ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-20-00643131 DATE: 20200921

BETWEEN:

ORPHEUS MEDICA INC. Plaintiff

– and –

DEEP BIOLOGICS INC., DEA SHAHINAS, SHRADDHA DUBEY and SEYYED MOSTAFA NATEGHOLESLAM Defendants

Counsel

Sam Presvelos, for the Plaintiff

Jeffrey S. Percival and Dylan Fisher for the Defendants

HEARD: August 14, 2020

papageorgiou J.

Nature of the Case

[1] The plaintiff, Orpheus Medica Inc. (“Orpheus”) has sued the defendants in this action alleging that Dr. Dea Shahinas, Ms. Shradda Dubey, and Dr. Mostafa Nategholeslam (collectively the “Individual Defendants”) are former employees who misappropriated confidential information and engaged in competition with Orpheus in violation of restrictive covenants, fiduciary obligations and/or employment duties of good faith, fidelity and confidence. Orpheus alleges that the Individual Defendants incorporated the corporate defendant, Deep Biologics Inc. (“Deep Biologics”) for the purpose of engaging in this tortious conduct. This matter is of significant importance as the plaintiff and the defendants are both developing rapid handheld COVID-19 diagnostic tests.

[2] The COVID-19 pandemic is a once in a lifetime event, which has had catastrophic repercussions. Governments around the world have taken extraordinary steps to combat the spread of the illness. In Canada, thousands of people have died, tens of thousands of people have lost their jobs, and the pandemic is ongoing. As will be described below in these reasons, in an effort to assist in battling this pandemic, the Government of Canada established a competition whereby companies could obtain grants for the development of products to diagnose COVID-19, such as the COVID-19 Challenge—Point of Care and Home Diagnostic Kit (the “Grant”).

[3] Orpheus and Deep Biologics applied for the Grant. Deep Biologics was successful; Orpheus was not.

Nature of the Motion

[4] On July 10, 2020 the parties appeared at a case conference to schedule an urgent injunction motion and to establish a timetable.

[5] The motions judge concluded that this matter was urgent and of importance, scheduled the injunction motion on an urgent basis, and granted the following interim injunction:

(a) The defendants shall refrain from using any confidential information and materials that may have been appropriated from the plaintiff for the purpose of developing a Covid-19 diagnostic testing kit; and

(b) The defendants shall refrain from using proceeds from the grant money pending the hearing of this injunction.

[6] On July 27, 2020 the interim injunction was continued.

[7] After the interim injunction was granted, there were significant additional materials filed by the parties including:

(a) Additional motion records filed by the plaintiff and defendants comprising over 755 pages of additional affidavit and supporting materials;

(b) Transcripts of the cross-examinations of 6 witnesses comprising over 800 pages;

(d) Facta and books of authority comprising more than 900 pages of caselaw.

[8] As a result, the case presented at the return of the motion on August 14, 2020 was considerably different than the case presented to the motions judge when the interim injunction was granted.

[9] The plaintiff sought an interlocutory order extending the interim injunction until trial as well as the following additional relief:

(a) An Order preventing Deep Biologics from directly or indirectly competing with Orpheus in the development of a COVID-19 rapid, handheld diagnostic device.

Decision

[10] On August 18, 2020, I released an endorsement dismissing the interlocutory injunction motion and vacating the interim injunction with reasons to follow. These are the reasons.

Analysis

[11] In arriving at this decision, I have considered the following legal and factual issues raised by the parties:

(a) What is the test for injunctive relief in this case?

(b) Has the plaintiff demonstrated a strong prima facie case?

i. What are the uncontradicted facts in this case?

ii. Did the Individual Defendants breach restrictive covenants in employment contracts?

iii. Did the defendants misappropriate Orpheus’ confidential information?

a) The Orpheus “Platform”;

b) Processes, programs, computational programs, artificial intelligence, models and algorithms;

c) Databases of single domain antibodies;

d) Evidence of misappropriation and use of Orpheus Purported Confidential Information.

iv. Did the Individual Defendants breach fiduciary duties owed to Orpheus?

v. Did the Individual Defendants breach employment duties owed to Orpheus?

a) Were Dr. Shahinas and Ms. Dubey employees in law beginning in April 2019 when they were initially retained as consultants?

b) Was Dr. Nategholeslam an employee with Implied Employment Duties?

c) Is the law on misappropriation of corporate opportunities applicable?

d) The evidence of breach of Implied Employment Duties

(d) Does the balance of convenience favour granting the injunction?

(a) What is the test for injunctive relief in this case?

[12] Pursuant to the Supreme Court of Canada decision in RJR MacDonald v. Canada (Attorney General), [1994 117 (SCC)], [1994] 1 S.C.R. 311, at p. 334, the usual test for an interlocutory injunction is as follows:

(a) Is there a serious issue to be tried?

(b) Will the party requesting the injunction suffer irreparable harm if the injunction is not granted? and

[13] In RJR MacDonald, the Court indicated that, although rare, there are exceptions where the moving party must establish a more stringent “strong prima facie case”: at p. 339.

[14] Courts have applied the more stringent “strong prima facie case” test in the following circumstances:

(a) Where the injunction will as a practical matter amount to a final determination of the action: RJR MacDonald, at p. 338.

(b) Where the plaintiff is seeking to enforce restrictive covenants restraining former employees from competing or soliciting customers. In Boehmer Box L.P. v. Ellis Packaging Ltd., [2007 14619] (Ont. S.C.), Brown J. (as he then was) explained the policy behind requiring the higher standard in such cases, as follows, at para. 39:

…when the injunction sought is intended to place restrictions on a person’s ability to engage in their chosen vocation and to earn a livelihood, the higher threshold of a strong prima facie case is the more appropriate test to be applied.

(c) Where the plaintiff seeks an interlocutory injunction alleging breach of post-employment fiduciary obligations: Benson Kearley & Associates Insurance Brokers Ltd., v. Jeffrey Valerio, [2016 ONSC 4290], at para. 46. In Lockwood Fire Protection Ltd. v. Jason Caddick et al., [2015 ONSC 6320], at para. 36, Dunphy J., explained:

If the strong prima facie case test applies to express restrictive covenants, it ought in my view to apply as well to a restrictive covenant which the plaintiff effectively seeks to imply by alleging the existence of fiduciary duties and a breach of them.

[15] As set out above, Orpheus seeks to restrain the defendants until the trial of the action from using any of the proceeds of the Grant and from competing with it in the development of a COVID-19 rapid, handheld diagnostic device.

[16] The initial Grant funding in the amount of $300,000 awarded to Deep Biologics must be used prior to September 15, 2020. Thereafter, Deep Biologics is eligible to apply for further funding. As such, if the interlocutory injunction is granted, Deep Biologics would permanently lose the Grant funding necessary to pay salaries, collaborators and suppliers, and would lose the ability to apply for further funding. More importantly, if the interlocutory injunction is granted, Deep Biologics would be unable to compete in the development of a COVID-19 rapid handheld diagnostic device. The interlocutory injunction sought is essentially a permanent injunction; the biopharmaceutical and biotechnical industries are in a race to develop a rapid test for the diagnosis of COVID-19. By the time this matter is resolved at trial, or even through a faster summary judgment process, there will likely no longer be a market for Deep Biologics’ product, given the intense competition and the urgency with which the scientific community is working to find better testing mechanisms.

[17] The injunctive relief sought in this case would, as a practical matter, result in both a final determination of the action as well as a restraint on competition. As such, the higher strong prima facie case standard is applicable.

(b) Has the plaintiff demonstrated a strong prima facie case?

[18] When considering whether a strong prima facie case exists, courts must conduct a more extensive review of the merits of the case: RJR MacDonald, at p. 339.

[19] In Benson, at para. 21, Charney J. described the high standard which must be met to establish a prima facie case as follows:

A strong prima facie case is one in which there is “a substantial likelihood of success in the action that justifies extraordinary relief at the very commencement of the proceeding.” (See: Factor Gas Liquids Inc. v. Jean, [2010 ONSC 2454], 264 O.A.C. 46 (Div. Ct.), at para 42). It is not enough to establish that the case will succeed on a balance of probabilities: the plaintiff must establish that he or she is “clearly right and almost certain to be successful at trial” (Barton-Reid Canada Ltd. v. Alfresh Beverages Canada Corp., [2002 34862 (ON SC)], 2002 34862 (Ont. S.C.), at para 9, and Accreditation Canada International v. Guerra, [2016 ONSC 3595] at para 41).

[20] In my view, the record before me is not sufficient to establish a strong prima facie case.

[21] In arriving at this conclusion, I have considered the evidence, law and arguments made in respect of the following issues:

i. What are the uncontradicted facts in this case?

ii. Did the Individual Defendants breach restrictive covenants in employment contracts?

iii. Have the defendants misused any of the plaintiff’s confidential information?

iv. Did the Individual Defendants breach fiduciary duties owed to the plaintiff?

v. Did the Individual Defendants breach implied employment duties?

i. What are the uncontradicted facts in this case?

[22] The plaintiff, Orpheus, is a biotech company wholly owned and founded by Dr. Saeid Babaei in December 2017. It was originally incorporated as Kannaba Technologies Inc. (“Kannaba”) and changed its name to Orpheus on April 24, 2019. Orpheus describes itself as having “expertise in detecting and modifying single-domain antibodies for diagnostic and therapeutic applications.” Single domain antibodies are antibodies found in camels, llamas and alpacas which have been studied and used in a variety of applications with the potential to address disease. It must be kept in mind that Orpheus does not actually develop or own any technology. Its work is focused on analyzing and finding antibodies that can be used to address pathogens.

[23] The Individual Defendants had various roles with Orpheus beginning in April 2019 and ultimately ending in March 2020 (Dr. Nategholeslam) and April 2020 (Dr. Shahinas and Ms. Dubey). The plaintiff asserts that to understand the Individual Defendants’ roles with Orpheus, and their various breaches it is important to appreciate their prior relationship with a related biotech company, AbCelex Technologies Inc. (“AbCelex”) which had also been founded and was wholly owned by Dr. Babaei.

[24] AbCelex was in the business of screening, identifying and modifying antibodies that could detect different viruses/bacteria. Like Orpheus, AbCelex did not develop or own any specific technology. Its work focused on analyzing and finding antibodies. Its research was exclusively applied to food safety and animal health issues, although Dr. Babaei asserts that the research had human health applications.

[25] Dr. Shahinas became employed by AbCelex as a scientist on September 21, 2015. In 2016 she was promoted to Senior Scientist. In 2017 she was promoted to Manager of Bioinformatics and Proteomics. She executed an employment agreement and confidentiality and non-disclosure agreement with restrictive covenants including:

(a) A restriction on her ability to compete with AbCelex for 6 months after the termination of her employment; and

(b) A restriction on her ability to solicit clients, suppliers and other employees for 12 months after termination of her employment.

[26] Ms. Dubey was hired by AbCelex as an Associate Scientist on July 8, 2015. She also signed an employment agreement and non-disclosure agreement which contained the same restrictive covenants as Dr. Shahinas.

[27] Dr. Nategholeslam began an internship or fellowship with AbCelex in February/March 2018. He was employed by the University of Guelph at the time doing post-doctorate work pursuant to fellowship program, MITACS. MITACS is a national, not-for-profit organization that builds partnerships between academic institutions and the private sector to create fellowship opportunities for graduate students, towards advancing university-industry partnerships. He worked as a data scientist. There was no evidence that he had executed any employment agreements with AbCelex.

[28] Dr. Babaei incorporated Orpheus to initiate discrete scientific research activities not within the strategic interests of AbCelex in December 2017.

[29] Orpheus’ initial focus, between December 2017 and March 2019, was the development of a rapid handheld test for the detection of THC in partnership with a local medical device company, BTNX Inc. (“BTNX”).

[30] AbCelex ceased operations on or around April 5, 2019 because it lacked interest from third party investors and the Individual Defendants’ roles with it ended at that time.

[31] Thereafter, in April 2019, Orpheus expanded its research mandate to focus on new, cannabinoid-based active ingredients, such as CBD, to treat pain and inflammation in humans.

[32] The Individual Defendants were then retained by Orpheus in April 2019.

[33] Dr. Nategholeslam continued his internship/fellowship with Orpheus beginning in April 2019 earning minor remuneration which he described as equivalent to minimum wage.

[34] Dr. Shahinas and Ms. Dubey were initially retained by Orpheus as consultants and invoiced Orpheus for the work they did.

[35] During the period when Dr. Shahinas worked as a consultant for Orpheus, she also consulted for other companies and Dr. Babaei did not know this.

[36] In particular, in June 2019, Dr. Shahinas was approached by a professor at Queens University to provide consulting services with respect to technology which someone at Queens had developed.

[37] In the course of that retainer, she executed a Non-Disclosure Agreement which provided as follows:

The representatives of the UNIVERSITY and INDIVIDUAL intend to hold discussions and exchange information regarding [Surface plasmon resonance using nanoplasmoni and photonic structures. [redacted]. Disclosure of technical and commercial nature on proprietary compound(s), product(s), know-how and expertise and on the possibility of INDIVIDUAL acting as a new company founder/co-founder, consultant &/or collaborator to [redacted] to bring antibody development and generate novel therapeutic/diagnostic products based on this technology.

[38] Dr. Shahinas did not advise Orpheus of this consulting agreement.

[39] In September 2019, Dr. Shahinas and Ms. Dubey were hired by Orpheus as full-time employees.

[40] Dr. Shahinas was hired as the Director of Research and Development earning an annual base salary of $85,000. Ms. Dubey was hired as a scientist earning an annual base salary of $55,000. Dr. Nategholeslam continued his role as a data scientist fellow earning minimal income.

[41] On January 5, 2020, the Individual Defendants incorporated the defendant Deep Biologics to create a spin-off company for four investigators from Queens University in order to commercialize proprietary nanostructure technology developed by Queens for detection of infectious diseases. This is the same group of professors who Dr. Shahinas had provided consulting services to in June 2019 referenced in the NDA above (hereinafter referred to as the “Queens Lab”).

[42] On February 11, 2020, Dr. Babaei advised Dr. Nategholeslam that Orpheus’ contribution to his funding would not be renewed after March 2020.

[43] In or around February and March 2020 the COVID-19 pandemic hit Canada.

[44] Sometime thereafter the Government of Canada announced the competition for the Grant. The Grant indicates that it opened on April 5, 2020 but there was no evidence as to when the Grant competition was announced.

[45] On April 21, 2020, Orpheus submitted its application for the Grant.

[46] Sometime in April 2020, Deep Biologics submitted its application for the Grant.

[47] On April 24, 2020, when Dr. Shahinas received her pay-stub for the month, she discovered that her salary had been cut by 30%, as had Ms. Dubey’s. When Dr. Shahinas asked Dr. Babaei about this, he indicated that the funding he had reserved for Orpheus’ operations was being redirected to his family and that the May monthly payroll would be affected as well.

[48] On April 27, 2020, Orpheus terminated the employment of Dr. Shahinas and Ms. Dubey effective April 30, 2020. He did not provide any severance. In an email to Dr. Shahinas, Dr. Babaei stated: “The Company [Orpheus] has no funding and never raised a dime since its inception. It has been personally financed by me until we are able to raise 3^rd party investors.”

[49] On or about June 2, 2020, the Government of Canada awarded Deep Biologics the Grant.

[50] Thereafter, Orpheus learned of the relationship between the Individual Defendants and Deep Biologics, and that it had been awarded the Grant.

ii. Did the Individual Defendants breach restrictive covenants in employment contracts?

[51] In Dr. Babaei’s affidavit, he asserts that Dr. Shahinas and Ms. Dubey executed agreements which included non-competition, non-solicitation and confidentiality provisions. He has been unable to locate any copies of these purported executed agreements but produced the following agreements executed by him, but not Dr. Shahinas or Ms. Dubey:

(a) Confidentiality and nondisclosure agreement dated April 8, 2019 between Orpheus and Dr. Shahinas (“Shahinas Purported NDA”);

(b) Employment agreement dated September 2, 2019 between Orpheus and Dr. Shahinas (“Shahinas Purported Employment Agreement”);

(c) Confidentiality and nondisclosure agreement dated April 8, 2019 between Orpheus and Ms. Dubey (“Dubey Purported NDA”); and

(d) Employment agreement dated September 12, 2019 between Orpheus and Ms. Dubey (“Dubey Purported Employment Agreement”).

[52] Collectively, I refer to the alleged agreements between Dr. Shahinas and Orpheus as the “Purported Shahinas Agreements”, the alleged agreements between Ms. Dubey and Orpheus as the “Purported Dubey Agreements” and all of the above agreements as the “Purported Orpheus Employment Agreements”.

[53] There are some troubling aspects to Dr. Babaei’s evidence concerning the Purported Orpheus Employment Agreements.

[54] Both Dr. Shahinas and Ms. Dubey deny executing the Purported Orpheus Employment Agreements or even seeing them at the time they were purportedly drafted.

[55] Dr. Shahinas asserts that on June 4, 2020, over one month after being terminated, she attended Orpheus’ office to return her keys to Dr. Babaei, at which time he requested that she sign the Purported Shahinas Agreements, back-dated to September 2, 2019 (the employment agreement portion) and April 8, 2019 (the non-disclosure agreement portion). Dr. Shahinas refused to sign the Purported Shahinas Agreements, which prompted the following text messages later that day:

Dr. Babaei: It seems you are planning to violate your obligations as an employee regardless of signing any agreement or not. We will take full force legal actions should any violations and harm [sic]caused to the Corporation. We take these matters very seriously and will pursue as needed.

Dr. Shahinas: I have not violated or plan to violate any obligations as an employee under the employment standards act. All I said is that I am not signing a retrospective employment agreement or NDA that I have never seen before. It is absurd for these to be presented to me one month after termination.

Dr. Babaei: Fair enough, [Emphasis added] just heads [sic] that we will fully enforce all provisions stipulated in both the CDA and employment agreements regardless you are acknowledging it or not.

Dr. Shahinas: I never received NDA or agreement, never agreed to it and never signed for it. As such nobody can hold me liable for any of the provisions listed.

[56] There was also a similar email exchange following this meeting.

Dr. Babaei: As per our discussion this afternoon, we are putting together our due diligence materials for prospective investors &/or strategic partnerships. We notice that you have not executed your subscription agreement. We need this to be signed off of to include in the cap table. As this was an arrangement as part of your employment engagement with us, I have added this to your original employment agreement as opposed to an amendment.

Dr. Shahinas: As mentioned today, there is no original employment agreement between me and Orpheus and it does not make sense for me to agree and sign this document presented to me today retrospectively [Emphasis added] considering I am no longer employed by Orpheus given the termination. The subscription agreement as it stands requires an investment of $40,000 based on the valuation of $20M that you mentioned to me today. I don’t think that a cost of $0.1 is reasonable for founding shares that I have been earning from 2018.

As this agreement stands, I would not have signed it in September 2019 and it also does not make sense to sign it now.

Dr. Babaei: The original document was found in your files while I cleaned your office a few weeks ago. It was never returned to me, and we only realized in the course of putting all agreements in the dataroom for upcoming financing.

The agreement is a standard employment term for a biopharma company, and as a matter of fact the exactly same one you signed with AbCelex Technologies on September 21, 2015. If there are any terms that you find unusual or onerous, I will be interested to learn about it and re-consider and, in particular, for future hires.

It does not matter if you sign this document or not, as you are fully bound by the confidentiality, non-compete and all other terms commensurate with your position as the Director of R & D with Orpheus Medica.

In terms of your calculations, please consult with your accountant or financial advisor for a better understanding. You can still let me know if you wish to proceed after you clarify with your advisors, otherwise, we will continue without this inclusion.

Dr. Shahinas: As I mentioned and you acknowledged yesterday, I have never seen this employment agreement and CDA before yesterday. [Emphasis added] I have never had it in my hands, seen it, read it or reviewed it. As a matter of fact, I have never agreed to this employment agreement or the non-disclosure agreement with Orpheus. The employment agreement with AbCelex was for a different position and was ended in April 2019. I never got a CDA or employment agreement with Orpheus and considering that you terminated the employment with Orpheus, it makes no sense to agree to this employment agreement or non-disclosure request retrospectively. It is just not fair to ask for it when I am no longer employed with Orpheus or privy to any confidential information.

[57] These text messages and emails are contemporaneous and support Dr. Shahinas’ evidence as to what transpired. Notably, nowhere in these text messages or emails does Dr. Babaei contradict Dr. Shahinas’ assertion that she never signed or even saw the Shahinas Purported Agreements before June 4, 2020. Indeed, in the text when she asserts that she had never seen the agreements before, he responds “Fair enough…”. In his supplementary affidavit, dated April 21, 2020, Dr. Babaei again asserts that Dr. Shahinas signed and returned a copy of the Shahinas Purported Employment Agreement during the week of September 3, 2019, even though his email exchange with her on June 4, 2020 specifically states that the agreement was never returned to him.

[58] Ms. Dubey asserts that her first time seeing the Purported Dubey Agreements was during the course of this litigation.

[59] The Dubey Purported Employment Agreement allegedly executed by Ms. Dubey on September 15, 2019 contains the same typographical error in Ms. Dubey’s address as Deep Biologics’ corporate records. They both show her address to be [REDACTED], Suite 2013, Mississauga, whereas her actual address is [REDACTED], Suite 2103 as reflected on her Record of Employment. [Note, I have redacted the street address from these reasons due to of privacy concerns for Ms. Dubey]. Dr. Babaei attached Deep Biologics’ incorporation documents and the Purported Orpheus Employment Agreements as exhibits to his initial affidavit in this proceeding sworn July 6, 2020. This demonstrates that he looked up Deep Biologics’ corporate records. It is significant that Deep Biologics’ corporate records were created in January 2020, more than four months after the date when Dr. Babaei alleges Ms. Dubey executed the Dubey Purported Employment Agreement. This typographical error is not repeated in any of Ms. Dubey’s other records from Orpheus.

[60] This evidence suggests that the Dubey Purported Employment Agreement was prepared after Deep Biologics was incorporated and then backdated. It is frankly inconceivable that Dr. Babaei would have made this typographical error in the Dubey Purported Employment Agreement in September 15, 2019 and that the exact same typographical error in her address was made coincidently in Deep Biologics’ corporate records in January 2020. It is more likely that Dr. Babaei, who had Deep Biologics’ incorporation documents in his possession, copied Ms. Dubey’s incorrect address from Deep Biologics’ corporate records, after it was incorporated, onto the backdated Dubey Purported Employment Agreement.

[61] Dr. Babaei’s evidence regarding the Purported Orpheus Employment Agreements is simply not credible on the record before me. Orpheus has not established a serious issue to be tried on this point, let alone a prima facie case, and there is no need for me to review and consider the precise scope of these restrictive covenants and whether they are valid and enforceable.

[62] Furthermore, the evidence presented by Dr. Babaei reflects adversely on the overall credibility of his evidence. It is not only an issue of his potentially being mistaken or misremembering; the evidence suggests that he fabricated the Purported Orpheus Employment Agreements after the fact when he discovered that Deep Biologics had been awarded the Grant.

[63] In weighing all of the evidence before me, I have taken this into account. I add that even if I had not had any concerns about Dr. Babaei’s credibility, I still would have dismissed this interlocutory injunction motion for the reasons set out below.

iii. Did the defendants misappropriate Orpheus’ confidential information?

[64] The elements of breach of confidence are as follows:

(a) the information has the quality of confidence about it;

(b) the information was imparted in circumstances importing an obligation of confidence; and

See Boehmer, at para. 62.

[65] In Boehmer, Brown J. (as he then was) described the type of information which can be considered confidential at para. 63:

In addition to the trade secrets of an employer, confidential information can include commercial information, such as special knowledge about the employer’s customers, knowledge of the employer’s policies and procedures that would make it possible to undercut the former employer with a view to inducing the customer to change from its current supplier to the former employee, as well as customer lists: 1259695 Ontario Inc. v. Guichard, [2005] O.J. No. 2049 (S.C.J.), at para 59. On the latter point, courts have found a misuse of confidential information not only where an employee departs with copies of customer lists, but where an employee has memorized the list. Quantum Management Service, supra., at p. 33-34.

[66] To be clear, confidential information need not involve trade secrets or be proprietary.

[67] To establish breach of confidence, the plaintiff must demonstrate with evidence that confidential information was taken and misused. Mere suspicion is not enough: Benson at para. 58.

[68] In Boehmer, even though Brown J., (as he then was) concluded that the departing employees had access to the former employer’s confidential information about its business, including databases, customer lists, and customer files in circumstances where a duty of confidence would apply, the moving party had failed to provide evidence that the departing employees had used any of this confidential information or that they would likely do so: at paras. 71-72. While the employer suspected that they had, the employees indicated that they had returned all confidential information in their possession, that they had not shared it with anyone and did not intend to. Justice Brown (as he then was) stated, as follows, at para. 74:

An injunction is an extraordinary remedy; a quia timet injunction even more extraordinary. An injunction should not be used to remind parties about the obligations they owe to others under the law. An injunction should issue only to restrain a breach, or a reasonably apprehended imminent breach, of legal obligations.

[69] In this case, Dr. Babaei indicated that the Individual Defendants had access to the following general categories of what he claims are confidential information:

(a) Its “Platform” of combining single domain antibodies with artificial intelligence;

(b) Processes, protocols and algorithms used to identify, filter, process and optimize single domain antibodies; and

(collectively, the “Purported Confidential Information”)

[70] In this section I address each of these areas followed by the evidence as to whether the defendants have misappropriated any Purported Confidential Information in subparagraph (d) below.

a) The Orpheus “Platform”

[71] Orpheus describes its “Platform” as its “approach” which combines the analysis of single domain antibodies with artificial intelligence.

[72] Orpheus does not have any patent over single domain antibodies. They were discovered in 2001 by Vrije Universiteit Brussel, which patented them. The patent has long since expired.

[73] Orpheus purchases publicly available libraries of single domain antibodies. It attempts to select, purify and modify these antibodies to find the best one to attach to a particular pathogen. When he was cross-examined, Dr. Babaei confirmed that single domain antibodies are not proprietary.

58-60

Q: And are these single domain antibodies considered proprietary?

A: No, they’re not.

Q. So, anyone could use them?

A: Anybody whose [sic] skilled and has the process and techniques and the infrastructure can go and develop their own single domain antibodies, right.

Q. But the single domain antibodies themselves aren’t propriety?

A: Yeah, nothing in the marketplace is proprietary. There are ten different antibody formats. None of them are proprietary.

[74] There are thousands of antibodies and manually analyzing them to determine which one is suitable for a given purpose is a very lengthy process. Accordingly, Orpheus uses artificial intelligence to accelerate the process. Again, it is important to understand that even the artificial intelligence Orpheus uses has not been developed by it. Rather, it uses open source, publicly available computer programs to analyze the data.

[75] Using artificial intelligence to enhance the evaluation of single domain antibodies is also not unique to Orpheus. When cross-examined, Dr. Babaei confirmed that many other companies purchase publicly available single domain antibodies and analyze them using artificial intelligence for the purpose of finding the best antibodies to fight disease. Other companies also use publicly available open source computer programs to analyze the data which they gather.

[76] The concept of using single domain antibodies in the fight against COVID-19 is also not a confidential or a proprietary process used by Orpheus. Dr. Babaei referred to research articles showing that other scientists are working with single domain antibodies to address COVID-19.

[77] The concept of using saliva to measure the presence of pathogens or using a handheld rapid device to do so is also not confidential.

[78] On the record before me, there is no substantial issue to be tried, let alone a strong prima facie case that the Orpheus “Platform” of using single domain antibodies and artificial intelligence to develop a COVID-19 rapid, handheld diagnostic device is confidential information.

b) Processes, programs, computational programs, artificial intelligence, models, algorithms

[79] The Individual Defendants say that the processes, programs, computational programs, artificial intelligence, models and algorithms they used when they were at Orpheus, and AbCelex previously, were not confidential but rather publicly available. With respect to processes, Dr. Shahinas indicated that they did make some modifications to some of these through trial and error, or other published literature, as they worked. For example, to identify single domain antibodies, they used a specific publicly available protocol published in 2013.

[80] Dr. Babaei admits that Orpheus uses publicly available materials but that modifications made by Orpheus make these confidential. There was no evidence on the scope or importance of any modifications to processes used or even if such modifications were recorded. In my view the burden was on Orpheus to provide some evidence as to how these publicly available materials were modified, so as to make them confidential to Orpheus. While I would not have expected it to file these materials in a public record, the plaintiff could have provided a general description of how they were modified and/or sought to file such records in redacted form or under seal to show that these public materials had been modified or enhanced by Orpheus.

[81] On the basis of the record before me, Orpheus has not established a prima facie case that it uses processes, programs, computational programs, artificial intelligence, models or algorithms which are confidential to it.

c) Databases of single domain antibodies

[82] Orpheus purchases publicly available libraries of single domain antibodies from third parties. These are clearly not confidential.

[83] However, it uses its expertise to analyze, modify and select single domain antibodies from these larger datasets which are then useful in diagnosing or treating various pathogens. For example, in its answers to undertakings, Orpheus listed various libraries of such datasets including anti-salmonella libraries, clostridium perfringens libraries and immuno-oncology libraries that it created.

[84] In my view, there is a strong prima facie case that the output of Orpheus’ analysis is confidential to Orpheus.

[85] It is critical, in my view, however, that Orpheus has not provided any evidence that at the time the Individual Defendants were terminated, on April 27, 2020, it had already done any analysis on antibodies which could address COVID-19. The defendants say that no such work had been done. They only got as far as discussions to ascertain whether they could purchase COVID-19 antibodies from third parties and discussions and strategies about the use of single domain antibodies for COVID-19.

[86] The timing of the project supports the reasonable inference that Orpheus had not yet done any work on trying to find the appropriate antibody for COVID-19 while the Individual Defendants were employed. In that regard, the grant submission filed by Orpheus on April 21, 2020, set out the various milestones and indicated that it would take six weeks to complete the first phase of the project which involved screening, production and purification of an antibody library to find an antibody with specificity for COVID-19. I am drawing the inference that this work would not have been begun, let alone completed when the Individual Defendants were terminated on April 27, 2020.

d) Evidence of misappropriation and use of Orpheus Purported Confidential Information

[87] The defendants deny misappropriating and using any materials from Orpheus or AbCelex (let alone confidential materials). They say that they returned everything, apart from one personal hard drive containing a copy of some output of analysis that Dr. Nategholeslam had done with respect to cannabinoids which was not completed, which he has not looked at and which he undertook to return.

[88] When cross-examined Dr. Babaei confirmed that the Individual Defendants returned to Orpheus all Orpheus computers and hard drives that they used for their work, with the one exception referenced above. Curiously, Dr. Babaei had not reviewed any of the Orpheus computers to determine whether any Purported Confidential Information was copied, sent to a third-party or sent to another computer: (Q733). During cross-examination, he was asked repeatedly what evidence he had that the Individual Defendants had actually used Orpheus’ Purported Confidential Information and he could not provide any apart from his belief which was based upon the fact that they were competing and had an aggressive timeline for completion of their work:

527

Q. Sir, you have no actual evidence that they are in fact using your confidential methods or materials for Deep Biologics. It’s a belief, that’s all it is, sir?

A. It’s a belief.

[89] Counsel for Orpheus argued that it is simply not credible that the Individual Defendants previously had access to the Orpheus Purported Confidential Information and have not been using it in the establishment of their competing business. There is a clear conflict in the evidence as to what the Individual Defendants did in this regard and the only evidence provided by Orpheus is Dr. Babaei’s belief and the inferences he says should be made.

[90] Furthermore, the defendants have provided compelling evidence that the technology used by Deep Biologics and for which it obtained the Grant, is fundamentally different than the technology which Orpheus proposes. The device which Orpheus ultimately partnered to develop with BTNX Inc. (“BTNX”) in its Grant application uses “labelled reagents” to detect a chemical reaction on a strip. The technology proposed by Deep Biologics in partnership with the Queens Lab uses the principle of light absorption. The only material similarity is that they will both test saliva, which is a requirement of the Grant that they applied for in any event and which many other companies use to test for antibodies.

[91] In my view, based upon the record before me, Orpheus has not established a substantial issue to be tried, let alone a strong prima facie case that the defendants have misappropriated and are using any of the Orpheus Purported Confidential Information.

[92] As I discuss below, the Individual Defendants are all qualified scientists in their respective fields. There is a compelling case that what the Individual Defendants are doing is using their knowhow, skills and expertise to develop the technology that is the subject of the Grant and that it is the use of this knowledge, skill and expertise which is one of Orpheus’ chief complaints. In that regard, when he was cross-examined, Dr. Babaei stated:

…396

Having like three key people, altogether, jointly working is overwhelmingly dangerous because these three people, if they were separated, they would not be effective at all.

The three of them in concert is what makes it effective because one knows machine learning, one knows how to do hands on antibody work and the other one can stitch it together and presented [sic] it. So, that’s what’s really damaging to us having three of them working together towards the same application and a goal that we have. [Emphasis added]

iv. Did the Individual Defendants breach fiduciary duties owed to Orpheus?

[93] All employees owe their employer certain basic duties including the duty of loyalty, fidelity, good faith, and confidence while they are employed. After the employment ends, “mere employees” may compete with their employer, as long as they do not violate enforceable restrictive covenants or misappropriate or use the employer’s confidential information: Benson, at para. 48. In Benson, at para. 55, Charney J., cited the leading case of Alberts v. Mountjoy (1977), [1977 1026 (ON SC)], 16 O.R. (2d) 682 (Ont. H.C.), where Estey J., explained:

It is now beyond argument that a departing servant has the right to compete with his former employer. He may do so by establishing a business in direct or partial competition and he may bring to that business the knowledge and skill which he acquired while in the former service, including knowledge and skill directly obtained from the previous master in teaching him his business.

See also Brown J. (as he then was) in Boehmer at para. 44.

[94] However, where employees are considered “fiduciaries”, there are elevated obligations on the fiduciary: Benson at para. 48.

[95] Where a fiduciary relationship exists, fiduciaries must avoid all conflicts of interest, act in the best interest of their employer and not profit from their position, including not “tak[ing] advantage of a corporate opportunity that ripened during the course of [their] fiduciary employment”: GasTOPS Ltd. v. Forsyth, [2009 66153], (Ont. S.C.), at para. 87. These duties extend post-termination. Fiduciary duties may attach to a non-fiduciary employee who departs with a fiduciary to establish a business that competes with her former employer. In the seminal case on fiduciary duties, Canadian Aero Service v. O’Malley, [1973] S.C.R. 592, (“Canaero”) at pp. 606-607 the Court provided as follows:

It follows that O’Malley and Zarzycki stood in a fiduciary relationship to Canaero, which in its generality betokens loyalty, good faith and avoidance of conflict of duty and self-interest. Descending from the generality, the fiduciary relationship goes at least this far: a director or a senior officer like O’Malley or Zarzycki is precluded from obtaining for himself, either secretly or without approval of the company (which would have to be properly manifested upon full disclosure of the facts), any property or business advantage either belonging to the company or for which it has been negotiating; and especially is this so where the director or officer is a participant in the negotiations on behalf of the company.

An examination of the case law in this Court and in the Courts of other like jurisdictions on the fiduciary duties of senior officers shows the pervasiveness of a strict ethic in this area of law. In my opinion, the ethics disqualify a director or senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.

[96] Establishing that an employee is a fiduciary has important implications beyond elevating the obligations which the employee owes to the employer. Where a fiduciary is found to have breached his or her obligations and pursued an opportunity that arose during the fiduciary relationship, there is no need for the employer to prove that it would have obtained the opportunity but for the fiduciary’s actions. The employer is entitled to claim a disgorgement of any profits realized by the fiduciary: Canaero, at p. 622, GasTops, at para. 468.

What then is a fiduciary?

[97] In Lac Minerals Ltd. v. International Corona Resources Ltd., [1989 34 (SCC)], [1989] 2 S.C.R. 574, the Court outlined three factors that are characteristic of fiduciaries, at p. 646:

(a) The fiduciary has scope for the exercise of discretion of power;

(b) The fiduciary can use such discretion to affect the beneficiary’s legal and practical interests; and

[98] In Hodgkinson v. Simms (1994), [1994 70 (SCC)], 117 D.L.R. (4th) 161 (S.C.C.), the Court held that to conclude someone is a fiduciary there must be “evidence of a mutual understanding that one party has relinquished its own self-interest and agreed to act solely on behalf of the other party”: at pp. 176-177.

[99] Typically, senior officers or employees who hold senior management positions owe their employer a fiduciary duty. Because of their position, these employees can unilaterally affect their employer’s business interests: Canaero, at p. 610; Boehmer, at para. 45.

[100] However, even if an employee is not in a management position, that employee may have fiduciary obligations where she is a “key employee” with a high degree of trust and confidence placed in her: Boehmer, at paras. 46-48. In GasTops, at para. 81, the Court stated that “[a] key employee is one whose position and responsibilities are essential [emphasis added] to the employer’s business, making it particularly vulnerable to competition upon that employee’s departure.” In GasTops, at para. 84, the Court concluded that even concluding that the employee was “key” was not the end of the inquiry:

After identifying an employee as “key”, further determining whether that employee is a “fiduciary” is a difficult question. According to James D’Andrea, generally, a fiduciary is one who is empowered to act on behalf of and for the benefit of another with the ability to affect that other’s interest through the use of discretion.”

[101] In Boehmer, at para. 51, Brown J. (as he then was) explained that determining whether an employee is a fiduciary is a fact driven inquiry which involves balancing competing considerations:

In assessing any situation involving a non-management employee, it strikes me that a court must balance competing considerations. Most employees possess some knowledge of economic value about their employer’s business, but our economic and legal systems place great stock in the ability of persons to move from employer to employer in the pursuit of better opportunities. Such is the lifeblood of a competitive economy. Yet, just because an employee is not part of management does not mean that an employer may not have reposed a larger than normal amount of trust in the employee, such that when he or she leaves the company the employee may be able to affect adversely the interests of the employer more so than would the average employee.

[102] Justice Brown in Boehmer (as he then was) at para. 49, cited Barton Insurance Brokers Ltd. v. Irwin, [1999 BCCA 73], 170 D.L.R. (4th) 69, at para. 39, where the Court explained one of the underlying concerns which courts have in this area. The imposition of fiduciary obligations restricts competition, something our society values. As such, courts should be cautious “in imposing restrictive duties on former employees in less than clear circumstances.”

[103] In assessing whether a non-management employee is a fiduciary, courts typically consider the nature of the relationship, the employee’s job function and the employee’s responsibilities. The main consideration is the degree of trust and confidence placed in the employee. In Boehmer, Brown J. (as he then was) examined case law in the area and explained, at para. 52, that the following factors have influenced courts in concluding that a non-management employee is a fiduciary:

(a) The existence of exclusive relationships with customers;

(b) The ability to unilaterally bind the employer to contracts;

(d) Supervisory responsibility over other employees.

[104] Dr. Babaei argues that the Individual Defendants were fiduciaries. He argues that he selected them from AbCelex because they were “key employees” who would assist Orpheus in its research and commitment to its strategic partners, collaborators and most importantly in retaining key aspects of AbCelex’s knowhow, confidential processes and trade secrets. He describes them as his “core” and trusted team. He says that he trained them, and they knew all intimate aspects of Orpheus’ and AbCelex’ platforms and applications for it. He says that they were so crucial that he arranged a line of credit against his matrimonial home and sold his life-long investments, at a loss, to help pay for their wages and to continue progress of their platform to detect and treat diseases of interest using single domain antibodies and artificial intelligence.

[105] He argues that Orpheus’ vulnerability to the Individual Defendants was particularly attenuated given that Orpheus was a start-up.

[106] Dr. Babaei says Dr. Shahinas was involved in all major decisions for the company and closely coordinated all aspects of the business although he did not set out any specific examples of what these were apart from providing a print-out of all text messages he had with her between June 2019 and April 2020. These text messages in fact support the argument that she worked entirely under his direction. In his affidavit sworn July 6, 2020, he described Dr. Shahinas’ general responsibilities with Orpheus as follows:

(a) Identification and analysis of therapeutic agents that includes both biologics (single-domain antibodies) and small molecules (cannabinoids) for disease of interest:

(b) Lead virtual screening (machine learning) of Orpheus’ pool of cannabinoid drug candidates;

(c) Setup algorithms for computational determination of drug candidates as well as identification of best formulation technology;

(d) Lead drafting and submission of governmental grants;

(e) Manage collaboration with academic and industry partners on various projects related to above, as strategically determined by Orpheus;

(f) Maintain records of experimental data in Orpheus’ laboratory notebooks and assist with keeping laboratory inventories, SOPs, and material safety data sheets; and

(g) Coordinate with myself and her co-workers to develop reports, presentations and defend scientific work.

[107] In its factum, Orpheus also points out that Dr. Shahinas admitted when cross-examined that she worked on cannabinoid and THC detection, contacted academic groups to inquire into whether there were already COVID-19 antibodies in existence which they could use, engaged in discussions and strategies about the use of single domain antibodies for COVID-19, developed strategic partnerships and collaborations with public, private and academic entities, sequenced single domain antibodies and explored the use of single domain antibodies to fight COVID-19.

[108] In his affidavit sworn July 6, 2020, Dr. Babaei described Ms. Dubey’s general responsibilities with Orpheus as follows:

(a) Identification and analysis of therapeutic agents that includes both biologics (single-domain antibodies) and small molecules (cannabinoids) for disease of interest;

(b) Assist with laboratory-based activities relating to building single-domain antibody pool of candidates (referred to as “libraries”) against various disease targets;

(d) Involved in identification and submission of government grants; and

(e) Assist with maintaining proper records of experimental data in Company’s laboratory notebooks; and assist with keeping laboratory inventories, SOPs, and material safety data sheets.

[109] In its factum, Orpheus also points out that Ms. Dubey admitted when cross-examined that she engaged in experimental design in lab work, managed inventories and supplies, tested cannabinoid libraries, sequenced DNA for cannabinoids, screened and purified single domain antibodies, researched single domain antibodies for COVID-19, obtained quotes to develop single domain antibodies for COVID-19 from suppliers, researched funding opportunities for COVID-19 and prepared grant applications.

[110] Dr. Babaei described Dr. Nategholeslam’s general responsibilities with Orpheus as follows:

(a) Building in-house computational capabilities based on application-specific algorithms, machine learning and processes together with other computational resources;

(b) Validating the accuracy and reliability of the computational, algorithms and machine learning processes built through the utilization of Orpheus’ single-domain antibody-antigen laboratory-generated biological data; and

(c) Leverage all validated computational tools to predict the best single-domain antibody therapeutic candidates to fight a particular pathogen like virus or bacteria.

[111] The Individual Defendants dispute the breadth of the responsibilities described by Dr. Babaei as discussed below.

[112] In my view, the indicia of a possible fiduciary relationship in this case are as follows:

(a) Dr. Babaei’s assertions that they were “key employees” and that he reposed significant trust and confidence in them. I do not give a great deal of weight to this given the credibility concerns I have set out above. Furthermore, in my view, the employer’s self-serving statements, made after the fact, that individuals are fiduciaries because of the employer’s feelings about how important they were is not enough, particularly given the contradictory evidence presented by the Individual Defendants.

(b) As set out above, Dr. Shahinas indicated that she had been involved in developing strategic partnerships and collaborations with public, private and academic entities. However, there was no evidence as to how important her role was, how much contact she had with them, whether she had any exclusive access to any partnerships or collaborators, or how important they were to Orpheus.

(c) As set out above, when Dr. Shahinas was hired as an employee of Orpheus she was promised founding shares of Orpheus as part of her employment remuneration. If she truly was a founder of Orpheus, in my view that would be some evidence of a fiduciary relationship. However, she never received any shares and there was no further discussion about any shares at all until June 4, 2020 – well over one month after she had been terminated and at a point in time when it appears Dr. Babaei knew about Deep Biologics and was trying to entice her to sign the Shahinas Purported Employment Agreement.

[113] In my view, Orpheus has not established a strong prima facie case that the Individual Defendants were fiduciaries, taking into account and balancing all of the evidence presented and competing considerations, for the following reasons:

(a) The Individual Defendants were not officers or directors or even senior managers. They did not earn significant remuneration and there is little evidence of their purported control over Orpheus’ operations.

(b) The Individual Defendants provided evidence that contradicted the scope of work they did with Orpheus set out above. Dr. Shahinas indicated that most of her time was spent drafting proposals and presentations intended to attract funding for Orpheus and certain other corporations owned by Dr. Babaei. Ms. Dubey indicated that when she was hired, there was never any discussion of her responsibilities. She provided a comprehensive list of all the work she had done, which included activities such as setting up accounts with vendors, moving warehouse items, relocating the lab, assisting with funding applications and conducting scientific research. Dr. Nategholeslam was also primarily involved in scientific research.

(c) In any event the descriptions which Dr. Babaei provided of the Individual Defendants’ responsibilities above and the evidence he relies upon from the Individual Defendants’ cross-examination are arguably consistent with them being “mere employees” doing scientific research under Dr. Babaei’s direction. I note that in a March 2020 email to a third party, Dr. Babaei stated as follows: “Our team is comprised of senior scientists and research associates, with more than 100 years of combined experience in computational biology and experimental biology to deliver well rounded, cost and time effective solutions to our strategic partners.”

(d) In all the materials provided, Orpheus did not set out any particular discretion that any of the Individual Defendants had with respect to either AbCelex’s or Orpheus’ businesses. Indeed, the word “discretion” does not appear anywhere in Orpheus’ evidence, apart from the AbCelex employment agreements and the Purported Orpheus Employment Agreements, where all the references to “discretion” are the discretion that AbCelex and Orpheus had over the Individual Defendants. Discretion to affect the employer significantly and adversely is a key consideration when evaluating whether a fiduciary relationship exists; this is missing from the relationship between Orpheus and the Individual Defendants.

(e) While I accept that as a start-up company, Orpheus would have more vulnerability to the actions of employees, in my view, the vulnerability is on both sides. In this case, the Individual Defendants have led evidence of their vulnerability. Dr. Shahinas and Ms. Dubey were retained by Orpheus initially as consultants working on an as-needed basis from April 2019 to September 2019. When Orpheus hired them in September 2019, he advised that he initially had funding until December 2019. This was then extended to March 2020 and then August 2020. Dr. Shahinas says that this employment insecurity is one of the reasons she would never have signed the Purported Shahinas Agreements. Dr. Nategholeslam’s arrangement was also insecure as it depended upon continued funding of the MITACS program. The Individual Defendants continued to look for opportunities throughout because of this financial insecurity. In GasTops, at para. 141, a case relied upon by Orpheus, the Court adopts the underlying rationale for the creation of fiduciary duties to be the equitable concept of fairness:

[141] Following Canaero, Ewaschuck J. stated in Quantum Management at paras. 41-42:

Following the fusion of law and equity, the common law developed exceptions that favoured employers as opposed to employees. These exceptions are founded on the equitable concept of fairness….

In these circumstances, it would be unfair to impose fiduciary obligations upon the Individual Defendants, as a surprise, after the fact, when Orpheus could have attempted to negotiate an agreement with anyone who it considers to be “key” which could take into account the interests and vulnerability of both parties. During his cross-examination, Dr. Babaei repeatedly said that such contracts are the way employers protect themselves in this industry. Indeed, that is what Dr. Babaei did with AbCelex.

(f) While these considerations may be less relevant in the context of this case, there is no evidence of any exclusive relationships with any of AbCelex’s or Orpheus’ suppliers or customers, that they had any ability to bind AbCelex or Orpheus contractually, or that they could set prices;

(g) The circumstances of Orpheus’ termination of Dr. Shahinas and Ms. Dubey, shortly after Orpheus submitted its grant application, is inconsistent with its assertion that they were “key employees” to which fiduciary duties should attach. Although Dr. Babaei explains that he terminated Dr. Shahinas and Ms. Dubey because he felt they were disengaged and unproductive, there is very little contemporaneous documentary support offered for this position. Although he says in his affidavit that he asked Dr. Shahinas about her lack of productivity, I was not referred to any written warnings, emails, and or complaints about her work despite having produced a comprehensive printout of all his text messages with Dr. Shahinas from June 2019 until April 2020. There are some complaints about Ms. Dubey’s performance in these text messages, but they only begin in early April 2020, a matter of weeks before he terminated her. Dr. Babaei terminated what he says were critical “key employees” who he reposed significant trust in without any attempts to address any of his alleged concerns. And he did so without any severance. In my view, this directly contradicts his assertion of their being “essential”. I note that he says that after he terminated them, he changed his business strategy to working with contract research organizations. In effect, the replacements for these “key employees” were contract researchers.

[114] There is a compelling case that Dr. Shahinas and Ms. Dubey were mere employees using their own considerable skill, knowhow and expertise, while working under the clear direction and control of Dr. Babaei. I am not suggesting that a scientist could never be a fiduciary. Clearly, they could be, but on the facts of this case, there is no strong prima facie case that they are. (With respect to Dr. Nategholeslam, as I will discuss below, he disputes that he was even employed by Orpheus at all.)

[115] The fact that they had knowledge of Orpheus’ business, that he trained them or mortgaged his house to pay them, or that he valued them is not enough.

[116] In Boehmer, Brown J. (as he then was) held that the employer had failed to establish a prima facie case that the employee owed a fiduciary duty even though the employee had a long history with the employer, knew the business and the clients well, and knew who the clients’ decision-makers were: at para. 58. The fact that an employee does his job well and is of value is not enough to make that employee a fiduciary.

v. Did the Individual Defendants breach employment duties?

[117] Orpheus argues that even if the Individual Defendants were not fiduciaries, an injunction should still be granted because there is a strong prima facie case that they breached their implied employment duties of fidelity, loyalty, confidence and good faith (“Implied Employment Duties”) by entering into the NDA, incorporating Deep Biologics, providing services to Deep Biologics, and applying for the Grant, thus pursuing a corporate opportunity which it says belonged to Orpheus. Counsel was unable to refer me to any cases where, in the absence of enforceable restrictive covenants or misappropriation of confidential information, courts had enjoined mere employees from competing with their former employer, after the employment ended, due to a violation of their Implied Employment Duty during their employment.

[118] As discussed above, there is an overlap in the case law between fiduciary duties and Implied Employment Duties, but the obligations are different in scope, duration and with respect to remedies available as discussed above in the section on fiduciary duties.

[119] There are a number of issues which are relevant to the claim against the Individual Defendants in respect of the claimed breach of their Implied Employment Duties.

a) Were Dr. Shahinas and Ms. Dubey employees in law beginning in April 2019 when they were initially retained as consultants?

[120] A great deal of time was spent arguing that Dr. Shahinas and Ms. Dubey, were in fact employees in law beginning in April 2019 when the parties understood that they had a consulting arrangement. This timing is important because it is when the Individual Defendants were approached by the Queens Lab and signed the NDA. Orpheus says that the Individual Defendants should have brought this opportunity to Orpheus as part of their Implied Employment Duties. The plaintiff relied on the well-established principles set out in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001 SCC 59], [2001] 2 S.C.R. 983, at para. 47.

[121] The distinction between true employees and independent contractors typically arises in cases like Sagaz where there are issues about the employer’s vicarious liability for an alleged employee’s actions or in respect of the application of employment legislation, cases of wrongful dismissal, the assessment of business and income taxes and the enforcement of contractual rights: Sagaz, at para. 36. These cases often involve an employer asserting that the person is not an employee but an independent contractor to avoid vicarious liability, avoid payments required by employment legislation, avoid taxes and/or avoid paying damages for wrongful dismissal. This case is the opposite. It is Orpheus trying to change its negotiated consulting arrangement to an employment arrangement in order to imply employment duties. In my view Orpheus is seeking to retroactively recharacterize what was in essence a consulting agreement.

[122] If I am wrong, even if they could be considered employees in law for some purposes based upon the test in Sagaz, it is trite that implied duties depend upon what was in the reasonable contemplation of the parties at the time a contract was entered into taking into account all of the surrounding circumstances: RBC Dominion, at para. 63. I am not persuaded that Implied Employment Duties were in the reasonable contemplation of the parties in April 2019 because Orpheus specifically told Dr. Shahinas and Ms. Dubey that they were not employees, but consultants. It is unfair for Orpheus to specifically negotiate a consulting arrangement, and then later attempt to elevate that relationship after the fact so as to impose Implied Employment Duties.

b) Was Dr. Nategholeslam an employee with Implied Employment Duties?

[123] Dr. Nategholeslam’s position is that he was never even employed by Orpheus. As stated above, he was employed by the University of Guelph at the time doing post-doctorate work pursuant to fellowship program, MITACS. Initially, this was done through AbCelex and then transferred to Orpheus when AbCelex ceased operations. Although Orpheus contributed funds to the MITACS grant, Dr. Nategholeslam was paid by MITACS through the University of Guelph. It is significant that Dr. Nategholeslam signed an employment agreement with the University of Guelph in April 2019. The terms and conditions specified that his primary duty included:

The PDF appointment works in the computational drug design and discovery area. The focus is on enhancing the various therapeutic and drug likeness properties of antibodies, through leveraging datasets of such properties through a blend of machine learning models. To that end, part of this work involves close collaboration with biologists to develop and extend antibody datasets, by sequencing and high-throughput screening of suitable antibody libraries…

[124] There was no non-competition covenant in his agreement with the University of Guelph. The only restrictive covenant related to confidential information.

[125] Dr. Nategholeslam says that he was collaborating with Orpheus through his employment with the University of Guelph. It is also significant, in my view, that although Dr. Shahinas and Ms. Dubey signed employment agreements with AbCelex, Dr. Nategholeslam never did and there was no evidence that he was ever asked to. There is also no evidence that Orpheus asked Dr. Nategholeslam to sign an employment agreement with Orpheus.

[126] While Dr. Nategholeslam clearly could not misappropriate Orpheus confidential information and may have had had some implied obligations to Orpheus, I am not satisfied on this record that Orpheus has demonstrated a strong prima facie case he owed the usual Implied Employment Duties which would prevent him from working for anyone else during his association with Orpheus. It was obvious from the start that he was already employed by someone else, the University of Guelph, where he was also working on leveraging machine learning models to enhance antibody development. There was nothing in the MITACS documentation filed that suggested any exclusivity to Orpheus.

c) Is the law on misappropriation of corporate opportunities applicable?

[127] Orpheus asserts that the Individual Defendants violated their Implied Employment Duties by misappropriating an Orpheus corporate opportunity. While it is not impossible that this argument could succeed, as noted above, the law of misappropriation of corporate opportunities has been developed in the context of fiduciary obligations. In Canaero the defendants O’Malley and Zarzycki were officers and directors of Canaero, who had been with the company in various capacities for decades. They attempted to obtain the rights to a particular project for two years on behalf of Canaero. While employed, they incorporated a new company, shortly thereafter resigned and pursued this project. The Court of Appeal concluded that there was no liability as they were “mere employees”. The Supreme Court of Canada overturned that decision on the basis that they were fiduciaries. The Court held as follows, at pp. 605-606:

What is not in doubt is that they acted respectively as president and executive vice-president of Canaero for about two years prior to their resignations. To paraphrase the findings of the trial judge in this respect, they acted in those positions and their remuneration and responsibilities verified their status as senior officers of Canaero. They were “top management” and not mere employees whose duty to their employer, unless enlarged by contract, consisted only of respect for trade secrets and for confidentiality of customer lists.

[128] I note that the court in GasTops suggested that even a mere employee cannot take advantage of a corporate opportunity encountered during the course of her employment (at para. 99) but this is not consistent with Canaero and in my view, the applicability of this law to what an employee is entitled to do after employment ends, will be an issue at trial best resolved on a full record.

[129] This has important implications for Orpheus’ claim that the Individual Defendants, as “mere employees” are liable for misappropriation of a corporate opportunity.

[130] In any event, there would be a serious issue as to whether the opportunity with Queens Lab, Deep Biologics, or the Grant, were Orpheus “corporate opportunities”. There is a very thorough discussion of how courts have interpreted and applied the concept of misappropriation of corporate opportunities with respect to fiduciaries in GasTops, a case relied upon heavily by Orpheus. It involves consideration of:

(a) Whether the fiduciary has taken “advantage of economic [opportunities] that they become aware of by reason of their employment with their former employer”: Gastops, at para. 141 citing Quantum Management, at paras. 41-42,

(b) Whether it was the defendant’s “position with the company or a fresh business initiative that led him to the opportunity which was later acquired”: GasTops, at para. 145 citing KJA Consultants Inc. v. Soberman, [2003 13546 (ON SC)], [2003] O.J. No. 3175 (S.C.J.),

(c) Whether the opportunity is a “maturing business opportunity”: GasTops, at para. 102 citing Canaero; or “ripe”: Pizza Pizza Ltd. v. Gillespie, [1990 4023 (ON SC)], 75 O.R. (2d) 225, cited in GasTops, at para. 104.

[131] In GasTops, at para. 148, the Court concluded that “in order for liability to attach to a fiduciary, his power [over the employer], be it legal or practical, it must have been the actual cause of acquiring the benefit.”

[132] Dr. Shahinas and Ms. Dubey gave evidence that they met the professors with the Queens Lab in or around June 2019, through their own contacts. At that time, they were working as consultants for Orpheus. Although Orpheus had supported a group of students at Queens University previously, the Individual Defendants assert that the individuals associated with the Queens Lab were not the same. There is no evidence that the Queens Lab professors were interested in or would have partnered with Orpheus. The idea of working on a rapid handheld diagnostic device to test for COVID-19 was not an Orpheus idea or one that only Orpheus would be able to pursue. Many companies are working on this and anyone could apply for the Grant. Furthermore, this opportunity could hardly be considered “ripe” or “mature” given that in Canada the significance of the pandemic became well known only in or around February 2020.

[133] Furthermore, there is no evidence that Orpheus had done any work towards the development of the COVID-19 rapid handheld test as of the Individual Defendants’ termination, apart from preparing a funding submission and general investigations discussed above. This is different than Canaero and other cases cited by Orpheus, which involved fiduciaries who worked on obtaining a specific project for their employer for some time. In the case of Canaero, the fiduciaries had worked for two years, then resigned and used relationships developed on behalf of Canaero to obtain an invitation to bid for this same project for themselves.

[134] In my view, as “mere employees”, provided they did not use any Orpheus Purported Confidential Information, or breach restrictive covenants, there would have been no legal impediment to the Individual Defendants incorporating Deep Biologics and pursuing the Grant and a business competitive with Orpheus had they done so the day after they were terminated. The problem is, they did it while they were still employed.

d) The evidence of breach of Implied Employment Duties

[135] In my view, the case for breach of implied employment duties that remains is that Dr. Shahinas and Ms. Dubey violated their implied duties of fidelity, confidence and good faith by:

(a) Incorporating Deep Biologics in January 2020;

(b) Providing Deep Biologics with consulting services; and

[136] Note, there is no suggestion that the Individual Defendants sabotaged the Orpheus Grant application. Dr. Babaei’s main complaint about their conduct with respect to it, is that they should have recommended Orpheus partnering with Queens Lab.

[137] In GasTops, the Court provided a thorough summary of obligations owed by employees which include the duty to not compete with their employer while employed, at para. 95:

It is implied in all employment contracts that employees will not compete with their employer while employed. Generally, merely planning to establish a competing business does not necessarily violate the duty to not compete.

[138] The Court in GasTops, at para. 95, further held that to constitute a breach, the employee must have been engaged in “active competition.”

[139] In this case, Dr. Shahinas and Ms. Dubey have given the following evidence explaining what they did:

(a) As noted above, their employment was insecure. As a result, they developed the concept of Deep Biologics in June 2019 as something they could fall back on if their employment with Orpheus ultimately ended.

(b) In January 2020 they incorporated Deep Biologics to assist Queens Lab in commercializing their proprietary nanostructure technology for the detection of infectious diseases. The collaboration work with Queens Lab was for a surface plasmon resonance nanostructure technology which Queens Lab had developed. Orpheus does not develop or own its own technology, although admittedly it does collaborate with technology companies.

(c) They say that while they did incorporate Deep Biologics, they did not work on the Grant application on its behalf other than review and proof-read it. The main work was done by the investigators at Queens Lab who in fact were the ones who decided to pursue this opportunity. When cross-examined, Dr. Shahinas indicated that these professors advised sometime in April 2020, that they wanted to pursue the COVID-19 Grant before Orpheus had even determined that it would apply.

(d) They say they were founders of Deep Biologics but not employees. They provided minimal unpaid services to Deep Biologics before they were terminated from Orpheus.

(e) Dr. Babaei had instructed Dr. Shahinas to make applications for funding for other distinct companies owned by him, without any concerns about competition with Orpheus. He also recommended that she provide consulting services to another company while employed with Orpheus. As a result, she did not think that anything she was doing violated any employment obligation.

[140] Despite the above explanations, I am satisfied that Dr. Shahinas’ and Ms. Dubey’s actions at some point went beyond planning to establish a competing business and constituted competition, although I cannot say when specifically, on this record. Thus, Orpheus has demonstrated a strong prima facie case that they have violated their Implied Employment Duties. The issue of damages will be a significant issue at trial in my view. Unlike breach of fiduciary duties which results in disgorgement of profits (Canaero, at p. 622), a plaintiff must prove her damages at trial in a breach of contract case.

[141] This was the Supreme Court of Canada’s approach in RBC Dominion, a case relied upon by Orpheus. In that case, the Court held that a manager who was a “mere employee” had breached his employment duty by coordinating the departure of virtually all of RBC’s investor advisers at his branch. The manager had copied client records and transferred them to Merrill Lynch where he and the departing investment advisors became employees. The trial court held that “RBC’s office was effectively hollowed out and all but collapsed”: at para. 1. The trial court calculated damages based upon profits lost by RBC and this was ultimately upheld by the Supreme Court of Canada.

(c) Has the plaintiff demonstrated irreparable harm?

[142] In RJR MacDonald, at p. 341, the Court described irreparable harm as follows:

“Irreparable” refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court’s decision. (R.L. Crain Inc. v. Hendry (1988), [1988 5042 (SK QB)], 48 D.L.R. (4^th) 228 (Sask. Q.B.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid, supra); or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined (MacMillan Bloedel Ltd. v. Mullin, [1985 154 (BC CA)], [1985] 3 W.W. R. 577 (B.C.C.A.)). The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be a relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)).

[143] The plaintiff’s evidence as to irreparable harm must be clear and not speculative. Absent clear evidence that irreparable harm will result, an interlocutory injunction should not be granted: Stress-Crete Limited v. Harriman, [2019 ONSC 2773], at para. 58 It is well established that irreparable harm is not made out simply because damages may be difficult to quantify. The plaintiff must prove that the alleged harm cannot be quantified in monetary terms: Stress-Crete, at para. 59.

[144] Orpheus complains that after Deep Biologics’ successful grant application, it was featured in a CTV news article and mentioned by the Prime Minister at a press conference. Dr. Babaei says that the combination of the Grant and the publicity has given Deep Biologics a competitive advantage in developing the COVID-19 rapid handheld test as well as attract other investors.

[145] Orpheus asserts that it will lose the ability to be the “first mover” to the Canadian market with a fast, mobile, cost effective COVID-19 testing kit and that it will suffer irreparable harm as prospective investors and strategic partners will be hesitant to invest in it while Deep Biologics leverages a similar device.

[146] Further, Dr. Babaei says Orpheus’ reputation and future investor opportunities have been damaged because of the optics of former members of his team competing with him. He states:

If Deep Biologics is permitted to operate, on account of the individual’s breach of their Employment Agreements and NDA as well as their duty of loyalty and fiduciary duties, by using confidential materials and manuals appropriated from Orpheus, it will tarnish how investors and strategic partners look at me, personally, and at Orpheus - in other words, investor and strategic partners’ confidence will be seriously undermined and future investment and partnership opportunities with Orpheus will be considered too “risky” as the same thing may happen on another project or company I am involved with.

[147] In my view the plaintiff has failed to establish irreparable harm for the following reasons:

(a) Dr. Babaei’s chief concern to Orpheus’ reputation set out above is that the defendants are operating in breach of Purported Orpheus Employment Agreements, their fiduciary duties, and Implied Employment duties by using confidential materials which have been misappropriated. As set out earlier in these reasons, Orpheus has not presented any strong prima facie case, or even substantial issue to be tried, that that is what the defendants are doing. It is very well established in the case law that mere employees may compete with an employer after their employment ends. If that hurts the employer’s reputation it is not compensable.

(b) Despite his assertion that the actions of the Individual Defendants have hurt its reputation and harmed its future prospects, on July 6, 2020, Orpheus entered into a Letter of Intent with Therma Bright Inc. to partner in the development of a handheld COVID-19 rapid test. The July 7, 2020 Press Release reads:

…The design and development of the fundamental components of the proposed test has already begun, which will allow Therma and Orpheus to deliver a solution quickly to the Canadian and a global market….

…Dr. Saeid Babaei, chairman and CEO of Orpheus Medica commented, “We are pleased and encouraged to enter into this partnership with Therma and our academic collaborators to fast track our unique saliva rapid test…”

(c) At the hearing of the interlocutory motion on August 14, 2020, the defendants sought to introduce new evidence after cross-examination of a subsequent Press Release from Orpheus and Therma Bright dated August 13, 2020. Orpheus opposed this evidence on the basis that the defendants should have requested as undertakings the production of any future press releases and did not do so. Orpheus also sought to introduce a further affidavit from Dr. Babaei addressing this further press release. I reserved on this matter and advised that I would address it in the reasons. On the basis of Nexim Healthcare Consultants Inc. v. Yacoob, [2018 ONSC 91], at para. 9, I am admitting both of these affidavits in the interests of justice and having a complete evidentiary record. I conclude that the evidence is relevant, responds to matters raised on cross examination, and would not result in any non-compensable prejudice. Clearly, since the press release did not exist before cross-examination, the defendants have a good explanation for why it was not included at the outset.

(d) The August 13, 2020 press release confirms that the funding arrangement with Therma Bright is ongoing. It states:

Therma will provide funding for the project in phases (“Phase” or “Phases”) contingent upon achieving certain corporate and scientific milestones. Therma will provide medical device expertise to help accelerate the development of CoviSafe screening test to address the ongoing pandemic.

Initial Phase 1 milestones have now been met and Therma has issued 1,000,000 warrants exercisable at $0.05 per share with a 5-year expiry.

…The design and development plan of CoviSafe is underway and Therma and Orpheus expect to deliver a solution quickly to the Canadian and global market.

…Dr. Saeid Babaei, Chairman & CEO of Orpheus Medica, commented: “We are pleased to have Therma’s support to complete the entire developmental and commercialization plan of CoviSafe, allowing us to expedite the prototype development, clinical validation and regulatory submission plans in the coming months.”

Mr. Rob Fia, CEO of Therma, commented, “We are excited to have completed Phase 1 of the development program and to enter into Phase 2 of this joint development arrangement with Orpheus Medica. Therma and Orpheus expect to move forward quickly to identify QEM manufacturers to assist with validation and manufacturing CoviSafe with the completion of our recent financing.”

Dr. Babaei asserted in his original affidavit material sworn July 6, 2020, his cross-examination and in his supplementary affidavit dated August 13, 2020, that Orpheus’ business relationship with Therma Bright is not firm, and that milestones will have to be reached at various stages. In my view, the press releases demonstrate a substantial commitment by Therma Bright to working with Orpheus. Indeed, Dr. Babaei states that the reason why Therma Bright issued the press release is because of its disclosure obligations as a public company. Given that this press release is required by securities laws, I draw the inference that Therma Bright has included all material information in it. There is nothing in the Press Release that demonstrates that the arrangement is in jeopardy. There is no evidence in this proceeding from Therma Bright indicating that it will not continue to work with Orpheus if the interim injunction is not continued or if the Individual Defendants are not enjoined from developing their test.

(e) There is no persuasive case presented, that Orpheus would be the “first mover” if Deep Biologics is removed from the equation. There are currently many companies developing a COVID-19 rapid handheld diagnostic saliva test – 4 of which obtained the Grant.

(d) Does the balance of convenience favour granting the injunction?

[148] In RJR Macdonald, at p. 342, the Court explained that in considering the balance of convenience the question is which of the parties would suffer greater harm from the granting or refusal to grant an interlocutory injunction pending a decision on the merits.

[149] The Court went on to explain, at p. 342, that, “the factors which must be considered in assessing the ‘balance of convenience’ are numerous and will vary in each case.” In an appropriate case, the Court may take into account the public interest in its analysis. In RJR Macdonald, at p. 343, the court directed that in “constitutional cases, the public interest is a ‘special factor’ which must be considered in assessing where the balance of convenience lies and which must be ‘given the weight it should carry.’” The Court explained, as follows, at p. 344:

It is, we think, appropriate that it be open to both parties in an interlocutory Charter proceeding to rely upon considerations of the public interest. Each party is entitled to make the court aware of the damage it might suffer prior to a decision on the merits. In addition, either the applicant or the respondent may tip the scales of convenience in its favour by demonstrating to the court a compelling public interest in the granting or refusal of the relief sought. “Public interest” includes both the concerns of society generally and the particular interests of identifiable groups.

[150] Finally, “[i]n the course of discussing the balance of convenience in American Cyanamid, Lord Diplock stated at p. 408 that when everything else is equal, “it is a counsel of prudence to… preserve the status quo”: RJR MacDonald, at p. 347.

[151] The balance of convenience criterion provides the court with the flexibility needed on a motion for interlocutory injunctive relief. It affords the court the opportunity to decide the matter on a basis of fairness, justice and common sense in relation to all the issues of fact and law which are relevant to the particular case.

[152] I find that the balance of convenience strongly favours the defendants and is not offset by the alleged irreparable harm which the plaintiff says it will suffer if the interlocutory injunction is not granted, for the following reasons:

(a) The only prima facie case made out by Orpheus is that Dr. Shahinas and Ms. Dubey violated their Implied Employment Duties by competing while employed by Orpheus. The case law establishes firmly that former employees are entitled to compete with their employer after employment ends. Enjoining “mere employees” from doing so in the absence of restrictive covenants or evidence of breach of confidence would be an extraordinary remedy, one that as far as I know has never been made. It would represent a significant departure from existing law which I am not prepared to undertake on the facts of this case.

(b) At trial, if successful for breach of Implied Employment Duties, Orpheus would not be entitled to disgorgement of profits which is the remedy for breach of fiduciary obligations. It will have to establish that Dr. Shahinas’ and Ms. Dubey’s actions while employed by Orpheus caused it damages as was required in RBC Dominion. An injunction at this stage would effectively give Orpheus the remedy of disgorgement at this early stage—something it would not be entitled to at trial. I am not suggesting this would never be appropriate, but it would be an extreme remedy on the facts of this case.

(c) An injunction is an equitable remedy. On the record before me, it appears that Orpheus obtained an interim injunction with a record that contained fabricated evidence. Orpheus has not come to this court with the requisite clean hands.

(d) The plaintiff has the continued ability to develop its own rapid COVID-19 diagnostic kit. Orpheus’ founder, Dr. Babaei, gave evidence of his impressive 20-year history in biopharma companies where he has in the past raised over $50 million in equity, debt and grant funding. Dr. Babaei expressed his view that Orpheus is a leader in the field of antibody research that it will be able to leverage in the development of a rapid handheld COVID-19 antibody test. When cross-examined, he stated:

952

A….So, the learning behind the single domain in the animal health highly relevant for COVID-19 because it shows we’re able to select the right antibody and it allows us to show that we can actually do manufacturing, scale it up and quantify that…And that’s what we’re confident that we can actually be a very strong contender in the COVID-19 race.

(e) As stated above, Orpheus has entered into a partnership with Therma Bright to pursue this opportunity.

(f) Conversely, the issuance of the injunction would:

i. preclude the defendants from utilizing the $300,000 Grant funds or apply for any further funding;

ii. preclude the development of Queens Lab technology for the critical COVID-19 diagnostic device market; and

iii. restrain the Individual Defendants from using their skill, knowhow and expertise.

(g) The defendants have also raised legitimate concerns about the undertaking as to damages provided by Orpheus. There is evidence that suggests that Orpheus has financial weakness. Courts have held that the strength of the undertaking as to damages is a factor to consider when evaluating the balance of convenience: Armes and 2331513 Ontario Inc. et al v. Barlett, [2018 ONSC 1396], at para. 36; Researchco Ltd. Partnership v. Real Estate Search Corp., [2004 35008], (Ont. S.C.), at para. 23.

(h) Finally, in accordance with RJR MacDonald, at p. 343, I am taking into account the public interest. The COVID-19 pandemic is a significant public health crisis that has affected all Canadians. Jobs have been lost. Businesses have closed. There have been significant impacts on the economy. There is considerable public interest in promoting research and development into diagnostic devices which will help to slow down the spread of this infection. It is for this reason that the Government of Canada established the Grant. The significance of this pandemic in Canada and globally cannot be understated. The COVID-19 Challenge issued by the Government states as follows:

The emergency of SARS-CoV-2 has, in short order, reshaped Canadian Society. In a matter of weeks, Canadians from coast to coast have had to engage in social distancing, while at the same time health care systems are threatened by a potential influx of severe cases, while the economy is distressed by a forced prorogation of economic activity. The response to this pandemic hinge on an all-of-society response, with frequent and timely lab testing as a central pillar of this work.

[153] If the injunction is granted, it will have the effect of eliminating one business which is engaged in the socially beneficial race to develop a rapid COVID-19 diagnostic device that could potentially save thousands of lives.

Conclusion

[154] The motion is dismissed.

[155] If the parties cannot agree on costs, they may make written submissions no longer than 5 pages as follows:

(a) Defendants within 15 days of receipt of these reasons:

(b) The plaintiff within 15 days of receipt of the defendants’ submission.

Papageorgiou J.

Released: September 21, 2020

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ORPHEUS MEDICA INC. Plaintiff

– and –

DEEP BIOLOGICS INC., DEA SHAHINAS, SHRADDHA DUBEY and SEYYED MOSTAFA NATEGHOLESLAM Defendants

REASONS FOR JUDGMENT

Papageorgiou J.

Released: September 21, 2020

Orpheus Medica v. Deep Biologics Inc., 2020 ONSC 4974

Case Summary

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Counsel

Nature of the Case

Nature of the Motion

Decision

Analysis

(a) What is the test for injunctive relief in this case?

(b) Has the plaintiff demonstrated a strong prima facie case?

i. What are the uncontradicted facts in this case?

ii. Did the Individual Defendants breach restrictive covenants in employment contracts?

iii. Did the defendants misappropriate Orpheus’ confidential information?

a) The Orpheus “Platform”

b) Processes, programs, computational programs, artificial intelligence, models, algorithms

c) Databases of single domain antibodies

d) Evidence of misappropriation and use of Orpheus Purported Confidential Information

iv. Did the Individual Defendants breach fiduciary duties owed to Orpheus?

What then is a fiduciary?

v. Did the Individual Defendants breach employment duties?

a) Were Dr. Shahinas and Ms. Dubey employees in law beginning in April 2019 when they were initially retained as consultants?

b) Was Dr. Nategholeslam an employee with Implied Employment Duties?

c) Is the law on misappropriation of corporate opportunities applicable?

d) The evidence of breach of Implied Employment Duties

(c) Has the plaintiff demonstrated irreparable harm?

(d) Does the balance of convenience favour granting the injunction?

Conclusion

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Legal Tests 4