## Facts

- Genzyme Corporation acquired Bone Care International on July 1, 2005.
- Charles Bishop, Keith Crawford, and Eric Messner were senior Bone Care officers who became Genzyme employees after the acquisition.
- Each individual defendant signed an employee agreement addressing intellectual property ownership, return of company property, confidentiality, and a covenant not to compete.
- The individuals left Genzyme between July and August 2005 and formed Proventiv Therapeutics LLC in September 2005 to develop competing vitamin D products; Proventiv was later acquired by Cytochroma, Inc.
- Genzyme alleged the individual defendants used confidential/proprietary information and company materials, failed to return property, diverted business opportunities, and exploited Genzyme/Bone Care intellectual property to create and monetize Proventiv.
- Genzyme asserted contract claims (IP rights, return of property, non-compete), and tort-based claims including breach of loyalty, conspiracy, and usurpation of corporate opportunity, along with misappropriation and unjust enrichment.
- The individual defendants moved under Rule 12(b)(6) to dismiss Counts Three through Eight, arguing unenforceability of the agreement provisions under Wisconsin law and displacement of tort/restitution claims by the Wisconsin Uniform Trade Secrets Act (WUTSA).

## Issues

1. Whether the employee agreement provisions (including non-compete-related provisions) were unenforceable as a matter of Wisconsin law at the pleading stage, requiring dismissal of the breach-of-contract counts.
2. Whether WUTSA displaced Genzyme’s tort and restitutionary claims because they sought civil remedies for trade-secret misappropriation.
3. Whether the amended complaint plausibly stated claims for breach of duty of loyalty, conspiracy, and usurpation of corporate opportunity under Rule 12(b)(6).

## Decision

- The court denied the Rule 12(b)(6) motion to dismiss Counts Three through Eight.
- The court declined to invalidate the challenged contract provisions on the pleadings, concluding enforceability and reasonableness turned on factual development.
- The court held WUTSA did not require dismissal of the tort-based claims at the pleading stage because the complaint alleged misuse of confidential information that could be non-trade-secret information.
- The court found the allegations sufficient to plead breach of duty of loyalty, conspiracy, and usurpation of corporate opportunity.

## Legal Principles

- A Rule 12(b)(6) motion tests the sufficiency of the pleadings; dismissal is improper unless the plaintiff can prove no set of facts entitling it to relief, and reasonable inferences are drawn in the plaintiff’s favor.
- Under Wisconsin law, whether restrictive covenants and related provisions are reasonable and enforceable is commonly fact-dependent and not ordinarily resolved solely from the pleadings.
- Contractual provisions requiring return of company property may be treated as separate obligations rather than restraints on trade, and may be analyzed independently from non-compete or damages language.
- WUTSA displaces conflicting tort and restitutionary remedies only to the extent the claim requires proof of a statutorily defined “trade secret”; claims that can be proven based on misuse of confidential but non-trade-secret information are not displaced.
- Whether information qualifies as a “trade secret” under WUTSA is often fact-intensive and generally unsuitable for resolution on a motion to dismiss.

## Conclusion

The court allowed Genzyme’s contract and related tort claims to proceed past the pleadings stage, holding that enforceability of the employee agreement provisions required factual development and that WUTSA did not categorically displace claims potentially based on misuse of confidential, non-trade-secret information.


Genzyme Corp. v. Bishop, 460 F. Supp. 2d 939 (W.D. Wis. 2006)