Trade Secrets And IP Protection In Biotech Collaboration And Licensing Deals

In the highly competitive biotechnology sector, innovation thrives on collaboration and the sharing of expertise, but this openness brings significant risks to the protection of intangible assets. Industrial secrets, strategic data, and proprietary know-how form the core value of companies in this field, making their safeguarding a critical concern from the very outset of partnerships or contract negotiations. As the line between value creation and vulnerability grows increasingly thin, mastering the mechanisms for protecting trade secrets and IP rights is essential to maintain a competitive edge, build trust among partners, and turn innovation into lasting success.

I. Protecting strategic information through trade secrets

I.1 A strategic advantage for protecting multiple types of sensitive information

Companies have always fiercely protected their intangible assets, whether unique formulas, proprietary methods, or sensitive data. Ensuring their confidentiality is essential not only to prevent their misappropriation or unlawful use by competitors but also to maintain a competitive advantage. Without such protection, the time and resources invested in innovation could be rendered worthless.

However, traditional IP law, which includes copyright, patents, trademarks, and designs, cannot always provide comprehensive protection for these critical assets, since it generally requires formal registration and public disclosure of the innovation to secure legal rights. Yet certain types of strategic information might not satisfy the originality or novelty requirement or may simply not be intended for public disclosure. For instance, a genetically modified microbial strain that is not patented, a database containing patients' genetic profiles, a clinical development strategy, or internal cell culture protocols could all be safeguarded as trade secrets, even if they do not meet the typical standard for conventional IP protection.

Given these limitations, trade secret protection stands out as an essential lever, bridging gaps by offering flexible and suitable protection for intangible assets that are unpatentable or not eligible for other IP rights.

I.2. Legal framework for trade secrets

On the international stage, the World Trade Organization (WTO) made a significant advancement with the adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994. It marked a major step forward in formally recognizing the legal protection of strategic information through trade secrets. TRIPS addressed

gaps left by traditional forms of IP law and provided an effective legal framework to meet the global challenges associated with safeguarding trade secrets.

Under TRIPS, information is protected as a trade secret if it satisfies three cumulative criteria: it is secret (in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question), has commercial value because it is secret, and has been subject to reasonable steps to keep it secret.

However, even with TRIPS in place, the specific laws governing trade secrets protection can vary among WTO member countries, leading to differences in how trade secrets are defended against misappropriation.

United States

In the United States, trade secret law has a long history¹, consolidated by the adoption of the Defend Trade Secrets Act on May 11, 2016, which unified the protection regime across the country.

Under these laws, to be protected as trade secret, (i) the owner must have taken reasonable measures to keep such information secret, and (ii) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information².

US law lays out a broad range of eligible information ("patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes") and lists acts that may qualify as "misappropriation"³. Misappropriation occurs when someone obtains or uses someone else's trade secret without permission, when it is acquired through improper means or under circumstances where there is an obligation to keep it confidential. This also includes situations where someone knows or should know that the trade secret was obtained improperly, was supposed to remain secret, or was received by accident or mistake and then acts on that knowledge.

Europe

In the European Union, Directive 2016/943 of June 8, 2016, on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use, and disclosure, adopts the definition and the three cumulative criteria set out by TRIPS Agreement⁴: the information must be secret (i.e., not generally known among or readily accessible to persons within the circles that normally deal with this kind of information in question), has commercial value because it is secret, and has been subject to reasonable steps to keep it secret.

The directive defines unlawful acts as obtaining a trade secret without the consent of the trade secret holder⁵, particularly if this access results from unauthorized access to any documents, objects, or files controlled by the trade secret holder, or through any conduct contrary to honest commercial practices. The use or disclosure of a trade secret without authorization is also unlawful if the person obtained it unlawfully, acts in breach of a confidentiality agreement or any obligation to not disclose or to limit use of the secret. The same applies if, at the time of the act, the person knew or should have known that the secret was obtained unlawfully, directly or indirectly, from another person.

The production, offering or placing on the EU market of infringing goods, or the importation, export, or storage of infringing goods resulting from the unlawful use of a trade secret is also prohibited if the person knew or should have known that the use was unlawful⁶.

I.3. Exceptions to trade secret protection

Despite protective legal frameworks, the scope of trade secret protection is not absolute.

In the United States, acquiring a trade secret is considered lawful if it is done with the permission of the rightful owner or obtained through fair and legitimate means⁷. For instance, independent discovering or creating through honest efforts, or accessing information that has already become public without breaching any confidentiality obligation, does not constitute unlawful misappropriation. Likewise, someone who is genuinely unaware of a confidentiality obligation or who receives a trade secret without knowledge of its improper origin is not held liable.

Additionally, U.S. law recognizes "reverse engineering" as a legitimate way to acquire a trade secret, as long as it is conducted honestly and does not violate any existing confidentiality agreements⁸.

In the European Union, acquiring a trade secret is considered lawful if it results from independent discovery or creation, or from observing, studying, dismantling, or testing a product or object made public or lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret, or from any practice consistent with honest commercial practices⁹.

II. Impact on structuring licensing and collaboration deals

Given the legal framework, it is essential to examine in detail how these legal considerations influence the structuring of licensing and collaboration deals.

II.1. Balancing patent and trade secret strategies

Securing and managing intangible assets has become a cornerstone of sustained competitive advantage. As companies navigate the complex landscape of IP, choosing between patent protection and trade secret strategies demands careful consideration and tailored approaches. In this context, the decision to opt for patent protection or trade secret protection requires a precise analysis of several criteria, including:

• Nature of the innovation: Certain innovations, such as proprietary experimental protocols, process optimizations that are difficult to patent, R&D results not subject to regulatory disclosure, or operational strategies developed in the clinical field, are particularly suited to trade secret protection. Disclosing such information in a patent application could not only result in the loss of significant competitive advantage but also expose Biotech to the risk of its intangible assets being exploited by competitors.
• Commercial exploitation potential: Anticipating the expected duration of innovation exploitation is crucial for adjusting the valorization For instance:
• • If the expected profitability of the innovation is concentrated over a short period (> 5 years), trade secrets may be appropriate, allowing for rapid exploitation while limiting protection costs.
  • If the innovation has medium-term value (5–15 years), it is necessary to assess the durability of the secret over time and the organization's ability to preserve it against competition.
  • If the innovation is part of a long cycle (< 15 years), filing a patent becomes
• Organization's ability to maintain confidentiality: This approach is truly relevant only if the company implements rigorous internal procedures, relies on reliable technical means, and fosters a culture focused on controlling access and sharing Indeed, without suitable systems or effective collective discipline, long-term protection of trade secrets is seriously compromised.
• Regulatory and competitive context: The protection strategy must take into account the competitive landscape (especially, market competition level and competitors' IP strategies), risks related to reverse engineering (if the innovation can be easily reproduced from the commercialized product, trade secrets lose effectiveness), and regulatory disclosure obligations (for instance, for health product approvals).

II.2. Best practices for managing trade secrets

Given the complexity involved in choosing between patent protection and trade secrets, it is critical to implement best practices that ensure the effective protection and management of confidential information.

Defining and implementing trade secret management

Effective trade secret management begins with a clear identification and classification of the information to be protected. This process involves mapping the categories of confidential knowledge, assessing their strategic value, and establishing documentation that details the scope and limitations of trade secrets involved in the partnership. Equally important is the designation of responsible personnel charged with monitoring compliance and overseeing the application of protection measures throughout the collaboration and the establishment of procedures for onboarding and offboarding employees.

Implementing comprehensive measures

Protecting trade secrets requires technical measures to ensure the security of sensitive information: strict access controls to sensitive data, limiting information dissemination to a restricted group of employees, segmenting data according to sensitivity level, and using technical tools such as encryption or physical protection of storage media.

Ensuring confidentiality through employee training and incident management

Continuous employee awareness and training on confidentiality issues and best practices, along with implementing incident management procedures and rapid response protocols in case of suspected leaks or breaches, play a fundamental role in maintaining confidentiality.

Defining and implementing contractual safeguards

Contracts with partners or service providers must include specific clauses on managing and protecting trade secrets, to ensure shared responsibility and traceability of exchanges involving confidential information. These clauses should clarify each party's responsibilities, sharing modalities, mechanisms for tracking confidential information exchanges, and applicable penalties for contractual breaches.

Ensuring compliance and defending trade secrets

Periodic review and internal audit procedures should be established to ensure compliance with protocols and to respond quickly in case of breaches or potential disputes involving sensitive data. These audits should identify any weaknesses, verify the adequacy of measures in place, and ensure continuous improvement of practices. In cases of disputes or suspicions of violations, having complete traceability of accesses, exchanges, and decisions related to trade secrets is a major asset for effectively defending company's rights.

Conclusion

Ultimately, protecting trade secrets and managing IP rights in biotech collaborations and licensing deals requires a thoughtfully developed and adaptive strategy. The effectiveness of this protection depends on tailoring measures to each partnership's specifics, remaining vigilant in risk anticipation, and rigorously applying organizational, technical, and legal safeguards. In an environment where rapid innovation and knowledge sharing are essential, the ability to balance security, agility, and regulatory compliance becomes a true lever for sustainability and competitiveness for Biotech.

Footnotes

1 Uniform Trade Secrets Acts (1979); Computer Fraud & Abuse Act (1986); Economic Espionage Act (1996)

2 18 U.S.C. §1839 (3)

3 18 U.S.C. §1839 (6)

4 Article 2

5 Article 4

6 Article 4

7 18 U.S.C. §1839 (5)

8 18 U.S.C. §1839 (6)

9 Article 3

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.