2017 , United States District Court for the Central District of California, Southern Division
Cormac J. Carney
Summary
In this 2017 case, ChromaDex, Inc. sued Elysium Health, Inc. for breach of supply and royalty agreements, fraudulent deceit, and misappropriation of trade secrets related to proprietary ingredients NIAGEN® and pTeroPure®. Elysium counterclaimed, alleging unfair competition and patent misuse. The case was filed in the United States District Court for the Central District of California and involved a DTSA claim. The court dismissed most of ChromaDex’s claims, including those for fraudulent deceit and misappropriation of trade secrets, but also dismissed in part Elysium’s counterclaims. The decision highlighted the importance of detailed factual allegations when claiming trade secret misappropriation and set a precedent on the application of patent misuse in contract disputes. This case also emphasized the narrow interpretation of exceptions to the economic loss rule in trade secret litigation.
Decision
The court granted in substantial part Elysium’s motion to dismiss ChromaDex’s claims for fraudulent deceit and misappropriation of trade secrets, and granted in part ChromaDex’s motion to dismiss Elysium’s counterclaims.
Legal Significance
The case is significant for its interpretation of the economic loss rule, requirements for alleging fraudulent deceit and misappropriation of trade secrets, and the application of patent misuse as a defense in contract disputes.
Financial Judgement
Key Takeaways
Key takeaways include the court’s narrow interpretation of exceptions to the economic loss rule, the importance of detailed factual allegations for trade secret claims, and the acknowledgment of patent misuse as a viable counterclaim in contractual agreements.
