Verdict-Plaintiff: the jury found that the IREF owned the EPI-1, EPI-2, and Acadesine databases in 2002 and 2003; that the databases were trade secrets in 2002 and 2003; that in February 2002, Hsu and Pfizer misappropriated the database trade secrets; and that their misappropriations were willful and malicious. Jurors found that the misappropriation of the IREF's trade secrets was a substantial factor in causing actual loss to the IREF or unjust enrichment to Pfizer.
Superior Court, Santa Clara County, California.
Ischemia Research and Education Foundation v. Pfizer Inc., a Delaware
corporation, and Ping Hsu, an individual, and Does 1-50, inclusive
No. 1-04-CV026653
DATE OF VERDICT/SETTLEMENT: December 22, 2008
EXPERT WITNESSES:
Plaintiff: Al Hobbs; Computer Forensics; Pasadena, CA Jimmy Jackson, Ph.D.; Economics; Washington, DC Sam L. Teichman, M.D.; Cardiovascular Medicine; Alamo, CA
Defendant: Alan Ratliff, C.P.A.; Accounting; Houston, TX
ATTORNEYS:
Plaintiff: Mark J. Geragos; Geragos & Geragos, A.P.C.; Los Angeles, CA (Ischemia Research and Education Foundation); Eugene Patterson Harris; Geragos & Geragos, A.P.C.; Los Angeles, CA (Ischemia Research and Education Foundation); Daniel Marino; Sutherland & Gerber; Washington, DC (Ischemia Research and Education Foundation); Gail L. Westover; Sutherland & Gerber; Washington, DC (Ischemia Research and Education Foundation)
Defendant: Michael C. Zellers; Tucker Ellis & West LLP; Los Angeles, CA (Pfizer Inc.); Enrique Marinez; Ropers Majeski Kohn Bentley PC; Redwood City, CA (Ping Hsu); Harry D. Cornett; Tucker Ellis & West LLP; Cleveland, OH (Pfizer Inc.); Allen J. Ruby; Law Offices of Allen Ruby; San Jose, CA (Ping Hsu); Charles Q. Socha; Socha, Perczak, Setter & Anderson, P.C.; Denver, CO (Pfizer Inc.)
JUDGE: Gregory H. Ward
RANGE AMOUNT: $5,000,000-999,999,999
STATE: California
COUNTY: Santa Clara
INJURIES: The IREF sought $14 million for the initial 10-month period of the original contract and $16 million for the EPI-1 and Acadesine databases, which the defendants reportedly used to a lesser degree to make inquiries.
Facts:
Plaintiff Ischemia Research and Education Foundation (IREF), a nonprofit medical research firm in San Bruno, operate the worldwide EPI-1, EPI-2 and Acadesine databases, which contain information from a consortium of medical centers throughout the world. The databases allow users to access extensive patient information and statistics for medical research. (Reportedly, the IREF's interest in a drug bears weight in that drug's approval by the U.S. Food and Drug Administration.)
In November 1999, Pfizer Inc. released Bextra, a drug to treat acute pain in patients with arthritis and menstrual problems. In 1999 and 2000, Pfizer, as part of a $4 million contract to use the IREF's research center, conducted a clinical trial to expand Bextra's usage for patients recovering from coronary artery bypass surgery. By using the databases, Pfizer compared its drug to other medications, measured its risk factors, and determined whether Bextra caused heart attacks and strokes.
In comparison to placebo groups (the non-Bextra drug groups), Pfizer found that increased doses of the compound found in Bextra caused heart attacks, strokes, gastrointestinal problems and sternal wound infections. IREF founder Dennis Mangano subsequently detailed Bextra's adverse effects in medical journals at the end of 2001, allegedly jeopardizing the drug's marketability.
Despite the results, the FDA let Pfizer conduct another study to have the Bextra formulation approved as a post-surgical drug through the IREF.
The FDA suggested that, if Pfizer still wanted to go forward with expanding the indications for the compound found in Bextra, the agency could do another study. The FDA suggested using the IREF databases because they were unique in the world.
The IREF quoted an approximately $16 million proposal to Pfizer that included providing productive access to the databases. Under the proposed agreement, Pfizer would turn over the placebo data to the IREF, which would have the unfettered right to publish the results.
Pfizer rejected the proposal.
The IREF alleged that, after rejecting the offer, Pfizer, in February 2002, hired Ping Hsu, a leading IREF statistician, to "ravage" the databases and create 159 subdatabases over the next 18 months to manipulate the study and "game" the FDA in effort to show that the drug was not dangerous. In creating subdatabases--mostly from the EPI-2 database, which Pfizer allegedly used to access the lion's share of its information--Pfizer and Hsu attempted to demonstrate that Bextra was a superior drug to other postcoronary bypass surgery medications, including placebo and non-steroidal inflammatory drugs, which had the same compound as Bextra.
In February 2004, Hsu was put on leave. He was terminated in April.
The FDA eventually denied usage of Bextra in a surgical setting and took the drug off the market in 2005.
The IREF sued Pfizer and Hsu under the Trade Secrets Act.
Having a postoperative drug on the market had the potential to reap a half of billion dollars a year, according to plaintiff's counsel, which argued that Pfizer, knowing that Bextra could not be expanded and knowing that Mangano would publish the results of the clinical trial, manipulated the IREF's EPI-1, EPI-2 and Acadesine databases to convince the FDA that Bextra was a safe drug and did so by conspiring with Hsu.
The plaintiff cardiovascular medicine expert testified about the computer footprints that Hsu left in the analysis of the drug throughout the clinical trial and how access to the three databases helped Pfizer at certain times. The expert isolated 11 to 15 of the 159 inquiries that the defendants made to show how each inquiry corresponded to what Pfizer needed to know as far as the study's structure and design.
The plaintiff computer forensics expert showed how the databases were accessed, where they were on Hsu's computer and laptop, and how Hsu tried to wipe out the information on his laptop.
The defendants denied the allegations, asserting that their conduct was proper.
Pfizer argued that it was unjustly caught in the crossfire of a dispute between the IREF and one of its former employees.
Hsu contended that, while he might have exercised bad judgment, he did not steal.
Additionally, the IREF sought an unspecified amount for the placebo group data that the defendants allegedly accessed. Mangano talked about that the value of the placebo information, testifying that, without access to the fresh data and information, Pfizer's clinical trial would have been depreciated and inconclusive.
The defense economics expert opined that, if a misappropriation of trade secrets occurred, as the IREF alleged, its worth was $100,000 to $333,000 at most.
The IREF was awarded $38,737,065 for misappropriation of trade secrets and $0 for unjust enrichment.
