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Exosome Diagnostics Suing Former Employee for IP Theft

NEW YORK (GenomeWeb) – Exosome Diagnostics is pursuing legal action against former employee Erez Eitan and his recently founded company NeuroDex, according to documents filed earlier this month in the US District Court for the District of Massachusetts.

Exosome Dx, based in Waltham, Massachusetts, claims that Eitan has breached his agreements to protect the company's trade secrets and to abstain from unfair competition by stealing Exosome's information, misleading the company about his work, and founding NeuroDex, a directly competing company which is incorporated in Delaware but operates in Massachusetts.

The firm is petitioning the court to enforce what it says are binding confidentiality and non-compete agreements that Eitan knowingly entered, and is seeking damages under 11 different counts, including fraud, breach of contract, various forms of tortious interference, violation of the Defend Trade Secrets Act, and unfair competition.

NeuroDex has a minimal public presence so far but is described as a diagnostics development company creating blood-based tests for various neurological conditions, including Alzheimer's disease, via the isolation of brain-derived exosomes.

In its court filing Exosome says that Eitan joined the company in January 2017 to research and develop liquid biopsy solutions for neurodegenerative diseases, agreeing as a condition of his employment to assign any research developments to Exosome and not to compete with Exosome for one year upon the end of his employment.

As part of his work at the company, Eitan reportedly conducted research as part of a collaboration with an entity — called "Partner 1" in the court filing — to develop a test for Parkinson's disease.

According to Exosome, Eitan failed to document this work, withheld information on the actual protocols, and later falsified protocol information "all in an apparent attempt to steal for himself the process and results that he was being paid to deliver."

Calling this an act of fraud, Exosome said it has had to divert "substantial resources" to try to recreate what Eitan "should have done and recorded."

"This has not only cost Exosome financially, but also siphoned off resources that would have been spent developing other breakthroughs in promising areas that would have helped patients and further enhanced the company's reputation," the firm wrote.

The filing states further that Eitan was found, in June of this year, to be consulting for another company, Cogentis Therapeutics, which led Exosome to terminate his employment.

Exosome claims that its former employee then attempted to be hired at "Partner 1," and "bragged that he, and only he, had personal knowledge of what made the Parkinson's experiment successful — even though he was supposed to perform and document the experiment for Exosome."

The various alleged acts, Exosome said, imperil its confidential information, trade secrets, and business plans, because the techniques the company uses in its work to create tests for pharmaceutical partners derive their value from being confidential and proprietary.

"If such techniques were to suddenly become available from a cut-rate source, such as Eitan or NeuroDex … Exosome's investment would be squandered, and its market position compromised," the firm wrote.

The company further argued that this danger is evidenced by the fact that previous competitors, failing to develop comparable platforms of their own, now license "slimmed-down versions" of Exosome's technology, which is a source of "significant revenue" for the company.

Based on these assertions, Exosome is asking the court to enter a preliminary injunction order that restrains Eitan from directly or indirectly "engaging in any employment or business activity directly related to Exosome's business … including at NeuroDex, for a period of 12 months."

The company also asks for Eitan to be prohibited from soliciting Exosome clients or "potential clients," using or disclosing any of its confidential and trade secret information, and requests that the court require the former employee to immediately return all "originals, copies, and other reproductions" of any company documents, specifically including information on two flash drives Exosome says he removed from the premises.

The company is asking the court to require Eitan to reimburse Exosome for the costs it incurred in obtaining any and all relief in the action, including but not limited to, attorneys' fees; to award Exosome monetary damages and punitive damages to be determined at trial; and to provide Exosome Dx restitution "for any unjust enrichment of NeuroDex and Eitan for its violations."