Trade secrets are of paramount importance at every stage of the healthcare & life sciences (HLS) supply chain. From the overall structuring and strategy of supply chain management to regulatory submissions to marketing and post-sales, it is critical for businesses to have a grasp of where trade secrets are held throughout their organization and understand how information is shared, treated, stored and accessed.
In this session of our five-part HLS Supply Chain Series, we took a look at key IP issues in the supply chain; the issues arising from data protection, R&D, advertising and promotions; and the handling of trade secrets owned by third parties. We examined how HLS companies can limit their exposure and study the impact of COVID-19 on maintaining the protection of trade secrets, and also discussed the potential for WTO Member States to temporarily waive all intellectual property (IP) rights regarding COVID-19 products, including trade secrets and knowhow and how this impacts, not only the COVID-19 situation but also any future pandemics or emergency situations.
Key takeaways: So now what?
- WTO IP waiver and local requisition measures: The potential WTO waiver of IP rights (including knowhow and trade secrets) for COVID-19 would temporarily suspend IP rights, requiring member countries to either enact new local laws or temporarily suspend existing laws to implement the decision. The wording of this proposal is currently under debate - the local requisition measures and the WTO IP waiver may provide a precedent for future pandemics or other emergencies, yet unknown. Even if you are not in the COVID-19 business today, it could potentially impact your business in the future.
- Restriction on the use and disclosure of trade secrets and knowhow: It is critical for businesses to restrict third party use of such information and to limit third party publication or disclosure of such information. Attention should also be given to existing contractual provisions in manufacturing and other similar agreements to assess the level of protection against disclosure.
- Recommended measures for companies: Companies should conduct an audit of their trade secrets and other disclosed sources of information to assess the information most at risk and identify potentially affected products. Companies should identify countries that present the greatest risk profile for their companies. Where possible, they should engage with industry bodies or directly with governments to potentially influence the position a government may take before the WTO or subsequently to assist locally in framing any potential measures that could minimize exposure. Companies should consider whether other IP protective measures or strategies exist to add additional layers of protection for sensitive or proprietary information.
- Impact of the Biden Administration: The Biden Administration has concluded that present US reliance on foreign pharmaceuticals and APIs is unacceptable. With the creation of the Biden Administration Supply Chain Disruptions Task Force, the Department of Health and Human Services, the United States Trade Representative and other US agencies have been charged with increasing domestic production and the rolling out of increased tools to combat unfair trade practices.
- Prevention is the best protection: As the majority of the risk to the loss of or threat to trade secrets lie in its employees, businesses should ensure that employees receive the appropriate on-boarding and refresher trainings related to the handling of trade secrets and knowhow. Trade secrets should be regularly audited, inventoried and monitored. There should be a quick response mechanism and a misappropriation plan in place for damage control and evidence preservation. Business partner selection is also critical and should be subject to the appropriate due diligence requirements.
- IP protection, regulatory and compliance issues are closely related to each other in the HLS industry, and data utilization makes the situation more complicated: In the current circumstances, management of data is very important, both in the context of business drivers and with regard to compliance. As businesses and the supply chain in the HLS industry become more global, the management of data, including trade secrets, is even more difficult and important.
- Documentation is key: Documentation can often be the biggest procedural hurdle in trade secrets litigation, particularly as trials often take place years after the infringement itself and claimants often find that they cannot meet the necessary burden of proof required. It is therefore essential to document trade secrets and the reasonable protection measures taken to protect them. These records should be periodically reviewed and kept up-to-date.
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