Genentech's Civil Suit Against JHL Alleges Proof of Criminal Theft of Trade Secrets

In late October 2018, former Genentech employees were charged with criminal theft for conspiring to steal trade secrets to assist biosimilar developer JHL Biotech in the development of its products.

Shortly after the indictments were released, Genentech filed a motion in the United States district court for the Northern District of California seeking an injunction to block JHL from making and selling potential biosimilars, as Genentech alleges that the company benefitted from its proprietary information. Though not indicted, JHL’s co-founder, co-chairman, president and CEO Racho Jordanov and co-founder, COO, and general manager Rose Lin, were listed as defendants by Genentech. Notably, the co-founders are also previous employees of Genentech.

Among those indicted were Xanthe Lam, Allen Lam, James Quach, and former JHL employee John Chan. The 4 allegedly stole trade secrets over the course of 5 years related to the biopharmaceutical dornase alfa (Pulmozyme) and some of Roche’s top-selling cancer drugs: rituximab (Rituxan), trastuzumab (Herceptin), and bevacizumab (Avastin).

Xanthe Lam, a principal scientist at the Roche Holding AG unit from 1986 until 2017, allegedly downloaded, collected, and transferred the proprietary information to her husband, Allen Lam, and others at JHL. She also allegedly secretly consulted for JHL while still employed at Genentech.

In Genentech’s civil complaint, the company states that there exists documentary evidence “including emails, text messages, Skype logs, and audit records…as well as admissions from [2] of the named defendants,” all of which “make clear that former Genentech employees and others at JHL conspired to give JHL an illegal and corrupt advantage in the biotechnology industry.”

The complaint includes a screenshot of Xanthe Lam’s Genentech-issued computer, which shows a folder titled “JHL” that contained subfolders, 4 of which were named for Genentech medicines for which JHL was in the process of developing a biosimilar. The folders contained confidential Genentech documents alongside JHL formulation and development documents. “She then used the information contained in the Genentech documents to edit and improve JHL’s documents and processes, including by directly copying Genentech’s trade secret information into JHL’s documents,” alleged the complaint.

Xanthe’s husband, Allen, served as a consultant for JHL from 2013 through fall 2015, and then for several months in 2017. Genentech alleges in its complaint that the Lams facilitated the theft of trade secrets by working closely with John Chan, a family friend whom Xanthe allegedly recruited to JHL in 2014. The complaint cites an email that Xanthe sent to her husband containing an attached confidential Genentech report, instructing him to “make a hard copy of the report attached for John. Don’t give him e-copy and tell him don’t show it to others.”

During an agreed-upon interview, Quach admitted that once he knew he would be working for JHL, he sought access to confidential Genentech information through Xanthe. “He further admitted that Xanthe granted him access to download these documents [3] times in July 2017, and that when he realized he needed additional confidential Genentech documents following his arrival at JHL, Xanthe downloaded and emailed those documents to him.”

If the indicted defendants are found guilty, Xanthe Lam, Allen Lam, and Chan face as many as 10 years in prison. Quach could face as many as 5 years. A hearing is scheduled for December 13, 2018.