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Synergy Advanced Pharmaceuticals, Inc. v. CapeBio

May 25, 2011


The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.



Synergy Advanced Pharmaceuticals, Inc. ("Synergy") brings this action against CapeBio, LLC ("CapeBio"), CombiMab, Inc. ("CombiMab") and Per Lindell (collectively, "Defendants"), seeking monetary and injunctive relief for defendants' breach of various contractual provisions. Synergy initially filed suit in New York State court, after which defendants removed the action to this Court on the basis for diversity jurisdiction.*fn1 Synergy now moves to remand the action to state court on the grounds that there is no diversity of citizenship and the case was fraudulently removed. Defendants oppose that motion, alleging, for the first time, that the Court has original jurisdiction over the action because it "arises under" federal patent law. Defendants also cross-move to drop defendants CapeBio and CombiMab, who have stipulated to being bound by any outcome of this case, in order to create diversity jurisdiction, as an alternative or additional ground of federal jurisdiction. For the reasons below, Synergy's motion is denied and defendants' motion is granted.


A. The Parties

Synergy is a small drug development company, incorporated in Delaware, with its principal place of business in New York.*fn2 Its primary business is the development of certain urgoguanylin or ST-peptide derivatives, including a compound called SP-304 or Guanilib, which are used to treat gastrointestinal disorders.*fn3 CapeBio is a pharmaceutical consultancy company, incorporated in Delaware, with its principal place of business in Maryland.*fn4 Lindell, who is a citizen of Maryland, is CapeBio's president and only shareholder.*fn5 Lindell is also the president and only shareholder of CombiMab, which is incorporated in Delaware, with its principal place of business in Maryland.*fn6

B. Agreement Between Synergy and CapeBio

On September 25, 2007, Lindell (on behalf of CapeBio) and Bernard Denoyer (on behalf of Synergy) executed a services agreement ("Agreement") under which CapeBio agreed to perform consulting services related to the research and development of gastrointestinal pharmaceutical products in exchange for specified monetary compensation.*fn7 Performance of the Agreement commenced on October 1, 2007*fn8 and was terminated on July 1, 2008.*fn9 The Agreement expressly provides that several of its provisions -- including a confidentiality provision, a covenant not to compete, and a provision regarding the assignment of inventions -- "shall remain in effect notwithstanding the termination of [the] Agreement for any reason."*fn10 Most pertinent to deciding Synergy's motion is the provision regarding the assignment of inventions.

The Agreement states that all ideas, methods, inventions, discoveries, improvements, work products or developments, whether patentable or unpatentable, that relate to [CapeBio's] work with [Synergy], made or conceived by [CapeBio], solely or jointly with others, while providing consulting services to [Synergy] . . . shall belong exclusively to [Synergy] . . . whether or not patent applications were filed thereon . . . . *fn11

Accordingly, CapeBio is required to assign all "such inventions and all such patents that may issue thereon" to Synergy.*fn12 These provisions apply to all inventions produced within one year of termination or expiration of the Agreement.*fn13

C. The August 25, 2009 Action

On August 25, 2009, Synergy filed a Complaint in New York State Supreme Court against CapeBio and Lindell.*fn14 The complaint alleged that Lindell had, inter alia, breached the Agreement's confidentiality provision by using confidential information to develop a molecule for treating gastrointestinal disease*fn15 and violated the covenant not to compete.*fn16 Pursuant to these allegations, Synergy sought both injunctive and monetary relief.*fn17 Upon obtaining an affidavit from Lindell swearing that he had not violated the Agreement, Synergy voluntarily discontinued that action without prejudice.*fn18

D. The Current Action

Four months after discontinuing the August 25, 2009 action, Synergy again filed a complaint in state court on December 22, 2009. That complaint -- which, in amended form, is the subject of this action -- repeats Synergy's allegations from the prior action*fn19 and further asserts that Lindell formed a new entity, CombiMab, as a shell company and alter ego of Lindell.*fn20 Synergy alleges that Lindell, through CapeBio and CombiMab, breached the Agreement by, inter alia, filing a patent or patents in competition with Synergy,*fn21 consulting or listing as consultants on a business plan several scientists who had consulting contracts with Synergy,*fn22 making presentations to various venture capital firms regarding the development of uroguanylin analogs and analogs of ST Peptides,*fn23 and misappropriating Synergy's confidential information for its own benefit.*fn24

Synergy also asserts that Lindell committed perjury by executing the affidavit that caused Synergy to discontinue its prior action without prejudice.*fn25 Synergy seeks, among other relief, assignment of any patents that properly should be assigned to it under paragraph 11 of the Agreement.*fn26

Defendants removed the action to federal court on the basis of diversity jurisdiction.*fn27 Over the course of the ensuing year, discovery was completed and a jury trial was scheduled to begin on April 23, 2011. On April 5, 2011, Synergy notified the Court that, in reviewing pretrial materials, it had become aware that there was no diversity of citizenship between the parties, as Synergy, CapeBio and CombiMab are all incorporated in Delaware.*fn28 Synergy alleges that the case was fraudulently removed to federal court through the deliberate omission by defendants' previous counsel of the fact that Synergy is a Delaware corporation, despite that fact appearing on the face of the Complaint.*fn29 As a result, Synergy now seeks to have the action remanded to state court.

Defendants oppose remand. While acknowledging that there is no diversity, defendants argue, for the first time, that the Court has subject matter jurisdiction over the case because it raises a substantial issue of patent law, over which federal courts have exclusive jurisdiction.*fn30 Additionally, defendants have entered into a Stipulation amongst themselves that binds CapeBio and CombiMab to whatever the outcome of the case may be. They argue that this Stipulation renders CapeBio and ...

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