SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA UNLIMITED JURISDICTION

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1 E. CRAIG MOODY, ESQ., SBN: Post Street, Suite 0 San Francisco, CA Telephone: () 1-00 Telecopier: () 1-01 Attorney For Petitioner Existence Genetics, LLC SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA UNLIMITED JURISDICTION EXISTENCE GENETICS, LLC, vs. Plaintiff, WILSON, SONSINI, GOODRICH & ROSATI, PC, AND DOES 1- Defendants. CASE NO.: COMPLAINT FOR PROFESSIONAL NEGLIGENCE, BREACH OF FIDUCIARY DUTY, FRAUD AND BREACH OF CONTRACT I. PARTIES / JURISDICTION / VENUE 1. Plaintiff is and at all times mentioned in the complaint was a Limited Liability Corporation, organized under the laws of the State of California with its principal place of business in Los Angeles County, and brings this action in the name Existence Genetics, LLC (EXGE) by which it is known and conducts its business.. Defendant Wilson, Sonsini, Goodrich and Rosati ( WSGR ) is a professional corporation organized and existing under the laws of the State of California with its principal place of business in Santa Clara County. The acts and omissions herein below described took place in Santa Clara County.. Plaintiff is currently ignorant of the true names and capacities of the defendants sued -1- COMPLAINT FOR PROFESSIONAL NEGLIGENCE

2 herein as DOES 1-, inclusive, and therefore sues those defendants by such fictitious names. Plaintiff will amend this Complaint to allege the said defendants true names and capacities when same are ascertained. Plaintiff is informed and believes, and thereon alleges, that each of said fictitiously named defendants is, in some legally actionable manner, responsible for the unlawful acts and/or omissions herein alleged and that plaintiff s injuries and damages as herein alleged were proximately caused by said unlawful acts and/or omissions on the part of said fictitious defendants. Plaintiff hereby incorporates herein by reference each and all of the charging allegations set forth herein below and hereby makes those allegations against each and all of said fictitious defendants.. Plaintiff is informed and believes, and thereon alleges, that at all times herein mentioned, each of the defendants was the agent of each of the other defendants, and in acting or failing to act as alleged herein, each defendant was acting within the course and scope of such agency and with the permission and consent of each of the other defendants. II. FACTUAL BACKGROUND. Existence Genetics, LLC (EXGE) met Wilson Sonsini Goodrich and Rosati, (WSGR) for the first time on February, 0 at WSGR s main offices in Palo Alto when EXGE s C.E.O. Brandon Colby (Colby) met WSGR partner Vern Norviel (Norviel). Colby, at this first meeting with Norviel, disclosed to Norviel that EXGE was a start-up company seeking representation for its intellectual property protection initiatives, including patent writing and prosecution. Norviel asked questions about what EXGE was planning to do and Colby informed him among many things that EXGE was a personal genomics company that would be providing genetic testing services for many different genes and diseases at once using DNA arrays in order to provide individuals with information about diseases for which they are at risk. Norviel advised -

3 Colby among other matters that A) the patent application process would cost around $,000; B) WSGR would be willing to defer EXGE s payments up to $0,000 until EXGE raised venture capital in a Series A initial financing round in exchange for a 1.% equity stake in EXGE, C) since EXGE was not a public company it would receive % off all rates at WSGR and D) that EXGE should avoid going to the venture capital firm Kleiner Perkins Caufield & Byers (Kleiner Perkins) for investment.. During that first face-to-face meeting, Norviel said he would conduct a conflict of interest check and would let Colby know if there were any conflicts and, if not, then Norviel would be able to represent EXGE. Norviel later reported to Colby that he had conducted a conflict of interest check and that there were no conflicts. After receiving this information and based upon it, as well as upon the indicated cost of EXGE s patent application process, EXGE decided to engage WSGR.. EXGE retained WSGR on or around August 1, 0 on an hourly billing basis with WSGR having no equity stake in EXGE. The representation included all intellectual property matters, such as patents and trademark matters, and all corporate matters, including formation, contracts, and employment matters.. EXGE believes WSGR, acting by and through its partner Vern Norviel, obtained EXGE as a client by fraud. Upon information and belief, it failed to advise EXGE that it simultaneously represented at least one direct competitor of EXGE, Navigenics, Inc. (Navigenics) and possibly others, who were seeking to obtain patents for matters directly competitive with EXGE s patents (i.e. simultaneous representation of clients with conflicting interest).. In addition to this fraud by omission, WSGR misrepresented its intended representation of EXGE by underestimating its fees and by misleading EXGE with respect to who would be performing the work involved. Although EXGE signed what it believes to be WSGR s standard -

4 engagement agreement, agreeing for example, to pay WSGR s customary hourly rate for professional services, it did so relying on Norviel s oral agreement to cut % off of all rates. Had EXGE known the true facts, both with respect to WSGR s representation of direct competitors and with respect to what WSGR would ultimately charge EXGE for its services and who would be performing the services, it would not have employed WSGR, but would have employed a law firm without such exorbitant billings and which did not represent direct competitors.. More than a year into the representation, on or about September, 0, EXGE was informed of WSGR s possible representation of Navigenics when late one night, a very junior WSGR associate who had been performing most of WSGR s services for EXGE, Kimberly Stopak (Stopak), let slip that WSGR represented Navigenics as well. On or about September, 0, EXGE became aware, through its own investigation, that patent applications of its direct competitors, Navigenics and andme, had entered the public domain in the beginning of 0 but that WSGR had never notified EXGE of this. WSGR was listed as the agent on Navigenics patent. WSGR had neither requested nor obtained a waiver or informed written consent from EXGE to simultaneously represent a direct competitor. (WSGR did, however, seek such a waiver regarding Affymetrix, a company with which EXGE sought to contract as a supplier.) Upon information and belief, WSGR also represents other potential competitors of EXGE.. EXGE was further surprised by the publication of these competitors patents because at the end of 0 WSGR had agreed orally and in communications that they would conduct a thorough scan of all competitors patent applications that are released and send EXGE updates every two weeks. When WSGR agreed to do this, they billed EXGE for the time they spent setting up this notification system and included a list of direct competitors that they included in the search, which specifically included Navigenics and andme. WSGR did notify EXGE regarding some of its competitors patents. Navigenics and andme, however, both had -

5 patent applications that entered the public domain at the beginning of 0 about which WSGR never notified EXGE. EXGE did not become aware of these patent applications until September 0. Due to WSGR s failure to abide by its obligations, EXGE only discovered that these applications existed long after its own non-provisional (final) patent application had been submitted six months earlier by WSGR in March 0. Knowledge of these two patent applications is pertinent to EXGE s intellectual property initiatives.. EXGE believes and on that basis allegesthat WSGR intentionally hid its representation of Navigenics from it. From Colby s very first meeting with Norviel, Norviel advised Colby to avoid Kleiner Perkins as a funding source because Norviel stated that Kleiner Perkins would take advantage of EXGE and that Kleiner Perkins was allegedly too rough to deal with. EXGE has now learned that Kleiner Perkins is the largest investor in Navigenics. EXGE believes that WSGR had an inherent conflict of interest at all times that it simultaneously represented EXGE and Navigenics. Norviel is, upon information and belief, the managing partner at WSGR for both Navigenics and EXGE.. With respect to EXGE s own patent applications, WSGR caused EXGE to incur, and continue to incur, substantial additional fees by A) recommending patents be split into multiple components upon submission to the United States Patent & Trademark Office (USPTO) when it was not necessary or advisable to do so, thereby incurring unnecessary legal expenses, B) introducing virtually all information provided to it by EXGE in the patent applications without any appropriate review, and without proper control by Norviel, resulting in an unnecessarily exceptionally large application with over 1,000 pages, C) providing substandard legal advice, resulting in potential future translation costs and D) providing substandard legal advice, resulting in unconscionable filing fees. Overall, it provided no strategic or tactical advice as it represented it would do. -

6 . Because WSGR and Norviel during their representation of EXGE worked with EXGE in writing their patent applications and developing their intellectual property protection strategies, WSGR and Norviel possess a considerable amount of confidential knowledge pertaining to EXGE. Since, upon information and belief, WSGR and Norviel still represent Navigenics and potentially a number of other competitors of EXGE, this knowledge of EXGE s patent application and intellectual property protection strategies represents a very substantial and real ongoing risk to EXGE s business.. Upon becoming aware of Navigenics and andme s publicly available patent applications, EXGE ed Stopak of WSGR, asking why it was never notified of this. She responded in an saying that they did not notify EXGE because your account is frozen. EXGE was very surprised by this because it had never before been notified that its account was frozen or been informed of, let alone consented to, the terms of its engagement of WSGR being changed in any way. What s more, the patent applications of EXGE s competitors (including Navigenics who was represented by WSGR) entered the public domain back in February 0, which was around months earlier than this correspondence. WSGR had been conducting other legal work, including disclosing some competitors patent applications, and billing EXGE for services the entire time, yet not advising EXGE of Navigenics and andme s patent applications. On Sept., 0 EXGE ed Vern Norviel to inquire how something like this could happen and on Sept, 0 Norviel responded by saying, I think it is likely necessary for us to come to an understanding about how to disengage, rather than addressing the underlying issue. After that, the majority of communications between EXGE and WSGR surrounded the disengagement and transfer of EXGE s account.. With respect to its billings, WSGR consistently inflated its bills and ignored EXGE s numerous requests to discuss them. It also failed to apply promised discounts to billing rates and, -

7 at one point, ceased doing work that it was obligated to perform, supposedly on the basis that EXGE s account had been frozen, without advising EXGE of this. On multiple occasions, WSGR did not timely provide requested patent filing fee estimates. In addition, toward the end of the relationship, WSGR added to EXGE s bill items that had supposedly occurred months earlier, in breach of its written statement explicitly to never increase EXGE s provisional bills, which had earlier been provided to EXGE. WSGR also billed EXGE for trademark matters for time allegedly spent on EXGE trademark matters after EXGE had already transferred all of such work to another firm. WSGR has continued to bill EXGE.. Finally, at the conclusion of its representation, WSGR did not turn over, and still has not turned over to EXGE, all of its files. WSGR continues to represent EXGE s competitors, although WSGR has substantial and confidential EXGE proprietary information, including, but not limited to, its business plans (which Norviel had requested from EXGE multiple times) and attorney work-product, such as notes, in its possession.. In summary WSGR s ethical lapses include A) fraud and misrepresentation in obtaining EXGE as a client; B) simultaneous representation of clients with conflicting interest and breaching its fiduciary obligations; C) abandoning its client; D) exorbitantly billing and continuing to bill EXGE when it no longer represents EXGE, and E) failing to return all its files to its client upon the client s request for them. WSGR's actions, or lack thereof, have caused and will likely continue to cause severe prejudice to EXGE in ways that continue to manifest themselves as EXGE continues on with its patent application and prosecution processes with new, competent, representation.. Beginning at or about the time of their first representation of EXGE, WSGR obtained from them and, on information and belief, unlawfully threatened to use or in fact did use, EXGE s confidential proprietary intellectual property in its representation of its other clients including but -

8 not limited to Navigenics.. EXGE has a number of times demanded that WSGR stop its wrongful conduct described above. WSGR, however has refused and still refuses to refrain from such conduct.. WSGR s threatened and actual wrongful conduct unless and until enjoined and restrained by an order of this court will cause great and irreparable harm to plaintiff as WSGR will be able to use its knowledge of EXGE s proprietary information in the representation of direct competitors to EXGE in helping them obtain patents of a similar nature with priority over the patents which WSGR has been and is trying to obtain.. EXGE has no adequate remedy at law for the injuries currently being suffered and which are threatened and as much it will be very difficult if not impossible for EXGE to determine a precise amount of damage that it will suffer if WSGR s conduct is not restrained.. As a proximate result of WSGR s wrongful conduct, EXGE s business and its intellectual property has been damaged in an amount which is difficult to measure but which exceeds, on information and belief, one-hundred-million dollars. The full amount of this damage is not now known to plaintiff and plaintiff will amend this complaint to state this amount when it becomes known to it. III. CAUSES OF ACTION FIRST CAUSE OF ACTION (FRAUD). Plaintiff incorporates herein by this reference all the allegations in paragraphs 1- above as though fully set forth at this point. -

9 . In connection with its representation of plaintiff in the course of meeting with the plaintiff at its offices to discuss that representation, defendants did not reveal to plaintiff the existence of its relationship with one or more direct competitors of plaintiff who were seeking intellectual property protection of the same or similar matters as plaintiff was seeking to protect its own intellectual property.. At the time defendants failed to disclose the above described facts to plaintiff, knew that these facts existed and deliberately concealed them from plaintiff and further, knew that these facts were not known to plaintiff, that they were not reasonably discoverable by plaintiff.. The suppression of the information that defendants represented direct competitors of the plaintiff was likely to mislead plaintiff and did in fact mislead plaintiff. Defendants made the aforesaid representations and suppressed aforesaid facts with the intent to induce plaintiff to enter an attorney client relationship with it in reliance thereon.. Plaintiff at the time of these failures to disclose and suppressions of fact occurred and at the time plaintiff took the actions herein alleged, was ignorant of the existence of the facts that defendants suppressed and failed to disclose. If plaintiff had been aware of the existence of those facts not disclosed by defendants, plaintiff would not have entered an attorney client relationship with the defendants. 0. As a proximate result of defendants fraud and deceit, and the facts alleged herein, plaintiff was damaged by being induced to expend innumerable hours, funds and energy in connection with defendants representation of plaintiff which came to a halt when plaintiff learned of the suppressed facts and misrepresentations and drew to defendants attention its knowledge of those facts, by reason of which plaintiff has been damaged. Plaintiff has been further damaged severely by losing time in its patent application process as a proximate result of the defendants conduct. -

10 1. As a further proximate result of defendants fraud and deceit and the facts alleged herein, plaintiff incurred costs as attorney s fees in obtaining new counsel to pursue its intellectual property protection which was abandoned by defendants.. Defendants intentionally concealed the aforesaid material facts known to the defendant with the intention of thereby depriving plaintiff of its legal rights and its property and plaintiff is therefore entitled to punitive damages.. In doing the acts herein alleged, defendants acted with malice in that its conduct was carried out with conscious disregard of plaintiff s rights and plaintiff is therefore entitled to punitive damages. WHEREFORE, Plaintiff prays for judgment as set forth herein below. SECOND CAUSE OF ACTION (BREACH OF FIDUCIARY DUTY). Plaintiff incorporates by this reference as though set forth at this point all the allegations of the proceeding paragraphs.. By virtue of the attorney-client relationship that existed between defendants and plaintiff and by virtue of plaintiff s having placed confidence in the fidelity and integrity of defendants and in trusting defendants with its highly confidential proprietary information a confidential relationship existed at all times herein mentioned between plaintiff and defendants and defendants owed plaintiff a fiduciary duty even after the attorney client relationship was terminated.. Despite having voluntarily accepted the trust and confidence of plaintiff in regard to its intellectual property and in violation of this relationship of trust confidence defendants abused -

11 the trust and confidence of plaintiff both before and after the termination of the attorney client relationship by using its confidential information concerning its intellectual property acquired during the course of defendants representation of the plaintiff without plaintiff s consent.. WSGR, because of its undisclosed representation of direct competitors of EXGE, who were seeking patents similar to those with respect to which WSGR was representing EXGE, was unable to provide the unfettered advice that its duty of loyalty of EXGE required. This representation of conflicting interests also compromised the confidentiality of EXGE s trade secrets and other confidential information. Its simultaneous representation of at least one and possibly several direct competitors of EXGE who were seeking to obtain the patents directly competitive with EXGE s patents, precludes WSGR from the compensation for their services.. As a result of defendants aforementioned breach of duties to plaintiff, defendants gained advantage in representing its other clients who were plaintiff s direct competitors.. As a proximate result of defendants breach of fiduciary duties owed to plaintiff both before and after the termination of the attorney client relationship, plaintiff was damaged in its property. WHEREFORE plaintiff prays for judgment as set forth herein below. THIRD CAUSE OF ACTION (PROFESSIONAL NEGLIGENCE) 0. Plaintiff incorporates herein by this reference as though set forth at this point all the proceeding allegations of this complaint. 1. By virtue of the attorney-client relationship that existed between defendant and plaintiff, defendants owed plaintiff a duty of care. -

12 . At all times after its representation of, and provision of legal services to, plaintiff commenced, defendants and each of them failed to exercise reasonable care and skill and undertaking to perform such legal services for plaintiff, in violation of their duty to exercise reasonable care and skill in such representation.. WSGR s ethical lapses include A) fraud and misrepresentation in obtaining EXGE as a client; B) simultaneous representation of clients with conflicting interest and breaching its fiduciary obligations; C) abandoning its client; D) exorbitantly billing throughout the representation and continuing to bill EXGE when it no longer represented EXGE, and E) failing to return all its files to its client upon the client s request for them. WSGR's actions, or lack thereof, have caused and will likely continue to cause severe prejudice to EXGE in ways that continue to manifest themselves as EXGE continues on with its patent application and prosecution processes with new, competent, representation.. Had defendants and each of them exercised proper care and skill in the foregoing matter of plaintiff s representation, plaintiff would not have incurred the damages which it did incur.. As a proximate result of such negligence, plaintiff was damaged in an amount to be proved at trial, but which exceeds the jurisdictional minimum of this court. WHEREFORE plaintiff prays for judgment as set forth below. FOURTH CAUSE OF ACTION (BREACH OF CONTRACT). Plaintiff incorporates by this reference as though fully set forth at this point all of the allegations of the preceding paragraphs of this complaint.. Plaintiff s representation by WSGR was undertaken pursuant to a written contract -

13 dated on or about August 1, 0. Pursuant to that contract defendants undertook to represent plaintiff in an affective and efficient manor and to respond to plaintiff s inquiries properly, and to preserve the confidentiality of all communications between plaintiff and WSGR.. Defendants breached said contract by failing to perform plaintiff s matter in an affective and efficient manor, by failing to respond to the reasonable inquiries of the plaintiff and by failing to keep confidential plaintiff s confidential information.. Plaintiff was damaged in its property as a result of these breaches in an amount that is uncertain but which will be proved at trial. WHEREFORE plaintiff prays for judgment as set forth herein below. //// //// //// //// //// //// VI. PRAYER WHEREFORE plaintiff prays for judgment as follows: 1. For general damages in a sum to be proved at trial but exceeding one hundred million dollars ($0,000,000);. for special damages in an amount to be proved at trial;. for punitive damages in amount appropriate to punish the defendant and deter others from engaging in similar conduct;. for costs herein; -

14 . for a permanent injunction enjoining WSGR and DOES 1- and each of them and their agents, servants, and employees and all persons acting under or in concert with or for them from the representation of any direct competitor of EXGE seeking protection of its intellectual property in the same or similar field as EXGE s intellectual property, including but not limited to Navigenics;. for such other relief as the court may deem proper. Dated: October, THE LAW OFFICE OF E. CRAIG MOODY By: E. CRAIG MOODY Counsel for Petitioner Existence Genetics, LLC -

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