Morrison Foerster recently secured a complete victory at the pleadings stage for its clients Kind Pharmaceuticals LLC and Hangzhou Andao Pharmaceutical Ltd., Chief Executive Dr. Dong Liu, and Chief Scientific Officer Dr. Shaojiang Deng (“Kind”) in the District Court for the Northern District of California. Kind is developing new drugs to treat anemia—called hypoxia-inducible factor prolyl hydroxylase inhibitors (“HIF-PHIs”)—in patients with chronic kidney disease.
Plaintiff FibroGen Inc. sought damages and equitable relief, alleging eight counts of breach of contract, breach of covenant of good faith and fair dealing, and correction of inventorship, and seeking a declaration of patent ownership over Kind’s patent. FibroGen based these causes of actions on non-compete provisions in former employment contracts with Drs. Dong and Liu, and allegations that unpatented HIF-PHI compounds in FibroGen’s compound library overlapped with HIF-PHI compounds in Kind’s patent. Kind moved to dismiss and moved for Rule 11 sanctions based on FibroGen’s failure to investigate its claims, arguing that the claims were unsupported or based on contractual provisions that were void under California Business & Professions Code § 16600.
On March 20, 2024, the Court dismissed seven of the eight counts in FibroGen’s complaint. The Court held that FibroGen had failed to plead sufficient facts to allege correction of inventorship and held the non-compete clause in the contracts underpinning the counts void under Section 16600. Kind answered the lone remaining count and brought counterclaims under California Business & Professions Code § 16600.5 seeking damages, attorney’s fees, and costs for FibroGen’s attempt to enforce the void non-compete clauses. Kind also renewed its sanctions motion, seeking attorney’s fees and costs incurred by Kind in defending the action to date.
Shortly before FibroGen’s response to Kind’s renewed motion for sanctions was due, the parties agreed to withdraw all pending legal proceedings between them regarding HIF-PHIs, without payment by any party. As a result, Kind Pharmaceuticals remains free to develop its clinical candidate, AND017, and other HIF-PHIs in its pipeline.
The MoFo team advising Kind was led by partners Daralyn Durie, Ragesh Tangri, and Fitz Collings, and associates Hannah Jiam, Timothy Trost, and Sydney Cooper.
A press release announcing the settlement can be found here.