Terran Biosciences, Inc., et al. v. Compass Pathfinder Limited, Ekaterina Malievskaia, M.D., and George Goldsmith — Court Denies Summary Judgment in Psilocybin Trade Secret Dispute

Background

Terran Biosciences, Inc., Scott Thompson, Ph.D., and the University of Maryland, Baltimore sued Compass Pathfinder Limited and its co-founders, alleging misappropriation of trade secrets related to psilocybin research. The claimed 'Psilocybin Trade Secrets' concern a mechanism to mitigate the hallucinatory effects of psilocybin while preserving its therapeutic, antidepressant benefits through sequential administration of a 5-HT2A antagonist followed by psilocybin. Plaintiffs allege Compass misappropriated these secrets on August 29, 2019, when it filed U.S. Provisional Patent Application No. 62/893,611, titled 'Methods of Co-Administering 5-HT2A Antagonists/Inverse Agonists and Psilocybin.'

The operative Fourth Amended Complaint asserts eleven counts, including claims under the Defend Trade Secrets Act and the Maryland Uniform Trade Secrets Act, plus unfair competition, fraud, and breach of contract. Defendants moved for summary judgment on all counts, arguing that plaintiffs failed to identify the trade secrets with sufficient particularity, that the information was generally known or readily ascertainable, that plaintiffs did not take reasonable measures to maintain secrecy, that defendants independently developed the information, and that plaintiffs' damages theories were flawed. The motion was supported by 111 exhibits totaling over 4,400 pages, while plaintiffs' opposition relied on 116 exhibits exceeding 6,000 pages.

The Court’s Holding

Judge Ellen Lipton Hollander denied the defendants' motion for summary judgment in its entirety. The court found that plaintiffs had identified their trade secrets with sufficient particularity to survive summary judgment even without specific numerical ranges for dosing and timing, because plaintiffs specified the sequential nature of the protocol, the order of administration, the relationship between the two doses, and the governing pharmacokinetic principle, which was enough to allow a jury to evaluate the claims.

The court also found genuine disputes of material fact on whether the trade secrets were generally known or readily ascertainable. Although defendants pointed to the PTO's rejection of related patent claims as obvious over the Perez patent, the court distinguished patentability from trade secrecy, noting that trade-secret protection requires neither novelty nor nonobviousness. The court further found disputes on reasonable secrecy measures, independent economic value derived from secrecy, and misappropriation, and it rejected the argument that filing the lawsuit itself was a superseding cause of the alleged damages.

Key Takeaways

• A trade-secret plaintiff need not identify specific numerical ranges for parameters like dosing and timing to survive summary judgment, provided the combination and the method of determining those parameters are sufficiently described.
• The PTO's rejection of patent claims as obvious does not establish as a matter of law that the underlying information was generally known for trade-secret purposes, because patentability and trade secrecy are distinct inquiries.
• Disclosures to academic colleagues may carry an implied expectation of confidentiality grounded in professional norms, and whether such disclosures destroy secrecy is a fact-intensive question for the jury.
• A defendant's rush to file a provisional patent application in response to a concern about imminent public disclosure can support an inference that the information derived independent economic value from its secrecy.
• A plaintiff's decision to file a lawsuit does not, as a matter of law, constitute a superseding cause that severs the causal chain between a defendant's alleged wrongdoing and the plaintiff's injury.

Why It Matters

This decision reinforces the distinction between patent law and trade-secret law in the biotechnology sector, where companies may pursue both forms of protection for related innovations. The court confirms that the PTO's obviousness determinations do not automatically defeat trade-secret claims, and it explains that Thompson's later patent publications postdated the alleged misappropriation, so they do not establish that no protectable trade secret existed when Compass allegedly acquired the information.

The case also highlights the difficulty of protecting early-stage scientific research as trade secrets in academic settings where collaboration and publication are common. Letting a jury decide whether academic norms create implied confidentiality obligations may reassure researchers who share preliminary findings with colleagues, while underscoring the importance of documenting the specific parameters and combinations that constitute the claimed trade secret.