Trade Secrets Protection in the Life Sciences Sector in the EU and US
DLA Piper’s Roberto Valenti and Ray Miller discuss trade secrets protection in the US and Europe and the peculiarities within the life sciences sector. They provide pragmatic approaches and suggestions on how to manage trade secrets for both pharmaceutical companies and medical device manufacturers.
Relevance of trade secret protection
- Trade secrets reflect assets that can be valued by third parties.
- It is important to balance patent rights and regulatory exclusivity, deciding whether the risk of disclosure is justified in order to obtain patent rights.
- Since 2016, in the US and Europe, there has been increasing importance placed on the relevance of trade secrets, when compared with patent protection.
- The concept of trade secrets should be expanded from covering only technical innovation (especially in light of the increase in aggregated data and AI). The concept also covers business operations, key clients, partnership arrangements and anything that has value to the company, is not known to others and cannot be easily deconstructed.
What clients don’t know about trade secrets
Trade secrets are particularly pertinent since the emergence of more technically important and convoluted solutions to problems in the life sciences sector. For example, it is difficult to deconstruct a biologic product or algorithm where digital solutions are used.
Trade secrets can be used as a balance to the heavy importance that has traditionally been placed on patents in the sector.
It is generally increasingly difficult in the US to get an injunction when trying to enforce a patent against an entity which has a solution to a healthcare problem. The public policy consideration will far outweigh the need to enforce the patent. This isn’t the case with a trade secret which, if appropriately managed, will provide protection in the form of injunctive relief.
There is much innovation in the life sciences sector in respect of both pharmaceuticals and medical devices, and a large amount of data can be protected as trade secrets in this sector.
It takes several years to obtain a patent, after which time a marketing authorisation must be obtained. If the manufacture of a product is protected as a trade secret, this can complement a company’s patent protection. Companies need to share confidential data, internally and sometimes externally. Having the correct management in place with respect to data protection is extremely important when it comes to trade secrets. Trade secret misappropriation typically occurs through employees, and it is essential to manage this.
Pragmatic suggestions and solutions
When an employee joins or leaves a company, an appropriate interview should include matters around trade secrets and their protection.
Trade secrets should be discreetly identified and managed as an asset. Employees should be appropriately and repeatedly educated on their importance; priorities should be identified, assigned and different classifications of trade secrets treated, managed and audited accordingly.
Good governance, awareness and educational policies, enforceable confidentiality agreements, as well as misappropriation response plans, are essential.