MERZ PHARM., LLC v. THOMAS, 2024 NCBC 32

STATE OF NORTH CAROLINA
WAKE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
23 CVS 32848
MERZ PHARMACEUTICALS, LLC,
Plaintiff,
v.
ANDREW THOMAS,
Defendant.
ORDER AND OPINION ON
PLAINTIFF’S MOTION FOR
PRELIMINARY INJUNCTION
THIS MATTER is before the Court on Plaintiff Merz Pharmaceuticals, LLC’s
Motion for Preliminary Injunction (“PI Motion,” ECF No. 58).
THE COURT, having considered the PI Motion, the briefs, affidavits, exhibits,
arguments of counsel, and all appropriate matters of record, CONCLUDES, in its
discretion, that the PI Motion should be GRANTED in part, and DENIED in part,
for the reasons set out below.
McGuireWoods LLP, by Heidi E. Siegmund, Dana L. Rust, and Zachary
L. McCamey, for Plaintiff Merz Pharmaceuticals, LLC.
Spengler & Agans, PLLC, by Eric Spengler, for Defendant Andrew
Thomas.
Davis, Judge.
FINDINGS OF FACT
1. 	The Court makes the following findings of fact solely for the purpose of
resolving the present PI Motion. They are not binding in any subsequent proceedings
in this action. See Lohrmann v. Iredell Mem’l Hosp., Inc., 174 N.C. App. 63, 75 (2005)
(“It is well settled that findings of fact made during a preliminary injunction
Merz Pharm., LLC v. Thomas, 2024 NCBC 32.

proceeding are not binding upon a court at trial on the merits.”), disc. rev. denied, 360
N.C. 364 (2006).
2. 	Plaintiff Merz Pharmaceuticals, LLC (“Merz Pharmaceuticals”) filed its
Verified Complaint on 16 November 2023 (“V.C.,” ECF No. 3), asserting claims
against Defendant Andrew Thomas arising out of Thomas’ alleged wrongful conduct
in connection with the termination of his employment at Merz Pharmaceuticals and
the 	commencement 	of 	his 	new 	employment 	at 	Revance 	Therapeutics, 	Inc.
(“Revance”).
3. 	Merz Pharmaceuticals is a privately-owned North Carolina limited
liability company registered to do business in North Carolina. 	(V.C. ¶ 3.) 	At all
relevant 	times, 	a 	separate 	entity, 	Merz, 	Inc., 	was 	the 	sole 	member 	of 	Merz
Pharmaceuticals. 	(Cleef Aff. ¶ 4, ECF No. 74.2.) 	In the Verified Complaint, Merz
Pharmaceuticals 	is 	described 	as 	“a 	leading 	pharmaceutical 	company,” 	which
“markets and sells its products to healthcare providers for therapeutic purposes.”
(V.C. ¶ 8.)
4. 	Thomas, a resident of South Carolina, is a former Merz Pharmaceuticals
employee. 	(V.C. ¶¶ 1, 4.) 	In October 2018, Thomas began working at Merz North
America, Inc. (“Merz NA”) as its Director of Government and Federal Accounts.
(Thomas Aff. I ¶ 18, ECF No. 19.1.)
5. 	Merz NA is a related entity of Merz Pharmaceuticals. 	As with Merz
Pharmaceuticals, Merz NA’s sole shareholder at all relevant times was Merz, Inc.
(Cleef Aff. ¶ 4.) Moreover, Merz Pharmaceuticals, Merz NA, and Merz, Inc., are “all

indirect wholly-owned subsidiaries of Merz Pharmaceuticals GmbH, a German
corporation.” (Cleef Aff. ¶ 4.)
6. 	As a condition of his employment with Merz NA, Thomas was required
to sign a Confidentiality, Nonsolicitation, and Proprietary Rights Agreement (the
“Agreement”), which contained certain restrictive covenants with respect to Merz
NA’s confidential information and trade secrets, as well as a nonsolicitation provision
regarding the customers of Merz NA. (V.C., at Ex. A, ECF No. 3.)
7. 	In an affidavit submitted by Thomas in opposition to the PI Motion,
Thomas stated that he does not recall signing (electronically or otherwise) the
Agreement. 	(Thomas Aff. I ¶ 6.) 	In response, Merz Pharmaceuticals submitted a
printout of a document showing that Thomas did, in fact, electronically sign the
Agreement. 	(V.C. ¶ 54.) 	Moreover, at the 6 May 2024 hearing on the PI Motion,
Thomas’ counsel conceded that for purposes of the PI Motion, Defendant was not
contesting this fact. Therefore, the Court finds that Thomas signed the Agreement.
8. 	Merz Pharmaceuticals contends that “[i]n this leadership role, Thomas
was responsible for spearheading Merz [Pharmaceuticals’] overall strategy for its
federal accounts program across the United States.” 	(V.C. ¶ 23.) 	Specifically,
Thomas’ duties included working to increase the market share in the governmental
sector of “[o]ne of Merz [Pharmaceuticals’] flagship products[,]” Xeomin. 	(V.C. ¶ 9.)
Thomas “managed a team of three directors who called on physicians and other
prescribers of Xeomin® within the Department of Defense (‘DoD’) and Department of
Veterans Affairs (‘VA’)[.]” (Thomas Aff. I ¶ 18.) Thomas’ “team of directors at Merz

[Pharmaceuticals] 	was 	responsible 	for 	achieving 	Merz 	[Pharmaceuticals’] 	sales
targets for Xeomin® within the Governmental Sector, by marketing Xeomin® to
prescribing healthcare professionals.” (Thomas Aff. I ¶ 20.)
9. 	Xeomin is “a federally regulated botulinum toxin injection[,]” which can
be used for both therapeutic and aesthetic purposes. (V.C. ¶¶ 9–10.) Therapeutically,
Xeomin is “used to treat upper limb spasticity, cervical dystonia, blepharospasm
(overactive eye blinking), and chronic sialorrhea (excessive salivation).” 	(V.C. ¶ 9.)
Xeomin is also sold for aesthetic purposes such as for smoothing frown lines. (V.C. ¶
10.) 	However, the federal government purchases Xeomin only for therapeutic uses.
(Cleef Aff. ¶ 3.)
10. 	Merz NA first obtained Food and Drug Administration (“FDA”) approval
for certain therapeutic uses of Xeomin in 2010 and for aesthetic uses in 2011. (Cleef
Aff. ¶ 3.) However, Merz Pharmaceuticals did not become the entity responsible for
the sale of Xeomin for therapeutic purposes until 1 January 2021. (Cleef Aff. ¶ 3.)
11. 	This change occurred because “[i]n 2020, Merz [Pharmaceuticals] and
[Merz NA] decided to separate [Merz NA]’s therapeutics business division from its
aesthetics business division.” 	(Cleef Aff. ¶ 5.) 	After this separation of business
divisions was effectuated, Merz NA continued to handle the sale of Xeomin for
aesthetic uses while Merz Pharmaceuticals was responsible for the sale of Xeomin for
therapeutic purposes. (Cleef Aff. ¶¶ 3–5.)
12. 	On 30 November 2020, Thomas received a letter stating that “Merz
Therapeutics . . . is transferring operations from Merz North America, Inc. to Merz

Pharmaceuticals, LLC, another Merz US affiliate, on January 1, 2021” and that his
“employment will similarly transfer and . . . you will become an employee with Merz
Pharmaceuticals, LLC.” (Thomas Aff. II, at Ex. C, ECF No. 64.7.)
13. 	On 1 January 2021, Merz NA and Merz Pharmaceuticals entered into
an Asset Transfer Agreement (“ATA”), in which Merz NA “transferred substantially
all 	of 	its 	assets 	and 	liabilities 	related 	to 	its 	therapeutics 	division 	to 	Merz
[Pharmaceuticals]. 	This transfer included all employees working in [Merz NA]’s
therapeutics division, including Thomas[.]” 	(Cleef Aff. ¶ 5.) 	Additionally, with
respect to the transferred employees, “the ATA transferred all restrictive covenant,
non-solicitation, 	and 	confidentiality 	agreements 	pertaining 	to 	the 	therapeutics
business from [Merz NA] to Merz [Pharmaceuticals].” (Cleef Aff. ¶ 6.)
14. 	Thomas accepted the transfer of his employment. 	(See Thomas Aff. II,
at Ex. C, ECF No. 64.7.) Accordingly, from 1 January 2021 onward, Thomas was no
longer 	an 	employee 	of 	Merz 	NA 	and 	instead 	became 	an 	employee 	of 	Merz
Pharmaceuticals. (Thomas Aff. III ¶ 11, ECF No. 70.1.) However, his “job duties and
title remained unchanged.” (Cleef Aff. ¶ 10.)
15. 	The Agreement was assigned from Merz NA to Merz Pharmaceuticals
per the terms of the ATA.1 Accordingly, the Agreement is a valid and binding contract
between Merz Pharmaceuticals and Thomas.
16. 	For reasons unrelated to the present PI Motion, Merz Pharmaceuticals
terminated Thomas’ employment on 31 July 2023. 	(V.C. ¶ 35; Thomas Aff. I ¶ 25.)
1 Although Thomas initially disputed that a valid assignment of the Agreement actually
occurred, he has now conceded this fact.

On the day of his termination, Thomas attached a personal thumb drive to his “Merz
[Pharmaceuticals]-owned computer and downloaded the contents of the desktop to
the [t]humb [d]rive.” 	(Thomas Aff. I ¶ 26; V.C. ¶ 36.) 	Subsequent forensic analysis
revealed that the same thumb drive was once again attached to Thomas’ Merz
Pharmaceuticals-owned computer on 7 August 2023. (Brown Aff. ¶ 6, ECF No. 75.8.)
17. 	Overall, “over 500 files were sequentially accessed, indicating a mass
transfer of files from the Merz [Pharmaceuticals] laptop to the personal USB thumb-
drive.” 	(Brown Aff. ¶ 7.) 	Merz Pharmaceuticals contends that the files and
documents downloaded by Thomas contained its confidential information and trade
secrets. 	(V.C. ¶¶ 36–39; O’Brien Aff. ¶ 11, ECF No. 59.2.) 	Among the hundreds of
downloaded 	documents, 	Merz 	Pharmaceuticals 	provides 	the 	following 	list 	of
examples in its Verified Complaint:
• 	Internal 	update 	presentations 	on 	behalf 	of 	Merz’s 	Federal
Accounts 	team 	showing 	federal 	channel 	trends, 	pricing
information, 	product 	volumes 	over 	time, 	targets, 	Xeomin®
utilization by sales channel, market insights, current strategies
and opportunities, and updates on the competitive landscape;
• 	Spreadsheets compiling Xeomin® market share data;
• 	Customer contact lists, including Xeomin® vials purchased by
customer;
• 	Performance reports showing Xeomin® quarterly utilization over
time;
• 	Internal presentations containing detailed performance data,
analytics, and strategies for Merz’s Therapeutics division as a
whole, 	including 	lists 	of 	top 	performing 	Xeomin® 	accounts
nationwide;

• 	Spreadsheets 	reflecting 	Xeomin® 	revenues 	by 	prescription
indications;
• 	Spreadsheets 	reflecting 	Merz’s 	overall 	Federal 	Accounts
performance over time and by region; and
• 	Spreadsheets identifying key customers and Xeomin® purchasing
data and trends for those customers.
(V.C. ¶ 39.)
18. 	On 10 August 2023, Thomas “returned all [his] Merz [Pharmaceuticals]-
owned computing devices to [the company], including the laptop computer, iPad, and
cell phone [he] used on behalf of Merz [Pharmaceuticals].” 	(Thomas Aff. I ¶ 30.)
However, 	Thomas 	did 	not 	provide 	the 	thumb 	drive 	at 	this 	time, 	and 	Merz
Pharmaceuticals was not yet aware of its existence. (V.C. ¶ 46.)
19. 	Thomas has testified that on 12 August 2023 he “permanently deleted
all 	the 	contents 	of 	the 	[t]humb 	[d]rive, 	including 	the 	Merz 	[Pharmaceuticals]
documents [he] had downloaded to the [t]humb [d]rive[.]” 	(Thomas Aff. I ¶ 31.)
Thomas further stated that “[s]oon thereafter, [he] reformatted the [t]humb [d]rive to
re-use it for storing [his] family’s archival home videos, which [he] was in the process
of converting to digital format.” (Thomas Aff. I ¶ 31.)
20. 	On 3 August 2023, just a few days after his termination from Merz
Pharmaceuticals, Thomas began communicating with a Revance representative
about the possibility of him obtaining a job at Revance. (V.C. ¶ 42.)
21. 	Thomas applied for his current position with Revance on 17 August
2023, and was interviewed three times over the course of the next few days. (Thomas
Aff. I ¶ 37–38.) 	Following his interviews, Revance offered Thomas a job as its

“National Account Director, Market Access,” on 21 August 2023, which he accepted
shortly thereafter. (Thomas Aff. I ¶¶ 38–40; see also Thomas Aff. I, at Ex. 4.)
22. 	On 8 September 2023, Merz Pharmaceuticals learned that Thomas had
begun working for Revance and proceeded to send both Thomas and Revance cease-
and-desist 	letters 	“raising 	concerns 	about 	his 	misappropriation 	of 	Merz
[Pharmaceuticals’] 	trade 	secrets 	and 	potential 	communications 	with 	Merz
[Pharmaceuticals’] customers.” (V.C. ¶¶ 51, 55.)
23. 	The Verified Complaint asserts that “Revance, like Merz, markets and
sells injectables to healthcare professionals for aesthetic and therapeutic purposes[,]”
and is a “direct competitor of Merz in the pharmaceutical industry.” (V.C. ¶¶ 17–18.)
24. 	Most notably, Revance recently “developed a botulinum toxin that
competes directly with Xeomin® in both the aesthetics and therapeutics spaces.”
(V.C. ¶ 20.) 	Revance’s botulinum toxin (or “neurotoxin”) is called Daxxify. 	(V.C. ¶
20.)
25. 	The FDA first approved Daxxify exclusively for an aesthetic purpose
(the treatment of frown lines) in September of 2022. (V.C. ¶ 20.) On 14 August 2023,
the FDA approved Daxxify for the therapeutic treatment of cervical dystonia—a
condition that Xeomin is also used, and approved, to therapeutically treat. 	(V.C. ¶
21.)
26. 	Merz 	Pharmaceuticals 	initiated 	this 	lawsuit 	by 	filing 	its 	Verified
Complaint in Wake County Superior Court on 16 November 2023 in which it asserted
claims against Thomas for (1) breach of contract; (2) misappropriation of trade secrets

under the North Carolina Trade Secrets Protection Act (“NCTSPA”); (3) conversion;
(4) breach of fiduciary duty; and (5) violation of the North Carolina Unfair and
Deceptive Trade Practices Act. (V.C. ¶¶ 64–101.)
27. 	This case was designated as a complex business case and assigned to the
undersigned on 17 November 2023. (ECF Nos. 1, 2.)
28. 	On 	1 	December 	2023, 	Merz 	Pharmaceuticals 	filed 	a 	Motion 	for
Expedited Discovery in which it asked the Court for “permission to conduct limited,
expedited 	discovery 	to 	facilitate 	its 	preparation 	of 	a 	forthcoming 	motion 	for
preliminary injunction.” 	(Mot. Exp. Disc., at 4, ECF No. 6.) 	The Court granted the
Motion for Expedited Discovery, in part, and directed the parties to “to meet and
confer for the purpose of seeking to reach agreement regarding the scope and timing
of the expedited discovery[.]” 	(Order on Pl.’s Mot. Exp. Disc., ECF No. 37.) 	As
directed, the parties filed a Joint Status Report (ECF No. 33), setting out the agreed-
upon scope and timetable for completion of the expedited discovery requested by Merz
Pharmaceuticals, which the Court adopted and incorporated by reference in its 23
January 2024 Order on Plaintiff’s Motion for Expedited Discovery. 	(Order on Pl.’s
Mot. Exp. Disc., at 3.) 	The parties proceeded to engage in limited discovery as
directed by the Court.2
29. 	On 22 March 2024, Plaintiff filed the present PI Motion, in which Merz
Pharmaceuticals requested that the Court order that Thomas:
2 Although Thomas contends that Merz Pharmaceuticals’ delay in filing the PI Motion
warrants its denial, the Court is satisfied that any such delay was reasonable based on the
circumstances set out above.

(1) 	refrain 	from 	accessing, 	using, 	or 	disclosing 	any 	confidential
information or trade secrets belonging to Merz [Pharmaceuticals]; and
(2) 	comply 	with 	Paragraph 	2(b) 	of 	his 	Confidentiality,
Nonsolicitation and Proprietary Rights Agreement [the “Agreement”],
including by refraining from soliciting any Merz [Pharmaceuticals]
Customers (including, without limitation, the Department of Veterans
Affairs, the Department of Defense, the Indian Health Service, the
Defense Health Agency, the Defense Logistics Agency, and the National
Institute of Health) and by refraining from interfering with Merz
[Pharmaceuticals’] relationships with such Customers.
(PI Mot., at 1.)
30. 	The PI Motion has been fully briefed, and the Court held a hearing on 6
May 2024 at which all parties were represented by counsel.
31. 	The PI Motion is now ripe for resolution.
CONCLUSIONS OF LAW
32. 	BASED UPON the foregoing FINDINGS OF FACT, the Court makes
the following CONCLUSIONS OF LAW:
33. 	Any Finding of Fact that is more appropriately deemed a Conclusion of
Law, and any Conclusion of Law that is more appropriately deemed a Finding of Fact,
shall be so deemed and incorporated by reference as a Finding of Fact or Conclusion
of Law, as appropriate.
34. 	A preliminary injunction “is an extraordinary measure taken by a court
to preserve the status quo of the parties during litigation.” Ridge Cmty. Invs., Inc. v.
Berry, 293 N.C. 688, 701 (1977). 	Accordingly, a Court will only issue a preliminary
injunction:
(1) if a plaintiff is able to show likelihood of success on the merits of his
case and (2) if a plaintiff is likely to sustain irreparable loss unless the
injunction is issued, or if, in the opinion of the Court, issuance is

necessary for the protection of a plaintiff’s rights during the course of
litigation.
A.E.P. Industries, Inc. v. McClure, 308 N.C. 393, 401 (1983) (cleaned up).
35. 	“The burden is on the moving party to establish its right to a preliminary
injunction, and the remedy ‘should not be lightly granted.’ ” Comp. Design &
Integration, LLC v. Brown, 2017 NCBC LEXIS 8, at *19 (N.C. Super. Ct. Jan. 27,
2017) (quoting GoRhinoGo, LLC v. Lewis, 2011 NCBC LEXIS 39, at *17 (N.C. Super.
Ct. Sept. 29, 2011)).
36. 	With respect to the second prong of the preliminary injunction test, this
Court has explained as follows:
North 	Carolina courts 	have 	held 	that 	in 	assessing 	the
preliminary injunction factors, the trial judge “should engage in a
balancing process, 	weighing potential harm 	to 	the plaintiff if 	the
injunction is not issued against the potential harm to the defendant if
injunctive relief is granted. 	In effect, the harm alleged by the plaintiff
must 	satisfy 	a 	standard 	of 	relative 	substantiality 	as 	well 	as
irreparability.” Williams v. Greene, 36 N.C. App. 80, 86, 243 S.E.2d 156,
160 (1978).
Irreparable injury under Rule 65 is established upon a showing
that 	“the 	injury 	is 	beyond 	the 	possibility 	of 	repair 	or 	possible
compensation in damages” or “that the injury is one to which the
complainant should not be required to submit or the other party
permitted to inflict, and is of such continuous and frequent recurrence
that no reasonable redress can be had in a court of law.” 	A.E.P., 308
N.C. at 407, 302 S.E.2d at 763 (citing Barrier v. Troutman, 231 N.C. 47,
50, 55 S.E.2d 923, 925 (1949)) (emphasis omitted).
If there is a “full, complete and adequate remedy at law,” the
moving party is not entitled to the equitable remedy of injunction. Bd.
of Light and Water Comm’rs v. Parkwood Sanitary Dist., 49 N.C. App.
421, 423, 271 S.E.2d 402, 404 (1980). “[O]ne factor used in determining
the adequacy of a remedy at law for money damages is the difficulty and
uncertainty in determining the amount of damages to be awarded for
defendant’s breach.” A.E.P., 308 N.C. at 406–07, 302 S.E.2d at 762.

Comp. Design & Integration, LLC, 2017 NCBC LEXIS 8, at *19–20.
37. 	Ultimately, “[t]he issuance of a preliminary injunction is a decision
committed to a trial court’s discretion.” 	State ex rel. Stein v. MV Realty PBC, LLC,
2023 NCBC LEXIS 102, at **37–38 (N.C. Super. Ct. Aug. 30, 2023) (citing State ex
rel. Edmisten v. Fayetteville St. Christian Sch., 299 N.C. 351, 357 (1980)).
38. 	Merz Pharmaceuticals asserts that it has shown a likelihood of success
on its claims for misappropriation of trade secrets and its claim for breach of contract.
Its breach of contract claim is premised on its assertion that Thomas has breached
both the confidentiality provision of the Agreement as well as the nonsolicitation
provision contained therein.
I. 	Breach 	of 	Confidentiality 	Provision 	of 	the 	Agreement 	and
Misappropriation of Trade Secrets Claim
39. 	For 	purposes 	of 	the 	PI 	Motion, 	Merz 	Pharmaceuticals’ 	claim 	for
misappropriation of trade secrets factually overlaps with the portion of its breach of
contract claim concerning Thomas’ alleged violations of the confidentiality provision
of the Agreement. Accordingly, the Court will analyze these two claims in tandem.
A. Likelihood of Success
40. 	To prevail on a breach of contract claim, a party must show: “(1)
existence of a valid contract; and (2) breach of the terms of that contract.” 	Poor v.
Hill, 138 N.C. App. 19, 26 (2000) (cleaned up).
41. 	The confidentiality provision of the Agreement required Thomas to
agree:
(i) to treat all Information as strictly confidential;

(ii) not to any time, whether during or after the termination of your
employment, directly or indirectly use, divulge, disclose, furnish, reveal,
or otherwise make accessible to any person or entity not affiliated with
Merz any Information unless such Information is in the public domain
through no fault of your own, except as may be required in the ordinary
course of performing your duties as an employee of Merz or as otherwise
required by law, and you shall keep secret all Information, and you shall
use Information only as required in the ordinary course of performing
your duties as an employee of Merz and in accordance with corporate
practices, 	conduct, 	customs 	and 	understandings 	as 	currently 	in
existence or as may be modified by Merz in its sole discretion from time
to 	time 	throughout 	your 	term 	of 	employment, 	and 	which 	are
incorporated herein by reference;
(iii) to refrain, upon termination with Merz, from, intentionally or
unintentionally, 	taking; 	removing; 	electronically 	transferring,
downloading, uploading or copying; appropriating; borrowing; or, in any
manner, going off with, carrying away, making off with or converting any
Information, or copies thereof, whether in tangible or intangible form,
unless you obtain written authorization from Merz in advance as based
on Merz’s policies, practices and corporate operations which may be
subject to modification from time to time in the sole discretion of Merz;
(iv) During your employment, you will not take, download, upload, copy,
transfer, use or permit to be used any notes, memoranda, reports, lists,
records, drawings, sketches, specifications, software programs, data,
documentation or other materials belonging to Merz or an Affiliate,
except for the sole benefit of Merz as part of your job duties. You further
agree that you will not, after the termination of your employment, use or
permit to be used any such notes, memoranda, reports, lists, records,
drawings, 	sketches, 	specifications, 	software 	programs, 	data,
documentation or other materials, it being agreed that all of the foregoing
shall be and remain the sole and exclusive property of Merz. You agree
that you will immediately upon the termination of your employment (or
at any other time upon Merz’s request), deliver all property of Merz or
any Affiliate, including, but not limited to, the materials referenced
above, and all copies thereof, as well as all company-issued cell phones,
computers, or similar devices (including all passwords and passcodes
necessary to access such devices) to Merz at its Raleigh, North Carolina
headquarters office or as otherwise directed by Merz management.
(Agrmt. § 1(b)(i)–(iv) (emphasis added).) 	The Agreement further provided that the
confidentiality provision would continue to be enforceable after Thomas’ employment

with Merz ended “until such time as such Information has become public knowledge
other than as a result of [Thomas’] breach of this Agreement or breach by those acting
in concert with [Thomas] or on [his] behalf.” (Agrmt. § 1(c).)
42. 	Moreover, the Agreement contains the following detailed definition of
the term “Information”:
For purposes of this Agreement, “Information” shall mean and include
any information, data and know-how relating to the business, market
and technology of Merz and/or the Merz Group that is disclosed to you
by Merz or the Merz Group or known to you or developed by you as a
result of your relationship with Merz. 	Information shall include trade
secrets (as that term is defined under the North Carolina Trade Secrets
Protection Act and the Defend Trade Secrets Act, 18 U.S.C. § 1833 (as
amended 	on 	May 	11, 	2016)) 	and 	confidential 	and/or 	proprietary
information relating to Merz and/or the Merz Group, including, without
limitation:
(i) 	past, present and prospective supplier and customer lists and
related information and data (including any of the foregoing
which 	may 	be 	subject 	to 	applicable 	state, 	federal 	and
international 	privacy 	laws), 	past, 	present 	and 	prospective
supplier, 	subcontractor, 	vendor 	and 	customer-specific
information, user lists, vendor lists, content provider lists, sales
techniques and reports; proprietary and confidential agreements
with 	past, 	current 	and 	prospective 	vendors, 	contractors,
negotiations and transactions or the terms of past, existing or
proposed business arrangements;
(ii) 	planning 	data, 	selling 	and 	marketing 	strategies, 	branding
information, business plans and strategies; product, program and
service 	commercialization 	strategies, 	strategic 	alliances 	and
objectives, product, program and service strategies; evaluations
related to past, current or potential products, services, programs
or activities of Merz or any Affiliate (as defined below);
(iii) 	system, product and process designs and specifications, formulas,
processes, 	plans, 	drawings, 	concepts, 	techniques, 	systems,
strategies, software programs (source, object, binary, html), code
listings, data bases, works of authorship, print outs; general
analytical and statistical data, general notes, documents, papers,
notebooks, manuals, and reports;

(iv) 	manufacturing 	and 	operating 	methods, 	specifications 	and
procedures including standard operating procedures;
(v) 	discoveries, research and development studies, tests and results
and related data and findings, inventions, trade secrets, concepts,
processes, methods, techniques, know-how, apparatus, devices,
prototypes, technology, systems, configurations, modifications,
improvements, enhancements, research and development data
and 	materials, 	including 	those 	related 	to 	the 	research 	and
development of products, materials or manufacturing and other
processes;
(vi) 	financial and accounting information, financial and accounting
records, pricing information, profit margins; projects, budgets,
projections, 	forecasts, 	financial 	spreadsheets, 	financial 	data,
financial 	status 	and 	position, 	financial 	projections, 	investor
information and proposals, current and prospective employment
and 	consultant 	listing 	and 	related 	information 	and 	data
(including any of the foregoing which may be subject to applicable
state, federal and international privacy laws);
(vii) 	all industrial and intellectual property rights, including without
limitation, 	patents, 	patent 	applications, 	patent 	rights,
trademarks, trademark applications, trade names, service marks,
service mark applications, copyrights, copyright applications,
databases, algorithms, computer programs and other software,
know-how, trade secrets, proprietary processes and formulae,
inventions, trade dress, logos, design and all documentation and
media constituting, describing or relating to the above;
(viii) 	past, current or future personnel or employee information or data
(including any of the foregoing which may be subject to applicable,
state, 	federal 	and 	international 	privacy 	laws); 	personnel 	or
employee records and data and information (including any of the
foregoing which may be subject to applicable, state, federal and
international privacy laws); compensation systems, performance
evaluation and employee manuals;
(ix) 	other information with respect to Merz, which, if divulged to
Merz’s competitors, would impair Merz’s ability to compete in the
marketplace;
(x) 	information 	received by 	Merz 	from 	a 	third 	party 	under 	an
obligation or an affirmative duty to handle such information in a
confidential or restricted use manner; and

(xi) 	any and all Intellectual Property (as defined herein) and Work
Product (as defined herein).
You 	understand 	that 	the 	above 	list 	is 	not 	exhaustive, 	and 	that
Information also includes other information that is marked or otherwise
identified as confidential or proprietary, or that would otherwise appear
to a reasonable person to be confidential or proprietary in the context
and circumstances in which the information is known or used.
(Agrmt. § 1(a).)
43. 	The North Carolina Trade Secrets Protection Act (“NCTSPA”) provides
that “actual or threatened misappropriation of a trade secret may be preliminarily
enjoined during the pendency of the action and shall be permanently enjoined upon
judgment finding misappropriation[.]” N.C.G.S. § 66-154(a).
44. 	With respect to showing either actual or threatened misappropriation of
a trade secret, this Court has explained as follows:
Actual or threatened misappropriation may be established by the
introduction of “substantial evidence” that a person against whom relief
is sought “[k]nows or should have known of the trade secret; and [h]as
had a specific opportunity to acquire it for disclosure or use or has
acquired, disclosed, or used it without the express or implied consent of
the owner [of the trade secret].” N.C. Gen. Stat. § 66-155. A defendant
may rebut an owner’s claim of misappropriation by proving that the
defendant 	acquired 	the 	owner’s 	trade 	secret 	information 	through
independent development or reverse engineering, or by proving that the
owner’s “trade secret” information was received from another person
with a right to disclose the information or is generally known in the
industry. N.C. Gen. Stat. §§ 66-155, 66-152.
Comp. Design & Integration, LLC, 2017 NCBC LEXIS 8, at *22 (alterations in
original).
45. 	For purposes of the NCTSPA, a trade secret is defined as
business or technical information, including but not limited to a formula,
pattern, 	program, 	device, 	compilation 	of 	information, 	method,
technique, or process that:

a. Derives independent actual or potential commercial value from
not 	being 	generally known 	or readily 	ascertainable through
independent development or reverse engineering by persons who
can obtain economic value from its disclosure or use; and
b. 	Is 	the 	subject 	of 	efforts 	that 	are 	reasonable 	under 	the
circumstances to maintain its secrecy.
N.C.G.S. § 66-152(3).
46. 	Generally, North Carolina courts consider the following six factors when
determining whether processes or information qualify as trade secrets under the
NCTSPA:
(1) the extent to which information is known outside the business; (2)
the extent to which it is known to employees and others involved in the
business; (3) the extent of measures taken to guard secrecy of the
information; 	(4) 	the 	value 	of 	information 	to 	the 	business 	and 	its
competitors; (5) the amount of effort or money expended in developing
the information; and (6) the ease or difficulty with which the information
could properly be acquired or duplicated by others.
Wilmington Star-News, Inc. v. New Hanover Reg’l Med. Ctr., 125 N.C. App. 174, 180–
81 (1997) (citations omitted). 	“The factors overlap, and courts considering these
factors do not always examine them separately and individually.” 	Comp. Design &
Integration, LLC, 2017 NCBC LEXIS 8, at *23.
47. 	Moreover, “in a trade secret misappropriation case, ‘an applicant for a
preliminary injunction must do more than merely allege that irreparable injury will
occur. 	The applicant is required to set out with particularity facts supporting such
statements so the court can decide for itself if irreparable injury will occur.’ ” Id., at
*23–24 (quoting N.C. Farm P’Ship v. Pig Improvement Co., 163 N.C. App. 318, 323
(2004)).

48. 	Merz Pharmaceuticals contends that its alleged trade secrets consist of
the following:
(1) presentations showing federal channel trends, pricing information,
product 	volumes 	over 	time, 	targets, 	Xeomin 	utilization 	by 	sales
channel, 	market 	insights, 	current 	strategies 	and 	opportunities,
and competitive updates; (2) customer contact lists, including lists
showing purchase volumes by customer; (3) market share data; (4)
Xeomin performance 	data and analytics, 	including 	a 	list 	of 	top-
performing 	Xeomin 	accounts 	nationwide; 	(5) spreadsheets reflecting
Merz’s overall Federal Accounts performance over time and by region;
and (6) spreadsheets identifying key customers, along with Xeomin
purchasing data and trends for those customers.
(Pl.’s Br. Supp. PI Mot., at 18–19, ECF No. 59; V.C. ¶ 27.)
49. 	The Court notes that all of the above-quoted information is protected by
the explicit terms of the confidentiality provision of the Agreement.
50. 	Moreover, based on its review of the evidence of record at this stage of
the litigation, the Court is convinced that Merz Pharmaceuticals has met its burden
in connection with the PI Motion to show that at least some of the information listed
above constitutes protectable trade secrets under the NCTSPA.
51. 	North Carolina courts have concluded that similar information can
constitute trade secrets. 	See e.g., Sunbelt Rentals, Inc. v. Head & Engquist Equip.,
LLC, 174 N.C. App. 49, 53–56 (2005); Drouillard v. Keister Williams Newspaper
Servs., Inc., 108 N.C. App. 169, 174 (1992); Comp. Design & Integration, LLC, 2017
NCBC LEXIS 8, at *28.
52. 	Furthermore, 	for 	purposes 	of 	the 	present 	PI 	Motion, 	Merz
Pharmaceuticals has offered evidence “that the information is valuable, both to
[itself] and [its] competitors, not generally known outside [Merz Pharmaceuticals],

difficult 	to 	duplicate 	or 	acquire, 	developed 	at 	significant 	cost 	to 	[Merz
Pharmaceuticals], and subject to adequate measures to guard its secrecy[.]” Id. (See
V.C. ¶¶ 11–13.)
53. 	Merz Pharmaceuticals asserts that it “has invested substantial amounts
of time and money in developing its trade secrets and confidential information[.]”
(V.C. ¶ 11.) 	Additionally, Merz Pharmaceuticals explains that such information is
valuable to both itself and its competitors because it includes marketing strategies to
grow accounts, which “would be invaluable to a new market entrant like Revance,
which is in desperate need of establishing accounts to compete with other long-
established neurotoxin products on the market[.]” (V.C. ¶ 26.) Merz Pharmaceuticals
contends that “[p]ossession of such information would provide a competitor such as
Revance an enormous unfair advantage by giving Revance all the information it
needs to effectively target Merz’s customers, anticipate Merz’s customer messaging,
and undercut Merz’s strategies and pricing in the therapeutic marketplace.” (V.C. ¶
28.) 	Moreover, Merz Pharmaceuticals argues that acquisition of “this information
gives Revance an enormous head start in entering the therapeutics market with
Daxxify®, and will permit Revance to avoid substantial costs that Merz incurred in
developing its trade secrets.” (V.C. ¶ 40.)
54. 	With respect to its reasonable efforts to safeguard the confidential
information, the record discloses that Merz Pharmaceuticals requires its employees
to sign employment agreements (like the Agreement), which contain confidentiality
clauses. (V.C. ¶ 13.) Additionally, Merz Pharmaceuticals has a number of policies in

place with respect to protecting the secrecy of its confidential information and trade
secrets, such as the following:
• 	storing Merz’s confidential information on secured and password-
protected electronic systems, and restricting access only to Merz
personnel;
• 	password-protecting any computers, laptops, or other electronic
devices provided to Merz employees and ensuring compliance
with applicable security measures;
• 	maintaining 	written 	policies 	and 	procedures 	governing 	its
information 	technology 	(IT) 	and 	security 	of 	its 	confidential
information;
• 	restricting 	remote 	access 	only 	to 	connections 	approved 	and
encrypted by Merz’s IT Department;
• 	prohibiting the connection of non-Merz issued electronic storage
media 	without 	verification 	and 	approval 	by 	Merz’s 	IT
Department;
• 	prohibiting the use of private electronic devices for storing Merz
data;
• 	storing confidential hard copy documents and storage media in a
place that is locked and inaccessible to third parties;
• 	encrypting sensitive data such that only authorized users can
read it;
• 	prohibiting the use of external free applications or external cloud
services for storage and requiring the use of Global-IT approved
storage solutions;
• 	securing and restricting access to physical facilities containing its
confidential and trade secret information through the use of key
cards and badge access;
• 	requiring non-disclosure and/or confidentiality agreements in any
business dealings with third parties before any Merz confidential
information is disclosed to such third parties; and

• 	restricting access to its most confidential information to only
select individuals on a need-to-know basis.
(V.C. ¶ 12.)
55. 	Notably, Thomas does not dispute the fact that he downloaded the
confidential information listed earlier in this Opinion onto his personal thumb drive
on 	31 	July 	2023—the 	day 	his 	employment 	with 	Merz 	Pharmaceuticals 	was
terminated.
56. 	His only serious argument on this issue is that his actions were
permissible pursuant to a “safe harbor” provision of the Agreement, which stated as
follows:
Notice of Immunity under the Economic Espionage Act of 1996,
as amended by the Defend Trade Secrets Act of 2016.
Notwithstanding any other provision of this Agreement:
(A) You will not be held criminally or civilly liable under
any federal or state trade secret law for any disclosure of a trade
secret that is made: (1) in confidence to a federal, state, or local
government official, either directly or indirectly, or to an attorney
and 	solely 	for 	the 	purpose 	of 	reporting 	or 	investigating 	a
suspected violation of law; or (2) in a complaint or other document
that is filed under seal in a lawsuit or other proceeding.
(B) If you file a lawsuit for retaliation by Merz for reporting
a suspected violation of law, you may disclose Merz’s trade secrets
to your attorney and use the trade secret information in the court
proceeding if you (1) file any document containing the trade secret
under seal; and (2) do not disclose the trade secret, except
pursuant to court order.
(C) Nothing precludes any Merz employee from cooperating
with 	any 	governmental 	investigation, 	making 	a 	truthful
statement or complaint to law enforcement or a government
agency 	or 	testifying 	under 	oath 	to 	law 	enforcement 	or 	a
government agency.

This Notice of Immunity is specifically included to provide notice of
Employee’s rights sufficient to comply with the provisions of the Defend
Trade Secrets Act of 2016.
(Agrmt. § 1(b)(vi).)
57. 	Thomas argues that this safe harbor provision immunizes him from
liability for downloading Merz Pharmaceuticals’ documents to his personal thumb
drive following his termination because he claims that he “reasonably believed they
constituted evidence of unlawful conduct by Merz that could form the basis for a
whistleblower lawsuit to be discussed with an attorney—and for no other purpose.”
(Thomas Aff. I ¶ 27.) 	Moreover, Thomas argues that he “has, in fact, filed a
counterclaim that details the basis for this reasonable belief.” 	(Def.’s Br. Opp. PI
Mot., at 16, ECF No. 70.)
58. 	However, the Court rejects Thomas’ argument. 	First, there is nothing
in 	the 	record 	suggesting 	that 	Thomas 	actually 	took 	the 	information 	he 	had
downloaded to an attorney prior to deleting it from the thumb drive.3 Second, he has
offered no explanation for the fact that a great number of the Merz documents he
downloaded onto his thumb drive bore no relation to the alleged conduct by Merz
Pharmaceuticals that ultimately formed the basis for his counterclaim. Finally, the
Court does not find it credible that he downloaded the documents to preserve evidence
of wrongful conduct by Merz Pharmaceuticals and then simply proceeded to delete
them.
3 The Court notes that in this lawsuit Thomas’ initial Answer did not contain any
counterclaim. (See Answer, ECF No. 32.) It was not until Thomas filed an Amended Answer
on 23 January 2024 that he actually asserted a counterclaim. (See Am. Answer & Countercl.,
ECF No. 36.)

59. 	For 	all 	of 	these 	reasons, 	the 	Court 	is 	persuaded 	that 	Merz
Pharmaceuticals has met its burden of showing a likelihood of success on its claims
that Thomas misappropriated its trade secrets and breached the confidentiality
provision of the Agreement.
B. Irreparable Harm
60. 	Additionally, 	the 	Court 	concludes 	that 	Merz 	Pharmaceuticals 	has
adequately shown the likelihood of irreparable harm absent the entry of injunctive
relief as a result of Thomas’ improper actions in downloading its confidential
information and trade secrets.
61. 	In its submissions to the Court, Merz Pharmaceuticals has sufficiently
demonstrated that Thomas’ unauthorized acquisition of its protected information will
cause it to suffer competitive harm unless the PI Motion is granted. 	Indeed, North
Carolina courts have repeatedly recognized the existence of irreparable harm in
similar contexts. 	See, e.g., Barr-Mullin, Inc. v. Browning, 108 N.C. App. 590, 597
(1993) (holding that a preliminary injunction was proper because “[t]he very nature
of a trade secret mandates that misappropriation will have significant and continuous
long-term effects. 	The party wronged may forever lose its competitive business
advantage or, at the least, a significant portion of its market share.”); Barker Indus.
v. Gould, 146 N.C. App. 561, (2001) (565–66) (concluding that injunctive relief was
properly awarded to prevent further misappropriation and improper use of plaintiff’s
trade secrets and confidential information); Armacell LLC v. Bostic, 2010 N.C. App.
LEXIS 1278, at *41 (N.C. Ct. App. July 20, 2010) (finding that “considering the very

nature of the misappropriation of trade secrets, the law of this State authorizes the
issuance of a preliminary injunction.”).
62. 	The Court has engaged in a balancing of the equities in which it has
weighed the potential harm to Merz Pharmaceuticals if an injunction is not issued
against the potential harm to Thomas if injunctive relief is granted. Having done so,
it is clear that the equities favor the entry of injunctive relief given that Thomas is
unable to show any legitimate harm he would suffer from being enjoined from using
Merz Pharmaceuticals’ confidential information.
63. 	Therefore, the Court concludes, in the exercise of its discretion, that
Merz Pharmaceuticals is entitled to a preliminary injunction with respect to Thomas’
use of Merz Pharmaceuticals’ confidential information and trade secrets.
II. Breach of Nonsolicitation Provision of the Agreement
64. 	However, the Court reaches a different conclusion with regard to the
portion of Merz Pharmaceuticals’ PI Motion regarding the nonsolicitation provision
in the Agreement.
65. 	The Court need not address whether Merz Pharmaceuticals has met its
burden of showing a likelihood of success on this component of its breach of contract
claim because even assuming arguendo that such a showing has been made, Merz
Pharmaceuticals has failed to demonstrate that it would suffer irreparable harm

absent the entry of a preliminary injunction as to Thomas’ alleged violation of the
nonsolicitation provision.4
66. 	Merz 	Pharmaceuticals 	contends 	that 	Thomas’ 	solicitations 	of 	“key
federal agency contacts whom he met through his work at Merz[,]” has or will cause
it to suffer irreparable harm because “Thomas’ intimate familiarity with Merz’
confidential information and business development strategies . . . makes him
uniquely well-situated” to convince “Merz’s federal customers [to] replace Xeomin
with Daxxify[,]” thus taking away market share from Merz. (PI Mot., at 3–6.)
67. 	Although Merz Pharmaceuticals seeks to enjoin Thomas from engaging
in solicitation of a handful of federal agencies with whom he had involvement during
his work for his Merz employers, Merz Pharmaceuticals’ irreparable harm argument
focuses on Thomas’ solicitation of individuals at the Veterans Administration (“VA”),
asserting that it will be irreparably harmed unless Thomas is enjoined from soliciting
personnel from this agency on behalf of Revance (and its Daxxify drug).
68. 	Merz 	Pharmaceuticals’ 	argument 	regarding 	irreparable 	harm 	can
essentially be summarized as follows: (1) in order to be prescribed to patients by VA
physicians, Daxxify must first receive “formulary approval” by the agency, and the
granting of such approval to Daxxify would be adverse to Merz Pharmaceuticals’
interests as a competitor; (2) absent an injunction, Thomas is likely to use his contacts
and relationships within the VA to make Daxxify’s receipt of formulary approval more
4 Thomas has filed a Motion for Partial Summary Judgment (ECF No. 63) on the issue of
whether Merz Pharmaceuticals’ deadline for seeking to enforce the nonsolicitation provision
has expired. The Court will address that motion by means of a separate order.

likely; and (3) assuming Daxxify does, in fact, receive such formulary approval, not
only will Daxxify be on the same footing as Xeomin (which received such formulary
approval years ago), but also Thomas will seek to persuade the VA to grant Daxxify
“preferred” (or “enhanced”) status over Xeomin.
69. 	In their arguments on this issue, the parties are referring to the VA
National Formulary (“VANF”), which “is a list of therapeutic agents (e.g., drugs and
drug-related supplies) that must be available for prescription at all VA medical
facilities and cannot be made non-formulary by a VISN [5] or [an] individual VA
medical 	facility.”6 	Veterans 	Health 	Admin., 	VHA 	Formulary 	Mgmt. 	Process,
Directive 1108.08 (July 29, 2022). 	The Veterans Health Administration (“VHA”) is
responsible for the management of VANF. 	Id. 	“It is VHA policy that VANF is the
only drug formulary authorized for use in the VHA; the use of VISN formularies or
local drug formularies at individual VA medical facilities is prohibited.” Id.
70. 	With regard to Merz Pharmaceuticals’ concern about the effect of
Thomas’ solicitation efforts on Daxxify receiving formulary coverage, that ship has
sailed. During the briefing period in connection with the present PI Motion, Daxxify
obtained formulary coverage in April 2024.7 Therefore, the Court must only address
5 “VISN” is the acronym for “Veterans Integrated Services Network.” 38 C.F.R. § 1.220(b).
6 Pursuant to Rule 201 of the North Carolina Rules of Evidence, the Court takes judicial
notice of this fact. See BIOMILQ, Inc. v. Guiliano, 2024 NCBC LEXIS 8, at *12 (N.C. Super.
Ct. Jan. 9, 2024) (“North Carolina courts and federal courts routinely take judicial notice of
public filings by federal agencies.”).
7 See VA National Formulary April 2024, https://www.pbm.va.gov/NationalFormulary.asp
(accessed May 13, 2024).

Merz Pharmaceuticals’ remaining argument regarding the possibility of Thomas’
solicitation efforts on behalf of Revance resulting in preferred coverage for Daxxify at
the expense of Xeomin.
71. 	In support of its PI Motion, Merz Pharmaceuticals submitted the
affidavit of Kevin O’Brien, who is the Chief Executive Officer of Merz. (O’Brien Aff.
¶ 1, ECF No. 59.2.) 	O’Brien describes his knowledge as being “[b]ased on [his]
familiarity with the formulary approval process generally[.]” 	(O’Brien Aff. ¶ 7.)
(emphasis added).
72. 	Thomas has filed multiple affidavits throughout the course of this
litigation, including an affidavit filed contemporaneously with his response brief in
opposition to the PI Motion. (See Thomas Aff. III, ECF No. 70.1.) Since 1999, Thomas
has “built a career working with botulinum toxins in the governmental sector[.]”
(Thomas Aff. III ¶ 12.) 	Thomas has “a deep familiarity and knowledge with the
formulary process in the governmental sector, including based on [his] dedicated, full-
time work in this area for 25 years.” (Thomas Aff. III ¶ 27.)
73. 	The affidavits of both O’Brien and Thomas each discuss the formulary
coverage process within the VHA. To the extent that their respective testimony is in
conflict, the Court, in its discretion, finds the testimony of Thomas to be more credible
than O’Brien’s testimony based on Thomas’ superior—and far more detailed—
knowledge of the manner in which formulary approval and purchasing issues are
handled by the VHA. Therefore, as set out below, the Court gives greater weight to
Thomas’ testimony on this subject.

74. 	In his affidavit, O’Brien testified that “[o]ne of the keys to success in the
federal sector (and in the pharmaceutical industry generally) is enhancing formulary
coverage.” (O’Brien Aff. ¶ 4.) O’Brien describes how he believes the formulary process
works as follows:
Every payor maintains a “formulary,” or a list of approved prescription
drugs for which it will provide reimbursement. 	Enhancing formulary
coverage 	involves 	convincing 	payors 	(including 	federal 	pharmacy
benefits managers) that they should favor a particular drug at the
expense of others. For example, a payor may limit the number of drugs
in a certain class that are available on formulary, provide improved
coverage for a particular drug, or remove preapproval requirements for
prescribers for a particular drug.
(O’Brien Aff. ¶ 4.)
75. 	Furthermore, O’Brien stated that while employed at Merz, one of
Thomas’ “important responsibilities was enhancing formulary coverage[,]” which
meant Thomas “worked closely with pharmacy benefits managers and other federal
contacts to improve formulary coverage for Xeomin® and to demonstrate why
Xeomin® should receive more favorable formulary coverage than other competitive
products.” 	(O’Brien Aff. ¶ 5.) 	Additionally, O’Brien testified that while at Merz,
“Thomas’ key federal contacts were agency employees, including individuals who are
involved in formulary coverage and purchasing decisions, which could significantly
impact prescription choices downstream for patients.” (O’Brien Aff. ¶ 6.)
76. 	O’Brien then stated his belief “that Thomas is doing the same type of
formulary work on behalf of Revance as he did for Merz[,]” and that he is “confident
that Thomas’ campaign to enhance formulary approval for Revance requires him to
explain to customers why Daxxify is safer and better than Xeomin, and why the

agencies should permit prescribers to switch from Xeomin to Daxxify.” (O’Brien Aff.
¶ 7.)
77. 	As an initial matter, Thomas testified that his “job duties at Revance
are different from [his] job duties at Merz.” (Thomas Aff. I ¶ 46.) Moreover, “[a]s an
employee of Revance, [Thomas] do[es] not manage any directors or other employees
who call on physicians or any other prescribers of Daxxify®.” (Thomas Aff. I ¶ 50.)
78. 	In addition, Thomas’ affidavit testimony contains extensive information
about how the formulary process actually works at the VA. 	He testified that “Mr.
O’Brien’s affidavit reflects a fundamental misunderstanding of formulary coverage in
the governmental sector[,]” and that he does “not believe Mr. O’Brien has knowledge
or familiarity about the formulary approval process in the governmental sector,
specifically (as opposed to the commercial sector).” (Thomas Aff. III ¶ 26.)
79. 	Thomas’ affidavit explains that prior to 2020 the VHA attempted to
regulate this class of botulinum toxins by providing enhanced levels of formulary
approval but has since abandoned that practice. (Thomas Aff. III ¶ 31.)
If 	this 	attempt 	had 	been 	successful, 	it 	could 	have 	resulted 	in 	a
permanent 	system 	of 	“enhanced” 	or 	differing 	levels 	of 	formulary
approval. However, the VHA abandoned the effort in around [sic] 2020.
Upon information and belief, the VHA reversed course due to significant
pushback from physicians and other prescribers in the governmental
sector. 	Simply put, the VHA does not recognize preferred classes or
distinctions 	between 	or 	among 	botulinum 	toxins—which 	are 	either
approved for formulary coverage, or disapproved for formulary coverage.
It is a binary distinction. 	All the approved botulinum toxins also have
the same coverage within the FSS. [8]
8 “FSS” is the acronym for “Federal Supply Schedule.” 	48 C.F.R. § 808.402 (“GSA has
delegated authority to the VA to procure medical equipment, supplies, services and
pharmaceuticals under the VA Federal Supply Schedule (FSS) program.”).

(Thomas Aff. III ¶ 31 (emphasis added in part).)
80. 	With respect to O’Brien’s discussion of “enhance[d] formulary coverage,”
Thomas has testified that although O’Brien’s description “might be accurate for
commercial insurance plans, it is false, inaccurate, and misleading as it relates to
formulary coverage in the governmental sector.” 	(Thomas Aff. III ¶ 30 (emphasis
added in part).)
81. 	The 	Court 	finds 	Thomas’ 	testimony 	to 	be 	credible 	that—despite
O’Brien’s assertions to the contrary—“there is no enhanced formulary coverage
within the VHA for botulinum toxins (like Xeomin® or Daxxify®), and there has not
been enhanced formulary coverage within the governmental sector since around
2020.” (Thomas Aff. III ¶ 30.) Accordingly, the Court accepts Thomas’ testimony that
the VHA will not confer preferred status on either Xeomin or Daxxify at the expense
of the other.
82. 	Therefore, the Court finds that Merz Pharmaceuticals has failed to show
irreparable harm absent the issuance of a preliminary injunction in connection with
its 	claim 	for breach of 	contract 	based on 	the 	nonsolicitation 	provision 	of 	the
Agreement.
CONCLUSION
1. 	For the reasons set out above, the Court, in the exercise of its discretion,
CONCLUDES that the PI Motion should be GRANTED in part and DENIED in
part. 	The PI Motion is GRANTED as to Merz Pharmaceuticals’ misappropriation
of trade secrets claim and its claim for breach of the confidentiality provision of the

Agreement. However, the PI Motion is DENIED as to Merz Pharmaceuticals’ claim
for breach of the nonsolicitation provision of the Agreement.
2. 	Before setting out the specific terms of the injunctive relief to which
Merz Pharmaceuticals is entitled, the Court deems it appropriate to allow the parties
an opportunity to submit a proposed preliminary injunction order that takes into
account the Court’s rulings contained herein. The parties are DIRECTED to confer
on this issue and submit either jointly or separately on or before 20 May 2024 a
proposed order.9 	The Court will determine at that time whether a hearing is
necessary with regard to the parties’ submissions.
SO ORDERED, this the 15th day of May, 2024.
/s/ Mark A. Davis 	l
Mark A. Davis
Special Superior Court Judge for
Complex Business Cases
9 The proposed order(s) should be submitted in Microsoft Word format.