By Aparajita Lath
The future of public health in an “RNA world” is on trial in a trade secrecy dispute worth $950 million currently being fought before the District Court of the Western District of Washington, Seattle between HDT Bio Corp. and Emcure Pharmaceuticals.
The trade secrets at issue concern an improvement over existing mRNA technology called “self-amplifying RNA” or “saRNA.” saRNA are effective at much smaller doses and lower costs. The saRNA technology is being used to develop vaccines for COVID, Zoster, Zika and Rabies.
Unlike existing mRNA vaccines that need to be stored at very low temperatures, saRNA vaccines can be freeze-dried and stored at higher temperatures. Lower cost and freeze-drying would solve some major distribution problems.
HDT claims that Emcure, through its Indian subsidiary Gennova Biopharmaceuticals, purloined its trade secrets to various aspects of making, mixing, and combining saRNA with its proprietary delivery technology (LIONTM).
What is a trade secret?
By definition, a trade secret must have “independent economic value” to provide a competitive advantage to its owner due to its exclusive use.
Camilla Hrdy and Mark Lemley’s paper titled “Abandoning Trade Secrets” provides much needed context for interpreting the legal “independent economic value” requirement.
Originally, in common law, trade secrets were required to be “used in business” to be protected. This requirement was linked to actual commercial activity. If unused, the trade secret would be deemed abandoned allowing third parties to use them.
However, complications arose with the application of this rule. Pre-commercial ideas that were “nascent, as-yet-unrealised” and were not yet “used in business” would strictly not be protected. This provided a more liberal pathway for knowledge transfer but disadvantaged the “idea-vendors” / inventors who were unable to commercialize their ideas. As the authors note, courts were uncomfortable with providing no remedy where the generator of the idea was actually working towards a future “use in business.”
Due to these and other related concerns, the Defend Trade Secrets Act which was modelled on United States Trade Secrets Act was drafted without explicitly requiring that trade secrets be “used” (some states still retain the use requirement).
However, as the article explains, the use requirement still remains in the statute through a more nuanced requirement of having to establish that the trade secret has “independent economic value” “actual or potential.” The inclusion of “potential value” provides more protection for early stage research and fills in the gap for inventors trying to commercialize their ideas through sharing. However, in cases where the idea generator has never used the trade secrets nor licensed them, a claim that the secrets have “independent economic value” becomes difficult to establish.
HDT Bio Corp v. Emcure
In the present case, while HDT spent several years of research in the general field of immuno-therapy prior to its collaboration with Gennova, it had not entered the market for sa-RNA based vaccines. In fact, mRNA vaccines themselves were formerly experimental and had never entered the market prior to the pandemic.
As per the complaint, it appears that the idea of taking this technology to market was one that was proposed by Gennova. It was only after this proposal was made that scientists at HDT “worked tirelessly to formulate, test, and refine their ‘emerging’ COVID vaccine and the underlying technology.” As the complaint reveals, HDT filed patents over this technology and conducted animal studies only after Gennova’s proposal. HDT also relied on Gennova’s clinical trial data and other information to secure future contracts. Absent cooperation from Gennova, these contracts failed. In such a situation, courts will have to separate the wheat from the chaff to ascertain whether or not HDT’s “trade secrets” were merely experimental ideas or ones with “independent economic value.”
Further, it remains to be seen whether HDT’s patents disclose their trade secrets (making them generally known) and whether the trade secrets are sufficiently separate from matters generally known to those specialized in this field.
For instance, the mRNA technology transfer hub in South Africa was able to reverse engineer Moderna’s vaccines without any assistance from Moderna. The hub relied on publicly available information and researcher support.
If the subject matter does not derive independent economic value from secrecy and is generally known, then inhibiting its use by third parties would impose an unjustified social cost, especially given its broad medical uses. As we have seen in recent years, RNA technology has many potential applications. Moderna’s patents, as available on its website, disclose methods for treating various diseases or disorders that are characterized by dysfunctional or aberrant protein or polypeptide activity, from cancer to rare diseases to diabetes.