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Maryland Federal Court Upholds Decision Modifying Subpoena, Granting Schulman Bhattacharya’s Motion to Protect Trade Secrets of Acclaimed Inventor

Sep 27

On September 23, 2022, Schulman Bhattacharya secured another victory for its client, Claudio De Simone, the inventor of the acclaimed probiotic product known as the De Simone Formulation.  The De Simone Formulation was formerly sold under the trademark VSL#3® and is now sold under the trademark Visbiome®.  In the recent court action, Professor De Simone prevailed again against VSL Pharmaceuticals, Inc., the owner of the VSL#3® trademark, and its licensees, Alfasigma USA, Inc., and Leadiant Biosciences, Inc.

On July 28, 2021, Schulman Bhattacharya filed a class action Complaint in the United States District Court for the District of Maryland on behalf of individual named Plaintiffs, as well as every person who has purchased VSL#3® from June 2016 to the present. Plaintiffs’ claim is that consumers came to associate the VSL#3® brand with the clinically tested De Simone Formulation; that Defendants VSL, Alfasigma, and Leadiant, together with the Italian manufacturers of VSL#3®, then manufactured and sold a new version of Italian-made “VSL#3,” which is materially different from the De Simone Formulation; that Defendants falsely advertised VSL#3® as clinically proven, and as the same as the De Simone Formulation, when it was neither; and that Plaintiffs were harmed as a result. Plaintiffs contend that, as confirmed by a string of federal court decisions, the vast majority of the claims asserted in the class action have already been proven in prior litigation handled by Schulman Bhattacharya, and Defendants should be barred by collateral estoppel from arguing otherwise.

Nonetheless, Defendants proceeded to serve a subpoena on Danisco USA, Inc., the manufacturer of the De Simone Formulation, demanding broad swaths of highly confidential information and trade secrets concerning the De Simone Formulation. This information belongs exclusively to Prof. De Simone, who has always vigorously maintained its secrecy. It also has nothing to do with the issues in the class action. Accordingly, Schulman Bhattacharya, on behalf of Prof. De Simone, filed a motion to modify the subpoena to eliminate the vast majority of Defendants’ requests.

On June 6, 2022, Magistrate Judge Gina L. Simms of the United States District Court for the District of Maryland granted the Firm’s motion and modified the Danisco subpoena to eliminate the challenged requests. In doing so, Judge Simms held that “there is no question” that the information sought in the Danisco subpoena constitutes Prof. De Simone’s trade secrets. Judge Simms also confirmed that the issue of whether VSL3® is the same as the De Simone Formulation had “clearly” been decided, and “they are not the same formulation.” She further found that the issue of whether VSL3® has been proven to be as effective as the De Simone Formulation had already been decided, and that VSL#3® has not been proven to be as effective. Finally, Judge Simms held that Defendants had “certainly” failed to establish a need for any of Professor De Simone’s confidential information or trade secrets in the class action. As she pointed out, this information could not help Defendants “establish the safety or efficacy of their Italian VSL#3 products,” nor could it help them “understand how their own VSL3 is less safe or less effective” than the De Simone Formulation or “what the components of [VSL#3®] are.” Judge Simms also held that a protective order would be insufficient to safeguard Professor De Simone’s interests, given that Defendants had admitted that they had previously tried (and failed) to reverse engineer the De Simone Formulation, and Professor De Simone is not a party to the class action. As Judge Simms emphasized, if Defendants tried to misuse Prof. De Simone’s information yet again, by the time he found out, “it would be too late.”

Dissatisfied with Judge Sims’ decision, Defendants appealed to District Judge Lydia Kay Griggsby, arguing that (i) Judge Sims’ decision should be overturned, (ii) Professor De Simone’s motion to modify the Danisco subpoena should be denied or, in the alternative, (iii) the matter should be returned to Judge Sims for reconsideration.  On September 23, 2022, Judge Griggsby issued her ruling, rejecting all of the objections raised by Defendants and affirming Judge Sims’ ruling in all respects.  Judge Griggsby held that “defendants have not shown that the June 6, 2022, Decision is either clearly erroneous, an abuse of discretion, or contrary to law. And so, the Court SUSTAINS the June 6, 2022, Decision.”  As a result, Professor De Simone’s motion to modify the Danisco subpoena to eliminate the vast majority of Defendants’ requests to Danisco is granted, and Defendants are precluded from pursuing any of the information sought in the subpoena that was challenged by Professor De Simone.