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Next Science (ASX:NXS) has seen a U.S. lawsuit against a former employee over non-compete clauses worsen as that employee now effectively counters the company is giving fraudulent information to shareholders.
In May last year, Next Science took to court its former Wound Care Sales VP Michael Morello for purportedly breaching a non-compete clause in his employment contract.
If you wanted proof corporate Australia can export its IP to the American landscape instead of the other way around, this case is a good example. Australians have a fondness for non-compete clauses; in America, it’s a far more complicated picture where they’re not as legally sound as perceived down under.
But that’s slightly beside the point we’re digging into here.
On Wednesday, Next Science confirmed it’s now facing a countersuit tied to its non-compete breach lawsuit filed by Mr Morello.
But Mr Morello’s claims don’t relate to why or why not his post-employment activities fail to constitute a breach or otherwise. Instead, Morello is accusing the company of fraud.
Next Science noted Wednesday that Morello had launched the countersuit from the position of being a shareholder in Next Science (despite the original grievance orbiting his capacity as a former employee).
According to the company, “Morello’s complaint makes several claims including that Next Science’s … technology has not been approved by the FDA.”
“The company confirms the products it sells are safe, effective, approved by the FDA… and promoted within their FDA approved intended use.”
Morello’s full complaint posits Next Science advertised their XBIO product as a biofilm without proper FDA approval and that the company is omitting acknowledgement of safety concerns around its ‘XPERIENCE’ breast implant surgery IP.
Not often do the ASX and investors see lawsuits over breast implants.
“The board is concerned the complaint has not been brought in good faith,” Next Science concluded on Wednesday.
Shares in the microcap were unmoved on Wednesday morning. Or rather, stagnant – near 11am Sydney time, not a single equity had traded hands per a third-party service that ports Morningstar data.
The company will provide updates as the case drags on.
NXS last traded at 11.5cps.
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