Undisclosed information refers to information which is secret and has commercial value because it is secret. Undisclosed information, or ‘trade secrets’, is protected in the TRIPs Agreement under the framework or discipline of unfair competition. There are important differences between the protection conferred under unfair competition and the protection conferred by other forms of IPR protection, especially patents:
• A patent owner obtains exclusive rights. This means he is the only one who can use the invention, commercialize the product etc. A patent owner can prevent any other person from using that invention. Even if a third party has developed the same product/process in an independent manner, without taking the technology of the patent owner, he is not allowed to use it, since the exclusive rights conferred are absolute. This is why, in economic terms, a patent confers a monopoly right. In the case of undisclosed information there is no exclusive right. If a third party develops the same information independently, this third party can use that information.
The philosophy is not to give exclusive or monopoly rights, but to provide protection against unfair competition and against dishonest commercial practices, such as industrial espionage.
• TRIPs does not create property protection for undisclosed information, but just refers to its possession. This is another important difference with a patent or trademark, in respect of which the owner has ‘property’.
• The value of undisclosed information does not lie in innovation or novelty - even a list of clients can be protected, though obviously this is not an invention - but in the fact that it has commercial value and in the fact that it is secret. So there should be measures to protect such information from disclosure; under TRIPs, this is an obligation.
• Unlike patents, which in general last for 20 years, in the case of undisclosed information there is no defined time limit. Undisclosed information is protected as long as it is kept undisclosed, as long as it is secret. The duration of the protection therefore depends on the factual situation, not on any legal provision.
Box 12 Interferon
In the pharmaceutical sector, many companies are trying to find solutions for the same problems. Competition is about coming first. An example is interferon, a human protein, developed on the basis of genetic engineering. Many companies in the US have tried to be the first to sequence the gene that codifies for interferon, in order to be able to produce it through genetic engineering. The race was won by Genentech, which obtained a patent. Once Genetech had this (product) patent, the other companies were out of this business; they were not allowed to put Interferon on the market, because the exclusive rights conferred are strong in the case of a product patent.
Implications for drug registration data.
TRIPs Article 39.3, which refers to information required by governments to provide registration for medicines or other chemical products, should be understood in this context. The subject of this protection is test data: the data of clinical trials carried out by the originator company in order to prove safety etc. This information is not invented or created. It is obtained by applying standard protocols on a certain (new) chemical substance. This is acknowledged by the TRIPs Agreement itself, which makes this kind of protection conditional upon the fact that there should have been a considerable effort to develop this information. Therefore, the concept here is not the protection of creation but the protection of investment and, in fact, there is a lot of concern about the expansion of the intellectual property system into the area of investment.
Furthermore, TRIPs requires this protection only in respect of NCEs. There is no need to provide this kind of protection for a new dosage form or for a new use of a known product.
However, when there is patent protection, the exclusivity given by the patent is considerably stronger, so Article 39.3 is mainly relevant in case of a NCE for which patent protection is not recognized. In such a case, two kinds of protection should be given: protection against disclosure and protection against unfair use.
Some countries, such as the US and the EU, have decided, in their (national) legislation, to give additional protection; they have adopted the concept of exclusivity for test data. This means they grant TRIPs-plus protection. In the US, the originator of the information is given a 5-year exclusivity period for the use of this information. In the EU, this is 10 years. But this is not the concept of TRIPs, this is not something that other countries need to follow; in particular developing countries interested in creating a competitive environment in the pharmaceutical sector should not follow this example.
It is important to realize that data exclusivity can interfere with the actual use of a compulsory license. For example, after the originator has submitted the relevant data and obtained registration of a NCE (first application, first registration), what would happen to a second company which wants to register the same product, either using a compulsory license, or in case the NCE is not patented?
• In EU and US, during the data exclusivity period, the second company can not rely on the information from the first registration, so it will not be able to register the same product unless it develops its own clinical test data.
• However, the authorities already know the characteristics and effects of the product (due to the first registration), so for consideration of the second application, all the authorities need, is confirmation that the second product is indeed similar to the first product. How to prove similarity is a matter for the national legislation; some countries require bio-equivalence tests, others may have different requirements. But under TRIPs, authorities can rely on the data from a prior registration. The second company therefore can obtain registration, based on the fact that the product is already registered.
The latter solution is adopted in the law of some countries, e.g. Argentina and Canada. The Supreme Court in Canada has ruled (in 1999) that this is legitimate, under Canadian law as well as under NAFTA, because the Authority is not requesting again for undisclosed information, it is just checking whether the two products are indeed the same.
Stakeholder’s views on data exclusivity
The innovative pharmaceutical industry argues that granting data exclusivity for test data is crucial, since the development of these data is expensive. Allowing other companies to rely on data developed by the innovator, instead of having to develop their own clinical data, would give them an unfair economic advantage. This, in turn, could create a disincentive for the introduction of innovative products and would discourage local R&D.
Consumer groups, such as the Trans-Atlantic Consumer Dialogue, on the other hand argue that, since data exclusivity essentially protects investment, companies seeking data exclusivity should be required to disclose the amount actually invested. This would enhance transparency and allow the establishment of a relation between the actual investment and the protection provided.
Others have proposed the development of a model for a time limited “royalty type” of payment for the use of the originator’s clinical data as a basis for registration of (branded) generics.
Under TRIPs, countries have options to decide how they wish to regulate the protection of undisclosed information. They can opt for TRIPs-plus protection by granting data exclusivity, or for strictly following the TRIPs standards. In making this choice, policymakers will have to weigh the protection of the interests of originator companies against the importance of creating a competitive environment in order to increase access. From a public health perspective, the introduction of TRIPs-plus standards seems not advisable for developing countries.