The opinion
1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 PTC THERAPEUTICS, INC., Case No. 25-cv-04594-AMO
Plaintiff,
8
ORDER RE DEFENDANTS’ MOTION
9 v. TO DISMISS THE FIRST AMENDED
COMPLAINT
10 ACUREX BIOSCIENCES
CORPORATION, et al., Re: Dkt. No. 99
11
Defendants. PUBLIC REDACTED
12
13 Plaintiff PTC Therapeutics, Inc. (“PTC”) asserts Defendants AcureX Biosciences
14 Corporation (“AcureX”), Dr. William Shrader, and Dr. Sean Pintchovski misappropriated trade
15 secrets regarding treatment of certain neurodegenerative diseases. The Court granted Defendants’
16 first motion to dismiss the complaint, and granted PTC leave to amend. Dkt. No. 89.
17 On amendment, PTC has dropped its claim under the California Uniform Trade Secrets
18 Acts, and so the following causes of action remain: 1) misappropriation of trade secrets under the
19 federal Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836, et seq.; 2) breach of contract by
20 Drs. Shrader and Pintchovski; 3) breach of the implied covenant of good faith and fair dealing by
21 Drs. Shrader and Pintchovski; 4) violation of California's Unfair Competition Law (“UCL”), Cal.
22 Bus. & Prof. Code § 17200, et seq.; and 5) declaratory judgment against AcureX stating PTC “is
23 the true and lawful owner of all right, title, and interest in” Int’l Pat. Appl. No.
24 PCT/US2023/073312, WO 2024/050513 A1, filed March 7, 2024. Dkt. No. 91-3 ¶ 193. In the
25 alternative, PTC seeks an order “reassigning all rights in the disputed patent application and all
26 patents issuing therefrom to PTC” or a declaration that PTC is a “co-owner” of the patent. Id.
27 Having considered the parties’ submissions, and with the benefit of oral argument, the
1 FACTUAL ALLEGATIONS
2 The Court previously granted Defendants’ first motion to dismiss. See PTC Therapeutics,
3 || Inc. v. AcureX Biosciences Corp., No. 25-CV-04594-AMO, 2026 WL 350772, at *1 (N.D. Cal.
4 || Feb. 9, 2026). On the question of whether PTC had plausibly alleged possession of a trade secret,
5 || the Court determined two of the five alleged secrets satisfied the pleading requirement. Jd. at *5 -
6 || *7. However, on the element of misappropriation, PTC offered only conclusory allegations and
7 || failed to carry its burden. Jd. at *7 - *8. PTC’s remaining claims failed, in large part, due to the
8 || absence of plausibly alleged misappropriation. As amended, the FAC now expands the list of
9 || alleged trade secrets and supplements the allegations of misappropriation. The Court assumes
10 || familiarity with its prior order, and therefore, recounts only those well-pleaded supplemental
11 allegations.
12 Previously, the Court held PTC had plausibly alleged the existence of two trade secrets: (1)
| ceria inte Polo Lt rrr
| es
A 16 | EE No. 80 at 8. The FAC now
2 17 || alleges three additional trade secrets:
iz (1) [PTC’s] discoveries relating o including the SAR
6 knowledge and characteristics that eit among the
= a = al
20 — (2) its proprietary assay cascade, used collectively, to make
ose discoveries, and (3) the know-how and negative know-how
21 relating to these discoveries and compound identification.
22 || Dkt. No. 105-3 at 10-11. PTC also describes as the “Proprietary Structural Motif,”
23 || which exists within the chemical structure of numerous other compounds identified and logged
24 || within PTC’s “internal compound library.” Dkt. No. 91-3 § 79. By testing these compounds
25 using the proprietary assay cascade, PTC determined many of them exhibited potent anti-
26 || ferroptotic effects that were “exceptional in the field of neurodegenerative research.” Jd. For
27 instance, PTC determined a compound labeled known externally a
28 showed ee Id. As alleged, this usage of
1 the compound was not widely known in the industry. Id.
2 The FAC also contains analysis from Dr. Derek Pratt, Professor of Chemistry and
3 Biomolecular Sciences at the University of Ottawa. Id. ¶ 129. As alleged, “resorufin-based
4 scaffolds and their ferroptosis-related activity have been discussed in the scientific literature prior
5 to – and since – ferroptosis was first described in approximately 2012 . . . .” Id. However, the
6 application of PTC’s Proprietary Structural Motif as a
7 was not a “straightforward inference from the general literature.” Id.
8 Similarly, in the case of —known as —published studies had
9 explored chemical modifications to its structure, but did not indicate the compound could
10 Id.
11 Regarding the proprietary assay cascade, PTC allegedly acquired the assays from
12 BioElectron, and they are used to investigate new compounds and “optimize their efficacy as a
13 drug.” Id. ¶ 80. PTC identifies twenty assays, including: “A high-throughput, ferroptosis cell-
14 survival assay, used as BioElectron’s Tier 1 primary screening assay; [and] [p]roprietary neuronal
15 culture systems and downstream functional assays (spearheaded by Dr. Pintchovski) used to
16 validate anti-ferroptotic and 15 LO inhibitory activity in neuronal contexts.” Id. Drs. Shrader and
17 Pintchovski were either involved in the development of, or have deep knowledge of, the twenty
18 assays. Id. Though PTC notes “some of these assays could be developed with knowledge from an
19 exhaustive review of published literature, . . . [t]he knowledge of the entire assay cascade
20 (collectively) and how to apply it to identify and optimize a lead compound is a closely held trade
21 secret.” Id. The allegations regarding Dr. Pratt’s analysis also go to this point. In that analysis,
22 Dr. Pratt indicates “many ferroptosis and LO-based assays are known in the art and used by
23 research groups,” but the specific assay cascade utilized by BioElectron was neither publicly
24 disclosed nor ascertainable. Id. ¶ 129.
25 As for know-how, PTC alleges Drs. Shrader and Pintchovski acquired certain knowledge
26 through their exposure to the alleged trade secrets, such as how to: “(i) induce ferroptosis, (ii)
27 measure protection against ferroptotic cell death, and (iii) use tiered screening assays to rapidly
1 FAC are additional mentions of “know-how,” particularly as to the other alleged trade secrets.
2 See, e.g., id. ¶¶ 79-80, 90, 109.
3 Turning to the element of misappropriation, PTC alleges Drs. Shrader and Pintchovski
4 were directly involved in BioElectron’s therapeutic drug, Utreloxastat, which was described as a
5 “second-generation” Vatiquinone. Id. ¶ 91. Part and parcel to this work was their access to, and
6 knowledge of, the alleged trade secrets. Id. ¶¶ 85-89. Once Drs. Shrader and Pintchovski
7 commenced work at AcureX, PTC alleges they utilized trade secret information to accelerate the
8 development of the compound CU-12991 and the drug candidate CU-13001. Id. ¶ 109. The FAC
9 refers to certain AcureX patent applications, which PTC avers contain the trade secrets described
10 previously. Id. ¶ 112. For example, PTC cites patent application PCT/US2023/078151 (the “’151
11 Application”), which lists Drs. Shrader and Pintchovski as inventors, and discloses a compound
12 “structure that is highly similar to BioElectron/PTC’s Proprietary Structural Motif compounds and
13 derivatives.” Id. ¶ 115. Specifically, PTC notes
14 Id. ¶ 116.
15 Moreover, in patent application PCT/US2023/073312 (the “’312 Application”), AcureX
16 allegedly disclosed PTC’s trade secret involving the effect of
17 Id. ¶ 120. This patent application also included a compound structure
18 which allegedly replicates the structure of . Id. ¶ 122. Last, PTC cites patent
19 application PCT/US2025/033092 (the “’092 Application”), which discloses AcureX’s compound,
20 CU-12991. Id. ¶ 125. As in the ‘312 and ‘151 applications, CU-12991 allegedly exhibits the same
21 Proprietary Structural Motif identified as PTC’s trade secret. Id. ¶¶ 125-27.
22 LEGAL STANDARD
23 “To survive a motion to dismiss for failure to state a claim after the Supreme Court’s
24 decisions in Iqbal and Twombly, plaintiffs’ allegations must suggest that their claim has at least a
25 plausible chance of success.” Levitt v. Yelp! Inc., 765 F.3d 1123, 1134-35 (9th Cir. 2014) (cleaned
26 up). The district court must assume that the plaintiffs’ allegations are true and draw all reasonable
27 inferences in their favor. Shields v. Credit One Bank, N.A., 32 F.4th 1218, 1220 (9th Cir. 2022).
1 re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).
2 DISCUSSION
3 The Court first addresses PTC’s DTSA claim, before turning to the contract claims and
4 UCL claim. Last, the Court reviews PTC’s request for declaratory relief.
5 I. DEFEND TRADE SECRETS ACT CLAIM
6 To advance a trade secret misappropriation claim under DTSA, the plaintiff must plausibly
7 allege: “(1) that the plaintiff possessed a trade secret, (2) that the defendant misappropriated the
8 trade secret; and (3) that the misappropriation caused or threatened damage to the plaintiff.”
9 InteliClear, LLC v. ETC Glob. Holdings, Inc., 978 F.3d 653, 657-58 (9th Cir. 2020) (citing 18
10 U.S.C. § 1839(5)). “[T]he definition of what may be considered a ‘trade secret’ is broad,” and
11 includes:
12 all forms and types of financial, business, scientific, technical,
economic, or engineering information, including patterns, plans,
13 compilations, program devices, formulas, designs, prototypes,
methods, techniques, processes, procedures, programs, or codes,
14 whether tangible or intangible, and whether or how stored, compiled,
or memorialized physically, electronically, graphically,
15 photographically, or in writing.
16 Id. at 657. Further, “[t]he information must ‘derive[ ] independent economic value, actual or
17 potential, from not being generally known to, and not being readily ascertainable through proper
18 means by, another person who can obtain economic value from the disclosure of use of the
19 information.’” Id. (citing 18 U.S.C. § 1839(3)).
20 The Court examines only the first two elements of the claim, since the parties have not
21 raised any arguments as to whether the alleged conduct “caused or threatened damage” to PTC.
22 Id. at 658.
23 A. Possession of a Trade Secret
24 “[T]he definition of trade secret consists of three elements: (1) information, (2) that is
25 valuable because it is unknown to others, and (3) that the owner has attempted to keep secret.”
26 InteliClear, LLC, 978 F.3d at 657 (citing 18 U.S.C. §§ 1839(3), (5)). “[T]rade secret cases present
27 . . . a ‘delicate problem.’” Joby Aero, Inc. v. Archer Aviation Inc., No. 25-CV-10703-SVK, 2026
1 Biztech, Inc., 149 F.4th 1081, 1089 (9th Cir. 2025)). “How can plaintiffs plead, discover, and
2 prove whether a trade secret has been misappropriated without giving away the trade secret? On
3 the other hand, how can defendants respond to discovery without giving away their own trade
4 secrets?” Id. (citation omitted). “Courts have struck a balance in addressing this ‘delicate
5 problem’ by holding that at the pleading stage, the DTSA does not require a plaintiff to ‘spell out
6 the details’ of every conceivable trade secret.” Mattson Technology, Inc. v. Applied Materials,
7 Inc., No. 23-cv-06071-SVK, 2026 WL 1303361, at *3 (N.D. Cal. May 12, 2026). At the same
8 time, a plaintiff “must ‘clearly refer to tangible trade secret material’ instead of referring to a
9 ‘system which potentially qualifies for trade secret protection.’” Imax Corp. v. Cinema Techs.,
10 Inc., 152 F.3d 1161, 1167 (9th Cir. 1998) (emphasis in original). Further, “[t]he plaintiff ‘should
11 describe the subject matter of the trade secret with sufficient particularity to separate it from
12 matters of general knowledge in the trade or of special knowledge of those persons . . . skilled in
13 the trade.’” Id. at 1164-65. “Plaintiffs may not simply rely upon ‘catchall’ phrases or identify
14 categories of trade secrets they intend to pursue at trial,” nor is it sufficient to “cite and incorporate
15 by reference hundreds of documents that purportedly reference or reflect the trade secret
16 information.” InteliClear, LLC, 978 F.3d at 658 (citations omitted). Ultimately, the plaintiff bears
17 the burden of sufficiently identifying the trade secrets and showing they exist. Id. (citing MAI Sys.
18 Corp. v. Peak Computer, Inc., 991 F.2d 511, 522 (9th Cir. 1993)).
19 As previously noted, PTC alleges three additional trade secrets in the FAC: 1) the use of
20 the Proprietary Structural Motif compounds, as exemplified in
21
22 Dkt. No. 91-3 ¶ 79; 2) knowledge and use of the proprietary assay
23 cascade, which comprises twenty discrete assays for studying new compounds and optimizing
24 their efficacy, id. ¶ 80; and 3) know-how about ferroptosis and tiered assays, id. ¶ 18. Here, PTC
25 has carried its burden as to the first two alleged secrets, but fails to do so as to the third.
26 The FAC provides an array of allegations that establish the contours of the Proprietary
27 Structural Motif trade secret. PTC identifies its chemical structure, the location of certain atoms in
1 such compounds . See id. ¶ 79. Additionally, PTC notes the
2 the Proprietary Structural Motif compounds have exhibited along
3 this biological pathway. Id. As a specific example of the Proprietary Structural Motif, PTC
4 alleges no published study had
5 . Id. PTC asserts various
6 research materials dating back to 2018 show BioElectron had identified this capability of the
7 Proprietary Structural Motif under Dr. Shrader’s supervision. Id. This level of information
8 suffices to notify Defendants of the boundaries of the alleged secret without requiring PTC to give
9 away its own secrets. See Joby Aero, Inc., 2026 WL 1625376, at *8 (citing Quintara Biosciences,
10 Inc., 149 F.4th at 1089).
11 Similarly, with respect to the proprietary assay cascade, PTC has plausibly alleged a trade
12 secret. PTC supplies a table of the twenty assays comprising the cascade. Dkt. No. 91-3 ¶ 80.
13 The table includes the name of the assay, a description of its purpose in the cascade, and the level
14 of involvement Drs. Shrader and Pintchovski had in its development. Id. Further, PTC does not
15 contend the individual assays are each a trade secret, but rather the collective use of the twenty in
16 a process to discover new potential compounds is proprietary. Id. The mere possibility that an
17 individual assay could be derived from a review of relevant scientific literature does not exclude
18 trade secret protection, since “[t]rade secrets frequently contain elements that by themselves may
19 be in the public domain but together qualify as trade secrets.” Buffets, Inc. v. Klinke, 73 F.3d 965,
20 968 (9th Cir. 1996). Here, given the specificity of PTC’s assay cascade allegations, Defendants
21 can certainly “ascertain at least the boundaries within which the secret lies.” Vendavo, Inc. v.
22 Price f(x) AG, No. 17-CV-06930-RS, 2018 WL 1456697, at *4 (N.D. Cal. Mar. 23, 2018).
23 Defendants counter with two main arguments, but neither persuades. First, Defendants
24 assert the use of the Proprietary Structural Motif in is not
25 secret because it was publicly disclosed in prior BioElectron patents that were ultimately
26 abandoned. Dkt. No. 98-3 at 16. Schedule 2.15a to the Asset Purchase Agreement includes a list
27 of dozens of patents and trademarks, including their status at the time of the Agreement. Dkt. No.
1 judicial notice of the patents themselves, Dkt. No. 99-1. This is not an argument suited to a Rule
2 12(b)(6) motion. As addressed in the Court’s prior order, judicial notice is not appropriate for
3 disputed facts contained within a document. See PTC Therapeutics, Inc., 2026 WL 350772, at *7
4 (citing CODA Dev. S.R.O. v. Goodyear Tire & Rubber Co., 916 F.3d 1350, 1360 (Fed. Cir. 2019))
5 (observing judicial notice of scientific articles to determine whether an alleged trade secret was
6 public knowledge was inappropriate). Though the FAC includes the Asset Purchase Agreement, it
7 does not include the details of the abandoned patents listed in Schedule 2.15a. Whether PTC’s
8 alleged trade secret was publicly known through these abandoned BioElectron patents is a factual
9 question to be adjudicated at summary judgment, not on a motion to dismiss. See AllRounds, Inc.
10 v. Eshares, Inc., No. 20-cv-07083-VC, 2021 WL 2945532, at *1 (N.D. Cal. July 14, 2021) (“The
11 question whether alleged trade secrets are disclosed in a patent application . . . may be beyond the
12 scope of a motion to dismiss when there are factual disputes about the extent of the disclosure or
13 what is encompassed by the claimed secrets.” (citation omitted).).
14 Second, Defendants argue PTC has failed to plausibly allege the trade secrets have
15 independent economic value from being kept secret. Specifically, Defendants contend the Asset
16 Purchase Agreement between PTC and BioElectron does not state PTC paid for the Proprietary
17 Structural Motif or assay cascade. Dkt. No. 109-3 at 13. The Court disagrees. To start, Section
18 1.1(a) of the Agreement states PTC purchased the “Acquired Assets” in exchange for monetary
19 consideration, assumption of certain liabilities, and potential contingency payments. Dkt. No. 91-
20 3 at 116. Section 9.1(a) defines “Acquired Assets” as including “all Intellectual Property,” id. at
21 171, which itself includes “trade secrets,” id. at 179. Accordingly, a reasonable inference to be
22 drawn from the language of the Agreement is that PTC paid for the information and techniques
23 that constitute the trade secrets alleged here. But even absent the terms of the Agreement, PTC
24 separately alleges these trade secrets “eliminated critical stages of trial-and-error research,” and
25 “allowed AcureX to bypass failed candidates,” which “would have required years of exploratory
26 research and substantial additional investment.” Id. ¶ 129. “Although ‘the standard to show that
27 trade secrets derive [independent] economic value is not a high standard,’ courts recognize that
1 misappropriation.” Cisco Sys., Inc. v. Chung, 462 F. Supp. 3d 1024, 1052 (N.D. Cal. 2020)
2 (internal citations omitted). PTC’s allegations overcome the pleading requirement because they
3 articulate the market advantage AcureX stood to gain from utilizing the alleged trade secrets. See,
4 e.g., MAI Sys. Corp., 991 F.2d at 521 (holding a plaintiff had shown economic value of a
5 “Customer Database” because a competitor could target more customers in the market by
6 possessing it).
7 Turning to the third alleged trade secret, know-how about ferroptosis and tiered assays,
8 PTC has failed to carry its pleading burden. PTC alleges that the know-how comprises
9 information on “how to (i) induce ferroptosis, (ii) measure protection against ferroptotic cell death,
10 and (iii) use tiered screening assays to rapidly identify and optimize lead compounds for 15-LO
11 inhibition.” Dkt. No. 91-3 ¶ 18. But PTC alleges no facts beyond these “catchall” phrases.
12 InteliClear, LLC, 978 F.3d at 658; see also Vendavo, Inc., 2018 WL 1456697, at *4 (dismissing
13 trade secret claims when the plaintiff has used only categories to describe the alleged trade secrets,
14 including “negative know-how”). As the FAC makes clear, the process of ferroptosis and its role
15 in development of neurodegenerative disease is no secret. Indeed, vast unredacted portions of the
16 FAC are dedicated to explaining this scientific background. See, e.g., id. ¶¶ 5-9, 36-41. So, the
17 broad categories PTC identifies related to ferroptosis cannot be distinguished “from matters of
18 general knowledge in the trade or of special knowledge of those persons . . . skilled in the trade.”
19 Imax Corp., 152 F.3d at 1167.
20 Last, the parties briefly dispute whether PTC plausibly alleges the number of compounds it
21 has tested containing the Proprietary Structural Motif constitutes a trade secret. Defendants
22 contend the number itself has no “independent economic value from being kept secret.” Dkt. No.
23 109-3 at 11. PTC’s only response to the argument is to state: “Knowing how many compounds
24 BioElectron tested, and which succeeded, is valuable to PTC because such information is non-
25 obvious, not publicly known, and directly relates to compound selection and know-how.” Dkt.
26 No. 105-3 at 15. This does not suffice, as PTC fails to explain how the number of compounds
27 tested translates to an economic benefit to any other actor in the market. Perhaps more
1 benefit. In so far as PTC contends the number of compounds it has tested is a trade secret, it has
2 failed to carry its pleading burden.
3 For these reasons, the Court determines PTC has plausibly alleged trade secrets regarding
4 the Proprietary Structural Motif and assay cascade, as discussed above. Conversely, PTC has
5 failed to plausibly allege trade secrets involving “know-how” or based on the number of
6 compounds it has tested.
7 B. Misappropriation
8 Under DTSA, “misappropriation” includes:
9 (A) acquisition of a trade secret of another by a person who knows or
has reason to know that the trade secret was acquired by improper
10 means; or
11 (B) disclosure or use of a trade secret of another without express or
implied consent by a person who—
12
(i) used improper means to acquire knowledge of the trade
13 secret;
14 (ii) at the time of disclosure or use, knew or had reason to
know that the knowledge of the trade secret was—
15
(I) derived from or through a person who had used
16 improper means to acquire the trade secret;
17 (II) acquired under circumstances giving rise to a duty
to maintain the secrecy of the trade secret or limit the
18 use of the trade secret; or
19 (III) derived from or through a person who owed a
duty to the person seeking relief to maintain the
20 secrecy of the trade secret or limit the use of the trade
secret; or
21
(iii) before a material change of the position of the person,
22 knew or had reason to know that—
23 (I) the trade secret was a trade secret; and
24 (II) knowledge of the trade secret had been acquired
by accident or mistake;
25
26 18 U.S.C. § 1839(5). PTC advances two theories of misappropriation. First, PTC asserts
27 Defendants actually used and disclosed the alleged trade secrets under Section 1839(5)(B)(ii)(II).
1 Defendants “knew or had reason to know” that the “knowledge” they used or disclosed was
2 “acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or
3 limit the use of the trade secret . . . .” Id. Second, PTC contends the FAC plausibly alleges
4 “improper means,” so the remaining misappropriation theories also apply. The Court first
5 addresses use and disclosure absent “improper means” under Section 1839(5)(B)(ii)(II). Then, the
6 Court turns to the sufficiency of the “improper means” allegations.
7 As discussed above, PTC has plausibly alleged two trade secrets regarding the Proprietary
8 Structural Motif and the assay cascade. So, PTC must allege facts to permit a reasonable inference
9 that Defendants used or disclosed those secrets, and knew the information had been “acquired
10 under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use
11 of the trade secret.” 18 U.S.C. § 1839(5)(B)(ii)(II). As to the Proprietary Structural Motif, PTC
12 has narrowly met its pleading burden; however, as to the assay cascade, it has not. Beginning with
13 the Proprietary Structural Motif, PTC relies on four primary allegations to support an inference of
14 misappropriation: 1) Drs. Shrader and Pintchovski both joined AcureX in late 2021, and prior to
15 their employment had worked extensively on Vatiquinone and Utreloxastat for BioElectron, Dkt.
16 No. 91-3 ¶¶ 105-05; 2) as part of their work on those drugs, Drs. Shrader and Pintchovski were
17 deeply involved the development of the alleged trade secret, id. ¶¶ 83-89; 3) within a few years of
18 working at AcureX, both Drs. Shrader and Pintchovski were named as inventors on the ‘151
19 Application, which disclosed a compound used to treat neurodegenerative disease, id. ¶¶ 114-16;
20 and 4) the ‘151 Application contained the Proprietary Structure Motif, identical to ,
21 id. Whether these allegations suffice to permit a reasonable inference of misappropriation is a
22 close question. However, because the Court must draw all reasonable inferences in PTC’s favor,
23 the Court concludes PTC has plausibly alleged misappropriation.
24 “[F]ew trade-secret plaintiffs will ever have anything but circumstantial evidence when
25 pleading a complaint, before any discovery has occurred.” Wisk Aero LLC v. Archer Aviation Inc.,
26 No. 3:21-CV-02450-WHO, 2021 WL 8820180, at *15 (N.D. Cal. Aug. 24, 2021) (citations
27 omitted). “In analyzing misappropriation, the inquiry focuses on all of the threads of its
1 isolation.” Id. at *11. Accordingly, “[t]he competitor’s knowledge will often have to be inferred
2 from that evidence at the pleading stage.” Id. at *15. Though PTC alleges mostly circumstantial
3 evidence of misappropriation, those allegations mirror the evidence in WeRide Corp. v. Kun
4 Huang, 379 F. Supp. 3d 834, 849 (N.D. Cal. 2019). There, the district court considered a trade
5 secret misappropriation claim involving autonomous driving technology. Id. at 840-41. Finding a
6 likelihood of success on the merits of the claim, the court relied on four pieces of evidence: 1) a
7 former employee of the plaintiff occupied a leadership role at the competitor company; 2) the
8 “implausibly fast” development of the autonomous driving technology at the competitor company;
9 3) the location of certain technical components in the competitor’s car was the same as the
10 plaintiff’s; and 4) the timing of the defendant company’s hiring of the plaintiff’s former employee
11 indicated the company knew he misappropriated the asserted trade secrets. Id. at 849-50. Here,
12 PTC advances similar allegations, particularly Dr. Shrader’s leadership position at AcureX, and
13 the relatively fast timeframe for AcureX to develop a competing compound.1 Moreover, PTC
14 alleges the Proprietary Structural Motif appears in the ‘151 Application, and
15 Dkt.
16 No. 91-3 ¶ 116. The alleged use of the Motif in a is akin
17 to the assertions in WeRide Corp., where the competitor company had utilized a “radar
18 component” in the same location as the plaintiff company’s vehicles. 379 F. Supp. 3d at 849.
19 Considering the allegations as a whole, and drawing inferences in the nonmovant’s favor, PTC has
20 plausibly alleged misappropriation of the Proprietary Structural Motif trade secret.
21 Turning to the assay cascade, PTC offers only conclusory allegations of use. In short, PTC
22
1 PTC alleges the World Intellectual Property Association published the ‘151 Application on May
23
10, 2024. In opposing this motion, PTC notes the provisional priority date for the ‘151
Application was October 31, 2022, just over one year after Dr. Shrader arrived at AcureX. Dkt.
24
No. 105-3 at 19. However, PTC does not request judicial notice of the application, nor does it
argue the information is incorporated by reference into the FAC. Indeed, PTC does not direct the
25
Court to any documentation of the provisional priority date. Therefore, the Court does not
consider the October 2022 date in its analysis. It is, nonetheless, reasonable to infer from the
26
allegations in the FAC that the ‘151 Application was submitted at some point prior to May 10,
2024. While the Court does not consider the development timeframe for the competing compound
27
to be one year, the Court reasonably infers a timeframe of less than three years. This is
1 assumes Defendants have used, and are currently using, the assay cascade based on: “(i)
2 Defendants’ intimate knowledge of this assay cascade; (ii) Defendants’ lead compounds CU-
3 12991 and CU-13001, inclusive of those disclosed in the relevant AcureX patent filings; and (iii)
4 the compressed timeframe in which Defendants have advanced their lead compounds.” Dkt. No.
5 91-3 ¶ 81. But PTC does not explain how the use of the cascade can be reasonably inferred from
6 the substance of the patent applications. Use of the Proprietary Structural Motif could be inferred
7 from its presence in the chemical structure of the AcureX compounds, as disclosed in those patent
8 filings. Id. ¶ 116. Yet as to the assay cascade, PTC does not allege the information appears in any
9 discernable way in those filings, nor does PTC explain how a compressed development timeframe
10 indicates use of the proprietary assays as opposed to any other assays. Absent any factual
11 allegations of use, the assay cascade claim cannot advance.
12 In the alternative, PTC contends the FAC plausibly alleges “improper means” sufficient to
13 state a claim for misappropriation under an acquisition theory. See 18 U.S.C. § 1839(5)(A)
14 (defining “misappropriation” to include “acquisition of a trade secret of another by a person who
15 knows or has reason to know that the trade secret was acquired by improper means”). The Court
16 is not persuaded. Under DTSA, the term “improper means”:
17 (A) includes theft, bribery, misrepresentation, breach or inducement
of a breach of a duty to maintain secrecy, or espionage through
18 electronic or other means; and
19 (B) does not include reverse engineering, independent derivation, or
any other lawful means of acquisition . . . .
20
21 18 U.S.C. § 1839(6). PTC argues Defendants acquired the alleged trade secrets by “improper
22 means” because Drs. Shrader and Pintchovski breached the confidentiality agreements they signed
23 with BioElectron, and AcureX induced that breach. Dkt. No. 105-3 at 23-24. Yet PTC does not
24 allege a factual basis for the breach or inducement—instead relying on an inference of breach
25 from the alleged use of the Proprietary Structural Motif in the ‘151 Application. An assertion of
26 “improper means” requires non-conclusory allegations of the breach. Indeed, cases finding a
27 plausibly alleged “improper means” theory have substantiated the breach of duty with allegations
1 WL 2300640, at *2 (N.D. Cal. May 30, 2019) (noting the defendant convinced a third-party to
2 deliver the plaintiff’s equipment to the defendant, and following cessation of the contract, the
3 defendant did not return equipment to the plaintiff); Gatan, Inc. v. Nion Co., No. 15-CV-01862-
4 PJH, 2017 WL 1196819, at *3 (N.D. Cal. Mar. 31, 2017) (observing the defendant misrepresented
5 to the plaintiff that it had no intention of competing in the spectrometer market prior to entering an
6 agreement for exchange of proprietary information); Alta Devices, Inc. v. LG Elecs., Inc., 343 F.
7 Supp. 3d 868, 883 (N.D. Cal. 2018) (noting the defendant did not return to the plaintiff
8 confidential information it had received pursuant to an NDA). If an “improper means” claim only
9 required the plaintiff to allege the existence of a duty to keep the information confidential, then it
10 would be no different from a claim under Section 1839(5)(B)(ii)(II). What distinguishes an
11 “improper means” claim from statutory provisions that do not use the term, is concrete allegations
12 of breach or inducement. The FAC provides no such allegations.
13 C. Statute of Limitations
14 Under DTSA, a civil action “may not be commenced later than 3 years after the date on
15 which the misappropriation with respect to which the action would relate is discovered or by the
16 exercise of reasonable diligence should have been discovered.” 18 U.S.C. § 1836(d). Defendants
17 assert PTC’s claims are time-barred because the initial cease-and-desist communication was sent
18 to Dr. Shrader in 2020. Dkt. No. 98-3 at 31. However, whether PTC exercised reasonable
19 diligence at that time in attempting to uncover misappropriation of the Proprietary Structural Motif
20 is beyond the bounds of the instant complaint. Further, PTC contends the assurances offered by
21 Dr. Shrader and his counsel obfuscated the alleged misappropriation. Dkt. No. 105-3 at 29. The
22 Court will not wade into this factual dispute on a Rule 12(b)(6) motion.
23 * * *
24 For these reasons, Defendants’ motion to dismiss the DTSA claim is GRANTED IN
25 PART and DENIED IN PART. PTC’s claims based on the assay cascade, “know-how,” and the
26 number of compounds PTC has tested are dismissed. PTC’s claim based on the Proprietary
27 Structural Motif may advance.
1 II. CONTRACT CLAIMS
2 On amendment, PTC asserts the same basis for its contract claims. In sum, Drs. Shrader
3 and Pintchovski allegedly violated the terms of the Proprietary Information Agreements they
4 signed with BioElectron/Edison Pharmaceuticals, which were acquired by PTC. PTC also
5 contends Defendants violated the implied covenant of good faith and fair dealing by
6 misrepresenting Dr. Shrader’s and Dr. Pintchovski’s role in the ‘682 Application to hide their
7 alleged breach of the contracts.
8 As noted in the Court’s prior order, California law governs the Proprietary Information
9 Agreements. PTC Therapeutics, Inc., 2026 WL 350772, at *8. So, “[t]o state a claim for breach
10 of contract, the plaintiff must plausibly allege ‘(1) the existence of the contract, (2) plaintiff’s
11 performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages
12 to the plaintiff.’” Access Optical Networks, Inc. v. Seagate Tech. LLC, No. 24-CV-03745-EKL,
13 2025 WL 240799, at *5 (N.D. Cal. Jan. 17, 2025) (citing Oasis W. Realty LLC v. Goldman, 51
14 Cal. 4th 811, 821 (2011)). Separately, “to establish a breach of the covenant of good faith and fair
15 dealing, a plaintiff must show: ‘(1) the parties entered into a contract; (2) the plaintiff fulfilled his
16 obligations under the contract; (3) any conditions precedent to the defendant’s performance
17 occurred; (4) the defendant unfairly interfered with the plaintiff’s rights to receive the benefits of
18 the contract; and (5) the plaintiff was harmed by the defendant’s conduct.’” In re Yahoo! Inc.
19 Customer Data Sec. Breach Litig., No. 16-MD-02752-LHK, 2017 WL 3727318, at *48 (N.D. Cal.
20 Aug. 30, 2017) (citation omitted).
21 PTC has plausibly alleged a breach of the Proprietary Information Agreements based on
22 use of the Proprietary Structural Motif in the development of AcureX’s compounds. In response,
23 Defendants argue PTC can only bring a breach of contract claim based on agreements related to
24 the EPI-743, EPI-589, and EPI-857 compounds. Dkt. No. 98-3 at 29. Even if true, the FAC
25 alleges the Proprietary Information Agreements relate to those compounds. The agreements were
26 operative at the time Drs. Shrader and Pintchovski were working on EPI-743, and the agreements
27 prohibit disclosure of “trade secrets.” Dkt. No. 91-3 ¶¶ 63-68, 73-75. Accordingly, the alleged
1 the Proprietary Information Agreements.
2 Regarding the breach of the covenant of good faith and fair dealing, PTC has failed to
3 plausibly allege a factual basis for its claim. To the extent PTC continues to rely on allegations
4 that Drs. Shrader and Pintchovski fraudulently concealed their identities as the true inventors of
5 the ‘682 Application, it has offered no new allegations, and similarly fails to meet its burden under
6 Federal Rule of Civil Procedure 9(b). PTC Therapeutics, Inc., 2026 WL 350772, at *9.
7 Additionally, PTC now asserts the representations made by Dr. Shrader and his counsel in
8 response to the cease-and-desist letters constitute a basis for the claim. Dkt. No. 105-3 at 26. This
9 argument lacks merit. To start, the FAC does not allege Dr. Pintchovski’s involvement in any of
10 that correspondence, so PTC has not asserted a claim against him. And even if it did, PTC does
11 not present any factual allegations explaining how the letter from Dr. Shrader’s counsel “unfairly
12 interfered” with its rights under the contracts or whether the communications at that time were
13 made in bad faith.
14 Therefore, Defendants’ motion to dismiss is DENIED as to the breach of contract claim
15 and GRANTED as to the breach of the implied covenant of good faith and fair dealing claim.
16 III. UCL CLAIM
17 California’s UCL prohibits “any unlawful, unfair or fraudulent business act or practice.”
18 Cal. Bus. & Prof. Code § 17200. However, under California law, the California Uniform Trade
19 Secrets Act (“CUTSA”) “provides the exclusive civil remedy for conduct falling within its terms
20 and supersedes other civil remedies based upon misappropriation of a trade secret.” x.AI Corp. v.
21 OpenAI, Inc., 821 F. Supp. 3d 1100, 1112 (N.D. Cal. 2026) (citation omitted). Though CUTSA
22 “expressly allows contractual and criminal remedies, whether or not based on trade secret
23 misappropriation,” it preempts civil remedies. K.C. Multimedia, Inc. v. Bank of Am. Tech. &
24 Operations, Inc., 171 Cal. App. 4th 939, 954 (2009). This includes claims under the UCL. See id.
25 at 962 (holding CUTSA preempted a UCL claim based on “the same conduct that g[ave] rise to
26 [the] trade secrets claim”). Because the factual basis underlying PTC’s cause of action under the
27 UCL is identical to the alleged misappropriation that animates the DTSA claim, CUTSA preempts
1 IV. DECLARATORY JUDGMENT
2 PTC seeks a declaration that it “is the true and lawful owner of all right, title, and interest
3 in” Int’l Pat. Appl. No. PCT/US2023/073312, WO 2024/050513 A1, filed March 7, 2024. Dkt.
4 No. 91-3 ¶ 193. In the alternative, PTC seeks an order “reassigning all rights in the disputed
5 patent application and all patents issuing therefrom to PTC” or a declaration that PTC is a “co-
6 owner” of the patent. Id. Plaintiff’s request for relief is governed by the Declaratory Judgment
7 Act, 28 U.S.C. § 2201, which provides: “[i]n a case of actual controversy,” a court “may declare
8 the rights and other legal relations of any interested party . . . whether or not further relief is or
9 could be sought.” 28 U.S.C. § 2201(a). Analysis under the Act proceeds in two parts: first, a
10 court must determine whether an “actual controversy exists,” and second, whether to exercise its
11 discretion to permit the declaratory judgment action. Am. States Ins. Co. v. Kearns, 15 F.3d 142,
12 143-44 (9th Cir. 1994).
13 “The Declaratory Judgment Act does not provide a cause of action when a party . . . lacks a
14 cause of action under a separate statute and seeks to use the Act to obtain affirmative relief.” City
15 of Reno v. Netflix, Inc., 52 F.4th 874, 878 (9th Cir. 2022). “The availability of relief under the
16 Declaratory Judgment Act ‘presupposes the existence of a judicially remediable right.’” Id.
17 (citation omitted). Since PTC has plausibly alleged other claims, declaratory relief is available at
18 the Court’s discretion. Defendants argue the Court should dismiss PTC’s claim for a declaration
19 of patent ownership on these allegations because it would run afoul of California Business and
20 Professions Code § 16600. Dkt. No. 98-3 at 31. Under that provision, “[a]ssignment clauses are
21 ‘unlawful non-compete provisions where they require an employee to assign an invention
22 conceived after departing from an employer’s service.’” Fibrogen, Inc. v. Hangzhou Andao
23 Pharm. Ltd., No. 22-CV-07148-AMO, 2024 WL 1199018, at *6 (N.D. Cal. Mar. 20, 2024).
24 Based on the present allegations, the Court determines Section 16600 is inapplicable, since it
25 applies to contracts, not judicial remedies to trade secret misappropriation. PTC’s requested relief
26 is a declaration from the Court about ownership of a patent; it does not implicate a contract
27 seeking to bind an employee after he has departed employment. Therefore, Defendants’ motion to
1 CONCLUSION
2 Based on the foregoing reasons, Defendants’ motion to dismiss PTC’s DTSA claim is
3 GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to PTC’s claims
4 || based on the assay cascade, “know-how,” and the number of compounds PTC has tested. The
5 || motion is DENIED as to PTC’s claim based on the Proprietary Structural Motif. Further, the
6 || motion to dismiss is DENIED as to the breach of contract claim and GRANTED as to the breach
7 || of the implied covenant of good faith and fair dealing claim. PTC’s UCL claim is preempted by
8 CUTSA, and thus Defendants’ motion to dismiss is GRANTED. Last, the motion to dismiss is
9 || DENIED as to PTC’s request for declaratory relief.
10 The Court has previously granted leave to amend the Complaint, noting in its prior order
11 that PTC had failed to plausibly allege a breach of the implied covenant of good faith and fair
12 || dealing. PTC has offered no new plausible allegations as to this claim, and so it is dismissed
13 || without leave to amend. Moreover, since PTC’s UCL claim is preempted by CUTSA, further
14 || amendment would be futile. Accordingly, the dismissal of the UCL claim is without leave to
3 15 || amend.
16 However, the Court grants leave to amend the DTSA claims based on “know-how” and the
i 17 || number of compounds tested. Likewise, PTC may amend its allegations of misappropriation of
Z 18 || the assay cascade. Should PTC choose to amend, it may only add allegations as to these claims.
19 Otherwise, PTC shall not add new causes of action or name additional defendants absent
20 || stipulation or leave of Court. Any amended complaint must be submitted within 21 days of the
21 posting of this Order.
22 IT IS SO ORDERED.
23 Dated: September 11, 2026
(aceh
25
ARACELI MARTINEZ-OLGUIN
26 United States District Judge
27
28