Judge OKs Ex-McDermott Client's Suit Over Alleged IP Theft

, The Litigation Daily

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Did a former McDermott Will & Emery partner conspire with his family to rip off one of the firm's clients? The former partner, John Fuisz, says a lawsuit against his father and brother alleging as much is "utter fantasy." But on Friday a judge refused to toss the case, ruling that a jury should make the call.

In a summary judgment ruling issued on Sept. 20, U.S. Magistrate Judge Paul Grewal in San Jose refused to toss unjust enrichment and correction of inventorship claims that Theranos Inc. brought against inventor and businessman Richard Fuisz, his son Joseph Fuisz, and their family company, Fuisz Pharma. Grewal found Theranos's evidence of IP theft far from damning, but he concluded that it's sufficient to survive summary judgment. Grewal also ruled that Theranos's claims should be decided by a jury, even though the company is only seeking equitable relief.

"No witness, no document, no interrogatory response offers direct evidence of the misappropriation," Grewal wrote. "But the case law. . .is clear: Circumstantial evidence can be enough to support a verdict."

Theranos is an up-and-coming biotech company that wants to revolutionize blood testing for diseases. Its young CEO, Elizabeth Holmes, was interviewed just a few days ago by The Wall Street Journal. This summer, Holmes told the San Francisco Business Times that "[t]he company's culture is such that confidentiality is the essence of its existence."

Holmes hired Boies, Schiller & Flexner to sue the Fuisz family in 2011. According to her suit, Theranos's "culture of confidentiality" was broken by John Fuisz, a former attorney at Theranos's one-time outside law firm, McDermott Will. Fuisz never represented Theranos. But according to Theranos, he accessed confidential documents relating to one of Holmes's inventions and then shared them with his father (Richard) and brother (Joseph) so that they could patent the invention. Richard Fuisz has at least 50 current U.S. patents to his name and has founded multiple companies, according to his Wikipedia entry.

John Fuisz, now at FuiszKindu Group, a two-man shop based in Washington, is no longer a defendant in the Theranos lawsuit. The company originally accused him of malpractice, but the claim was dismissed on statute of limitations grounds. Theranos and Boies Schiller later filed a separate malpractice suit against McDermott Will, alleging that the firm failed to protect Theranos's confidential materials. A judge in Washington dismissed that case in August, ruling that Theranos "failed to plead sufficient facts beyond conclusory statements."

John Fuisz slammed Theranos's case against his family in an e-mail to the Litigation Daily.

"The concept that I even had access to [Holmes's] files is pure fantasy," he wrote, adding that Holmes's parents made the mistake of blabbing about her daughter's invention to Richard Fuisz and his wife. "The two couples were friends. . . clearly [Holmes] had reason to believe her parents said too much," he wrote.

According to Fuisz, some Boies Schiller attorneys left the firm because they were concerned about their names being attached to the case. "I have been asked not to sue at least one of them when the final judgment is in," he added. "I think that speaks to the complete and utter sham that this case is."

The Boies Schiller team on the case includes David Boies, William Marsillo, and Michael Jay. David Boies handled the oral argument on the summary judgment motion. A Boies Schiller spokesperson declined to comment.

Campbell, Calif.-based Banie & Ishimoto represents the Fuisz defendants.

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