‘Illegal and corrupt advantage’: Federal grand jury serves criminal theft charges to JHL Biotech

Following an internal investigation by Genentech, the company found that JHL Biotech used illegally obtained trade and confidential information in the development of its biosimilar pipeline.

On October 29, 2018, former Genentech employees, Xanthe Lam, Allen Lam, James Quach, and JHL employee John Chan were charged with criminal theft.

Genentech gave a statement regarding the suit, which alleges former Genentech employees Xanthe Lam and Allen Lam illegally disclosed Genentech’s trade secrets to JHL.

JHL allegedly used the information in the development and manufacture of its biosimilar portfolio. The company focused on the development of biosimilars some of which were biosimilars of Genentech's biologics. 

From 2013 to 2017, Xanthe Lam and Allen Lam provided JHL with information. The two also revealed confidential and proprietary information related to several of Genentech’s medicines.

James Quach gained unauthorized access to Genentech’s secure document control systems through Xanthe Lam, according to the statement. The company stated that he used access to the systems to obtain information related to Genentech’s manufacturing process. Quach was an employee of JHL’s manufacturing plant in China.

JHL employees, John Chan, and the company’s co-founders, Racho Jordanov and Rose Lin, were also said to have solicited and accepted Genentech trade secrets from both Xanthe and Allen Lam.

Genentech’s statement read, “We reported these illegal activities to the US Attorney’s Office and have cooperated with and will continue to work with law enforcement officials in their ongoing criminal investigation of these matters.”​

“In addition, following the arrests, Genentech filed a civil complaint in US District Court for the Northern District of California against the indicted individuals, JHL, and Racho Jordanov and Rose Lin.”​

Indictment, civil complaint​

Genentech also provided us with its civil complaint, which was filed against the four indicted individuals.

Per the complaint, Genentech stated there was documentary evidence, including emails, text messages, Skype logs, and audit records that made it “clear”​ that former Genentech employees and others at JHL “conspired”​ to give JHL an “illegal and corrupt advantage”​ in the biotech industry.

The complaint reads, “Although criminal sanctions are warranted, this lawsuit seeks injunctive relief and civil damages from JHL and the individuals who conspired to steal Genentech’s trade secrets.”​

The theft was said to include: FDA-approved analytical methods, formulation, quality acceptance criteria, and manufacturing protocols and procedures.

According to the complaint, Xanthe Lam’s participation in the theft occurred while she was a Genentech employee. She was a senior scientist at the company and had access to secure document repositories. Xanthe had signed Genetech’s Proprietary Information Agreement, which required her to not disclose any proprietary, confidential, or trade related information to unauthorized competitors and third parties.

Xanthe worked for JHL while still employed by Genentech. The complaint states that in a draft for JHL Stability Protocol, “the identified author ‘Xanthe Lam’ inserted edits and comments into JHL’s document, including changing certain JHL’s testing parameters to exactly match the confidential testing parameters in Genentech’s proprietary Stability Protocol for Pulmozyme [dornase alfa].”​

Since the charges were filed, Genentech motioned for an injunction preventing HGL from making and selling potential biosimilars. The motion also requests that the court stops JHL from making, testing, using, promoting, etc. any products that were developed in whole or in part with the benefit of Genetech’s trade information. A hearing for this motion is scheduled for December 13, 2018.