Plans by Gilead Sciences to hire a Field Medical Associate Director from Vertex Pharmaceuticals in anticipation of highly competitive battle in the hepatitis C market turned into a court brawl last week when Vertex filed a trade secrets lawsuit against Gilead. 

Vertex’s Complaint

The two pharmaceutical companies are locked in a battle over drugs for the treatment of hepatitis C. Vertex, a global biotechnology company based in Boston, manufactures Incivek®. Gilead, a California-based biopharmaceutical company, is focused on treatments for a variety of conditions, including HIV/AIDS, hepatitis, serious respiratory and cardiovascular conditions, cancer, and inflammation.  Industry watchers expect Gilead to file for FDA approval on a hepatitis C drug that will compete with Incivek® by the end of the year.

Vertex had employed Betty Kritikos, who holds a PharmD in Pharmacy, from late 2007 through March 29, 2013.  Kritkos resigned her position at Vertex and planned to begin working for Gilead in a directly competitive position starting today (April 1, 2013).  Several days after receiving Kritikos’ resignation, Vertex sent a courier to her home to reclaim her laptop and a wide assortment of other electronic devices, according to Vertex’s complaint. Upon retrieving her computer, Vertex conducted a computer forensics analysis, which the company claims shows that Kritikos downloaded multiple highly confidential Vertex documents while waiting for the courier to pick up the laptop.  The complaint further alleges that Kritkos began emailing Vertex documents containing trade secrets to her personal email account around the time she started talking to Gilead about employment opportunities.

Vertex charges that Kritikos is subject to an Employee Non-Disclosure, Non-Competition & Inventions Agreement, which the company says she signed upon accepting employment with Vertex and which, according to the complaint, she reaffirmed in 2011 and 2012.  Now, Vertex is seeking damages and injunctive relief against both Kritikos and Gilead for breach of contract, breach of fiduciary duty, unfair and deceptive trade practices, violations of the Massachusetts Trade Secrets Act, and violations of the Computer Fraud and Abuse  Act.

The case is captioned Vertex Pharmaceuticals, Inc. v. Betty Kritikos and Gilead Sciences, Inc. It is filed in U.S. District Court for  the District of Massachusetts. Click on the link to read the complaint.

Observations

The Vertex / Gilead litigation shows how important it is for pharmaceutical and other life science companies to protect their trade secrets and other highly valuable intellectual property. As I have recently written, companies that are not careful about their trade secrets and other proprietary information can find themselves on the wrong side of a lawsuit or even a criminal referral to the Federal Government.  Recent case law confirms not only that pharmaceutical companies are prime targets for trade secret theft (both foreign and domestic), but underscores the need to regularly reassess the adequacy of a company’s firewalls for safeguarding intellectual property, such as trade secrets, and other proprietary information.  The risks of not doing so can be severe and can include millions of lost dollars in research and development and an even greater loss in competitive advantage.