Integrated Genomics has sued two former staffers for allegedly breaking the non-compete clause of their employment contracts when they left the company in 2004 to join the bioinformatics staff at the US Department of Energy’s Joint Genome Institute.
In the suit, filed in December in the US District Court for the Northern District of Illinois, Eastern Division, the company alleges that JGI’s freely available IMG (Integrated Microbial Genomes) system “directly competes with Integrated Genomics’ ERGO software,” and that the employees breached their employment contracts as well as their “duty of loyalty” when they joined the institute.
IG also accuses the ex-employees — Nikos Kyrpides and Natalia Ivanova — of unfair competition and “tortious interference with prospective economic advantage.”
Meantime, a lawyer for Ivanova said he plans to countersue IG, which he claims has an “ulterior motive” in suing his client.
In its suit, IG claims it has suffered “money damages in the form of lost business, lost goodwill, and lost profits,” and requests that the court award damages “including but not limited to lost profits and such other relief from the defendants as Integrated Genomics requests.”
In addition, IG asks that Kyrpides, Ivanova, “and their officers, agents, servants, employees and all persons in active concert or participation with them” be permanently barred from “developing, marketing, selling, or offering for sale any product, including but not limited to software, which would directly compete with Integrated Genomics products.”
In a press release issued last week announcing the suit, IG President John Elling said that litigation “is not the option we wanted to pursue,” and added that the company had “spent considerable time and resources for over a year trying to reach an amicable resolution to these issues.”
Elling did not return calls seeking further comment, while a JGI spokesman declined to comment on the matter.
Employment Agreement or Involuntary Servitude?
In its complaint, IG claims that Kyrpides, director of bioinformatics at IG, and Ivanova, a research scientist at the company and principal assistant to Kyrpides, both joined the firm in 1999 and signed employment agreements that prohibited them from “directly or indirectly” engaging in “the business of developing, producing, marketing, or selling products or services which would compete with products or services of the kind or type developed or being developed, produced, marketed, or sold by the company, or planning to be produced, marketed or sold as described in any business plan of the company or as set forth in any notes or minutes of internal company meetings, while the employee was employed by the company.”
The terms of this non-compete clause extended to two years beyond “the termination or expiration” of the employment period, the company said.
Both Kyrpides and Ivanova breached their agreements, IG claims, “by accepting position[s] at the Joint Genome Institute developing software which competes with Integrated Genomics software.”
Furthermore, IG claims that both Kyrpides and Ivanova “obtained extensive knowledge regarding the customers and employee base of Integrated Genomics” while employed at the firm, and used this knowledge “to offer Integrated Genomics customers a competing product which had been developed in violation of Kyrpides and Ivanova’s employment agreements.”
However, in a motion to dismiss the case filed on Jan. 13, Ivanova’s attorney Glenn Gaffney claims that the non-compete language in the IG employment agreement is “overbroad” and “should be deemed unenforceable as a matter of law.”
The agreement “effectively precludes Ivanova from working anywhere worldwide in any capacity even as a secretary if that company develops, produces, or markets or sells any product or service” that competes with Integrated Genomics, the filing states. He adds that the clause “is redolent of the historical past when involuntary servitude was an acceptable practice.”
The filing also notes that the term “competitive” is not defined in IG’s complaint. Furthermore, it points out that even if the non-compete provision in the employment agreement is ruled to be enforceable, it expired in May 2006.
Gaffney told BioInform this week that he plans to file a countersuit in the case and said that IG appears to have some “ulterior motive” in suing Ivanova — an action that he described as “abusive.”
“If they wanted to sue the other entity because they think the other entity did something wrong, then they should have sued them,” he said. “They can’t, obviously, so they’re using Ivanova as some kind of pawn to get back at them, I guess.”
Gaffney added that the fact that IG issued a press release about the suit “is indicative that there’s got to be an ulterior motive here.”
The non-compete clause “is redolent of the historical past when involuntary servitude was an acceptable practice.”
IMG, ERGO, et al.
IG’s suit does not describe how the IMG software competes with ERGO, nor does the company provide details on the negative economic impact it claims to have suffered as a result of IMG’s availability.
Both platforms were originally designed for microbial genomic annotation and use comparative genomics to help analyze newly sequenced microbial genomes. However, they are far from the only such systems available.
The Institute for Genomic Research hosts the Comparative Microbial Resource, for example, while Argonne National Laboratory maintains the PUMA2 system, and the Fellowship for the Interpretation of Genomes has developed another large-scale microbial annotation system called SEED.
ERGO actually shares the same ancestry as the latter two, as all three are offshoots of the WIT (What is There) comparative genomics system developed at ANL in the mid-90s.
The JGI website includes an “IMG lineage” page that lists these resources as well as several others that offer “analogous” and “similar” functionality as IMG, though it notes that “IMG has also a number of unique analytical capabilities.”
A bioinformatics scientist who is familiar with this range of projects, but requested anonymity because he does not want to influence ongoing litigation, said that IMG, ERGO, CMR, WIT, SEED, and PUMA2 “all share results of fifteen years of research carried out in various academic settings.”
He added that IMG is an academic system, and “does not compete with ERGO's commercial applications and is not supposed to be used for commercial purposes.”