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Judge LeGrow Dismisses Breach of Contract and Trade Secret Claims for Failure to Comply with Statute of Limitations

February 21, 2020

In Ocimum Biosolutions (India) Ltd. v. AstraZeneca UK Ltd., C.A. No. N15C-08-168 AML CCLD, defendant AstraZeneca entered a three-year subscription agreement with plaintiff Ocimum. The contract permitted AstraZeneca to access Ocimum’s biological database, but required the company to return or destroy all unreserved data at the end of the term. After the agreement expired, Ocimum suspected AstraZeneca wrongfully retained data and later brought claims for breach of contract, misappropriation of trade secrets, and unjust enrichment. AstraZeneca filed a motion for summary judgment, arguing that the claims were untimely because Ocimum had notice of the alleged breach well before it sued.

At summary judgment, Judge LeGrow rejected three arguments that the plaintiff raised to support the promptness of its claims. First, Ocimum argued that mere suspicion of a claim could not establish inquiry notice. Remarking that a reasonable suspicion is clear and distinguishable from a subjective belief, Judge LeGrow disagreed. In Delaware, courts exploring inquiry notice consistently have held that a party is on inquiry notice when it has “facts sufficient to make [it] suspicious or that ought to make [it] suspicious.” IBio, Inc. v. Fraunhofer-Gesellschaft zur Forderung der Angewandten Forschung E.V., 2018 WL 6493503 (Del. Ch. Dec. 10, 2018).

Second, Ocimum argued that it conducted a diligent inquiry into AstraZeneca’s understanding of the agreement. Ocimum claimed that the investigation dispelled its early suspicions and precluded inquiry notice. Judge LeGrow determined that the plaintiff’s undetailed, 30-minute inquiry was not reasonable or diligent, and therefore could not preclude inquiry notice.

Finally, Ocimum argued that the continuing breach doctrine tolled the statute of limitations for its breach of contract claim. Judge LeGrow determined that the doctrine did not apply where a plaintiff could allege the elements of its claim after a single incident. Accordingly, Judge LeGrow held that Ocimum’s breach of contract claim was time-barred. The Court further held that inquiry notice of one claim provides “inquiry notice of all other potential claims premised on the same factual basis.” On that determination, Judge LeGrow granted the defendant’s summary judgment motion and dismissed all claims.

Analysis: The CCLD continues to be a favored venue for litigating trade secrets disputes. See, e.g., Incyte Corporation v. Flexus Biosciences, Inc., C.A. No. N15C-09-055 MMJ CCLD. This case highlights the importance of bringing trade secrets claims quickly. In her analysis, Judge LeGrow noted that a good faith relationship should not override attention to one’s business interests and protecting trade secrets. Companies must pay attention to “red flags” and reasonably investigate suspicions of wrongful activity or breach. Delaying litigation or failing to conduct a reasonable inquiry into early suspicions could impede future legal remedies.

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