The context: the EU trade secrets directive to be soon implemented in France

Before 9 June 2018, France shall implement the EU trade secrets directive of 8 June 2016. A law proposal was published on 19 February 2018 and was strongly debated before the French parliament on 27 March 2018. The EU trade secrets directive relates to the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The purpose of the directive is to provide effective and comparative legal means for protecting and defending trade secrets throughout the EU. The objectives are notably to encourage innovation-related cross-border activity within the EU, and to protect the confidentiality of litigated trade secrets in the course of legal proceedings instituted for their defense.

Trade secrets are important for the life sciences sector

Behind every patent there is a trade secret. Furthermore, part of the data resulting from R&D is not patentable or, for some data, patents are difficult to file or to enforce. And, of course, patent protection is limited in time.

This is why secrecy is interesting, in a sector in which companies are amongst the most research-intensive companies in the world, and trade secrets should be part of a balanced IP portfolio.

Examples of data that should be considered and protected as trade secrets are: strategic business plans, data resulting from early-stage research, chemical formulae, clinical trial data (methods, results, etc.), bioprocesses to manufacture biologic or biosimilar, analytical software and proprietary biological databases, etc.

Therefore the protection of trade secrets is crucial for the life sciences sector

Many pharmaceutical and biotechnology companies outsource some of their R&D and/or manufacturing, which requires the transfer of sensitive information which may qualify as trade secrets. Likewise, in the context of strategic deals (collaborations, joint ventures, licensing and acquisitions), trade secrets may be shared during the diligence process or the implementation of the deal.

Therefore, it is crucial that the exchanges of such information are appropriately controlled, especially when the deal fails or when a collaboration lasts for years and is not successful.

What is at stake for the life sciences sector?

First, the directive provides that alleged unauthorized disclosure of a trade secret shall be exempted from civil remedies (in other words, authorized), if the use or disclosure of the trade secret was carried out for exercising the right of freedom of expression and information or for revealing misconduct, wrongdoing or illegal activity in the name of public interest. This exemption is included within the French law proposal. One of the main issue here is to determine whether clinical trial data (especially negative data) would fall into that scope of exemption. One can also hope that the EMA and national medicines agencies will take a safe course of action in their interpretation of what constitutes a commercially confidential information and become less inclined to disclose information – such as clinical trial data – that is in the public interest.

Second, within the context of collaboration between pharmaceutical or biotechnology companies and universities or research centers, and beyond the collaboration agreement entered into by the parties, the directive should ensure that a researcher cannot use or publish any information provided or generated by the company under the research collaboration. This greater protection should have a positive impact on research and innovation.

To conclude, a few recommendations

Internally, especially in case of high staff-turnover or partnership for research and/or production processes: be vigilant and proactive about maintaining secrecy of your trade secrets, strengthen the measures protecting all information considered as trade secrets in order to increase the chances to obtain the qualification of unlawful for acquisition, use and disclosure of your trade secrets by employees or partners.

When negotiating collaboration agreements: precisely identify all parties’ trade secrets and their authorized holders.

When performing collaboration agreements: be cautious about overstepping the boundaries and making yourselves the targets of misappropriation accusations. Implementation of firewalls and/or clear rooms could help to ensure that those with knowledge of the partner’s trade secrets are not tasked with developing substantially similar products.

Finally, even though the directive provides for legal means to protect trade secrets in the course of legal proceedings, include an arbitration clause in your strategic deals and agreements.