United States District Court, D. Massachusetts
PHIO PHARMACEUTICALS CORP. f/k/a RXI PHARMACEUTICALS, Plaintiff,
ANASTASIA KHVOROVA, Defendant.
MEMORANDUM AND ORDER
J. CASPER UNITED STATES DISTRICT JUDGE
Phio Pharmaceuticals Corp. f/k/a RXi Pharmaceuticals
Corporation (“RXi”) has filed this lawsuit
against Defendant Anastasia Khvorova (“Khvorova”)
alleging misappropriation of trade secrets in violation of
the Defend Trade Secrets Act, 18 U.S.C. §§ 1836-39
(Count I), Massachusetts Trade Secrets Act (Count II) and
Mass. Gen. L. c. 93, §§ 42-42A (Count III); breach
of fiduciary duties (Count IV); breach of contract (Count V);
and unfair competition in violation of Mass. Gen. L. c. 93A,
§ 11 (Count VI). D. 18. Khvorova has moved to dismiss
under Fed.R.Civ.P. 12(b)(7). D. 21. For the reasons stated
below, the Court DENIES the motion.
Standard of Review
to Rule 12(b)(7), a party may move for dismissal of an action
for failure to join a party under Rule 19. Fed.R.Civ.P.
12(b)(7). The Court conducts a two-part inquiry to determine
whether a party must be joined under Rule 19. See
Picciotto v. Cont'l Cas. Co., 512 F.3d 9, 15 (1st
Cir. 2008). First, the Court must decide whether a party is
necessary under Rule 19(a). United States v. San Juan Bay
Marina, 239 F.3d 400, 405 (1st Cir. 2001). If a party is
a necessary one, the Court must then ask whether joinder is
feasible. Fed.R.Civ.P. 19(a). If joinder is not feasible,
then the second determination that must be made under Rule
19(b) is whether the party is indispensable such that,
“in equity and good conscience, the action should
proceed among the existing parties or should be
dismissed.” Fed. R. Civ. P. 19(b).
“[T]he moving party carries the burden of showing why
an absent party should be joined.” Raytheon Co. v.
Cont'l Cas. Co., 123 F.Supp.2d 22, 32 (D. Mass.
with Rule 12(b)(6) motions, a court must accept the
allegations contained in the plaintiff's complaint as
true for the purpose of the Rule 12(b)(7) inquiry.”
McCaskill v. Gallaudet Univ., 36 F.Supp.3d 145, 151
(D.D.C. 2014); Davis Cos. v. Emerald Casino, Inc.,
268 F.3d 477, 479 n.2 (7th Cir. 2001) (stating that
“[f]or purposes of a motion to dismiss for failure to
join a party under Rule 19, we accept the allegations in the
complaint as true”). However, “a court is
‘not limited to the pleadings' and may consider
‘other relevant extra-pleading evidence.'”
Phoenix Ins. Co. v. Delangis, CIV.A. No.
14-10689-GAO, 2015 WL 1137819, at *2 (D. Mass. Mar. 13, 2015)
(quoting Axis Ins. Co. v. Hall, 287 F.R.D. 110, 113
(D. Me. 2012)).
otherwise noted, the following facts are based upon
allegations in RXi's amended complaint, D. 18, and are
accepted as true for consideration of the motion to dismiss.
RXi is a Massachusetts-based pharmaceutical company that has
contributed to the development of ribonucleic acid
interference (“RNAi”), a compound that can
destroy selected sequences of ribonucleic acids
(“RNA”). D. 18 ¶¶ 2-3, 15. RNAi has
vast potential to treat and cure numerous diseases and
conditions, including Alzheimer's Disease, inflammatory
diseases, macular degeneration and heart disease.
Id. ¶ 2. RXi has patented and performed six
clinical studies with a self-delivering RNAi called
sd-rxRNA® compound, which is notable for (among other
things) its exceptional half-life. Id. ¶¶
3, 6. Features of sd-rxRNA® are described in U.S. Patent
No. 8, 796, 443 (“'443 Patent”), id.
¶ 6, which was assigned to RXi and lists Khvorova as
lead inventor, see D. 18-1 at 2.
Khvorova's Employment at RXi
connection with its RNAi work, RXi hired Khvorova as its
Chief Scientific Officer in 2008. D. 18 ¶ 7. She was
promoted to Senior Vice President and Chief Scientific
Officer on September 24, 2011. Id. As part of the
conditions of her employment, Khvorova agreed not to disclose
or use in an unauthorized manner any RXi confidential
information acquired over the course of her employment.
Id. ¶¶ 24-26, 28-32. Khvorova's
employment agreements from 2008 and 2011 indicated that the
restrictions on use of confidential information continued to
apply after her employment terminated. Id.
¶¶ 26, 31. Concurrently with the execution of the
2011 Employment Agreement, Khvorova assigned to RXi certain
intellectual property she developed while working at a
different company and agreed that the technology disclosed in
those assignments was subject to the same confidentiality
provisions as in her RXi employment agreements. Id.
¶¶ 33-34. Khvorova received cash, stock, stock
options and future cash payments valued in the millions of
dollars (at the time) in exchange for these assignments to
RXi. Id. ¶ 33.
November 8, 2011, Khvorova allegedly sent confidential
information detailing RXi's methodology for the
developmental testing of RNAi to her personal email account.
Id. ¶ 36. On or between February 24 and 26,
2012, Khvorova downloaded “massive” amounts of
RXi data and experimental findings, which triggered an
internal investigation into Khvorova's download activity.
Id. ¶ 37. Khvorova and RXi entered into a
separation agreement shortly thereafter. Id. ¶
38. Pursuant to the terms of the separation agreement,
Khvorova assigned certain intellectual property rights to RXi
and acknowledged her continued obligation not to disclose RXi
confidential information. Id. ¶¶ 38-39.
Alleged Post-Termination Disclosure of Confidential
before April 22, 2013, Khvorova began working for the
University of Massachusetts Medical School
(“UMass”), one of RXi's competitors in the
field of pharmaceutical RNAi research and development.
Id. ¶ 47. During her employment with UMass, RXi
sent Khvorova reminders regarding her confidentiality
obligations with respect to RXi's intellectual property.
See id. ¶ 53. In December 2015, Dr.
Khvorova's laboratory released an article titled
“Hydrophobically Modified siRNAs Silence Huntington
mRNA in Primary Neurons and Mouse Brain, ” which
described the utility of an RNAi molecule that RXi describes
as “strikingly similar” to its sd-rxRNA®.
Id. ¶ 51. On November 3, 2016, Khvorova was
named as an inventor on U.S. Patent application 15/089423
(the “'423 Application”). Id.
¶¶ 12, 52; D. 22-1 at 4. In April 2016, Khvorova and
her co-inventors assigned the '423 Application to UMass.
D. 22-1 at 266, 268-69. The '423 Application allegedly
describes a class of RNAi molecules possessing the same
non-public experimental features of sd-rxRNA®. D. 18
¶ 52. RXi and Khvorova were investigating these
molecules during her tenure at RXi. Id.
5, 2017, RXi submitted an assignment document indicating that
Khvorova assigned the '423 Application to RXi. D. 22-1 at
270-73. The document was signed by Geert Cauwenbergh
purportedly as power of attorney on behalf of Khvorova.
Id. at 273. On August 23, 2017, however, UMass filed
a declaration with the United States Patent and Trademark
Office (“USPTO”) clarifying ...