Can you keep a trade secret? Understanding pharmaceutical IP

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Patents are the ‘go-to’ form of Intellectual Property (IP) protection for new pharmaceuticals. Through patents, protection can be attained for a drug itself, for a drug that is used as a medicament for the first time and for a drug with a new specific use, for example in the treatment of a certain disease or patient group. This type of IP provides a company with a 20-year monopoly on its invention.

However, surrounding every new drug developed there is a wealth of valuable know-how that can provide the cutting edge for the company to identify and develop its future drug candidates. In the pharmaceutical industry, the extreme expense of developing new drugs means that companies must act to maintain their competitive edge by protecting know-how relating to their patented innovations.

The flip side of the patent system is that patent applications are published, so any know-how included in a patent application will enter the public domain. This would clearly be undesirable for the patent holder where that knowledge presents an opportunity for a competitor to optimise their own development pipelines.

Therefore pharmaceutical companies look to other forms of IP to protect their valuable know-how: trade secrets hold the key here.

A trade secret can be any information that a company keeps secret, and there is usually some commercial value from keeping that information under wraps.

One of the key benefits of trade secrets is that, unlike patents, the information never has to be published. It can be kept secret forever if no one spills the beans. However, there is little that can be done to reverse any disclosure of a trade secret, even if it’s unintentional. This makes it important to keep the trade secret under wraps as much as possible, even within a company, and only divulge the information to anyone that is trusted and knows to keep the information secret. By contrast, the 20-year monopoly provided by patent protection exists regardless of who knows about your invention.

The differences in protection afforded by patents and trade secrets work well together in the pharmaceutical industry.

New pharmaceuticals are best protected with patents because their molecular structure and formulation will be disclosed as part of the marketing authorisation process and can be reverse engineered. Keeping a new pharmaceutical secret is not a viable option once it starts to travel down the commercialisation pathway.

However, trade secrets can be used very effectively to protect know-how relating to how that new pharmaceutical has been developed. This know-how cannot be reverse-engineered from studying the pharmaceutical. So if everyone stays tight-lipped this can be kept a secret forever, providing the company with a commercial advantage long into the future.

The value of know-how to pharmaceutical companies was recently highlighted when investors were voted down in proposals for pharmaceutical companies Pfizer, Johnson & Johnson and Moderna to share technology and know-how relating to their COVID vaccinations.

Whilst the registration of trade secrets is not an option, there are several steps that companies should take to protect their trade secrets, including:

  • Only disclosing trade secrets to trustworthy parties.
  • Using non-disclosure agreements as a legal backstop and to inform collaborators and contractors what information relates to trade secrets.
  • Reviewing any contracts of employment and ensure that they cover the protection of confidential information and trade secrets.
  • Reviewing any information relating to trade secrets to ensure that it is marked as confidential (e.g. using a watermark).
  • Keeping a register to track who has access to confidential information, and that they know the information is confidential.
  • Reviewing and updating IT security, including employee education and antivirus protection.

If you would like to know more about how trade secrets and patents can be employed to protect your innovation, please contact the author or your usual Barker Brettell attorney.