintiffs, defendant had no role in the day-to-day operations of Belmac and did not participate in the business relationship between Belmac and plaintiffs. (D.I. 10 at 3) In support of this assertion, defendant attached to its motion declarations by Adolfo Herrera, the general manager of Belmac, and James Murphy, chairman, president, chief executive officer and a director of defendant. (D.I. 11 at A-42, A~ 101) Defendant further asserts that the contracts and negotiations between Belmac and plaintiffs were conducted on behalf of Belmac by its general manager, Adolfo Herrera, and his predecessors. (D.I. 10 at 3) According to defendant, it had no rights, obligations, or duties under any agreements executed by Belmac with plaintiffs. (D.I. 11 at 3) Furthermore, defendant asserts “Belmac never acted on Bentley’s behalf during these negotiations or during contracting with Ethypharm.” (Id.)

Belmac manufactured Omeprazole for plaintiffs from 1992 through 2002. 2 (D.I. 1 at ¶ 10, 84) Plaintiffs assert that during this time, “Bentley and its agent, Belmac S.A., clearly and repeatedly confirmed and acknowledged that the machinery, know-how, processes, and technology used in the manufacturing of Omeprazole were proprietary to Ethypharm.” (D.I. 1 at ¶ 62) For example, plaintiffs state that Belmac employees were required to sign confidentiality statements to that effect. (Id.) Plaintiffs assert that “Bentley has been lying to the public and to Bentley’s shareholders to create the false and misleading impression that Bentley, rather than Eth-ypharm, holds a proprietary interest in the technology, trade secrets, know-how ... relating to the manufacture and sale of Omeprazole.” (D.I. 1 at ¶ 68) Plaintiffs assert that “Bentley and its agent, Belmac S.A., embarked on a bold scheme to steal Ethypharm’s machinery, know-how, trade secrets, technology, ... processes, formu-lae, and analytical methods.” (D.I. 1 at ¶ 84)

Defendant counters, by way of declaration, that shortly after Belmac began to manufacture Omeprazole, Belmac discovered that plaintiffs’ patented process was not adequate and, thus “proceeded to de *430 velop its own manufacturing process, utilizing its own funds, including conducting all necessary clinical trials.” (D.I. 11 at 4) Furthermore, defendant asserts it had no involvement in these efforts by Belmac. (Id.) Defendant states that Belmac eventually developed a successful organic process and formulation for manufacturing Ome-prazole. (Id.)

III. STANDARD OF REVIEW

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Ethypharm S.A. France v. Bentley Pharmaceuticals, Inc., 388 F. Supp. 2d 426, 62 Fed. R. Serv. 3d 1403, 2005 U.S. Dist. LEXIS 21037, 2005 WL 2335308 (D. Del. 2005).

388 F. Supp. 2d 426 (Ethypharm S.A. France v. Bentley Pharmaceuticals, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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