Think back to school. As soon as you shared a secret, there was no chance you’d ever get control of it back. In the same way, preventing the theft of ideas through corporate espionage or other means presents challenges. What is clear to the perpetrators is the value that trade secrets hold. But what is under-appreciated by many in the life sciences is just how many trade secrets they might have and just how much value they can secure by protecting them.
Instead, for most founders in the life science sector, obtaining patents is often viewed as the best - or perhaps the only - element of a successful IP strategy. This may be because, among the pharma and biotech communities, there is an overall misunderstanding of the value of trade secrets, with the regulatory emphasis on disclosure overshadowing the role of confidential ‘know how’ in their IP protection strategy. It’s time this was brought back to the fore.
WHAT TRADE SECRET PROTECTION IS AVAILABLE TO PHARMA COMPANIES IN EUROPE?
The process of obtaining a marketing authorisation involves disclosing the molecular structure and formulation of a new pharmaceutical product, meaning these elements of a product cannot be kept secret, as would be required for a trade secret. Given this, patents remain the gold standard in protecting a drug’s most valuable elements. However, there is much more to the development and launch of a pharmaceutical product than just the components of the product alone.
Indeed, aspects of a pharmaceutical product’s development that are not disclosed can be of significant value to competitors. As such, pharma companies should consider whether protecting these through the filing of patent applications, which are ultimately published, is the best approach, or whether alternative forms of IP can yield more value.
Within the EU, trade secrets come under the EU Trade Secrets Directive (2016/244/EU). Although this was enacted to ensure a harmonised regime across the EU’s Member States, the directive was also implemented into UK law and remains in force following Brexit.
The EU Trade Secrets Directive refreshed the definition of a trade secret stating information could be recorded as a trade secret if:
- It is kept secret.
- It has commercial value because it is kept secret.
- Reasonable steps have been taken to keep the information secret by those responsible for controlling the information.
As this is a directive, Member States do have a degree of flexibility in terms of how they affect the EU Directive in their national courts. In the UK, post-Brexit there is also scope for courts to reach different decisions on the interpretation of the statute since there is no longer a need to refer to the European courts. This means there can be differences between territories in the court’s view as to what constitutes a trade secret and exactly what action is required to ensure that they remain protected.
WHAT CAN LIFE SCIENCES COMPANIES PROTECT WITH TRADE SECRETS?
Within the life sciences, trade secret protection is increasingly being employed to protect intellectual property assets that can’t be effectively protected under the patent regime, perhaps due to potential challenges in enforceability of patent rights, or for which protection as a trade secret may be more effective.
Therefore, it is important for innovators in the life sciences to know what assets might be susceptible to protection with a trade secret. Taking aside those aspects of a pharmaceutical product that will likely need to be disclosed to regulators, the list might include:
- Manufacturing and production processes
- R&D data relating to ongoing research and development, and experimental results
- Ongoing and historical clinical trials data
- Client information and marketing
- Market research
- Marketing strategy and business plans
- Product development plans
- Quality control techniques
- Data on pharmacological and biological targets, pathways and receptors
- Customisation of any equipment/technology being used for research, testing, or production
- Employee know-how, i.e. specialist knowledge employees have that is not known by competitors or more generally
DATA AND SYSTEMS: BUILT FOR TRADE SECRETS
Arguably the most valuable aspect of the drug development process is the clinical trials data required for regulatory approval. At the same time, these data can drive development of therapeutic and diagnostic inventions with a digital element, which has an ever-increasing potential to add value to a product’s lifecycle. Interestingly, these are areas where patent protection may be less suitable, increasing the need to consider trade secrets as a means for securing value.
Clinical trial data is central to drug development. Although there is a move towards greater transparency, at least in the early stages of development, there remains a need to protect this valuable data and the important insights it generates. Where early filed patents could give competitors an insight into how dosages, compositions and even the full range of clinical/therapeutic uses have been reached, opting to initially maintain these developments as trade secrets can provide a key commercial advantage.
In relation to diagnostic inventions, trade secrets also have a role to play in protecting aspects of a potential product as software-based control systems, since the use of patents can be cumbersome in this role. For example, a company might develop an algorithm for analysing patient data that, being hosted by a central server, is not accessible to the end user and, therefore, can be kept secret.
SECURING THE PIPELINE: LEAD GENERATION AND TARGET VALIDATION
As target validation is the first step in the discovery of a new drug, it is also furthest removed from the regulatory process. During this stage, a range of techniques will be used to identify a candidate compound or biologic which can safely deliver its promised therapeutic benefits, which can then be taken into the development pipeline.
Indeed, even after successful target identification, candidate drugs will often fail in early stage pre-clinical trials, and in many cases their failure can be traced back to inadequate target validation techniques. It is to address this shortcoming that an ever-increasing array of new techniques are being deployed, such as those based on functional analysis, expression profiles, cell-based models, or the identification and monitoring of key biomarkers.
Overall, this means that, once the correct target identification and validation techniques have been developed, they instantly become a highly valuable asset that must be protected to maintain a competitive advantage. Again, the ability to keep these approaches secret makes trade secrets an ideal form of protection.
A NEW APPROACH
Obtaining comprehensive and robust patent protection will always lay at the heart the IP strategy of a life sciences start-up, providing a springboard for securing investment and building value. However, an IP strategy that neglects trade secrets risks missing opportunities to enhance that value and, perhaps more worryingly, leaving the door open to competitors to benefit from your hard-won advances.