David S. Levine[1]
Associate Professor, Elon University School of Law
Affiliate Scholar, Center for Internet and Society at Stanford Law School
The unprecedented Covid-19 (Covid) virus has brought to the forefront many challenges associated with exclusive rights, information sharing, and innovation. How do we get effective diagnostics, treatments and vaccines quickly and safely to the public? More specifically, how do we ensure that sufficient quantities are produced, that health products are affordable, and that they are equitably distributed globally? Among many challenges on the road to this outcome is the difficult question of how to handle trade secrets, namely, information that is valuable because others do not know it.
The most famous trade secret is the Coca-Cola formula, but trade secrecy spans a shockingly broad range of critical and life-saving information. Indeed, trade secrets are everywhere in the battle to defeat Covid, from clinical data to pharmaceutical manufacturing processes. For the public at large, Covid trade secrets raise two primary issues: (a) When do you have a Covid trade secret, and (2) Should access to that trade secret extend to competitors, civil society groups, and/or the public? Both are challenging questions, and the below presents a general overview of the framework for addressing each question.
a) What are trade secret law core principles? Might exceptions or limitations to trade secrets be lawful under international trade law?
Often labeled as “confidential information,” or “proprietary information,” trade secrets actually encompass vast quantities of information needed to discover, test, create, and manufacture diagnostics, treatments, medicines, and vaccines. In the case of Covid, potential trade secrets include manufacturing processes, test data, medical formulas, and cell lines and other biological resources. Chemical formulas are classic trade secrets. So are processes for manufacturing. For vaccines and other biologic medicines, cell lines, genomic information, and other biological material can also be held as trade secrets. Similarly, data about the effectiveness of medicines and vaccines are trade secrets. Even “negative information” – information about what does not work – can be a trade secret. This information is essential to the rapid development of, and access to, safe and effective Covid diagnostics, treatments and vaccines worldwide.
Trade secrets are often, but not always, a prerequisite to product, process, and commercial service development and innovation, as well as the advancement of knowledge and science. Federal laws, primarily the federal Defend Trade Secrets Act (DTSA) and state laws modeled after the Uniform Trade Secret Act (UTSA), provide robust ability for trade secret owners, like pharmaceutical companies, to bring trade secret misappropriation actions against former employees and others who gain unauthorized access to their claimed trade secrets. The federal Economic Espionage Act (EEA) allows federal prosecutors to bring criminal actions under certain circumstances, especially those involving what we colloquially call “hacking.” Other federal and state laws can be used to prevent public disclosure of information disclosed to public authorities. As a result, trade secrets are a powerful exemption to state and federal access to information laws, like the Freedom of Information Act. At the international level, the European Union’s (EU) Trade Secrets Directive and the World Trade Organization’s (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) Article 39 provide similar trade secrets protections.
Unlike patents, regulatory entities do not grant or confirm trade secrets; rather, one has a trade secret by keeping valuable information secret. Trade secrets are not meant to be shared unless the owner authorizes it and then, usually, under a requirement of secrecy by the authorized party. Thus, the core trade secret legal action is one for misappropriation of it by a former employee/competitor through commercial espionage or sloppy trade secret management.
Indeed, the very designation of information as a “trade secret” can result in wide swaths of information held from public inspection, regardless of whether the information actually qualifies as a trade secret. Government regulators can also run into challenges getting access to trade secrets, especially absent clear statutory mandates for access. Even when access to regulators is permitted, there are always limitations on disclosure of the same information to the public. Thus, the designation of information as a “trade secret” is among the most powerful legal weapons against public, and even regulatory, access to information.
There are very limited exceptions when trade secrets might be accessed without concerns about misappropriation. Within trade secrets law, reverse engineering and independent discovery of a trade secret eliminate its protections; the subject information is no longer a “trade secret.” Additionally, the DTSA includes a limited exception for “whistleblowing,” and the EU’s Trade Secret Directive offers limited support for journalists revealing trade secrets in the “public interest.” There are also specific situations, like defendants interrogating breathalyzer machine accuracy in driving while impaired criminal prosecutions, where limited trade secret access has been granted to individuals or parties to a court proceeding. Currently, there is a debate about whether the names of businesses that have received federal Covid-19 relief loans are trade secrets.
More specifically for present purposes, there is nascent precedent for requiring disclosure of clinical trial results and redacted data both within the U.S. and Europe, especially when public funding supports the underlying research. In addition to new rules allowing access to clinical trial results and data, like those issued by the European Medicines Agency, there is precedent for allowing limited exceptions, for public health reasons, to so-called data/market exclusivity rules that generally allow biopharmaceutical companies enormous control over information submitted to national medicines regulatory authorities. While these are positive advances in balancing the commercial interest in secrecy with concerns about access to information, including medicines-related confidential information, they are limited, do not generally focus on trade secrets specifically, and have not been tested extensively in courts.
More importantly, there are no legislatively codified compulsory avenues for requiring non-registration and non-clinical trial trade secrets to be shared with competitors, civil society groups, or other “watchdog” or advocacy entities. Additionally, while voluntarily licensing of trade secrets is permissible, the decision to license is solely one of the owner, and can easily be cost-prohibitive or denied outright. Compulsory licensing, common in other forms of IP, is unusual in trade secrecy, especially with respect to biological resources and manufacturing information. Obviously, civil society groups and watchdogs will not be licensing trade secrets from those that they seek to monitor and influence.
It is important to note that the TRIPS Agreement and the WTO’s Doha Declaration on the TRIPS Agreement and Public Health (Doha Declaration) raise possible avenues for limited trade secret access. As previously mentioned, TRIPS Agreement Article 39 requires some degree of protection for trade secrets against unauthorized acquisition or use. Unlike patents, there is no involuntary use exception.
Nonetheless, through plausible interpretation of certain TRIPS Agreement provisions, trade secrets might be made accessible to ensure access to medicine. Articles 7 and 8 outline “objectives” and “principles,” respectively, for “social and economic welfare” (Article 7) and “public health” (Article 8). This language might offer support for trade secret access to foster the faster production of generic equivalents of medicines. Moreover, the Doha Declaration’s paragraph 4 states that the TRIPS Agreement “can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.” Additionally, it reaffirms “the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.” (Emphases added).
Lastly, it is important to recognize that trade secrets are often tethered to a country’s national security interests. As TRIPS Agreement Article 73 refers to a country’s right to take “any action which it considers necessary for the protection of its essential security interests,” the sharing (or lack thereof) of trade secrets on these grounds requires consideration. As discussed more fully below, “national security” is usually the most powerful basis for preventing access to information held by governments, so using it to encourage sharing of information during a pandemic would be novel.
Thus, the TRIPS Agreement may be the best route towards expanding trade secret access, as it has built-in recognition of concerns about which trade secret law is generally aloof. Of course, such access, were it allowed, would likely come at a cost, as is the case with patents, but the foregoing remains an open and untested question. Nonetheless, the TRIPS Agreement might be interpreted to allow trade secret access in ways heretofore unseen.
Trade secrets are a complicated and body of law, with significant variations in international and national law, but some possible scope for limitations and exceptions. Moreover, its application is extremely fact- and sector-specific, and the existence of a trade secret must be assessed individually against its value in the industry sector in which it operates as a piece of information. Therefore, few blanket modes of behavior or application apply to trade secrets broadly.
b) Should access to trade secrets be extended beyond the owner’s immediate interest?
For purposes of understanding approaches to access to information challenges related to Covid data, diagnostics, treatments, medicines, and vaccines, there are a few key concepts to keep in mind:
(1) Trade secrecy is a form of information access control. Trade secret law has governed (and thereby denied) public access to information about many issues of worldwide importance, like the safety of fracking, the operation of voting machines, and the composition of our food supply, like the “pink slime” in beef products. In the case of Covid research, product development, and commercialization, data and manufacturing processes are key trade secrets. After all, if a company knows what works, and what does not, then it has a competitive advantage of others who lack that knowledge. When it possesses efficient means of production and can embargo access to essential biological resources, the trade secret owner has a significant competitive advantage. Thus, trade secrets are part of the information access control mechanisms in what Frank Pasquale calls the “black box society” that includes a range of tools, from the attorney-client privilege to exemptions from application of the Freedom of Information Act.
Changing the scope and power of trade secrecy can have an impact beyond the mere commercial secret holder and trade secret law itself. The United States Trade Representative has reported, for example, that robust trade secret protection supports “critical advances with respect to key environmental challenges, including the mitigation of, and adaption to, climate change.” Given that, it is important to also note that trade secret law and practice puts the power to control access to information about those activities — including the risks, downsides, and effects on the public — largely in the hands of those who seek to maintain exclusive control over that information.
(2) Trade secrets operate in the national security context. As noted above, in the US, the EEA raises the national security specter in the trade secret context. When the United States grapples with China, Russia, and other state actors seeking to steal valuable information from US companies, trade secret law is front-and-center. This is a real threat because it involves vital information regarding weapons systems and technologies, artificial intelligence, and a host of other critical information. This reality therefore complicates trade secret access, because it ties trade secret law to national security concerns, at least in part. Moreover, efforts to prevent hoarding of Covid vaccines will run head-on into industry’s powerful hold on the public image of innovation requirements in any country where research is occurring.
(3) Trade secrets are granular. The traditional notion of a trade secret is one that has commercial value to others, and it is already defined quite broadly wherever the label is used. Overly powerful trade secret law can have the effect of hampering the development and use of new forms of information creation and innovation. For example, changes in how people share information can have both positive and negative implications. The Obama administration discussed the “rise in the US workforce of different expectations regarding work, privacy, and collaboration” as a “cultural shift” that will “likely disrupt security procedures and provide new openings for collection of sensitive US economic and technology innovation.” Industrialized countries have reacted to this shift with increased penalties for violation of current commercial norms and making trade secret law increasingly uniform.
The Covid pandemic creates new and unprecedented challenges to trade secrecy’s dominance. In the absence of law reform, courts have generally been unwilling to force trade secret access unless an extremely compelling reason arises, like a defendant’s ability to present exculpatory evidence in a criminal trial. Therefore, a trade secret in one context could be rendered accessible in a different context.
There is a unique opportunity to make compelling public policy arguments in the interest of developing new health technologies against Covid for the world’s population and ensuring that supply and price are not exclusively in the control of trade secret owners. For example, clinical data access might be justified by virtue of the clinicians’ need for access to all relevant information when making treatment decisions, the requirement of patient informed consent, and the researchers’ obligation to verify, validate, challenge, or aggregate earlier evidence, among other reasons.
Historically, trade secret law has been, at best, agnostic about these kinds of concerns. Certainly, we do not want trade secrecy law to become an even stronger lever to limit legitimate information gathering (also known as “competitive intelligence”) and new forms of innovation. More specifically, worldwide and equitable access to life saving diagnostics, treatments, medicines, and vaccines may hinge on robust trade secret access.
(4) Define trade secret “stakeholders” broadly. As should be obvious by now, while the world grapples with Covid and trade secrets related to needed medical technologies, trade secret owners’ interests are not the only concerns that governments, regulatory bodies, and international organizations should consider. The case must be made that state regulators seeking access to trade secrets, academics, civil society groups, the public at large, and even other manufacturers and competitors, are relevant stakeholders, with interests to balance against the traditional commercial, competitive, and proprietary owner’s interests.
(5) Trade secrecy is not sacrosanct: Perhaps most importantly, trade secrets sound crucial and necessary to innovation, and often are meaningful and desirable incentives. However, not all secrets deserve unwavering protection, and not all alleged “trade secrets” are actual trade secrets. As difficult, time-consuming, and expensive as it may be, because information may not qualify as a trade secret upon closer inspection and because public needs may need to trump private, profit-maximizing interests, we should always question, interrogate, and weigh any designations of untrammeled trade secret protection over valuable information.
If it turns out that an alleged “trade secret” is actually a trade secret, then a harder question must be asked: Should the trade secret be shared anyway? In the Covid context, certain trade secrets might serve society more thoroughly through wider access, allowing full technology transfer that would foster rapid expansion of needed manufacturing capacity and reduced pricing. Understandably, profit-making entities and those merely seeking to be first-to-market want to not only recoup costs, but usually to make as much money as possible through exploiting secret information. We must find a balance between rendering all information accessible and squeezing every dime out of trade secrets that warrant greater use.
Because profit seeking is an understandable and celebrated goal in a capitalist economy, as this overview explains, it faces few limits in current trade secret practice. As of now, there is no general principle in trade secret law that establishes a public interest in its access, or that mandates its sharing with competitors. However, the Covid pandemic presents new exigencies that require significant modification in our understanding of the use and role of trade secrets in our innovation ecosystem. Specifically, Covid requires serious consideration of a public health exception for pharmaceutical, diagnostic, and medical device trade secrets.
In sum, because it can be literally a life-or-death decision, Covid has forced the question of public access to trade secrets to the front of the long list of challenges that we face. If we are to defeat this unprecedented pandemic in a safe, effective, and expeditious manner, then we will need to find a new balance between the interests of the trade secret owner and everyone else. Unfortunately, this is not an easy task, as trade secret law has many moving parts, is surprisingly complex both theoretically and practically, and operates best at a granular level.
Nonetheless, we can begin the discussion by asking whether there is an actual trade secret to be shared, and if so, when and how it must be shared? If we can get answers to these two questions, then we will have a much better chance to see Covid’s threats addressed and eradicated with minimal loss of life. These are not unanswerable or insurmountable questions, but to address them will require industry, governments, international bodies, and civil society to understand each other’s individual interests while thinking collectively, and collaborate in ways heretofore unseen in trade secrecy law, or perhaps anywhere.
[1] Thanks to Brook Baker and Todd Gers for their comments.
