A leading California medical device maker is asking a Ventura County court to stop a former employee from striking out on her own with a competing product.
Irvine-based Allergan is the maker of the Lap-Band, a band that is wrapped around a patient’s stomach during a surgical procedure to reduce its size and help the patient eat less and lose weight. The company, which also makes the blockbuster drug Botox, is suing Janel Birk, an Oxnard woman who Allergan alleges left the firm to form her own company and develop a device that would compete with the Lap-Band.
Allergan said it could not comment on the lawsuit, which was filed in Ventura County Superior Court. Birk also declined to comment for this story.
The lawsuit highlights the strategies that companies take in California to prevent former employees from starting up competitors. Unlike many states, California’s laws put limits on how far companies can go in creating and enforcing non-compete agreements.
“In California, [former employees] can go across the street and set up shop and use their experience to compete against you. What they can’t do is pick up documents that are yours and that you’ve kept under protection,” said Michael Brooks, an intellectual property attorney in Simi Valley. “The middle ground is when someone walks across the street but their brain has information that they only gained because of the position they held.”
In its court filings, Allergan alleges that Birk was hired as an inventor and spent 11 years at the firm working on obesity-treating devices. In September 2009, Allergan alleges, Birk told the company she wanted to resign to spend more time with her child.
Within a month, Allergan alleges, Birk had filed several provisional patent applications for an intragastric bariatric device similar to Allergan’s products and formed a company called Innovelle with her husband. Allergan alleges one of Birk’s notebooks contains drawings that later showed up in the patent filings and that she collaborated with one of the engineers she oversaw before she left.
Brooks, who is not involved in the case, said several elements of Allergan’s complaint were unusual. He said it is standard practice for companies to debrief so-called “inventive” employees before they depart a company, no matter the circumstances. Allergan made no mention of debriefing Birk in its complaint.
“If any of your key inventive employees are leaving, you debrief them,” Brooks said. “If they are leaving for these reasons [to spend time with a child], just to be cautious you say, ‘Why don’t we just put you on a year’s paid leave?’ It’s cheap insurance.”
Brooks also said there was nothing unusual about the quickness with which the provisional patent applications were filed by Birk.
He said provisional applications are meant to be quick sketches to get an inventor’s idea “on the record” with patent officials. In Birk’s case, the filings contained some hand-drawn diagrams.
Intellectual property lawsuits are often contests of resources. Birk has not indicated to the court which attorneys will represent her, but Allergan, a company with a $24 billion market capitalization, has retained Gibson, Dunn & Crutcher, a top-shelf international law firm. Brooks said it’s a common strategy for large companies to try to bury a potential startup competitor under legal costs and make it less attractive to investors.
Allergan acquired Santa Barbara-based Inamed in 2006 for about $3.4 billion after a brief bidding war.
The company’s lawsuit would not be the first time a large company with tri-county operations has turned to the courts to stop former employees from opening a competing business. Bill Parrish and Tim Fitzgibbons were locked in a legal wrangle with Oregon-based Flir Systems for three years. The two sold their former company, Indigo Systems, a Goleta-based maker of infrared vision systems components, to Flir in 2004 for $185 million.
In 2005, Parrish and Fitzgibbons decided to start a company that would compete with Flir. They offered Flir a stake in the new venture, but the Flir turned them down. In 2006, Parrish and Fitzgibbons left Flir and started talks with Raytheon about technology for the new company.
Flir sued in Santa Barbara County Superior Court to stop them, alleging there was no way the pair could carry out their business plan without stealing trade secrets that belonged to Flir. Raytheon pulled out of the business talks after Flir filed suit.
Last June, Superior Court Judge James Brown issued a stern decision siding with Parrish and Fitzgibbons.
He wrote that Flir had brought the lawsuit without any evidence that trade secrets were at risk and mainly for the purpose of tangling up Parrish and Fitzgibbons’ attempt to form a competitor. Brown awarded them $1.6 million in attorney’s fees. The award was upheld on appeal.