5th Circuit vacates order denying injunction in biotechnology trade secret dispute

The U.S. 5th Circuit Court of Appeals in New Orleans (whose rulings apply to all Louisiana, Mississippi, and Texas employers) recently tossed out an order from a Texas-based district court denying a temporary court order to Direct Biologics, LLC.

The 5th Circuit ruled Direct Biologics had presented sufficient evidence that its trade secret information in the hands of its former employee and business competitor, Vivex Biologics, Inc., could constitute irreparable harm if Direct Biologics could present evidence Vivex and the former employee would likely use that information during the pendency of the lawsuit. The court’s opinion offers guidance for employers facing confidential data breaches and hiring employees from competing firms.

Direct Biologics sues former employee, his new employer

Direct Biologics is a biotechnology company in the regenerative medicine field, which manufactures biologically derived pharmaceutical products, including stem cell therapies and tissue regeneration grafts.

In 2018, it hired Adam McQueen as one of its first employees. At the time of his resignation in March 2022, he served as one of Direct Biologics’ Executive Vice Presidents. As a senior employee, he participated in product development, sales, operations, and regulatory and compliance work.

Along with these responsibilities, McQueen had access to large amounts of Direct Biologics’ confidential and trade secret information. The company alleged he was one of its only employees with access to both of its two major product lines and that he had access to the formula for its “flagship technology.”