The opinion
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Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
Present: The James V. Selna, U.S. District Court Judge
Honorable
Lisa Bredahl Not Present
Deputy Clerk Court Reporter
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
Not Present Not Present
Proceedings: [IN CHAMBERS] Order Regarding Motion for Remand/ Dismissal
Plaintiff/ Counterdefendant BioCorRx Inc. (“BioCor”) filed a motion to remand
the action and dismiss counterclaims against it. Mot., Dkt. No. 15. Defendants/
Counterclaimants VDM Biochemicals, Inc. (“VDM”) and David Martirosyan
(“Martirosyan”) (together, “Defendants”) opposed. Opp’n., Dkt. No. 17. BioCor filed a
reply. Reply, Dkt. No. 18.
For the following reasons, the Court GRANTS the motion to remand and
accordingly does not reach the motion to dismiss.
I. BACKGROUND
The following facts are alleged in BioCor’s complaint. Compl., Ex. A, Dkt. No. 1-
1.
BioCor is a healthcare solutions company focused on providing novel treatment
approaches for alcohol addiction, opioid addiction, and other addiction disorders. Id. ¶ 1.
BioCor and Defendants entered into non-disclosure and co-development agreements for
the purpose of developing and commercializing a chemical compound called “VDM-
001”. Id. ¶¶ 5, 9, 19. Pursuant to these agreements, BioCor agreed to provide the capital
and expertise to conduct studies required to validate, develop, and commercialize VDM-
001 in exchange for an ownership interest in VDM-001. Id. ¶¶ 9, 25. BioCor funded
several studies, engaged consultants, and provided other resources for the development of
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Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
provided Defendants with critical direction on what studies to conduct, shared its know-
how and trade secrets regarding the development of drug treatments, and shared its ideas
regarding novel applications for which VDM-001 might be developed, including for
indications outside of addiction treatment (the “novel indications”). Id. ¶¶ 11, 28. The
confidential data and reports generated by each of the studies and observational research
commissioned and paid for by BioCor, including the written analyses and results
provided by BioCor’s consultants, belongs to BioCor as confidential and proprietary
trade secret information (the “BioCor IP”). Id. ¶¶ 29, 31, 35-36.
After BioCor and its consultants disclosed the BioCor IP to Defendants,
Defendants improperly disclosed and used the BioCor IP to obtain an inflated
valuation of the VDM-001 IP to force BioCor to accept a higher price for the
ownership interest it already owned (or otherwise forfeit its ownership interest without
reimbursement), and install Martirosyan as a member of the BioCor Board of Directors.
Id. ¶ 37, 39. Defendants also disclosed and used the BioCor IP to file a patent application
covering the novel indications for VDM-001 asserting sole ownership over the patent
application. Id. ¶ 37.
On April 14, 2021, BioCor initiated this action by filing a Complaint in the
Superior Court of the State of California for the County of Orange. See id. The
Complaint alleges state and common law claims for (1) declaratory relief, (2) breach of
contract, (3) misappropriation of trade secrets, (4) intentional misrepresentation, (5)
concealment, (6) false promise, (7) promissory estoppel, and (8) constructive trust. See
id. On May 21, 2021, Defendants removed the action to this Court. See Notice of
Removal, Dkt. No. 1. On May 28, 2021, Defendants filed their Answer and
Counterclaim. See Answer, Dkt. No. 7.
II. LEGAL STANDARD
A. Motion to Remand
Under 28 U.S.C. § 1441(a), a defendant may remove a civil action from state court
to federal court so long as original jurisdiction would lie in the court to which the action
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Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
Doubts as to removability should be resolved in favor of remanding the case to the state
court. Id. This “‘strong presumption’ against removal jurisdiction means that the
defendant always has the burden of establishing that removal is proper.” Id. (quoting
Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir. 1990)).
“A motion to remand the case on the basis of any defect other than lack of subject
matter jurisdiction must be made within 30 days after the filing of the notice of removal.”
28 U.S.C. § 1447(c); see also Maniar v. FDIC, 979 F.2d 782, 786 (9th Cir. 1992). A
district court lacks power to order a remand in violation of Section 1447(c). Id.
III. DISCUSSION
A. Motion to Remand
BioCor asks the Court to remand this case on the grounds that Defendants cannot
satisfy their burden of demonstrating that federal jurisdiction is proper. See Mot., Dkt.
No. 15, at 5. Specifically, BioCor argues that Defendants’ asserted basis for removal is
that the claims for declaratory relief and misappropriation of trade secrets arise under
federal patent law (notably under 35 U.S.C. § 256), but that its declaratory and trade
secret claims are actually based in state law. Id. (quoting Notice of Removal, Dkt. No. 1,
at 5).
I. Declaratory Relief Claim
BioCor first argues that federal law neither creates nor constitutes a necessary
element of its declaratory relief claim. Id., at 6.
To state a claim for declaratory relief under California law, a plaintiff is required to
allege (1) a proper subject of declaratory relief, and (2) an actual controversy involving
justiciable questions relating to the rights or obligations of a party. See Brownfield v.
Daniel Freeman Marina Hosp., 208 Cal. App. 3d 405, 410 (1989). BioCor argues that it
has properly stated a claim for declaratory relief and that patent law is in no way a
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Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
agreement and co-development agreement, and (2) that this contract dispute is the subject
of its declaratory relief claim. Id. (citing Compl., ¶¶ 44, 47; Cal. Code of Civ. P. § 1060
(identifying contracts as proper subject of declaratory relief)).
Defendants, in opposition, argue that substantial issues of patent inventorship and
novelty are “essential to the resolution” of BioCor’s claim for declaratory relief because
the claim speaks to the issue of who owns the BioCor IP and the underlying patent
application. Opp’n., Dkt. No. 17, at 6. Specifically, Defendants state that “the right of
inventorship (and by extension the right of ownership of the BioCorRx IP) depends on
the resolution of two essential questions of federal patent law: (1) did Plaintiff and/or
their consultant solely conceive of and/or ‘invent’ the ‘new indications for VDM-001’;
and (2) are the alleged ‘new indications for VDM-001’covered by or otherwise fall
within the scope of disclosures and claims asserted in the original ‘338 Patent.” Id., at 7.
Defendants contend that because BioCor’s complaint seeks a determination of sole
ownership of the VDM-001 IP, the resolution of its request for a declaration of rights to
the IP depends on the outcome of substantial questions of patent law. Id.
The Court agrees with BioCor that its claim for declaratory relief does not
necessarily raise issues of patent law. BioCor’s Complaint satisfies the first requirement
of a declaratory relief claim by alleging that it entered into the co-development and non-
disclosure agreements with VDM. See Compl., ¶¶ 9-11, 19, 44, 47. BioCor’s Complaint
satisfies the second requirement by alleging that BioCor and VDM disagree regarding
their respective rights relating to the VDM-001 IP and BioCor IP under those agreements.
Id., ¶¶ 38-40, 45. Although some of the rights that BioCor seeks– a declaration regarding
whether it owns a percentage interest in the VDM-001 IP, whether it has sole ownership
of the BioCor IP, whether VDM is bound by the agreed-to valuation, and whether VDM
has the right to disclose the BioCor IP to third parties without BioCor’s consent– may
involve VDM’s right to use or disclose the BioCor IP in its patent application, this does
not transform a quintessentially state law claim into a federal question. See Quest
Nutrition, LLC v. Bd. of Supervisors of LSU Agric. & Mech. Coll., No. CV 14-02005
SJO EX, 2014 WL 3362061, at *3 (C.D. Cal. July 8, 2014) (“That Plaintiff’s remedy for
some of these state law claims may ‘tangentially involve issues of patent ownership does
not convert the state causes of action into federal law claims.’”); Prize Frize, Inc. v.
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Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
The Court further finds that the contract law questions at issue can be determined
without addressing the patent-law question of novelty. As BioCor notes in its Reply, it is
only seeking a determination that it owns the IP in question, which would include an
ownership interest in a pending application because of alleged improper use of the trade
secret data in that application. See Reply, Dkt. No. 18, at 5 (citing Compl., Dkt. No. 1-1,¶
47). The mere fact that this ownership interest in the pending application, if established,
might result in an issued patent that is later invalidated in a separate proceeding on the
grounds of lack of novelty is of no moment to the ownership right. Id. Accordingly,
because BioCor’s declaratory relief claim concerning ownership of the VDM- 001 IP
and BioCor IP, including the pending patent application, is based on rights created under
state law, the Court finds that the claim does not arise under patent law.
ii. Trade Secret Misappropriation Claim
BioCor next argues that federal law neither creates nor constitutes a necessary
element of its trade secret misappropriation claim. See Mot., Dkt. No. 15, at 9.
In California, a claim for misappropriation of trade secrets requires a plaintiff to
establish that (1) the plaintiff owned a trade secret, (2) the defendant acquired, disclosed,
or used that trade secret through improper means, and (3) the defendant’s actions
damaged the plaintiff. Cal. Civ. Code § 3246.1(b). “‘Improper means’ includes theft,
bribery, misrepresentation, breach or inducement of a breach of a duty to maintain
secrecy, or espionage through electronic or other means.” Id. at § 3426.1(a).
BioCor contends that it has properly alleged a trade secret misappropriation claim
by pleading that: (1) it owns trade secrets, (the BioCor IP) (Compl. Dkt. No. 1-1 ¶¶ 35,
55); (2) Defendants misappropriated that information by obtaining it under false
pretenses (id. ¶ 57), improperly disclosing the novel indications to a third party (id., ¶
59), and filing a patent application that relies on and discloses the BioCor IP (including
the novel indications) (id.,¶¶ 37, 41, 59); and (3) that the IP has substantial value from
not generally being known, and that BioCor has been damaged by Defendants’
misappropriation of the IP (id., ¶¶ 55-56, 60). Mot., Dkt. No. 15, at 9.
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Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
the patent application may be evidence of its trade secret misappropriation claim, the
mere presence of the patent application does not create a substantial issue of patent law.
Mot., Dkt. No. 15, at 10. In Uroplasty, the defendant filed a patent application after
leaving his job with the plaintiff, and the plaintiff subsequently filed an action for
misappropriation of trade secrets, breach of fiduciary duty, and breach of contract.
Uroplasty, 239 F.3d at 1291. The Federal Circuit ordered remand with instructions to
dismiss for lack of jurisdiction, reasoning that the claims for trade secret
misappropriation required a showing that the defendant used its trade secrets or
confidential information, “a burden that can be met without requiring the resolution of a
substantial issue of patent law. Because proving the same alleged acts also could support
the breach of contract and fiduciary duty claims without resolving a substantial patent
issue, patent law is not essential to any of the claims of the well-pleaded complaint.” Id.,
at 1280. Defendants attempt to distinguish Uroplasty on the grounds that “the well-
pleaded Complaint in Uroplasty did not include allegations that certain technology was
conceived, discovered, or otherwise solely invented and therefore solely owned by the
plaintiff, nor did its prayer demand a correction of inventorship by reassignment of the
patent application subsequently filed by the defendant.” Opp’n., Dkt. No. 17, at 11.
Defendants argue, as they did with respect to the declaratory relief claim, that the right of
inventorship and ownership of the IP for the trade secret misappropriation claim requires
findings regarding who invented the new indications for VDM-001 and whether said
indications were novel based on a comparison of disclosures in the original ’338 Patent.
Id., at 10. Accordingly, Defendants contend, patent law questions must be resolved in
order for BioCor to prevail on its trade secrets misappropriation claim. See id.
The Court will follow the approach taken by the Federal Circuit in determining that
it is not required to substantively examine inventorship in order to resolve an issue of
patent ownership based on misappropriation of trade secrets. See Drone Techs., Inc. v.
Parrot S.A., 838 F.3d 1283, 1293 (Fed. Cir. 2016) (“It does not follow from our
examination of patent ownership in Pandrol that we here must consider whether Ms. Lee
is correctly named as the sole inventor for purposes of determining [ownership]. Indeed,
while ownership and inventorship are related concepts, they involve separate inquiries.”)
What is more, the Court finds relevant the fact that BioCor’s trade secret
misappropriation claim arises from a dispute over the what is owed to BioCor as a result
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Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
disclosed in the pending patent application does not transform the state law claim into a
federal one. Accordingly, the Court finds that patent law is not necessarily raised by
BioCor’s trade secret misappropriation claim.
iii. Defendants’ Counterclaims as a Basis for Removal Jurisdiction
Next, BioCor argues that Defendants’ efforts to justify removal jurisdiction based
on 28 U.S.C. § 1454, which permits removal of a “civil action in which any party asserts
a claim for relief under any Act of Congress relating to patents,” was improper. Mot.,
Dkt. No. 15, at 13. Specifically, BioCor contends that 28 U.S.C. § 1454 applies only to
state court actions in which a party actually “asserts a claim for relief arising under any
Act of Congress relating to patents,” but that at the time Defendants filed their notice of
removal, no party had asserted any claim
for relief under any act of Congress relating to patents. Id.
As noted above, the Court agrees with BioCor that its Complaint asserted only
state law claims. Accordingly, the fact that Defendants did not file any answer or
counterclaim in the state action, but instead simply invoked 28 U.S.C. § 1454 in its notice
of removal (before filing any pleading asserting patent law claims), means that at the time
of removal, no party had asserted a claim for relief under any Act of Congress relating to
patents. See Masimo Corp. v.Mindray DS USA, Inc., No. CIV. A. 14-0405 SDW, 2015
WL 93759, at *3 (D.N.J. Jan. 7, 2015) (holding that a defendant’s “reference to potential
patent law counterclaims in its Notice of Removal is insufficient to establish jurisdiction
pursuant to Section 1454”). As such, relying on the plain language of Section 1454 and
the principle of strict construction of removal statutes, the Court finds that removal was
improper and remand is warranted because no federal question existed at the time of
removal.
Given that there is no basis for federal jurisdiction, the Court finds that removal
was improper. Accordingly the Court GRANTS the motion to remand.
B. Motion to Dismiss
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CIVIL MINUTES - GENERAL
Case No. SACV 21-938 JVS (KESx) Date July 21, 2021
Title BioCorRX, Inc. v. VDM Biochemicals, Inc. et al.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS the motion.
IT IS SO ORDERED.