Childrens Hospital Research Center At Oakland v. Ervin Epstein

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: CHILDREN'S HOSPITAL & RESEARCH CENTER AT OAKLAND d/b/a UC Benioff Children's Hospital-Oakland (California)
  • Defendant: Ervin Epstein (individual) and Pellepharm, Inc. (Delaware)
  • Plaintiff’s Counsel: Marton Ribera Schumann & Chang LLP
• Case Identification: 4:18-cv-07828, N.D. Cal., 12/31/2018
• Venue Allegations: Venue is alleged to be proper as both the individual defendant, Dr. Epstein, and the corporate defendant, Pellepharm, Inc., reside in the Northern District of California.
• Core Dispute: Plaintiff alleges that its former employee, Dr. Epstein, in breach of his employment agreement, misappropriated inventions related to cancer treatments, failed to disclose them, and improperly assigned the resulting patent applications to his own company, Pellepharm, Inc.
• Technical Context: The technology involves topical pharmaceutical formulations of "hedgehog pathway inhibitors" for the treatment of skin cancers, particularly basal cell carcinoma.
• Key Procedural History: This complaint initiates the litigation. The central dispute arises from an Inventions Agreement signed by Dr. Epstein in 2008, which assigned rights to inventions conceived during his employment to the Plaintiff. The complaint alleges that patent applications filed by the Defendants in 2015 and 2017 contain subject matter that rightfully belongs to the Plaintiff under that agreement.

Case Timeline

II. Technology and Patent(s)-in-Suit Analysis

The complaint does not allege infringement of any issued patent. It centers on a dispute over the ownership of two patent applications: U.S. Patent Application Nos. 15/173,257 and 15/429,006. To provide technical context, the complaint frequently references U.S. Patent No. 9,072,660, an issued patent co-owned by the Plaintiff on which Defendant Dr. Epstein is a named inventor, covering technology that Plaintiff alleges is directly related to the disputed applications.

U.S. Patent No. 9,072,660 - Topical Itraconazole Formulations and Uses Thereof

The Invention Explained

• Problem Addressed: Basal cell carcinoma (BCC) is a common skin cancer often linked to the "hedgehog (HH) signaling pathway" (’660 Patent, col. 1:13-16). While drugs that inhibit this pathway exist, their systemic use can cause significant side effects like taste loss and myalgia, limiting long-term use ('660 Patent, col. 1:40-48). An effective topical treatment was needed to deliver the drug locally to the tumor site, thereby avoiding systemic toxicity.
• The Patented Solution: The patent describes methods and compositions for transdermally delivering a therapeutic amount of a triazole-triazolone compound, specifically itraconazole, to a subject ('660 Patent, Abstract). The invention is a cream formulation designed to allow the active drug to penetrate the skin and reach the dermis, where the cancer is located, to inhibit the HH pathway locally ('660 Patent, col. 2:33-37).
• Technical Importance: The technology provides a potential pathway for treating a prevalent form of skin cancer locally, which could offer a safer and more tolerable alternative to systemic therapies.

Key Claims at a Glance

No probative visual evidence provided in complaint.

The complaint does not assert any patent claims for infringement. To provide technical context for the dispute, independent claim 1 of the '660 Patent is summarized below.

• Independent Claim 1:
  • A method for treating basal cell carcinoma (BCC) in a subject.
  • The method involves contacting a topical surface with a specific transdermal cream.
  • The cream is an oil-in-water emulsion containing specific concentrations of:
    • itraconazole (1% to 12%).
    • one or more hydrophobic oils (30% to 40%).
    • a cyclodextrin complexing agent (5-10%).
    • a glycerol monooleate (5-10%).
    • a caprylic triglyceride (5-10%).
    • a surfactant (1-20%).
  • The method results in delivering a therapeutic amount of itraconazole.

III. The Accused Instrumentality

The complaint does not accuse a specific product, method, or service of patent infringement. Instead, the dispute centers on the ownership of intellectual property itself, namely two patent applications and the underlying inventions.

Disputed IP Identification

• U.S. Patent Application No. 15/173,257 ("the '257 application"), filed by PellePharm, which allegedly discloses the use of hedgehog inhibitors like IPI-926 (patidegib) and topical itraconazole to treat basal cell carcinomas (Compl. ¶¶ 32, 33).
• U.S. Patent Application No. 15/429,006 ("the '006 application"), filed by PellePharm with Dr. Epstein as the sole inventor, which allegedly discloses the use of hedgehog inhibitor compounds for treating pruritus (itching), including in connection with cancer (Compl. ¶¶ 39, 42).

Functionality and Context

• The complaint alleges that the subject matter of these applications derives directly from the research Dr. Epstein conducted while employed by Plaintiff, which focused on the same class of compounds (hedgehog inhibitors) for the same disease (basal cell carcinoma) (Compl. ¶¶ 20, 29, 31).
• It is alleged that the '006 application contains "verbatim the same disclosures as the '257 application" relating to the use of specific hedgehog inhibitors, despite the applications having different named inventors (Compl. ¶ 43). This allegation suggests a direct link between the two bodies of work that Plaintiff claims as its own.

IV. Analysis of Infringement Allegations

The complaint does not contain allegations of patent infringement. The central claims relate to ownership of intellectual property, breach of contract, and conversion. Therefore, an infringement analysis is not applicable.

V. Key Claim Terms for Construction

As the complaint does not assert any patent claims for infringement, a claim construction analysis is not applicable.

VI. Other Allegations

The complaint's primary causes of action are not based on patent infringement but on common law and contract claims related to IP ownership.

• Conversion and Constructive Trust: Plaintiff alleges that Dr. Epstein intentionally "converted" its intellectual property by taking inventions he was obligated to assign to CHRCO and instead transferring them to PellePharm (Compl. ¶¶ 52, 54, 56). Plaintiff seeks a constructive trust, an equitable remedy, to compel PellePharm to transfer legal title of the disputed patent applications and any related IP back to CHRCO (Compl. ¶¶ 61-63).
• Breach of Contract: The complaint alleges that Dr. Epstein breached his Inventions Agreement in two primary ways: (1) by failing to assign inventions conceived within the scope of his employment to CHRCO, and (2) by failing to "promptly disclose" his patent filings to CHRCO as the agreement required (Compl. ¶¶ 69, 71). This failure to disclose allegedly prevented CHRCO from protecting its own IP rights (Compl. ¶ 75).

VII. Analyst’s Conclusion: Key Questions for the Case

The resolution of this case does not appear to turn on claim construction or infringement, but on questions of contract law and inventorship.

• A core issue will be one of contractual scope: Does the research underlying the '257 and '006 patent applications fall within the definition of "Inventions" that were "made or conceived or reduced to practice... during the period of [Dr. Epstein's] employment with CHRCO," as specified in the controlling Inventions Agreement? The court will likely need to determine the factual boundaries of the research Dr. Epstein performed for CHRCO versus for PellePharm.
• A key evidentiary question will be one of conception and derivation: What evidence exists to establish precisely when and by whom the subject matter of the disputed applications was conceived? The case may turn on whether Dr. Epstein can substantiate his claim that the inventions were "neither conceived nor reduced to practice at CHRCO" and were not derived from the work he performed for Plaintiff.