Intellectual Property: Patent or Padlock: Patents and Trade Secrets Form the Heart of an Effective IP Strategy - A typical life sciences company probably keeps more than two-thirds of its proprietary

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Intellectual Property: Patent or Padlock: Patents and Trade Secrets Form the Heart of an Effective IP Strategy
A typical life sciences company probably keeps more than two-thirds of its proprietary information in the form of trade secrets.


BioPharm International
Volume 20, Issue 2

The rights conferred by Congress in the form of the patent grant is, "the right to exclude others from making, using, offering for sale, or selling" the invention in the United States or "importing" the invention into the United States. This right is solely exclusionary, and must be enforced by the patentee. In other words, in the grant of patent, the government is not conveying any exclusive rights to affirmatively make, use, offer for sale, sell, or import the patented technology, but rather the right to exclude others from practicing the invention. Once a patent is issued, the patentee must actively enforce the patent through the courts in order to stop infringement.

TRADE SECRETS

A trade secret is more conceptual and less tangible than a patent. Generally, it is agreed that trade secrets encompass the proprietary information of a company (or individual), regardless of whether it involves a composition or a process, or whether it is patentable. Almost all states have adopted parts or all of the Uniform Trade Secrets Act. According to the act, a "trade secret" is information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.


Quick Recap
Trade secrets derive their value (whether actual or potential) from being generally not known to, or readily ascertainable by proper means by other persons, who can or may obtain economic value or advantage over others from their disclosure or use. Therefore, trade secrets must be subject to reasonable steps to keep the information secret, in the sense that the information 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 industries that normally deal with the particular kind of information.

A trade secret should be protected from improper exploitation, by physical segregation of persons from certain confidential and proprietary information. An example of this might be assembly line or process development workers where each is exposed to only a specific part of a complex manufacturing process. Another way to protect trade secrets involves establishing contractual relationships, such as nondisclosure or confidentiality agreements, or this type of language within more complex agreements.

The remedies available for trade secret misappropriation address unfair competition from possession of the proprietary information. According to the Uniform Trade Secrets Act, misappropriation is characterized as:

(i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (ii) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who has utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of his position, knew or had reason to know that it was a trade secret ad that knowledge of it had been acquired by accident or mistake.

Remedies for misappropriation or improper use of a trade secret include monetary damages, recovery of profits, a reasonable royalty, and injunctive remedies. Actual or threatened misappropriation may be enjoined. Upon application to the court an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate a commercial advantage that otherwise would be derived from the misappropriation.


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