Opinion

The Invention Casket: Trade Secret Case Threatens Medical Research and U.S. Innovation

Amid the pandemic, medical research and collaboration are more important than ever. What if a company were to discover an effective treatment tomorrow? Church bells might ring like they did when Jonas Salk’s polio vaccine was proven effective in 1955. Or they might not, if the company claimed this treatment as a trade secret, burying hopes that other innovators might use it to develop new cures or therapies. The company would have a monopoly on this secret, potentially forever. The incentive for others to innovate further on this treatment would be lost, because the secret would be locked in a safe. 

A pending trade secret case at the U.S. International Trade Commission has alarmed doctors, economists and intellectual property experts who fear just such a scenario. The case involves a popular competitor to Botox – and related potential medical applications – illustrating how a bad outcome in this case could stifle innovation that leads to path-breaking treatments.

The company that brought this case is Botox manufacturer Allergan, which was recently acquired by health care giant AbbVie. Intellectual property Professor Shubha Ghosh recently warned the ITC against “clearing the field for Botox” saying in comments submitted to the ITC that “there are good reasons to be concerned about the ITC being co-opted to further limit competition given how Allergan has operated in the past and in this case.” Allergan, he observed, “has paid out hundreds of millions of dollars to settle claims that it blocked competition in a number of drug markets.”  

Now Allergan is attempting to block its Botox competitor called Jeuveau, a product approved by the Food and Drug Administration. In August, an ITC administrative law judge granted Allergan’s request, ruling that the bacteria used to make the product was a trade secret and recommending that Jeuveau imports and sales be banned for 10 years. But the judge’s recommendation is so broad that it could deter other companies from developing new drugs and therapies based on the bacteria. Trade secret status allows a company to forever bury an innovation for its own use, excluding others from learning, adapting, researching or exploring improvements to the secret. Think of it like a casket for inventions. 

In contrast to trade secrets, which lock up innovations for the benefit of one party, patents are pro-innovation because they require full public disclosure of inventions. This case appears to be Allergan’s way of indefinitely extending its expired patents.

Trade secrets certainly do have their place in the ITC. Congress authorized the commission to investigate allegations of unfair trade practices and did not limit the ITC’s jurisdiction to patent cases. But the fact is that the ITC has heard thousands of patent cases compared to only a handful trade secrets cases. That means that the commission knows how to strike the right balance in patent cases between the protection of intellectual property rights and the public interest. The ITC lacks such a track record in trade secrets cases, and the risks of that are apparent.

The nation’s foremost expert on trade secret jurisprudence, Roger Milgrim, has declared the decision in question an “unwarranted and improper use of trade secret law,” one that threatens to disrupt the “carefully calibrated” system which has “fostered the world’s most vibrant technological environment.” Far from fostering innovation and spurring competition, the decision would freeze innovation and take a well-liked nascent pharmaceutical product off the market.

In dozens of comments submitted to the ITC opposing the judge’s decision, doctors and nurses noted that Jeuveau gives patients more options, offers clinical advantages and is less expensive. They also warned that blocking Jeuveau by deeming the botulinum bacteria at issue a trade secret could bar others from using the strain to develop patient applications, which is the chilling effect on medical research I fear.   

Indeed, the ITC also heard objections from AEON Biopharma, an American company that is currently developing medical applications from the same bacteria Allergan claims is a trade secret. AEON’s innovations give new hope to patients suffering from disabling disorders. If Allergan succeeds locking away this bacteria through a trade secret designation, patients could be denied these treatments.  

This case would have lasting implications for all industries, and its long-term effects could be stark. If Allergan is allowed to bury knowledge, future ideas and innovation, the ITC’s public interest mandate will have been perverted to serve the interests of a single foreign company. This would be to the detriment of scientific advancement and future therapeutic medical treatment.   

Noted trade lawyer and economist Gary Hufbauer cautioned the ITC in submitted comments that the judge’s holding, if not overturned, would turn the ITC into “the ‘best friend’ of aspiring monopolists” and that “it’s hard to imagine a decision more starkly opposed to the U.S. public interest.” I agree. If the full ITC does not overturn the judge’s decision, the floodgates will open, and copycat cases will proliferate, as this case will provide a roadmap for other aspiring monopolists who want to put profits over the public. We can do better. If the ITC fails to reverse course, and U.S. Trade Representative Robert Lighthizer and President Donald Trump need to be the final decision-makers, I hope they will stand up for the public. 

 

Paula Stern was chairwoman of the International Trade Commission from 1984-86 and served as a commissioner for nine years; she is a consulting expert to Kobre & Kim LLP, counsel for Daewoong Pharmaceutical, which is one of the parties in the case discussed here.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

Do NOT follow this link or you will be banned from the site!