Applied Biological Laboratories, Inc. v. Diomics Corporation, 3:20-cv-02500

Applied Biological Laboratories (Plaintiff) alleges Diomics and its CEO Anthony Zolezzi (Defendants) misappropriated confidential trade secrets relating to an antiviral nasal spray (including use of IgG) after NDA-protected business negotiations and access to Plaintiff’s encrypted repositories.
Plaintiff disclosed research, formulations, manufacturing methods, mechanism-of-action materials, and “dead-end” research to Pegasus/PanTheryx and Zolezzi in 2017–2018; negotiations ended in 2018.
Zolezzi was hired by Diomics in March 2020; Diomics soon announced DioGuard, an intranasal IgG-based product, prompting Plaintiff’s investigation and suit alleging DTSA, CUTSA, and Cal. Bus. & Prof. Code § 17200 claims.
Defendants moved to dismiss under Rule 12(b)(6) and for a more definite statement, primarily arguing Plaintiff failed to identify specific trade secrets or plead how they were used/acquired.
The court concluded Plaintiff pleaded sufficient facts and circumstantial allegations to survive dismissal on the DTSA and CUTSA claims (Counts I–II) and denied the more definite statement motion.
The court dismissed the § 17200 unfair-competition claim (Count III) as preempted/duplicative and a shotgun pleading, but granted leave to amend.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plaintiff sufficiently identified trade secrets to state DTSA/CUTSA claims	Identified mechanism of action, formulations, ingredients (IgG), repository contents, and development "dead-ends"	Allegedly too vague; did not specify which trade secrets or how used	Denied dismissal — allegations sufficient at pleading stage
Whether Plaintiff alleged how Defendants acquired/used secrets	Zolezzi had authorized access to encrypted files and asked specific questions; Diomics had no prior experience; rapid development suggests misuse	Circumstantial facts insufficient; speed alone inadequate	Denied dismissal — circumstantial allegations plausible pre-discovery
Motion for a more definite statement	Plaintiff: not feasible pre-discovery to provide more detail	Defendants: request to require specificity	Denied — court found current factual pleading adequate
Whether § 17200 claim survives given CUTSA claims (preemption/shotgun pleading)	§ 17200 protects unfair acts independent of trade-secret status; seeks relief for non-trade-secret confidential info and breaches of NDA	Claim duplicates CUTSA nucleus of facts and is pleaded by incorporating prior paragraphs (shotgun)	Granted dismissal of § 17200 with leave to amend; plaintiff must plead distinct facts/legal theory

Ashcroft v. Iqbal, 556 U.S. 662 (pleading must state a plausible claim)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (trade-secret pleadings must give notice)
SmileCare Dental Grp. v. Delta Dental Plan of Cal., 88 F.3d 780 (12(b)(6) standard applied in Ninth Circuit)
Droeger v. Welsh Sporting Goods Corp., 541 F.2d 790 (circumstantial evidence can support trade-secret claims)
Yeiser Research & Dev. LLC v. Teknor Apex Co., 281 F. Supp. 3d 1021 (defendant's lack of prior industry experience plus targeted curiosity supports inference of misappropriation)
Accenture Glob. Servs. GMBH v. Guidewire Software Inc., 581 F. Supp. 2d 654 (rapid development alone insufficient without access allegations)
K.C. Multimedia, Inc. v. Bank of Am. Tech. & Ops., 171 Cal. App. 4th 939 (CUTSA preempts UCL claims that rely on same nucleus of facts)
Angelica Textile Servs., Inc. v. Park, 220 Cal. App. 4th 495 (preemption determination is factual)