Pfizer shines a spotlight on the value of trade secrets

What happened?

In a nutshell, Pfizer filed a lawsuit against one of its long-time employees for stealing confidential documents, some of which relate to their COVID-19 vaccine, whilst preparing to leave to join a competitor.  That competitor, Xencor, is not named in the lawsuit and, in fact, it is not even clear whether the allegedly offending ex-employee, Chung Xiao Li, has joined the company yet, which makes it likely that Xencor have not seen the documents and now almost certainly never will now. Read more about how Pfizer shines a spotlight on the value of trade secrets here.

This demonstrates perfectly how powerful the trade secrets provisions can be, because it has enabled Pfizer to nip the matter in the bud and preserve its valuable trade secrets before significant any damage could be done.  It also sends a clear message to others that Pfizer recognises, preserves and enforces its trade secrets along with all of their other IP rights.

Whilst Pfizer has, undoubtedly, filed numerous patent applications for the technology to which this confidential information relates, these may not even have been published yet, let alone granted, so they are not likely to be enforceable for months or even years, by which time, Xencor (or another competitor) could have seen and used the trade secrets created using Pfizer’s investment to get a head start in a field that is fiercely competitive and in which the race to be first to market with breakthrough technology is critical.

What does this mean for the rest of us?

Trade secrets arise throughout the business world, and they can all be covered by the Trade Secrets Directive, which lays down the provisions for preventing unauthorised use of trade secrets, provided certain conditions are met (source: ):

“trade secret” means information which—

(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among, or readily accessible to, persons within the circles that normally deal with the kind of information in question,

(b) has commercial value because it is secret, and

(c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret;

This means that if you have some confidential information that meets these three criteria, you can use the Trade Secrets Directive to protect it against unauthorised use (or at least take action in the event that there has been unauthorised use of it). This requires some careful management, though, because it is difficult to claim that information was, in fact, a trade secret after there has been some undesirable use of it, unless you have previously treated that information as a trade secret within your business.

What can you do?

Although trade secrets do not require any form of registration, they do need to be carefully captured and preserved if you want to retain the ability to prevent or halt their unauthorised use by others. What is key here is the requirement to treat the information as a trade secret within your business.  For example your employment contracts and shareholders agreements need to stipulate your internal policies for storage, use, preservation and disclosure of your confidential information and, where appropriate, specific information and data.  Don’t rely on this being inherent or understood, because the last thing your company needs is for your trade secrets to walk out of the door with a disgruntled employee or director. You could also enforce a policy within the business whereby certain information is strictly only divulged on a ‘need-to-know’ basis.

Another thing to consider is making sure your level of cyber security matches the importance of keeping your confidential information safe.  Apparently, an estimated €60 billion in economic growth could be lost every year in Europe alone through cyber theft of trade secrets (source: ).  Do consider taking steps to ensure that your business doesn’t add to that statistic.

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