Genentech Sues Indicted Ex-employees and Competitor JHL Biotech

Shortly after a federal grand jury indicted four former employees of U.S.-based biotech firm Genentech Inc. (Xanthe Lam, Allen Lam, John Chan, and James Quach) for allegedly stealing Genentech’s trade secrets to assist JHL Biotech Inc., a Taiwan-based company, in developing and selling drugs similar to those made by Genentech, Genentech filed civil suit against all four defendants as well as JHL and its co-founders, who are also former employees of Genentech. Genentech asserted 10 claims, including violation of both federal and state trade secret laws and violations of the federal Computer Fraud and Abuse Act.

In sum, according to Genentech’s complaint, “JHL’s unlawful scheme to steal Genentech’s trade secrets commenced in 2013, when JHL founders Racho Jordanov and Rose Lin solicited Xanthe [Lam] and her husband [Allen Lam] to help JHL develop biosimilar versions of four Genentech medicines.” Allen Lam allegedly agreed to serve as a consultant for JHL and Xanthe Lam began surreptitiously working for JHL, while still serving as Principal Scientist at Genentech.

Between 2013 and 2017, Xanthe and Allen Lam allegedly provided JHL with confidential and trade secret information from Genentech that helped accelerate JHL’s development of biosimilar versions of Genentech medicines. By 2017, the alleged scheme expanded to include former Genentech employee James Quanch who downloaded hundreds of files containing confidential information from Genentech’s secure document repository system to an external storage device, and then took such information with him to start a new job with JHL.

Genentech alleges that the defendants’ conduct was “brazen theft” of its trade secrets. Genentech seeks, among other things, damages for actual loss and unjust enrichment, punitive damages, disgorgement, attorney’s fees for the investigation and litigation, and injunctive relief.

TIP: This case is a reminder that companies can often build off of a criminal indictment by bringing parallel civil suits to protect their interests. In doing so, however, companies should be careful to navigate the intricacies of dual criminal/civil litigation.