As the world struggles to confront the Covid-19 pandemic, how to handle access to trade secrets — information that is valuable because others do not know it — is one of the myriad challenges to achieving safe and effective vaccines, diagnostics, and treatments for the people of the world.
The most famous trade secret is the Coca-Cola formula. If someone accessed that formula who wasn’t supposed to, a misappropriation lawsuit from Coca-Cola would soon follow. While a scenario like that may seem foreign to the Covid-19 pandemic, trade secrecy spans a shockingly broad range of critical and lifesaving information.
This poses a problem because if information is accessible to more than just the trade secret’s owner, it could lead to greater and more rapid advances against Covid-19, while helping to assure that medical services and vaccines would be affordable for all. But treated as a valuable commodities held by various property owners, Covid-19 trade secrets could be used without regard to public health or the best interests of the world’s people.
Often labeled as confidential information or proprietary information, trade secrets encompass vast quantities of information needed to discover, test, create, and manufacture diagnostics, treatments, and vaccines. They are everywhere in the battle to defeat Covid-19, from clinical data to pharmaceutical manufacturing processes.
Potential trade secrets include manufacturing processes, test data, medical formulas, and more. For vaccines and other biologic medicines, cell lines, genomic information, and other biological material can also be held as trade secrets. Data about the effectiveness of medicines and vaccines are trade secrets. Even so-called negative information — information about what does not work — can be a trade secret.
All of this information is essential to the rapid development of, and access to, safe and effective Covid-19 diagnostics, treatments, and vaccines worldwide.
The nature of trade secrecy in a competitive marketplace is obvious: If Coca-Cola’s formula was accessed by a competitor who could use that information, Coca-Cola would have a competitor that could drive down its price and the company’s profits. So the instinct in the commercial marketplace is for a trade secret owner to hold valuable information as trade secrets, except where patenting is preferred.
While that is normally an uncontroversial decision, when it comes to public health, the problems with such practices are many. Trade secret law has governed (and thereby denied) public access to information about many issues of national importance, like hydraulic fracturing (“fracking”) safety, voting machine operation, and the composition of our food supply, like the “pink slime” in beef products. There is currently a debate about whether the names of businesses that have received federal Covid-19 relief loans are trade secrets.
In the case of Covid-19 research, product development, and commercialization, data and manufacturing processes are key, and can be designated as trade secrets. After all, if a company knows what works and what does not, then it has a competitive advantage over others lacking that knowledge. When it possesses efficient means of production and can embargo access to essential biological resources, it has a significant competitive advantage.
Does all of this mean we should get rid of trade secrets so civil society groups and competitors can have access? Not so fast. Trade secrecy is unquestionably necessary as an incentive to innovation. Companies need to have assurance that if they invest time, money, and labor into an innovation they will be able to not only recoup costs but also have the opportunity to turn a profit. If they are prevented from keeping valuable information secret, then they may not innovate because competitors would simply use the valuable information they have developed.
There are two hard questions about trade secrets: When should a trade secret be shared more broadly? And under what circumstances?
Unfortunately, trade secret law has little to say about these issues. While independent discovery and reverse engineering end trade secret protection, and there are limited circumstantial trade secrets exceptions for whistleblowers, journalists, and criminal defendants, trade secret law generally operates to empower the owners of trade secrets to control if, when, and how their secrets are shared. As a result, unless a trade secret owner licenses the information, the secret remains locked up by the owner, perhaps forever.
Clearly, there should be times when trade secrecy’s ability to lock down information gives way to broader national and international information sharing concerns. If there were ever a case for reexamining trade secrecy’s unquestioned dominance, a public health crisis on the scale of Covid-19 would be the time.
If there is a legal reassessment, the health care community must be part of it because it falls to medical experts to explain what information is needed, by whom, and when.
To assess the hows and whens of trade secret access during the Covid-19 pandemic, we need a granular understanding of how a particular trade secret is used in a given company and industry. For example, if a pharmaceutical company discovers that a particular vaccine development process is a dead end, it might speed things up if other developers had access to that knowledge. On the other hand, to encourage medical advancement and public health, there may be information that should be protected by trade secrecy, at least for a period of time, like a revolutionary diagnostic tool with unusually costly research and development requirements. We will have no way of balancing competing interests, understanding the public health effects, and gauging the most compelling needs without the expertise provided by scientists, clinicians, and other medical professionals.
Trade secrecy operates as a complicated and poorly understood impediment to public health advances, even as individual entities may benefit from their power. Because there is no all-encompassing solution for this vexing challenge, awareness of the problem is the first step to addressing it. What seems initially like a narrow issue involving intellectual property law and innovation may actually be a critical barrier to our ability to rapidly, effectively, affordably, and safely solve the Covid-19 pandemic.
The time is now to examine, and reexamine, trade secrecy’s hold on information and our collective health.
David S. Levine is an associate professor of law at Elon University School of Law and affiliate scholar at the Center for Internet and Society at Stanford Law School. The author thanks Brook Baker for comments on a prior draft.
I vehemently disagree since trade secret is one of the three cornerstones of intellectual property. The other two are patents and copyright. There is already assault on COVID-19 related patent (Gilead’s on remdesivir).
To advocate ignoring intellectual property rights due to specious and convenient public health reasons sets a dangerous precedent and is a slippery slope towards socialism which I believe is not welcome by majority of people in the USA.
There’s no need to eviscerate trade secrets. Clearly they have value. In the context of COVID-19, where speed is essential, there is greater value through transparency than secrecy. Investors or funders could condition funding on transparency. R&D companies are free to decline the funding, and risk coming in last. The greatest value of any program is in the product, and speed. Trade secrets modestly enhance value, and slow things down.
Mr. Chu, thanks for reading and your comment.
If you read the piece in full, you’ll see that I’m hardly arguing for “ignoring IP rights.” I don’t discuss anything other than trade secrets, and am instead advocating for a granular examination of when trade secrecy is actually beneficial, versus when it is unnecessary and/or not worth the cost to public health.
I also refer you to Mr. Fehlner’s thoughtful comment.
Had a national or international program on the scale of the Manhattan Project been implemented, the issues of trade secrecy and patents (Intellectual Property overall) could have been managed. Due to the lack of coordination and cooperation in the current milieu, this opportunity has not been realized. For example, if an “all comers” therapeutic trial was coordinated at national or international levels, this issue would need to be addressed. Instead we have over 2,500 companies competing with each other.
Dr. Spector, thanks for your comment. Agreed; coordination and collaboration is essential, and better done at the national and/or industry level.
The overall message here, at least until the broader perspective shows up later in the article, is that all information is inherently valuable, and if we just knew what every company ‘s employees know, or was observed by accident, faster progress would be made. This is simply not true, because what is useful depends on the context at the source, and how the information will be used in the future. Also, the quality of that information has not been vetted at anything resembling gold standard quality. Particularly for developing a new treatment paradigm, there are all sorts of confounding factors. However, there is one important area where sharing really helps: open source software. There the fundamental insights are publicly available for free, and the interesting commercial aspects are developed when the software is assembled and used.
Mr. Vosburgh, thanks for reading and for your comment.
I refer you to my response to Mr. Chu.
Additionally, all information is not “inherently valuable,” as you note, and I’m not sure where you find that idea in my article. I am urging a granular understanding of when we need trade secrecy, and when we’d be better off with information sharing.
My sense is few trade secrets really provide a long lasting barrier to competition because of parallel development and reverse engineering. Even coca cola has myriad analogs. G
Even manufacturer technology general has alternatives that mean the trade secret value is relatively small. I would love to see data on the duration and magnitude of value.
Ms. Pullan, thanks for reading and your thoughtful comment.
Clearly, there is a temporal limit to a trade secret’s value as a secret, but it depends, as you note, on issues like ease of reverse engineering and value in the marketplace. I refer you to my article with Ted Sichelman, to which I referred in the article: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3166834. I am also focusing on speed, which, as noted, may be impeded by trade secrecy.
If trade secrecy is knowledge . . .
Aw, nuts. I meant ” If trade secrecy is compromised . . .”.
A trade secret is knowledge that would not exist unless somebody paid for it to exist. If trade secrecy is knowledge for COVID-19, that means I won’t spend a penny on developing that information. It won’t exist in my hands or anybody else’s hands. That is the future you are arguing for. Trade secrecy is not an impediment to progress — it is the incentive for progress. If you want faster progress, strengthen trade secrecy, don’t weaken it.
You are correct about investor financial incentives to protect trade secrets, and their value in a normal situation. COVID is anything but normal, and the daily losses the world economy suffers dwarf individual profit potential from trade secrets. This means that funders seeking the fastest solution, ahead of or instead of profit, should require information transparency to accelerate a solution. For governments, philanthropies, and impact investors, sped is most important. As you rightfully point out, the funders really call the shots. They could amplify the value of their funding by insisting on information sharing. Unfortunately, for the most part it seems like they haven’t.
Mr. Thorson, thanks for reading and for your comment.
Please see my response to Mr. Chu and Mr. Vosburgh, above. Also, please see the article to which I referred in my response to Ms. Pullan. We need a much better understanding of when we need trade secrecy, and when it is not a meaningful incentive and/or information sharing would be better for the public (the primary beneficiaries of IP investment in public health).
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