## Facts

- AngioScore, Inc. developed and sold the AngioSculpt scoring balloon catheter as its primary product and had substantial cash reserves.
- Eitan Konstantino co-founded AngioScore, served as CEO, and later remained a director after ending his employment, retaining access to confidential company information.
- While still on AngioScore’s board, Konstantino participated in the development of a competing scoring balloon catheter, “Chocolate,” through TriReme Medical, Inc. and related entities, including Quattro Vascular PTE Ltd.
- Chocolate was designed to compete for the same customers, use similar materials, and be priced to undercut AngioSculpt by $25.
- Konstantino attended board meetings where AngioScore’s product strategy, performance, and financial condition were discussed while Chocolate was being developed.
- When questioned about possible competition, Konstantino made statements the court found misleading, minimizing or denying that a competing product was being developed.
- AngioScore alleged Konstantino failed to present the Chocolate opportunity to AngioScore and instead pursued it for himself and the defendant entities.
- QT Vascular Ltd. later acquired or continued the Chocolate-related business and was alleged to be a successor to TriReme and/or Quattro.

## Issues

1. Whether Konstantino, as an AngioScore director, breached fiduciary duties of loyalty, good faith, and disclosure by developing and appropriating a directly competing product and related corporate opportunity.
2. Whether Konstantino improperly used AngioScore’s confidential information to advance the competing venture.
3. Whether TriReme and Quattro were liable for aiding and abetting Konstantino’s breach of fiduciary duty.
4. Whether QT Vascular was liable as a successor for conduct tied to the Chocolate business.
5. Whether defendants’ conduct constituted unlawful or unfair business practices under California’s Unfair Competition Law.

## Decision

- The court found for AngioScore in all material respects after a bench trial.
- The court held Konstantino breached fiduciary duties as a director by secretly developing and pursuing the Chocolate product opportunity, failing to disclose it to AngioScore, and making misleading statements to conceal the competing venture.
- The court held TriReme and Quattro liable for aiding and abetting Konstantino’s breach based on knowing participation and benefit from the misconduct.
- The court held QT Vascular liable under a successor-liability theory tied to its continuation of the Chocolate business.
- The court found defendants’ conduct violated California’s Unfair Competition Law.
- The court imposed equitable relief aimed at disgorging benefits derived from the misappropriated opportunity, including relief tied to the Chocolate product line.

## Legal Principles

- Corporate directors owe fiduciary duties of loyalty, good faith, and full disclosure, including a duty of candor when conflicts and competitive activities are implicated.
- Under California’s corporate opportunity doctrine, a director may not appropriate for personal benefit an opportunity within the corporation’s line of business that the corporation is financially able to pursue; at minimum, the director must disclose and present the opportunity to the corporation.
- Misuse of a corporation’s confidential information to develop or position a competing product supports a finding of breach of the duty of loyalty.
- A third party may be liable for aiding and abetting breach of fiduciary duty where it knows of the fiduciary relationship and breach and provides substantial assistance or participation.
- Successor liability may attach where an acquiring or continuing entity effectively carries forward the relevant business and liabilities under applicable state-law theories.
- Conduct that is unlawful or unfair in business competition can support liability and equitable remedies under California’s Unfair Competition Law.

## Conclusion

The court concluded that a founder-director violated fiduciary duties by covertly developing and commercializing a directly competing medical device while serving on the company’s board, and it extended liability to participating entities for aiding and abetting, to a successor entity for continuing the business, and under California’s UCL, awarding equitable relief aimed at disgorgement tied to the competing product line.


AngioScore, Inc. v. TriReme Med., Inc., No. 12-cv-03393-YGR, 2015 WL 4040388 (N.D. Cal. July 1, 2015)