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Former Integrated Genomics Employees Cleared of all Charges in Breach-of-Contract Case

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By Uduak Grace Thomas

The last of the charges leveled against Nikos Kyrpides, one of two former employees of Integrated Genomics accused of breaching the non-competition and non-solicitation obligations in their employment contracts, have been dismissed.

In the original complaint lodged in the US District Court for the Northern District of Illinois, Eastern Division, in late 2006, the company alleged that the Joint Genome Institute’s freely available Integrated Microbial Genomes system “directly competes with Integrated Genomics’ ERGO software,” and that its former employees breached their contracts as well as their “duty of loyalty” by accepting positions at JGI "developing software which competes with Integrated Genomics' software.” (BI 03/09/2007)

Both Integrated Genomics' ERGO and JGI's IMG software were designed for microbial genomic annotation and to support comparative genomic analysis. ERGO is an offshoot of the What is There, or WIT, comparative genomics system, which was developed at Argonne National Laboratory.

Nikos Kyrpides, who currently heads the genome biology program at JGI, was absolved in July of the final charge of soliciting colleague Natalia Ivanova to leave Integrated Genomics, culminating a three-year battle with his former employers.

Ivanova, who currently leads the metagenome analysis group in the genome biology program at JGI, was charged alongside Kyrpides in 2006 but was acquitted of all charges against her in 2008.

In a document dated Mar. 4, 2008, the court dismissed the charges against Ivanova, stating that it "had no subject matter jurisdiction" over Integrated Genomics' claims against her because the company failed to prove that it had suffered $75,000 worth of damages as a result of her alleged actions.

In addition to the breach-of-contract charges leveled against both defendants, Integrated Genomics accused Kyrpides specifically of soliciting Ivanova to jump ship from Integrated Genomics to JGI.

On the contract-related charges, a document dated Jan. 1, 2010 states that the court found that Integrated Genomics' non-compete clause was "overly broad and beyond that necessary to protect [the company's legitimate business interests" and ruled in favor of Kyrpides.

The document further states that Integrated Genomics did not provide evidence of the alleged financial losses that it claimed to have suffered as a result of Kyrpides' involvement with the IMG software.

While nearly all allegations against Kyrpides were dismissed over the course of past two years, the solicitation charge was not brought to trial until earlier this year.

Kyrpides told BioInform that the trial could have been prevented if both parties were able to reach a settlement. However, under the terms of the settlement offered by Integrated Genomics, Kyrpides would have been prevented from working for two years, which he said was "not negotiable."

The outcome of the trial is detailed in a court document dated July 19, 2010, which states that the court found "no direct evidence that Kyrpides had a conversation with Ivanova soliciting her to leave Integrated Genomics" and that "even if … Ivanova left because Kyrpides solicited her and Integrated Genomics was injured, [the company] has failed to prove any damages."

In addition to dismissing the charges against him, the company was ordered to pay wage arrears and fees owed to Kyrpides for a separate contract plus accrued interest.

Integrated Genomics CEO John Eling declined BioInform's request for comments based on the advice of legal council.

While this case was a legal minefield riddled with multiple charges and countercharges, Kyrpides said that the "most important thing" to note is that the case against him and Ivanova was dropped because Integrated Genomics had "no evidence."

He believes that the company is resorting to unfair legal tactics to obtain business contracts, "because they don’t really have a good business model."

Kyrpides noted that the company has also used this approach on at least one other academic, referring to a suit brought by Integrated Genomics against Tillman Gergross, a professor of engineering at the University of Dartmouth, in 2007. The complaint, also filed in the United States District Court of the Northern District of Illinois, accused Gerngross of two claims of breach of contract and one claim of fraudulent misrepresentation.

The charges are related to genomic data from Pichia pastoris, a common yeast that Integrated Genomics sequenced in 2002. "At the time, it was the only source from which the data for [P. pastoris] could be licensed," according to court documents for the case.

Gerngross devised a system by which yeasts could express proteins in a manner similar to human cells and co-founded a company in 2000 called GlycoFi, which was eventually sold to Merck in 2007.

According to the court documents, Gerngross used Dartmouth's facilities to conduct GlycoFi business with the college's permission and obtained a license from Integrated Genomics in 2002 to use the P. pastoris data. Gerngross claimed that he informed a company representative at the time that he was "involved in a commercial effort," but the representative later testified that he considered Gerngross to be an academic customer.

Integrated Genomics asserts that by using the P. pastoris data in research efforts at GlycoFi, Gerngross violated the terms of his contract which stated that the data was to be used exclusively for academic purposes and that he misrepresented himself by not disclosing his commercial intentions to the company at the time of the agreement.

So far, some of the charges against Gerngross have been dropped but his case is still pending.

"I think it is important for the community to know that this is something that Integrated Genomics is doing," Kyrpides said.

Both Kyrpides and Ivanova have continued their research in microbial genome analysis and metagenomic analysis at JGI. In addition, Kyrpides said he plans to continue working on developing informatics tools to study and understand these genomes.


Have topics you'd like to see covered in BioInform? Contact the editor at uthomas [at] genomeweb [.] com.