Family Law

Sperm Bank Espionage Case Moves Forward

Who are these sperm bank spies, and what secrets are they accused of stealing?

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The area of assisted reproductive technology doesn’t just involve difficult family law questions.  It also involves intrigue! Did you know that sperm banks have trade secrets that are closely guarded? Apparently, they do. And they are now the subject of a fierce lawsuit between Seattle Sperm Bank and Cryobank America.

Earlier this month, a Washington federal court made a ruling in the case, in which it denied in part, and granted in part, Cryobank America’s motion to dismiss. The court granted the motion to dismiss on a vague claim of unfair competition under Washington law.  But it denied the motion — and let the lawsuit proceed, in other words — on two other claims: a federal claim under the federal Defend Trade Secrets Act, and a state claim under the Washington Uniform Trade Secrets Act.

Who Are These Sperm Bank Spies?

The backstory is a little complicated, but worth understanding. A sperm bank called the Seattle Sperm Bank expanded in 2015, to Arizona, where it opened the Phoenix Sperm Bank. (Luckily there’s no claim in the lawsuit alleging that they need more exciting names for their sperm banks).

Phoenix Sperm Bank hired Michael Blaine and Sanjay Kumar in May and June 2015, respectively, as Biological Analysts for the Phoenix branch. Blaine and Kumar’s jobs consisted of managing the Phoenix laboratory, calibrating equipment, analyzing test results, providing genetic reviews, and ensuring compliance with U.S. Food and Drug Administration guidelines for tissue banks. All very normal job duties.

The facts, as alleged in the complaint, paint a picture of deception and malice though. The complaint alleges that early on in his relatively short career with Seattle Sperm Bank, Kumar filed for the website domain name CyrobankAmerica.com in September 2015. The following March, Kumar and Blaine together obtained a business license from the Texas Secretary of State to operate Cryobank America, Inc.  Kumar was listed as the “CEO and Co-Owner” and Blaine as “CFO and Co-Owner.” Hmm…

But even more dubiously — and very foolishly — Kumar’s father-in-law purchased two cryo-storage tanks from Seattle Sperm Bank, claiming they were for unrelated business. It’s not clear why Kumar’s father-in-law wouldn’t try to find similar storage tanks from literally any other company besides the one where his son-in-law was running a long con. In any event, waiting to apply for that Texas business license might have been a good idea. Because the paper trail was pretty obvious.

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On April 20, 2017, both Kumar and Blaine gave notice to Seattle Sperm Bank that they were in resigning. Blaine explained that he was leaving because his wife was graduating medical school and had received a residency in Texas. Kumar offered the explanation that he had received an offer as a manager at a biotech company, which technically was true.

So What Are These Sperm Bank Secrets?

The complaint explains how under the Food and Drug Administration, sperm banks must follow intense regulations related to their handling of human tissue. Specifically, they have to maintain a number of Standard Operating Procedures (SOPs) that detail their steps to meet certain regulatory requirements, and which are designed to “prevent circumstances that increase the risk of the introduction, transmission, or spread of communicable diseases.” That’s pretty important and complicated stuff. So it might be easier to just crib the necessary information from someone who already has it completed. The complaint explains that pursuant to these regulations, Seattle Sperm Bank had developed over 50 SOPs consisting of thousands of pages.

Before giving notice to Seattle Sperm Bank, Kumar and Blaine downloaded and copied over 1500 documents, including SOP and form documents, to a removable hard drive, and walked out with them. Presumably while wearing trench coats and glancing around furtively.

Of course, these facts come from the complaint, and those civilly liable are presumed not liable until the preponderance of evidence shows otherwise. Isn’t that how the saying goes?

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In the meantime, I’m looking forward to the discovery phase of the case. And we will eventually see the Law & Order episode detailing the seedy underbelly of sperm bank competition. (Seedy! Ha! See what I did there.)

Ellen TrachmanEllen Trachman is the Managing Attorney of Trachman Law Center, LLC, a Denver-based law firm specializing in assisted reproductive technology law, and co-host of the podcast I Want To Put A Baby In You. You can reach her at babies@abovethelaw.com.

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