United States District Court, S.D. Indiana, Indianapolis Division
In Re APPLICATION OF MEDYTOX, INC. FOR AN ORDER PURSUANT TO 28 U.S.C. SECTION 1782 TO CONDUCT DISCOVERY FOR USE IN A FOREIGN PROCEEDING
REPORT AND RECOMMENDATION ON APPLICATION FOR
ASSISTANCE IN FOREIGN LITIGATION
Doris
L. Pryor, United States Magistrate Judge
Medytox,
Inc. (“Medytox”), has filed this Application for
Assistance in Foreign Litigation and requests that the Court
issue an order granting it leave to obtain discovery for use
in a foreign court proceeding, pursuant to 28 U.S.C. §
1782. Medytox seeks to take the deposition of and submit
thirteen (13) requests for production to its former employee
and Respondent, Byung Kook Lee (“Dr. Lee”).
Medytox intends to use this information in connection with a
case pending in the Seoul Central District Court in Republic
of Korea.[1] (No. 2017Ga-Hap574026). In that case,
Medytox has sued Daewoong Pharmaceuticals Co., Ltd. and
Daewoong Co., Ltd. (the “Daewoong Defendants”)
for misappropriation of trade secrets.
Background
Medytox
is a Korean biopharmaceutical company that develops and
produces C. botulinum toxin Type A neurotoxin
(“BTX”) biopharmaceutical drugs. Medytox's
principal place of business is located in Seoul, Korea. BTX
drugs are used cosmetically to remove skin wrinkles and used
medically to treat certain muscular conditions. One of the
most well-known BTX drugs is Botox, which is sold by
Allergan.
According
to Medytox, the Daewoong Defendants distributed Botox in
Korea for Allergan from April 1995 to May 2006, and again
from April 2007 to January 2009.[2] In 2010, the Daewoong
Defendants filed a claim for a new BTX drug with the Korean
Ministry of Food and Drug Safety, asserting that they had
discovered a BTX strain that they isolated from Korean soil.
The Korean Ministry of Food and Drug Safety approved the
Daewoong Defendants' BTX drug, Nabota, in November 2013.
Because Medytox believed that the Daewoong Defendants'
development of a BTX drug in such a short timeframe was
improbable, and their explanation for how they acquired the
BTX strain was impossible, Medytox launched an internal
investigation into the potential theft of its BTX trade
secrets, including the potential theft of Medytox's own
BTX strain.
To
develop a BTX drug, a manufacturer needs both a BTX strain
and a process to safely handle, develop, and commercialize
the strain. Medytox invested millions of dollars and
conducted extensive research to successfully commercialize
and develop its BTX strain into a drug called Meditoxin.
During its development of Meditoxin, Medytox accumulated a
substantial amount of confidential and proprietary
information that it uses for the manufacture of the drug, all
of which was compiled into a comprehensive manual called the
Master Production and Control Record (“Master
Record”).
Dr. Lee
worked as a researcher for Medytox in Korea from 2004 through
2008. Dr. Lee's position required that he be given access
to Medytox's BTX strain and Master Record, along with
other proprietary information related to the Meditoxin
manufacturing process.
In
August 2008, Dr. Lee left Medytox to pursue graduate studies
at Hanyang University in Korea. While at Hanyang University,
Dr. Lee and CW Suh, an employee of the Daewoong Defendants,
worked and authored an academic paper together. Both Dr. Lee
and Mr. Suh studied under the same professor, Eun-Kyu Lee,
and worked in the same lab together.
Dr. Lee
worked as a consultant for the Daewoong Defendants starting
in 2010. He would advise the Daewoong Defendants on the safe
management of botulinum toxin strains. In 2011, Dr. Lee began
working as a visiting scholar at Purdue University in
Indiana. During his time at Purdue, Dr. Lee worked with Dr.
Kinam Park, a professor with close ties to the Daewoong
Defendants. Eventually, Dr. Lee enrolled in a post-doctorate
program at Purdue. Currently, Dr. Lee resides in the Southern
District of Indiana.
As a
result of Medytox's internal investigation, in January
2017, Medytox filed a criminal complaint with the Seoul
Metropolitan Police Agency (“SMPA”) against the
Daewoong Defendants and Dr. Lee. [Dkt. 15 at 4]. After filing
its complaint, Medytox learned that Mr. Suh had obtained a
BTX strain and related trade secrets from a friend at Hanyang
University, an individual who Medytox understood to be Dr.
Lee. Additionally, Medytox believes that senior management at
Daewoong instructed Mr. Suh to encourage Dr. Lee to provide
the Daewoong Defendants with the key components of
Medytox's Master Record and its BTX strain. In connection
with the criminal complaint, the SMPA requested an interview
with Dr. Lee, who ultimately travelled to Korea for two days
of interviews. [Dkt. 18-1 at 1.]
Medytox
represents that through its investigation, it learned Dr. Lee
was in extensive contact with the Daewoong Defendants during
the development of their drug, Nabota. Before leaving
Medytox, Dr. Lee allegedly printed several copies of
Medytox's Master Record and emailed to his personal email
address documents containing a number of Medytox's
proprietary trade secrets. Medytox also discovered that
sometime in 2008, Dr. Lee used his access card to enter
Medytox's strain reserve, where he removed and took with
him a viable BTX strain. Medytox believes that Dr. Lee stole
its BTX strain and the related Master Record and then sold
those items to the Daewoong Defendants. Medytox also believes
that the Daewoong Defendants encouraged Dr. Lee to carry out
this theft.
On June
6, 2017, Medytox filed a lawsuit against the Daewoong
Defendants and Dr. Lee in state court in Orange County,
California (Cause No: 30-2017-00924912-CU-IP-CJC) (the
“California Action”). Medytox picked California
because it believed that it could pursue claims against all
of the Defendants there. On October 12, 2017, the California
Superior Court granted Dr. Lee's motion to dismiss for
lack of personal jurisdiction. [Dkt. 16-3.] Regarding the
Daewoong Defendants' Motion to Dismiss, the California
Court found that the appropriate forum to adjudicate the
remaining allegations was Korea, and thus stayed the
California Action pending the resolution of proceedings in
Korea. [Dkt. 16-3].
On
October 30, 2017, Medytox filed suit against the Daewoong
Defendants in Seoul Central District Court in Korea, alleging
theft and misappropriation of trade secrets (the
“Korean Action”). Dr. Lee was not named as a
party in the Korean Action. This litigation is ongoing, and
the Korean court has ordered the parties to conduct
sporulation testing on their BTX strains to determine the
origin of the Daewoong Defendants' BTX strain. [Dkt. 2-1
at 5.]
On May
4, 2018, Medytox brought a separate suit against Dr. Lee in
state court in Marion County, Indiana (Cause No.
49D01-1805-PL-017584) (the “Indiana Action”).
Medytox's Indiana complaint alleged the following counts
against Dr. Lee: (i) violation of the Indiana Uniform Trade
Secrets Act; (ii) breach of contract; (iii) conversion; (iv)
unjust enrichment; and (v) violation of the Korean Unfair
Competition Prevention and Trade Secret Protection Act. On
October 4, 2018, the Marion County Court dismissed Count Five
and stayed the remaining counts pending resolution of the
Korean Action.
Discussion
On July
13, 2018, Medytox filed an application for judicial
assistance in the Southern District of Indiana, pursuant to
28 U.S.C. § 1782, to obtain discovery from Dr. Lee to
use in the Korean Action. Medytox's application,
accompanied by two declarations and a memorandum of law,
seeks evidence from Dr. Lee relating to his work with both
Medytox and the Daewoong Defendants and their representatives
during the time of the development and production of the
Daewoong Defendants' drug, Nabota.
Title
28 U.S.C. §1782 authorizes a federal district court to
order the production of evidentiary materials for use in
foreign legal proceedings, provided the materials are not
privileged. Intel v. Advanced Micro Devices, Inc.,
542 U.S. 241, 247 (2004). The purpose of § 1782 is to
provide efficient means of assistance to parties in
international litigation seeking “discovery relating to
that litigation in a federal district court, and in the
discretion of that court, . . . obtain[ing] as much discovery
as it could if the lawsuit had been brought in that court
rather than abroad.” Heraeus Kulzer, GmbH v.
Biomet, Inc., 633 F.3d 591, 594 (7th Cir. 2011). In
addition, § 1782 also aims to encourage “foreign
countries by example to provide similar means of assistance
to our courts.” Schmitz v. Bernstein Liebhard &
Lifshitz, LLP, 376 F.3d 79, 84 (2nd Cir. 2004). §
1782 provides in relevant part:
The district court of the district in which a person resides
or is found may order him to give his testimony or statement
or to produce a document or other thing for use in a
proceeding in a foreign or international tribunal, including
criminal investigations conducted before formal accusation.
The order may be made pursuant to a letter rogatory issued,
or . . . upon the application of any interested person and
may direct that the testimony or statement be given, or the
document or other thing be produced, before a person
appointed by the court. . . . The order may prescribe the
practice and procedure, which may be in whole or part the
practice and procedure of the foreign country or the
international tribunal, for taking the testimony or statement
or producing the document or other thing. To the extent that
the order does not prescribe otherwise, the testimony or
statement shall be taken, and the document or other thing
produced, in accordance with the Federal Rules of Civil
Procedure.
28 U.S.C.A. § 1782(a).
In
1855, Congress first provided for federal-court aid to
foreign tribunals, specifically by authorizing the federal
courts to respond to letters rogatory forwarded through
diplomatic channels. Intel, 542 U.S. at 241. The
scope of federal courts' authority to assist foreign
tribunals has expanded ever since. Id.
“Section 1782 is the product of congressional efforts .
. . to provide federal-court assistance in gathering evidence
for use in foreign tribunals.” Glock v. Glock,
Inc., 797 F.3d 1002, 1007 (11th Cir. 2015) (citing
Intel, 542 U.S. at 241). In its ...