Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 1 of 18 Page ID #:82 1 Anthony J. Dain (Bar No. 98947) E-mail: anthony.dain@procopio.com 2 Tiffany Salayer (Bar No. 226189) E-mail: tiffany.salayer@procopio.com 3 PROCOPIO, CORY, HARGREAVES & SAVITCH LLP 4 525 B Street, Suite 2200 San Diego, CA 92101 5 Telephone: 619.238.1900 Facsimile: 619.235.0398 6 Attorneys for Defendant 7 KEVIN MURPHY 8 UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 THE NEWPORT BRAIN RESEARCH LABORATORY, INC., a California 11 corporation, and NBRL V, a Nevada limited liability corporation, 12 Plaintiffs, 13 v. 14 KEVIN MURPHY, an Individual; and 15 DOES 1 through 10, 16 Case No. 8:18-cv-01625-JLS-JDE DEFENDANT KEVIN MURPHY’S ANSWER TO COMPLAINT DEMAND FOR JURY TRIAL Defendants. 17 18 19 20 21 22 23 24 25 26 27 28 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 2 of 18 Page ID #:83 1 Defendant KEVIN MURPHY (“Murphy” and/or “Defendant”) hereby submits 2 the following Answer and Affirmative Defenses to Plaintiffs’ THE NEWPORT 3 BRAIN RESEARCH LABORATORY, INC. and NBRL V (collectively “Plaintiffs”) 4 Complaint. Defendant Murphy, for himself and no other, denies, generally and 5 specifically, any and all allegations of the Complaint which are not expressly 6 admitted or denied hereinafter. It is not intended that there be any admission by 7 silence or omission as to any allegations of the Complaint. This Answering 8 Defendant hereafter responds to each of the sections of Plaintiffs’ Complaint exactly 9 as it is set forth in utilizing the Plaintiffs’ headings, as follows: JURISDICTION AND VENUE 10 11 1. Defendant denies each and every allegation contained in paragraph 1. 12 2. Defendant admits he is an individual residing in the state of California. 13 Murphy denies each and every remaining allegation contained in paragraph 2. 14 3. THE PARTIES 15 16 Defendant denies each and every allegation contained in paragraph 3. 4. Defendant is without sufficient knowledge or information to form a 17 belief as to the truth of the allegations and on that basis denies each and every 18 allegation contained in paragraph 4. 19 5. Defendant is without sufficient knowledge or information to form a 20 belief as to the truth of the allegations and on that basis denies each and every 21 allegation contained in paragraph 5. 22 6. Though Plaintiffs incorrectly set forth defendant’s address, Defendant 23 admits he is an individual who resides in San Diego County. 24 7. Defendant is without sufficient knowledge or information to form a 25 belief as to the truth of the allegations and on that basis denies each and every 26 allegation contained in paragraph 7. BACKGROUND 27 28 8. Defendant denies each and every allegation contained in paragraph 8. 1 8:18-CV-01625-JLS-JDE DOCS 3468131.5 Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 3 of 18 Page ID #:84 1 Plaintiffs’ former Chief Medical Officer has acknowledged Plaintiffs have no trade 2 secret Magnetic EEG/ECG-guided Resonance Therapy technology. Moreover, on 3 information and belief Defendant alleges at times relevant herein NBRL had non4 medical personnel creating protocols for the administration of TMS treatment, which 5 protocols were not revealed to personnel who were actually administering the 6 stimulation. These protocols were then administered through a laptop in the 7 treatment room, utilizing hardware and software that overrode the FDA approved 8 medical devices, such as the MagVenture transcranial magnetic stimulator, in 9 violation of Section 510(k) of the Food, Drug and Cosmetic Act. Thus, Plaintiffs’ 10 technology, while not “revolutionary, proprietary [and] trade secret,” was employed 11 in a manner that resulted in Plaintiffs practicing medicine without a license and in 12 violation of the Food, Drug and Cosmetic Act. 13 9. Defendant is without sufficient knowledge or information to form a 14 belief as to the truth of the allegations and on that basis denies each and every 15 allegation contained in paragraph 9. Moreover, on information and belief Defendant 16 alleges at times relevant herein NBRL had non-medical and likely unlicensed 17 personnel creating protocols for the administration of TMS treatment, which 18 protocols were not revealed to personnel who were actually administering the 19 stimulation. Thus, if the purported “trade secret protocols” are licensed to physicians 20 for administration without the physicians’ knowledge of what the protocols are, 21 Plaintiffs are practicing medicine without a license. Moreover, if the licensed 22 protocols are administered by overriding FDA approved medical devices, Plaintiffs 23 are in violation of Section 510(k) of the Food, Drug and Cosmetic Act. 24 10. Defendant Murphy admits he is a licensed medical doctor, has a 25 specialty in radiation oncology, and is a professor at the University of California San 26 Diego (“UCSD”). Dr. Murphy admits that he came to NBRL’s facility, doing 27 business as the Brain Treatment Center (“BTC”) on or about September 30, 2013 to 28 “explore the possibility of having BTC treat a patient.” 2 DOCS 3468131.5 The patient was Dr. 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 4 of 18 Page ID #:85 1 Murphy’s son, who suffers from autism. Dr. Murphy’s sole interest at that time was 2 to seek treatment for his son; he did not express interest in entering into a business 3 relationship. It was Plaintiffs, whose principals were not licensed to practice 4 medicine in California, who expressed interest in a business relationship with Dr. 5 Murphy because of Dr. Murphy’s knowledge and experience. Dr. Murphy denies 6 each and every remaining allegation contained in paragraph 10. 7 11. Dr. Murphy admits that his son’s treatment continued through 8 December 2013. Though the principals of NBRL and Dr. Murphy discussed a 9 potential service agreement for EEG reads and protocols, they never entered into any 10 “joint business relationship.” Dr. Murphy denies NBRL “disclosed its trade secret 11 MeRT technology to [Dr. Murphy] under the NDA.” In fact, even if Exhibit “1” to 12 the Complaint been valid and executed by Defendant, the NDA requires NBRL to 13 notify Dr. Murphy within 45 days of giving him oral or written confidential (trade 14 secret) information, identifying that the information was confidential under the 15 NDA. NBRL never provided any such notice. Further, in fact, NBRL never even 16 disclosed to Dr. Murphy the treatment protocol it was administering to his son. 17 NBRL’s principals Jin and Ring did not instruct Dr. Murphy on how to read EEGs 18 and/or subsequently develop treatment protocols for patients using Plaintiffs’ MeRT 19 (sic) technology. Dr. Murphy is a board-certified radiation oncologist who has a 20 Master’s Degree in Neurophysiology. For more than 20 years he has specialized in 21 treating the brain, including treating adult and pediatric brain and central nervous 22 system tumors. Dr. Murphy is skilled in reading and interpreting 23 electrophysiological information, including EEGs. To date Dr. Murphy has read tens 24 of thousands of EEGs. 25 Dr. Murphy denies that NBRL set up Del Mar Neuro center “so that defendant 26 could treat patients using NBRL’s MeRT (sic) technology.” NBRL was conducting 27 a clinical trial on patients in its separate offices at Del Mar Neuro Center. Dr. 28 Murphy was not involved in the clinical trials, did not treat any NBRL patients, was 3 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 5 of 18 Page ID #:86 1 not the doctor of record for any of NBRL’s patients, did not consult with any NBRL 2 patients, and did not have access to any of the patients’ medical records or any of the 3 algorithms used in NBRL’s treatment protocols. Dr. Murphy received no 4 compensation from NBRL, paid his own expenses and conducted his own research 5 treating his own medical patients. A friend and colleague of Dr. Murphy’s, Greg 6 Mauro, paid the rent for the entire Del Mar space as a favor to Dr. Murphy. 7 Moreover, Dr. Murphy developed his own proprietary database and proprietary 8 protocols for treating patients with transcranial magnetic stimulation that is entirely 9 unique and independent from NBRL. 10 On information and belief, in NBRL’s clinical trial, non-medical and 11 unlicensed staff at NBRL were creating treatment protocols; these protocols were not 12 shared with personnel actually administering the alpha wave pulses to patients’ 13 brains. To administer the protocols, non-medical (unlicensed) personnel were using 14 a laptop, hardware and software that overrode the FDA approved medical devices 15 actually administering the alpha wave pulses to patients. Thus, NBRL and its 16 personnel were practicing medicine without a license and were using and marketing 17 a medical device in violation of Section 510(k) of the Food, Drug and Cosmetic Act. 18 12. Dr. Murphy admits that he participated in joint presentations with 19 NBRL, including the joint presentation at Camp Lejeune. Dr. Murphy presented on 20 his own behalf, paid for his own travel and expenses and received no compensation 21 from NBRL for the presentations. Dr. Murphy denies that NBRL has a proprietary 22 or copyright interest in the slides. Dr. Murphy created his own slides for the 23 presentation and did not use any slides created by NBRL. Moreover, the slides are 24 not subject to copyright protection. Dr. Murphy did not collaborate with NBRL on 25 clinical trials. Dr. Murphy denies each and every remaining allegation contained in 26 paragraph 12. 27 13. Dr. Murphy denies that he and NBRL formed NBRL V. NBRL’s 28 principals requested Dr. Murphy be involved with the formation of NBRL V, the 4 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 6 of 18 Page ID #:87 1 Nevada limited liability company, because, as NBRL’s Chief Executive Officer 2 Conway Ho told Dr. Murphy, they needed Dr. Murphy to be a member because 3 Messrs. Ho and Jin would not pass “scrubbing by the Navy” to obtain a contract to 4 treat veterans. Dr. Murphy declined. On information and belief, Dr. Murphy alleges 5 that he did not ever explicitly or even impliedly agree to be a member, manager or 6 officer of NBRL V. On information and belief, Dr. Murphy alleges that Ho, Jin or 7 others are solely responsible for forming and operating NBRL V, and for listing Dr. 8 Murphy as a member on governmental filings without Dr. Murphy’s consent. Dr. 9 Murphy has requested that his name be removed from any such governmental filing, 10 and NBRL has refused his request. On information and belief, Dr. Murphy alleges 11 he has not received any government filings, minutes of any meetings, notices of any 12 meetings, any K-1 report, or other tax report, any tax information, e-mails, or phone 13 calls related to NBRL V. Dr. Murphy first became aware that he was listed as a 14 member of NBRL V was when this complaint was served on him. Dr. Murphy 15 denies each and every remaining allegation contained in paragraph 13. 14. 16 Dr. Murphy denies each and every allegation contained in paragraph 14. 17 Dr. Murphy is treating patients as a physician licensed to practice medicine. Dr. 18 Murphy received no trade secrets in fact, and Plaintiffs have conceded so, by never 19 notifying Dr. Murphy, as required by the NDA (even if it had been signed), that he 20 received any trade secrets. Thus, Dr. Murphy never used “stolen trade secret 21 information about which he learned from NBRL under the NDA,” and is not 22 “unfairly competing with NBRL by treating military personnel and veterans.” 23 Moreover, Dr. Murphy has not disparaged NBRL to “military leaders.” In fact, 24 NBRL CEO Conway Ho has openly bragged about his purported ties to the Chinese 25 People’s Liberation Army, and another principal of NBRL bragged that he had 26 uncles who were Generals in the Chinese Army. 27 / / / 28 / / / 5 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 7 of 18 Page ID #:88 FIRST CLAIM FOR RELIEF (Federal Unfair Competition Brought by NBRL) 1 2 3 15. To the extent any allegations of the Complaint are not addressed above, 4 they are denied. 16. Dr. Murphy denies each and every allegation contained in paragraph 16. 5 6 Dr. Murphy’s proprietary PrTMS treatment protocols are safe and effective and his 7 treatment of his patients are safe and effective. However, Plaintiffs allegation that 8 Dr. Murphy’s PrTMS treatments are not safe, while alleging that NBRL’s “are quite 9 safe,” is a concession and an admission that the two treatment protocols are entirely 10 different. This is a concession and an admission that Dr. Murphy is, in fact, not 11 using any of NBRL’s purported trade secret technology in his treatment of his 12 patients. Rather, Dr. Murphy has independently invented and created a unique, 13 proprietary treatment protocol separate and apart from anything owned by NBRL. 14 17. Dr. Murphy denies each and every allegation contained in paragraph 17. 15 18. Dr. Murphy denies each and every allegation contained in paragraph 18. 16 19. Dr. Murphy denies each and every allegation contained in paragraph 19. 17 20. Dr. Murphy denies each and every allegation contained in paragraph 20. 18 21. Dr. Murphy denies each and every allegation contained in paragraph 21. SECOND CLAIM FOR RELIEF (Copyright Infringement Brought by NBRL) 19 20 21 22. To the extent any allegations of the Complaint are not addressed above, 22 they are denied. 23. Dr. Murphy is without sufficient knowledge or information to form a 23 24 belief as to the truth of the allegations and on that basis denies each and every 25 allegation contained in paragraph 23. 26 24. Dr. Murphy denies each and every allegation contained in paragraph 24. 27 25. Dr. Murphy denies each and every allegation contained in paragraph 25. 28 26. Dr. Murphy denies each and every allegation contained in paragraph 26. 6 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 8 of 18 Page ID #:89 1 27. Dr. Murphy denies each and every allegation contained in paragraph 27. 2 28. Dr. Murphy denies each and every allegation contained in paragraph 28. 3 29. Dr. Murphy denies each and every allegation contained in paragraph 29. 4 30. Dr. Murphy denies each and every allegation contained in paragraph 30. 5 31. Dr. Murphy denies each and every allegation contained in paragraph 31. 6 THIRD CLAIM FOR RELIEF (Breach of Contract Brought By NBRL) 7 8 32. To the extent any allegations of the Complaint are not addressed above, 9 they are denied. 10 33. Dr. Murphy denies each and every allegation contained in paragraph 33. 11 As Plaintiffs’ former Chief Medical Officer has acknowledged, Plaintiffs have no 12 trade secret algorithms for alpha wave frequencies, other variables or treatment 13 protocols. Moreover, to the extent Plaintiffs identify any purported confidential or 14 trade secret information they claim they provided to Dr. Murphy - which Dr. Murphy 15 denies occurred - Plaintiffs did not ever verbally express to Dr. Murphy that the 16 information was confidential and in fact did not ever follow-up in writing within 45 17 days confirming to Dr. Murphy that any such information was confidential, both of 18 which are material requisites specifically required in the NDA in Exhibit 1 to the 19 Complaint. 20 34. Dr. Murphy denies each and every allegation contained in paragraph 34. 21 35. Dr. Murphy denies each and every allegation contained in paragraph 35. 22 36. Dr. Murphy is without sufficient knowledge or information to form a 23 belief as to the truth of the allegations and on that basis denies each and every 24 allegation contained in paragraph 36. 25 FOURTH CLAIM FOR RELIEF (Theft of Trade Secrets Brought by NBRL) 26 27 37. To the extent any allegations of the Complaint are not addressed above, 28 they are denied. 7 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 9 of 18 Page ID #:90 1 38. Dr. Murphy denies each and every allegation contained in paragraph 38. 2 39. Dr. Murphy is without sufficient knowledge or information to form a 3 belief as to the truth of the allegations and on that basis denies each and every 4 allegation contained in paragraph 39. 5 40. Dr. Murphy denies that he signed the document attached to Plaintiffs’ 6 complaint as Exhibit 1 (Dkt. 1-1). On or about September 30, 2013, Murphy was at 7 BTC (NBRL’s dba) to obtain medical treatment for his son. Dr. Murphy had learned 8 of BTC through a friend who told him that another friend’s grandson had received 9 autism treatment at BTC. As he was present at the clinic solely as the father of a 10 patient, an NDA as set forth in Exhibit 1 would have not been a standard document 11 to be signed before he could obtain medical treatment for his son. Dr. Murphy was 12 led to believe that BTC had licensed doctors/physicians who had designed individual 13 treatment protocols, including wave frequencies, for use on his son. On information 14 and belief, Dr. Murphy later learned that non-medical unlicensed personnel were 15 creating the protocols and determining the frequency of alpha waves for Murphy’s 16 son and other patients at the clinic. NBRL’s non-medical personnel would set a 17 frequency protocol in a separate secure room, and then send the protocol via the 18 internet to a laptop; the laptop had hardware and software set up to override the FDA 19 approved machine that delivered the doses of alpha waves to Dr. Murphy’s son and 20 other patients. Thus, whether non-medical or medical personnel were manually 21 placing the FDA approved machinery to Dr. Murphy’s son’s or other patients’ heads, 22 the only persons with knowledge of what medical treatment was actually being 23 delivered to the patients’ brains were NBRL’s non-medical unlicensed personnel. 24 Thus, on information and belief, Plaintiffs were practicing medicine without a 25 license and were using a medical device (the laptop, hardware and software) that was 26 not cleared by the Food and Drug Administration under Section 510(k). Dr. Murphy 27 denies that NBRL provided him with any alleged trade secrets at that time, or at any 28 time thereafter. NBRL never even provided any of the protocols or frequencies to 8 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 10 of 18 Page ID #:91 1 Dr. Murphy that it was using for the treatment of his son. Dr. Murphy denies each 2 and every remaining allegation contained in paragraph 40. 3 41. Dr. Murphy denies each and every allegation contained in paragraph 41. 4 42. Dr. Murphy denies each and every allegation contained in paragraph 42. 5 43. Dr. Murphy denies each and every allegation contained in paragraph 43. 6 44. Dr. Murphy denies each and every allegation contained in paragraph 44. 7 45. Dr. Murphy denies each and every allegation contained in paragraph 45. 8 FIFTH CLAIM FOR RELIEF (Tortious Interference With Prospective Economic Advantage Brought By NBRL) 9 10 46. To the extent any allegations of the Complaint are not addressed above, 11 they are denied. 12 47. Dr. Murphy denies each and every allegation contained in paragraph 47. 13 Dr. Murphy is a physician, licensed to practice medicine in California. At all times 14 relevant herein NBRL was registered as either a medical diagnostics development 15 corporation or a management services organization. Neither of these types of 16 entities can legally practice medicine in California. In California, management 17 services organizations may only engage in administrative services on behalf of 18 professional corporations and may not engage in the practice of medicine. 19 Development of medical treatment protocols is the practice of medicine. Thus NBRL 20 –whether organized as a medical diagnostics development company or a 21 management services organization – may not legally be in direct competition with 22 Dr. Murphy, who treats patients as a licensed physician, for the medical services 23 utilized in treating patients with alpha wave technology. Moreover, to the extent 24 NBRL was employing or otherwise using non-medical personnel to create protocols 25 and/or administer alpha wave treatment to patients’ brains, and was overriding 26 medical devices that were FDA approved to administer such treatment, it and its 27 principals were practicing medicine without a license and were violating Section 28 510(k) of the Food, Drug and Cosmetic Act. 9 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 11 of 18 Page ID #:92 1 48. Dr. Murphy denies each and every allegation contained in paragraph 48. 2 49. Dr. Murphy denies each and every allegation contained in paragraph 49. 3 In fact, NBRL CEO Conway Ho openly bragged about his purported ties to the 4 Chinese People’s Liberation Army, and another principal of NBRL bragged that he 5 had uncles who were Generals in the Chinese Army. 6 50. Dr. Murphy admits he was the treating physician for the patient 7 described, but denies each and every remaining allegation contained in paragraph 50. 8 51. Dr. Murphy denies each and every allegation contained in paragraph 51. 9 52. Dr. Murphy denies each and every allegation contained in paragraph 52. 10 53. Dr. Murphy denies each and every allegation contained in paragraph 53. 11 54. Dr. Murphy denies each and every allegation contained in paragraph 54. 12 13 14 SIXTH CLAIM FOR RELIEF (Unfair Competition Under Cal. Bus. Prof. Code § 17200 Brought By NBRL) 55. To the extent any allegations of the Complaint are not addressed above, 15 they are denied. 16 56. Dr. Murphy denies each and every allegation contained in paragraph 56. 17 57. Dr. Murphy denies each and every allegation contained in paragraph 57. 18 58. Dr. Murphy denies each and every allegation contained in paragraph 58. 19 59. Dr. Murphy denies each and every allegation contained in paragraph 59. 20 SEVENTH CLAIM FOR RELIEF (Fraud and Deceit Brought By NBRL and NBRL V) 21 22 60. To the extent any allegations of the Complaint are not addressed above, 23 they are denied. 24 61. Dr. Murphy denies each and every allegation contained in paragraph 61. 25 62. Dr. Murphy denies each and every allegation contained in paragraph 62. 26 63. Dr. Murphy denies each and every allegation contained in paragraph 63. 27 64. Dr. Murphy denies each and every allegation contained in paragraph 64. 28 65. Dr. Murphy denies each and every allegation contained in paragraph 65. 10 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 12 of 18 Page ID #:93 1 66. Dr. Murphy denies each and every allegation contained in paragraph 66. 2 67. Dr. Murphy denies each and every allegation contained in paragraph 67. 3 EIGHTH CLAIM FOR RELIEF (Slander Per Se Under Cal. Civ. Code § 46 Brought By NBRL) 4 68. 5 To the extent any allegations of the Complaint are not addressed above, 6 they are denied. 7 69. Dr. Murphy denies each and every allegation contained in paragraph 69. 8 70. Dr. Murphy is without sufficient knowledge or information to form a 9 belief as to the truth of the allegations and on that basis denies each and every 10 allegation contained in paragraph 70. 11 71. Dr. Murphy denies each and every allegation contained in paragraph 71. 12 72. Dr. Murphy denies each and every allegation contained in paragraph 72. 13 73. Dr. Murphy denies each and every allegation contained in paragraph 73. 14 NINTH CLAIM FOR RELIEF (Breach Of Fiduciary Duty Brought By NBRL V) 15 74. 16 To the extent any allegations of the Complaint are not addressed above, 17 they are denied. 75. 18 Dr. Murphy denies he was one of the original members of NBRL V. 19 Dr. Murphy denies each and every remaining allegation contained in paragraph 75. 20 76. Dr. Murphy denies each and every allegation contained in paragraph 76. 21 77. Dr. Murphy denies each and every allegation contained in paragraph 77. 22 78. Dr. Murphy denies each and every allegation contained in paragraph 78. 23 79. Dr. Murphy denies each and every allegation contained in paragraph 79. OBJECTIONS TO PLAINTIFFS’ PRAYER FOR RELIEF 24 Dr. Murphy denies that Plaintiffs are entitled to the requested relief identified 25 26 in items 1-23 of their Prayer for Relief or any other relief. Dr. Murphy denies all 27 allegations in the Complaint not expressly admitted above. 28 / / / 11 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 13 of 18 Page ID #:94 AFFIRMATIVE DEFENSES 1 2 80. In further response to the Complaint, and without admitting that as to 3 any of the below allegations he bears the burden of proof, Dr. Murphy alleges as 4 follows: 5 FIRST AFFIRMATIVE DEFENSE (Failure to State a Cause of Action) 6 7 1. As a first, separate and affirmative defense to Plaintiffs’ Complaint on 8 file herein, and each and every purported cause of action therein stated, Defendant 9 alleges that the Complaint and each and every cause of action therein fails to state 10 facts sufficient to constitute a cause of action against Defendant. 11 SECOND AFFIRMATIVE DEFENSE (Lack of Damages) 12 13 2. As a second, separate and affirmative defense to Plaintiffs’ Complaint 14 on file herein, and each and every purported cause of action therein stated, Defendant 15 alleges that Plaintiffs have suffered no loss, damage, injury or harm as a result of any 16 conduct, inactions, or actions, as alleged in the Complaint. 17 THIRD AFFIRMATIVE DEFENSE (Fraudulent Filing) 18 19 3. As a third, separate and affirmative defense to Plaintiffs’ Complaint on 20 file herein, and each and every purported cause of action therein stated, Defendant 21 alleges that Plaintiffs have fraudulently filed invalid copyright registrations, have 22 harmed Defendant by this action and are not entitled to any recovery. 23 FOURTH AFFIRMATIVE DEFENSE (Copyright Invalidity) 24 25 4. As a fourth, separate and affirmative defense to Plaintiffs’ Complaint on 26 file herein, and each and every purported cause of action therein stated, Defendant 27 alleges that Plaintiffs have filed invalid copyright registrations in that the works are 28 not original, the works lacked copyrightable subject matter, or the contents are in the 12 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 14 of 18 Page ID #:95 1 public domain, and/or to the extent that Plaintiffs claim rights to elements of the 2 alleged works that are not original, are functional or otherwise not protectable under 3 copyright. 4 FIFTH AFFIRMATIVE DEFENSE (Fraudulent Inducement) 5 6 5. As a fifth, separate and affirmative defense to Plaintiffs’ Complaint on 7 file herein, and each and every purported cause of action therein stated, Defendant 8 alleges it is barred in whole or in part as all or part of the transactions resulted from 9 Plaintiffs’ fraud, deceit or misrepresentation. Plaintiffs held themselves out to the 10 public and Defendant Murphy as having California licensed doctors and/or 11 physicians treating patients. On information and belief, at all times relevant hereto, 12 the individuals who treated patients on behalf of Plaintiffs were not doctors and/or 13 physicians licensed to practice medicine in California. 14 SIXTH AFFIRMATIVE DEFENSE (Invalid Contract) 15 16 6. As a sixth, separate and affirmative defense to Plaintiffs’ Complaint on 17 file herein, and each and every purported cause of action therein stated, is barred in 18 whole or in part as the contract asserted is invalid/illegal and cannot be enforced 19 because all or part of the contract or transaction resulted from fraud, deceit or 20 misrepresentation by Plaintiffs. 21 SEVENTH AFFIRMATIVE DEFENSE (Breach of Contract) 22 23 7. As a seventh, separate and affirmative defense to Plaintiffs’ Complaint 24 on file herein, and each and every purported cause of action therein stated, Plaintiffs 25 breached the contract, if any, with Defendant and by reason of such breach of 26 contract, this answering Defendant has been excused of any duty he may have to 27 perform. 28 13 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 15 of 18 Page ID #:96 EIGHTH AFFIRMATIVE DEFENSE (Readily Ascertainable) 1 2 3 8. As an eighth, separate and affirmative defense to Plaintiffs’ Complaint 4 on file herein, Defendant alleges that the information was/is readily ascertainable by 5 proper means, such as availability in trade journals, reference books, or published 6 materials. NINTH AFFIRMATIVE DEFENSE (Truth) 7 8 9 9. As a ninth, separate and affirmative defense to Plaintiffs’ Complaint on 10 file herein, and each and every purported cause of action therein stated, Defendant 11 alleges that any statements he made were true. TENTH AFFIRMATIVE DEFENSE (Estoppel) 12 13 14 10. As a tenth, separate and affirmative defense to Plaintiffs’ Complaint on 15 file herein, and each and every purported cause of action therein stated, Defendant 16 alleges that by virtue of Plaintiffs’ omissions, carelessness and intentional or 17 negligent acts, Plaintiffs are estopped from prevailing against Defendant. ELEVENTH AFFIRMATIVE DEFENSE (Unclean Hands) 18 19 20 11. As an eleventh, separate and affirmative defense to Plaintiffs’ 21 Complaint on file herein, and each and every purported cause of action therein 22 stated, Defendant alleges that by virtue of Plaintiffs’ unlawful, immoral, careless, 23 negligent and other unlawful conduct, Plaintiffs are barred from recovery against 24 Defendant by the equitable doctrine of “unclean hands” and of in pari delicto. 25 Dr. Murphy became interested in using alpha wave treatment for brain 26 disorders after investigating it in relation to this son’s autism. Dr. Murphy had his 27 son treated at BTC where he met Messrs. Jin and Ho. While subsequently Dr. 28 Murphy and Messrs. Jin and Ho discussed the possibility of future collaboration on 14 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 16 of 18 Page ID #:97 1 the science and research, they never agreed to enter into a business relationship. 2 Ultimately both used office space at Del Mar Neuro Center, paid for by a third party, 3 to conduct their independent research. 4 Dr. Murphy conducted a separate practice treating patients and conducted 5 independent research on alpha wave treatment variables. Dr. Murphy developed an 6 independent proprietary database and independent treatment protocols for 7 administering alpha waves to patients. Dr. Murphy did not have any business 8 relationship with BTC or NBRL, paid his own expenses and did not receive any 9 compensation from BTC, NBRL or any entity related to any of them. 10 NBRL was conducting a clinical trial on PTSD patients in its separate medical 11 offices at Del Mar Neuro Center. Dr. Murphy was not involved in the clinical trial 12 being conducted by NBRL, did not treat any of NBRL’s patients, was not the doctor 13 of record for any of NBRL’s patients, did not consult with any patients in the clinical 14 trial and did not have access to any of the patients’ medical records or algorithms 15 used in the NBRL treatment protocols. On information and belief, NBRL used non16 medical unlicensed staff to create the treatment protocols for the patients in its trial. 17 These protocols were not shared with personnel actually administering the alpha 18 wave pulses to patients’ brains. NBRL was also using a laptop, hardware and 19 software that overrode the FDA approved medical devices administering the alpha 20 wave treatments to patients. Thus, NBRL and its principals were practicing 21 medicine without a license and were using and marketing a medical device in 22 violation of Section 510(k) of the Food, Drug and Cosmetic Act. 23 At one point in early 2015, Dr. Murphy went to his lab on a Saturday and 24 noticed the door was unlocked. Dr. Murphy recognized an IT specialist from NBRL 25 who was in Dr. Murphy’s clinic installing surveillance cameras. NBRL also had the 26 locks changed on the server room and refused to give Dr. Murphy access when he 27 asked. Dr. Murphy asked CEO Conway Ho why the cameras were being installed 28 and Mr. Ho told him not to take it personally, but that “we don’t trust anyone.” On 15 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 17 of 18 Page ID #:98 1 information and belief, Dr. Murphy alleges Plaintiffs were attempting to surveil and 2 discover the method used by Dr. Murphy in his treatment of his patients and to 3 obtain access to Dr. Murphy’s proprietary database and his separate treatment 4 protocols. 5 Dr. Murphy was extremely concerned about this improper surveillance, and he 6 was particularly concerned that it was an intrusion on his and his patients’ statutorily 7 protected privacy rights. The cameras had audio and visual capability. Thus, 8 NBRL’s surveillance also violated Dr. Murphy’s patients’ HIPPA rights. As a result 9 of these actions, Dr. Murphy decided to move his clinic away from the Del Mar 10 facility to a separate location in Rancho Bernardo, California, which he did. When 11 Murphy informed Conway Ho he was doing so, Mr. Ho made several attempts to 12 convince Murphy to stay. First, he offered Dr. Murphy monetary compensation and 13 an equity interest in Mr. Ho’s company. In addition, Mr. Ho then offered and 14 Plaintiffs’ counsel drafted a proposed fee splitting arrangement between NBRL and 15 Dr. Murphy for treatment of Dr. Murphy’s patients. Dr. Murphy believed both offers 16 were improper and declined these offers outright. 17 Defendant alleges that he presently lacks sufficient knowledge or information 18 upon which to ascertain whether as yet unstated affirmative defenses are available. 19 Defendant reserves the right to assert additional defenses ascertained by further 20 investigation and discovery. 21 DATED: November 7, 2018 22 PROCOPIO, CORY, HARGREAVES & SAVITCH LLP 23 By: /s/ Anthony J. Dain Anthony J. Dain (Bar No. 98947) Tiffany Salayer (Bar No. 226189) Attorneys for Defendant Kevin Murphy 24 25 26 27 28 16 DOCS 3468131.5 8:18-CV-01625-JLS-JDE Case 8:18-cv-01625-JLS-JDE Document 12 Filed 11/07/18 Page 18 of 18 Page ID #:99 DEMAND FOR JURY TRIAL 1 2 Defendant Kevin Murphy demands a jury trial on all issues. 3 4 DATED: November 7, 2018 PROCOPIO, CORY, HARGREAVES & SAVITCH LLP 5 6 By: /s/ Anthony J. Dain Anthony J. Dain (Bar No. 98947) Tiffany Salayer (Bar No. 226189) Attorneys for Defendant Kevin Murphy 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 DOCS 3468131.5 8:18-CV-01625-JLS-JDE