Case 3:17-cv-01459 Document 1 Filed 03/17/17 Page 1 of 20

1 Michael E Zeliger (SBN 271118)

michael.zeliger@klgates.com
2 Ranjini Acharya (SBN 290877)
ranjini.acharya@klgates.com
3 Jerrold F. Petruzzelli (SBN 77748)
jerry.petruzzelli@klgates.com
4 K&L GATES LLP
630 Hansen Way
5 Palo Alto, CA 94304
Telephone: +1 650 798 6700
6 Facsimile: +1 650 798 6701

7
Attorneys for Plaintiff
8 SONOMA PHARMACEUTICALS, INC.

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UNITED STATES DISTRICT COURT
10 NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
11

12 SONOMA PHARMACEUTICALS, INC., Case No.:

13 Plaintiff, COMPLAINT FOR DAMAGES AND
INJUNCTIVE RELIEF FOR:
14 v.
1. MISAPPROPRIATION UNDER THE
15 COLLIDION, INC., HOJABR (HOJI) ALIMI, DEFEND TRADE SECRETS ACT
SAMEER HARISH, ANTOINETTE DOUGLAS, (DTSA) 18 U.S.C. 1836; AND
16 MONICA SHAFFER, and DOES 1 to 10, 2. BREACH OF FIDUCIARY DUTIES
17 Defendants. Trial Date: None Set
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COMPLAINT
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1 Plaintiff Sonoma Pharmaceuticals, Inc. f/k/a Oculus Innovative Sciences (Plaintiff or

2 Sonoma), by and through its undersigned attorneys, alleges against Defendants Collidion, Inc.,

3 Sameer Harish, Hojabr (Hoji) Alimi, Antoinette Douglas, and Monica Shaffer (collectively

4 Defendants, and each a Defendant) as follows:

5 NATURE OF THE ACTION

6 1. This action arises under the Defend Trade Secrets Act (DTSA), from Defendants

7 calculated misappropriation and use of Sonomas confidential, proprietary and trade secret

8 information unfairly to compete with Sonoma in the United States.

9 2. This Court should not allow Defendants to enjoy the significant economic and market

10 benefits that are certain to result from these illicit activities.

11 3. Sonoma seeks injunctive relief as well as damages to address the harms caused by

12 Defendants illegal activities.

13 PARTIES

14 4. Plaintiff Sonoma Pharmaceuticals, Inc. is a Delaware corporation with its principal

15 place of business at 1129 North McDowell Blvd. Petaluma, CA 94954. Plaintiff formally changed

16 its name from Oculus Innovative Sciences, Inc. in 2016.

17 5. Defendant Collidion, Inc. (Collidion) is a Nevada corporation with principal place

18 of business at 1356 Gordon Lane, Santa Rosa, CA 95404. Upon information and belief, Collidion

19 can be served through its registered agent for service of process, Lynne Bolduc, located at 16148

20 Sand Canyon Avenue, Irvine, CA 92618.

21 6. Upon information and belief, Hojabr (Hoji) Alimi (Alimi) is an individual residing

22 in Santa Rosa, California.

23 7. Upon information and belief, Antoinette Douglas (Douglas) is an individual

24 residing in Fairfield, California.

25 8. Upon information and belief, Sameer Harish (Harish) is an individual residing in

26 Walnut Creek, California.

27 9. Upon information and belief, Monica Shaffer (Shaffer) is an individual residing in

28 Sebastopol, California.

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COMPLAINT
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1 10. Sonoma is ignorant of the true names and capacities of the remaining defendants,

2 sued as Does 1 through 10, and therefore sue defendants by such fictitious names. Sonoma will

3 amend this Complaint to allege true names and capacities when ascertained. Sonoma is informed

4 and believes, and on that basis alleges, that each of the fictitiously named defendants are in some

5 manner responsible for the harm Sonoma has incurred and will incur if injunctive relief is not

6 allowed or damages are not awarded.

7 JURISDICTION AND VENUE

8 11. This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331 as Sonoma

9 asserts a claim for misappropriation of trade secrets under the DTSA, 18 U.S.C. 1836, as amended.

10 12. This Court has supplemental or pendant jurisdiction over Sonomas remaining claims

11 pursuant to 28 U.S.C. 1367 because such claims are so related to Sonomas federal

12 misappropriation of trade secrets claim that they form part of the same case or controversy under

13 Article III of the United States Constitution.

14 13. This Court has personal jurisdiction over Defendants Alimi, Douglas, Harish, and

15 Shaffer because they are residents of this District and have committed acts giving rise to liability

16 within this District and the State of California.

17 14. This Court has personal jurisdiction over Defendant Collidion because Collidion

18 operates a business in the State of California, has an office for the transaction of business in the State

19 of California, has registered to do business in the State of California, and has committed acts giving

20 rise to liability within the State of California.

21 15. Venue is appropriate in this judicial district pursuant to 28 U.S.C. 1391 because a

22 substantial part of the events giving rise to this dispute and the damages sustained in this dispute

23 have occurred, and are occurring, within this District.

24 FACTUAL BACKGROUND
25 Sonomas Business Activities

26 16. Sonoma is a specialty pharmaceutical company that develops and markets unique and

27 effective solutions for the treatment of dermatological conditions and advanced tissue care.

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1 17. Sonomas dermatological and advanced skin care products are sold throughout the

2 United States and internationally. Sonomas products have improved outcomes for more than five

3 million patients globally by reducing infections, itch, pain, scarring and harmful inflammatory

4 responses to medical procedures and various medical afflictions.

5 18. Sonomas success in a competitive market is dependent upon its ability to develop

6 products that are innovative and meet the demands of its customers. Sonoma has therefore invested

7 significant time, effort, and money into research and development, particularly with respect to the

8 driving safe and effective healthcare products, treatments, and medicines to market through the

9 development and acquisition of innovative technologies.

10 19. Sonomas ability to achieve success in this competitive market hinges on its ability to

11 protect its confidential, proprietary, and trade secret information from public disclosure.

12 20. As just one example, Sonoma is the market leader in the development of wound care

13 agents that incorporate hypochlorous acid. Hypochlorous acid is a compound that is also produced

14 by the human bodys immune system upon demand to eradicate foreign pathogens in the body.

15 21. Sonoma has dedicated many years of work to the perfection of its hypochlorous acid

16 products, which became the foundation for Sonomas well-known Microcyn range of products.

17 Sonomas Microcyn technology was the very first hypochlorous acid introduced into the U.S.

18 advanced wound care market. The Microcyn range of products continues to be one of the top-

19 selling brands of hypochlorous acid-based wound care agents in the United States.

20 22. Sonoma has continued to invest in developing new hypochlorous products since the

21 first of its products was launched nearly 15 years ago. For example, in August 2016, Sonoma

22 announced that it had obtained Food and Drug Administration approval to begin marketing a new

23 hypochlorous acid product for the removal of foreign material from the sites of dermal procedures.

24 23. Much of the information regarding the development, testing, formulation, and

25 methods of manufacturing Sonomas products, including its hypochlorous acid products, continues

26 to hold substantial commercial and competitive value.

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COMPLAINT
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1 24. By way of example, Sonomas gel-based hypochlorous acid products make use of a

2 proprietary gelling agent, the composition of which is not known or disclosed to any third parties,

3 and is part of the information that Sonoma considers its trade secrets.

4 25. Sonoma discloses certain aspects of the methods of manufacture for its hypochlorous

5 acid-based products as part of the disclosure of inventions for which Sonoma has soughtand

6 obtainedpatent protection.

7 26. Sonoma otherwise strictly maintains the confidentiality of much of the information

8 for its products, including formulation information, batch records, operations manuals, and analytical

9 methods, which are used as part of Sonomas efforts to achieve regulatory compliance and to ensure

10 the safety and efficacy of its products. This information is highly confidential in nature, is not

11 disclosed in Sonomas patent applications, and is part of the information that Sonoma considers its

12 trade secrets.

13 27. Sonoma also keeps confidential certain business information relating to its vendors,

14 and its customer lists.

15 Sonomas Protection of Its Confidential, Proprietary, and Trade Secret Information

16 28. Sonoma takes the protection of this proprietary information seriously, and has taken

17 diligent and reasonable steps to protect its proprietary information from disclosure or use by third

18 parties, unless such third parties are subject to protective provisions restricting disclosure or further

19 use of same unless in furtherance of Sonomas interests. These measures include, by way of

20 example, strict limitations on the dissemination of information on a need-to-know basis, the use of

21 employee confidentiality agreements, the use of non-disclosure agreements with third parties, and

22 the deployment of multiple layers of password-only access to its databases.

23 29. Internally, Sonoma protects its proprietary information by requiring its employees to

24 execute an assignment of inventions and confidentiality agreement. (Confidentiality Agreement).

25 A standard copy of the Confidentiality Agreement (as signed by Defendant Douglas) is attached

26 hereto as Exhibit A.

27 30. Sonomas Confidentiality Agreement exists to protect Sonomas highly sensitive

28 confidential trade secrets from public disclosure. Each employee agrees therein at all times during

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1 the term of [my] employment and thereafter, to hold strictest confidence, and not to use, except for

2 the benefit of the Company, or to disclose to any person, form [sic] or corporation without written

3 authorization of the Board of Directors of the Company, any Confidential Information of the

4 Company. See Exhibit A, 2. This obligations importance is underscored by the Confidentiality

5 Agreements prohibition that the signatory employee has no right to use the Confidential

6 Information after employment for any purpose: I understand that nothing in this Agreement

7 conveys to me a personal license to the Companys Confidential Information. I understand that upon

8 the termination of my employment with the Company I will have no rights to use the Companys

9 Confidential information for any purpose. Id.

10 31. When an employee is terminated or voluntarily discontinues employment with

11 Sonoma, that employee is required to return all Sonoma items in his or her possession. Specifically,

12 under section 5 of the standard Confidentiality Agreement, each employee covenants as follows. I

13 agree that at the time of leaving the employ of the Company I will deliver to the Company (and will

14 not keep in my possession, recreate, or deliver to anyone else) any and all devices, data, notes,

15 reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials,

16 equipment, other documents or property, or reproductions of any aforementioned items developed by

17 me pursuant to my employment with the Company of [sic] otherwise belonging to the Company, its

18 successors or assigns. In the event of the termination of my employment, I agree to sign and deliver

19 the Terminations Certification attached hereto See Exhibit A, 5.

20 32. Further steps taken by Sonoma to ensure that its information is protected when an

21 employee departs or is terminated include changing critical passwords for its systems and databases,

22 and wiping access cards.

23 33. Sonoma maintains an employee handbook outlining its policies and guidelines for

24 employees dealing with Sonomas electronic data and sensitive business information, which

25 employees are required to review and acknowledge as part of their employment.

26 34. Sonomas physical facilities are monitored, and individuals can only gain access to

27 Sonomas facilities by using a coded access card.

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COMPLAINT
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1 35. Sonomas most sensitive confidential proprietary and trade secret information,

2 including its correspondence with the FDA and other regulatory bodies that discloses formulation

3 information, batch records, operations manuals, and analytical methods for Sonomas products, is

4 stored on a secure physical server.

5 36. Physical access to Sonomas internal computer server, on which its most confidential

6 information for submission to regulatory authorities is stored, is through a locked room containing

7 no other hardware equipment, limited to very few personnel. Remote access to this highly

8 confidential information on the server is also limited: the server drive is only accessible by high-

9 level employees who are responsible for regulatory affairs, and those employees are required to

10 successfully navigate password prompts before being able to access the confidential information.

11 The Relationship Between Sonoma and Defendants Alimi, Douglas, Harish, and Shaffer

12 37. Alimi served continuously as Sonomas Chief Executive Officer from 1999 until
13 February 2013. At all times prior to 2013, Alimi was also the President of Sonoma. Alimi also
14 continuously served as Chairman and a member of Sonomas Board of Directors from 1999 to early
15 2014.
16 38. On March 21, 2013, Alimi stepped down as Sonomas President, remaining as
17 Sonomas CEO, and became the CEO of Sonomas former subsidiary, Ruthigen, Inc. (Ruthigen).
18 39. Sonoma and Ruthigen entered into a Shared Services Agreement (SSA) to share
19 employees and facilities, meaning that Ruthigens employees worked at the same facility, and had
20 access to certain of Sonomas confidential information, including information relating to formulation
21 information, batch records, operations manuals, and analytical methods for Sonomas products,
22 which Ruthigens employees also had a duty to guard.
23 40. Sonoma and Ruthigen also entered into a License and Supply Agreement (LSA)
24 effective May 22, 2013. A copy of the LSA is attached hereto as Exhibit B. By the terms of that
25 LSA, Sonoma shared certain of its proprietary technology and know-how relating to the manufacture
26 of a unique and proprietary chemical formulation with Ruthigen, to allow Ruthigen to develop and
27 commercial products utilizing Sonomas proprietary technology and knowhow for certain
28 applications. See Exhibit B, Recitals.

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COMPLAINT
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1 41. The LSA included an obligation for each party to protect the other partys

2 confidential information and know-how, shared under the LSA, from unauthorized disclosure. See

3 Exhibit B, 10.1 (the Parties agree that the receiving Party shall keep confidential and shall not

4 publish or otherwise disclose or use for any purpose other than as provided for in this Agreement

5 any Know-how and other information and materials furnished to it by the other Party or the other

6 Party's Affiliates or sub-licensees pursuant to this Agreement, or any provisions of this Agreement

7 that are the subject of an effective order of the Securities Exchange Commission granting

8 confidential treatment pursuant to the Exchange Act of 1934 as amended (collectively "Confidential

9 Information"), except to the extent that it can be established by the receiving Party that such

10 Confidential Information). These obligations extended beyond the termination of the LSA. See,

11 e.g., id., 14.3.

12 42. Ruthigen became a public corporation on or about March 26, 2014 and remained as

13 an independent entity until it merged with Pulmatrix Inc. in June 2015.

14 43. At the time of the Pulmatrix merger, Alimi stepped down as Ruthigens CEO.

15 44. During his tenure at Sonoma, Alimi directed and had overall responsibility for

16 Sonomas overall business plans and operations. In particular, Alimi directed the development of

17 Sonomas hypochlorous acid products, and oversaw bringing of these products to market. Alimi was

18 knowledgeable in fine detail about, and responsible for, all of Sonomas operations, activities, and

19 all its expenditures.

20 45. As a result of his duties at Sonoma, Alimi had substantial access to all of Sonomas

21 proprietary, confidential, and trade secret information.

22 46. As a result of his roles as CEO, President, and Board Member of Sonoma, Alimi

23 owed the highest unqualified fiduciary duty to Sonoma. As such, Alimi was and is required to abide

24 by the highest standards with regard to handling and use of Sonomas proprietary, confidential, and

25 trade secret information.

26 47. As Sonomas CEO, Alimi was aware of Sonomas policy on having all employees

27 execute its Confidentiality Agreement. In fact, Alimi was responsible for ensuring that all

28 employees, including himself, executed a Confidentiality Agreement as a condition of becoming an

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COMPLAINT
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1 employee and maintaining employment at Sonoma. As Sonomas employee, Alimi was subject to

2 the same requirement. As its CEO, he was responsible for enforcing this requirement without

3 exception, for ensuring that adequate records were kept with respect thereto, and that all employees

4 employment files, as required by law, contained a copy of such executed Confidentiality Agreement.

5 48. Alimi, as founder of Sonoma, was Sonomas first employee. No Confidentiality

6 Agreement has been found in Alimis company personnel file or elsewhere, despite Sonomas

7 diligent efforts to locate the same. On information and belief, Sonoma alleges that either Alimi did

8 not sign such a Confidentiality Agreement, in order to evade the obligations placed on all employees

9 by Sonoma, or in violation of his duties as a Sonoma fiduciary, Alimi destroyed his signed

10 Confidentiality Agreement.

11 49. Sonoma employed Douglas as an integral member of the Sonoma team on July 17,

12 2008. Douglas was employed by Sonoma as its Associate Director of Regulatory Affairs, and then

13 Director, Regulatory Affairs and Quality Assurance until February 1, 2013 when she transferred to

14 Ruthigen as Director of Regulatory Affairs and Quality Assurance. As part of her duties at Sonoma

15 and then at Ruthigen, Douglas was responsible for regularly liaising with the FDA and other

16 government agencies regarding all of Sonomas products. Information submitted by Sonoma to the

17 FDA to comply with the Sonomas regulatory disclosure obligations is highly confidential and has

18 substantial commercial value, insofar as the same bears on Sonomas products commercial viability,

19 its products safety, and the companys financial performance.

20 50. Douglas had access to, and knew, all of Sonomas highly sensitive and confidential

21 trade secret information and had access to, and knew, every piece of research and development

22 information that Sonoma submitted to regulatory bodies. Thus, Douglas had detailed knowledge and

23 access to all of the development, testing, formulations, and methods of manufacture information for

24 all of Sonomas products and, in particular, its hypochlorous acid products. Douglas signed

25 Sonomas Confidentiality Agreement on or about July 7, 2008.

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COMPLAINT
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1 51. Section 2(a) of the Confidentiality Agreement signed by Douglas states:

2 I recognize that the employer-employee relationship is an inherently

confidential relationship. I agree at all times during the term of my
3 employment and thereafter, to hold in strictest confidence, and not to
use, except for the benefit of the Company, or to disclose to any
4 person, form or corporation without written authorization of the Board
of Directors of the Company, any Confidential Information of the
5 Company. I understand that "Confidential Information" means any
Company proprietary information, data or trade secrets, including, but
6 not limited to, patent applications, copyright application, submissions
to the FDA and other regulatory agencies, purpose or executed
7 agreements with third parties, marketing and other research, business
plans, finances or other business information, strategic aims, product
8 plans, products, services, customer lists and customers (including but
not limited to customer of the Company on whom I called or with
9 whom I became acquainted during the term of my employment),
disclosed to me by the Company wither directly or indirectly in
10 writing, orally or my drawing or observation, during my training
and/or employment. I agree to never represent that the Company's
11 Confidential Information is my personal property. I understand that
nothing in this Agreement conveys to me a personal license to the
12 Company's Confidential Information. I understand that upon the
termination of my employment with the Company I will have no rights
13 to use the Company's Confidential Information for any purpose. I
further understand the Confidential Information does not include any
14 of the foregoing items which has become publicly known and made
generally available through no wrongful act of mine or of others who
15 were under confidentiality obligations as to the item or items involved.

16 52. Company is defined to include Oculus Innovative Sciences, Inc., a Californian

17 corporation, its subsidiaries, affiliates, successors or assigns. See Exhibit A, 1 (emphasis added).

18 Ruthigen, which was Sonomas wholly-owned subsidiary during the term of Douglass employment,

19 was covered by the terms of the Confidentiality Agreement that Douglas signed.

20 53. Section 5 of the Confidentiality Agreement required Douglas to return Sonomas

21 documents at the time she left Sonomas employment. See Exhibit A, 5. (I agree that, at the time

22 of leaving the employ of the Company I will deliver to the Company (and will not keep in my

23 possession, recreate or deliver to anyone else) any and all devices, data, notes, reports, proposals,

24 lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other

25 documents or property, or reproductions of any aforementioned items developed by me pursuant to

26 my employment with the Company of otherwise belonging to the Company, its successors or

27 assigns. In the event of the termination of my employment, I agree to sign and deliver the

28 "Terminations Certification" attached hereto)

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COMPLAINT
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1 54. By signing the Confidentiality Agreement, Douglas agreed to be bound by all of its

2 terms.

3 55. Harish was employed as the Chief Financial Officer of Sonomas subsidiary,

4 Ruthigen, on February 1, 2013. At that time, pursuant to a shared services agreement between

5 Ruthigen and Sonoma, Ruthigen employees and contractors shared the same facilities as Sonoma

6 employees and had access to certain of Sonomas confidential information. As Ruthigens CFO,

7 Harish was privy to confidential and trade secret information of Ruthigen and Sonoma.

8 56. Alimi, as CEO of Ruthigen, extended an offer of employment to Harish, who in turn

9 agreed to and accepted the offer on February 1, 2013. A copy of the fully executed offer of

10 employment is attached hereto as Exhibit C.

11 57. By signing the letter of employment, Harish agreed to be bound by the Confidential

12 and Proprietary Information clause, which provides:

13 The Company expects that you work all your business hours
exclusively for Ruthigen, and that you will not directly or indirectly
14 engage in any other employment, consulting or business activity
elsewhere. This policy is further detailed in a certain Confidentiality
15 Agreement, a copy of which is attached for your signature. The
Company has a firm policy against its employees using any trade
16 secrets or other proprietary information of third parties or previous
employers in the course of performing their duties for the Company.
17 This policy is set forth in a certain separate agreement entitled
"Proprietary Information and Inventions Agreement," a copy of which
18 is attached for your signature. During your employment with Ruthigen
and with the Company, you may not disclose to the Company or use,
19 or induce the Company to use, any trade secrets or other proprietary
information of others, including your prior employers. By accepting
20 employment with the Company, you agree that you will not, in the
performance of your duties at the Company, utilize or disclose any
21 proprietary information of former employers and that you will take
with you no tangible items such as drawings or reports when you leave
22 your current employer.

23 58. By the terms of that letter, Harishs Ruthigen employment was contingent in part

24 upon Harish signing the Sonoma Proprietary Information and Inventions Agreement (which, for

25 purposes of such agreement, defined Company employees to include employees of its subsidiary

26 Ruthigen) , attached to that letter. See Exhibit C, at pp. 1-2. No such signed agreement of this kind

27 has been found in Harishs Sonoma personnel file, despite Sonomas diligent search of its records.

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COMPLAINT
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1 59. Shaffer was employed as Alimis assistant at Ruthigen on March 6, 2013. On

2 information and belief, once Ruthigen became a public corporation in 2014, Shaffers role expanded

3 to include quality assurance activities for Ruthigens products. As part of her duties as assistant to

4 the CEO, upon information and belief, Shaffer had detailed knowledge of Sonomas operations,

5 business development activities, vendor relationships, and customers.

6 60. As part of their employment at Sonoma and/or Ruthigen, Defendants Harish, Shaffer,

7 and Douglas had access to Sonomas confidential business development activity information, vendor

8 relationship information, customer lists, operating procedures, formulas, batch records, operations

9 manuals and analytical methods used across all of Sonomas product lines.

10 61. Alimi founded Collidion in 2015. Upon information and belief, Douglas, Harish, and

11 Shaffer began to work for Collidion as employees or consultants shortly thereafter.

12 Defendants Alimi, Douglas, Harish, and Shaffer Have Knowingly Misappropriated Sonomas
Confidential, Proprietary, and Trade Secret Information
13
62. Defendants are well aware that Sonoma uses a proprietary gelling agent in all of its
14
products, which Sonoma obtains from a third-party vendor. Defendants are also aware that no other
15
party has any right of access to, or use of, Sonomas proprietary gelling agent.
16
63. However, in April 2016, upon information and belief, Sonoma learned that Shaffer, at
17
Alimis explicit direction, sought to order Sonomas proprietary gelling agents from Sonomas third-
18
party vendor.
19
64. Sonoma considered such conduct a breach of Alimi and Shaffers obligation to keep
20
Sonomas confidential information secret, and was alarmed by this misuse of Sonomas confidential,
21
proprietary, and trade secret information, and efforts to profit from the same.
22
65. Concerned by these actions, Sonoma caused a letter to be sent to Collidions Board of
23
Directors. A copy of that letter, dated April 12, 2016, is attached hereto as Exhibit D. In that letter,
24
Sonoma sought, in part, assurances from Collidions Board that both Collidion and Alimi would
25
cease any further attempt to misappropriate and/or use Sonomas confidential, proprietary, and/or
26
trade secret information, and refrain from basing their future endeavors upon Sonomas trade secrets.
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1 66. Collidion responded on April 29, 2016 and refused to provide Sonoma with any such

2 assurances. See Exhibit E. Faced with Collidions truculence, and lacking any means, short of then

3 available proof that would warrant formal litigation, by which to verify whether Alimi was engaging

4 further in anti-competitive behavior, Sonoma did not pursue the matter.

5 67. Then, on January 16, 2017, Sonoma received a letter purportedly written by

6 Defendant Harish, a copy of which is attached as Exhibit F. That letter appeared to provide proof

7 that Sonomas concerns described in its April 12, 2016 letter, were justified. In that letter, Harish

8 purportedly alleged that Collidion intends to work on Hypochlorous Acid products and directly and

9 indirectly compete with [Sonoma]. The subsidiary that will do so is going to be known as

10 Avenlogics Inc.

11 68. Sonoma was further informed by Exhibit F that Defendants Alimi, Douglas, Harish,

12 and Shaffer allegedly knowingly and systematically copied all of [Sonomas] trade secrets

13 including Standard Operating Procedures, Formulas, Batch Records, Operations Manuals and

14 Analytical Methods and are currently using these as a basis for starting up operations at the Santa

15 Rosa facility. See Exhibit F (emphasis added).

16 69. Sonoma subsequently attempted several times by telephone to contact Harish to: (i)

17 verify that he is indeed the author of the letter attached as Exhibit F; and (ii) confirm the letters

18 allegations. To date, Harish has not responded.

19 70. Sonoma also reached out to Douglas to attempt to verify the allegations in the letter

20 attached as Exhibit F. Sonoma was able to speak with Douglas on two occasions in February 2017,

21 after being informed by Douglas at the outset that she was no longer a Collidion employee.

22 However, Douglas was not able to confirm whether the allegations in the letter are true or false.

23 71. The allegations in the letter have led Sonoma reasonably to believe that all

24 Defendants have in fact misappropriated Sonomas confidential, proprietary and trade secret

25 information by, inter alia, systematically copying Sonomas standard operating procedures,

26 formulas, batch records, operations manuals and analytical methods used across all of Sonomas

27 product lines.

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1 Defendants Actions Indicate Misuse of Sonomas Misappropriated Trade Secrets

2 72. Based on the allegations in the letter attached at Exhibit F, Sonoma further believes
3 that Defendants intend to misuse the confidential and trade secret information that they unlawfully
4 misappropriated from Sonoma.
5 73. As described in Exhibit F, Defendants have allegedly purchased the exact same
6 analytical and production equipment used by Sonoma, based on the information that Alimi, Douglas,
7 Harish, and Shaffer misappropriated from Sonoma. As further described in Exhibit F, Defendants
8 allegedly are intending to use this equipment to make use of the confidential operating procedures,
9 formulas, batch records, operations manuals and analytical methods that are used by Sonoma, to
10 achieve state-level (and then eventually federal level) approvals for products previously developed
11 by and proprietary to Sonoma, which directly compete with Sonomas hypochlorous acid-based
12 products. As also described in Exhibit F, these files are currently being held in cloud-based
13 applications.
14 74. On January 21, 2017, Sonoma received a copy of Collidions presentation to
15 prospective investors in connection with Collidions $10mm Series A Preferred Stock Offering. A
16 copy of that presentation is attached hereto as Exhibit G.
17 75. Collidions presentation states Collidions intention to enter the drug and medical
18 device market, and specifically, the hypochlorous acid market. Collidions presentation declares that
19 it is raising investor funds to implement its intention.
20 76. For example, Collidion identifies Avenlogic, Inc. as a Collidion subsidiary that will
21 be the disruptive antimicrobial products platform. See Exhibit G, at 6.
22 77. Collidion also identifies hypochlorous acid as natures defense against infection,
23 and describes it as Our Active Ingredient. See Exhibit G, at 10 (emphasis added). Collidion then
24 provides an analysis of reasons why to pursue the disinfectant market (id., at 19-20); timelines for
25 Collidions entry into the disinfectant market (id., at 22); and its business strategy for addressable
26 markets for hypochlorous acid-based products (id., at 23-29).
27 78. It took Sonoma tens of millions of dollars and many years of development using its
28 confidential information and trade secrets to achieve success in the antiseptic/disinfectant markets

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1 which rely on hypochlorous acid-based products. According to Collidions presentation, Collidion

2 intends to succeed in the market in far less time and using far less money and investing far fewer

3 resources into research and development than that invested by Sonoma. This cannot and would not

4 be possible without the Defendants misappropriation of Sonomas confidential information and

5 trade secrets.

6 79. Collidion underscores the interconnectedness of the activities that Alimi knew of,

7 directed, and participated in at Sonoma, and the activities that Alimi is undertaking at Collidion. For

8 example, Collidion outlines Alimis alleged contributions while at Sonoma, including a claim that

9 between 2002 and 2005, After >3 years of R&D, Hoji [Alimi] stabilize[d] the target pH neutral

10 [hypochlorous acid] with a 2-year shelf-life under ambient temperatures. For the first time, the

11 product could be bottled and shipped around the world. See Exhibit G, at 14.

12 80. Collidion also identifies certain milestones achieved by Sonoma (identified by its

13 former name, Oculus Innovative Sciences), and implicitly suggests that Alimi was responsible for

14 achieving those milestones:

15

16
17

18

19

20

21

22

23

24

25

26

27

28 See Exhibit G, at 15.

15
COMPLAINT
 Case 3:17-cv-01459 Document 1 Filed 03/17/17 Page 16 of 20

1 81. Collidion explicitly describes Alimis Road to Collidion, Inc. and highlights the

2 dates that Alimis ostensible non-compete agreements with Sonoma and Pulmatrix are set to expire

3 as roadblocks to the building of Collidions manufacturing plant and operations in connection with

4 the production of hypochlorous acid-based products:

10

11

12

13

14

15

16
17

18

19 See Exhibit G, at 18.

20 82. The information in Exhibit F and Exhibit G has led Sonoma to believe that
21 Defendants have misappropriated Sonomas confidential, proprietary and trade secret information
22 contained in the standard operating procedures, formulas, batch records, operations manuals and
23 analytical methods, and are using and are intending to disclose and use the same to compete unfairly
24 with Sonoma.
25

26

27

28

16
COMPLAINT
 Case 3:17-cv-01459 Document 1 Filed 03/17/17 Page 17 of 20

1 FIRST CAUSE OF ACTION

Misappropriation of Trade Secrets Under 18 U.S.C. 1836, et seq.
2

3 83. Sonoma incorporates by reference and realleges the allegations in paragraph 1 - 80 as

4 if fully set forth herein.

5 84. Sonoma owns and possesses certain confidential, proprietary and trade secret

6 information, as alleged above.

7 85. This confidential, proprietary, and trade secret information relates to products and

8 services used, sold, shipped and ordered in, or intended to be used, sold, shipped and/or ordered in,

9 interstate or foreign commerce.

10 86. Sonoma has taken reasonable measures to keep such information secret and

11 confidential.

12 87. This confidential, proprietary, and trade secret information derives independent

13 economic value from not being generally known to, and not being readily ascertainable through

14 proper means by another person who could obtain economic value from the disclosure or use of the

15 information.

16 88. In violation of Sonomas rights, Defendants have misappropriated the confidential,

17 proprietary and trade secret information in the improper and unlawful manner as alleged herein.

18 89. Defendants misappropriation of the confidential, proprietary, and trade secret

19 information was intentional, knowing, willful, malicious, fraudulent, and oppressive.

20 90. Defendants failed to return Sonomas confidential and trade secret information as

21 required under their employment obligations.

22 91. On information and belief, Defendants are intending to use Sonomas confidential

23 and trade secret information unfairly to compete with Sonoma, to Sonomas detriment.

24 92. On information and belief, if Defendants conduct is not remedied, and if Defendants

25 are not enjoined, Defendants will continue to misappropriate, disclose, and use for their own benefit

26 and to Sonomas detriment, Sonomas trade secret information.

27

28

17
COMPLAINT
 Case 3:17-cv-01459 Document 1 Filed 03/17/17 Page 18 of 20

1 93. As the direct and proximate result of Defendants conduct as aforesaid, Sonoma has

2 suffered and, if Defendants conduct is not stopped, will continue to suffer, irreparable injury and

3 significant damages, in an amount to be proven at trial.

4 94. Because Sonomas remedy at law is inadequate, Sonoma seeks, in addition to

5 damages and permanent injunctive relief to recover and protect its confidential, proprietary, and

6 trade secret information and other legitimate business interests.

7 95. Sonomas business is reliant on its business reputation and its ability to maintain and

8 grow its customer base in a competitive market. Sonoma will continue suffering irreparable harm

9 absent injunctive relief.

10 96. Sonoma has a substantial likelihood of success on the merits because of Defendants

11 blatant, willful, and malicious misappropriation of trade secrets through the improper and unlawful

12 methods, as alleged herein.

13 97. Sonoma has been damaged by all of the foregoing, and is entitled to its damages, in

14 an amount to be determined at trial, as well as an award of exemplary damages and attorneys fees.

15 SECOND CAUSE OF ACTION

16 Breach of Fiduciary Duty and Duty of Loyalty

17 98. Sonoma incorporates by reference and realleges the allegations in paragraph 1 - 95 as

18 if fully set forth herein.

19 99. As CEO, President, Chairman, and Board Member of Sonoma, Defendant Alimi

20 owed Sonoma a duty of undivided loyalty. Alimi was obliged to act with the utmost good faith, and

21 in the best interests of Sonoma at all times. That duty continued beyond the termination of Alimis

22 relationship with Sonoma.

23 100. Sonoma was entitled to place its trust and confidence in Defendant Alimi, and to

24 expect Defendant Alimi to act with the utmost good faith toward Sonoma.

25 101. Sonoma relied on Defendant Alimis loyalty and integrity and his faithful

26 performance of his Sonoma duties and responsibilities.

27 102. By not performing his duties to Sonoma, by acting in conflict of interest, by engaging

28 in business for his own account to compete with Sonoma, and by misappropriating and misusing

18
COMPLAINT
 Case 3:17-cv-01459 Document 1 Filed 03/17/17 Page 19 of 20

1 Sonomas trade secrets and confidential information to establish Collidion as a directly competitive

2 enterprise, and by taking affirmative steps to deceive Sonoma and conceal his improper conduct,

3 Defendant Alimi has breached his undivided fiduciary duty of loyalty to Sonoma.

4 103. Defendant Alimi has, on information and belief, knowingly and willingly breached

5 his duty of loyalty to Sonoma by scheming to deceive and defraud Sonoma, misappropriating and

6 stealing Sonomas confidential and trade secret information, soliciting Sonomas existing

7 shareholders to invest in Collidion, and diverting and misappropriating Sonomas trade secrets,

8 confidential and proprietary business information.

9 104. Defendant Alimi has, on information and belief, acted in a manner inconsistent with

10 his duty of trust to Sonoma, by soliciting Sonomas shareholders for his own interest and that of

11 Collidion, and acting for his own and Collidions interests directly to Sonomas detriment.

12 105. As a direct and proximate result of Defendant Alimis breach of his fiduciary duties

13 towards Sonoma, Sonoma has been and is being harmed. Sonoma is entitled to damages, in an

14 amount to be determined at trial, as well as disgorgement from Defendant Alimi, and the forfeiture

15 and return of all monies, securities, and ownership derived from Collidion based on

16 misappropriation and misuse of confidential information, and compensation paid to him due to such

17 breach, the exact amount to be determined at trial. Sonoma is further entitled to injunctive relief

18 against Defendant Alimi, and all those acting in concert or participation with him, remedying their

19 past improper conduct, and preventing such conduct in the future.

20 106. Defendant Alimi is, on information and belief, still in possession of Sonomas

21 confidential and trade secret information, and is able to access and use this information on behalf of

22 Defendant Collidion. Further, on information and belief, Defendant Alimi has shared this

23 confidential information with others including vendors and prospective customers who may use, or

24 are using the information to Sonomas detriment.

25 107. As a direct and proximate result of Defendant Alimis disloyalty and breaches of his

26 fiduciary duties, Sonoma has been irreparably injured, and has suffered damages in an amount to be

27 determined at trial. Because its remedy at law is inadequate, Sonoma seeks, in addition to its

28 damages and permanent injunctive relief, enjoining Defendant Alimi, and all those acting in concert

19
COMPLAINT
 Case 3:17-cv-01459 Document 1 Filed 03/17/17 Page 20 of 20

1 or participation with him, from further improper conduct, and further remedying their improper

2 conduct as aforesaid.

3 PRAYER FOR RELIEF

4 WHEREFORE, Sonoma respectfully requests that this Court:
5 A. Award damages as described in each of the above claims, in favor of Sonoma and
6 against Defendants in an amount to be proved at trial;
7 B. Grant a permanent injunction against Defendants jointly and severally, enjoining each
8 from violating their legal and contractual duties owed to Sonoma, from using
9 Sonomas confidential, proprietary, and trade secret information and directing the
10 return of all of Sonomas property;
11 C. Award exemplary damages for willful and malicious action on the part of Defendants,
12 the exact amount to be determined at trial;
13 D. Awarding Sonoma pre-judgment and post-judgment interest, and its attorneys fees,
14 costs, and other expenses incurred in this action; and
15 E. Granting Sonoma such other and further relief as this Court deems just and proper.
16
JURY DEMAND
17
Sonoma demands a trial by jury on all issues so triable.
18

19

20 Respectfully submitted,
21

22 Dated: March 17, 2017 By: /s/ Ranjini Acharya

23 Michael E Zeliger
Ranjini Acharya
24 Jerrold F. Petruzzelli
K&L GATES LLP
25
Attorneys for Plaintiff, Sonoma Pharmaceuticals,
26 Inc.
27

28

20
COMPLAINT