Government
Patents, trade secrets' problems aired Firms must wrestle between choosing to protect a new product or process with a patent, or treating the discovery as a trade secret
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Patents and trade secrets both offer effective, legal means of protecting a new product or process. Some things, such as business and accounting procedures or accumulated data on customers, suppliers, and raw materials, clearly don't meet the criteria for a patent and must be protected as trade secrets. But in many cases the choice is nowhere near so clear-cut, and whatever the choice, there is a need to keep information confidential for at least some period of time. Carl K. Bjork of Dow Chemical Co. participated in the "Symposium on Intellectual Property: the Tension Between Patents and Trade Secrets" sponsored jointly at the Kansas City meeting by the board-council Committee on Patents & Related Matters and the Division of Chemical Information. At the symposium, he pointed out that "premature release of information" concerning a property that is to be patented can be "used as a killing reference" to prevent patenting. For a property that is to be maintained as a trade secret, "such disclosure is not only premature but deadly." Bjork says there are three main ways in which valuable information can be lost. First, there is the loss through premature disclosure, generally in some form of written publication, such as a journal article, sales brochure, advertisement, or even letter. This problem can be solved by setting up a mechanism that assures that all parties responsible for intellectual property review and approve prior to release all material submitted for disclosure to the public. The second facet of the problem is 14
C&EN Oct. 4, 1982
"inadvertent loss, which is more insidious and harder to control," he says. Usually this release is oral. For example, Bjork says, one receives permission to present a paper, obtains the necessary clearances for release of the information to be disclosed, and then departs from or augments the text of the cleared manuscript during the presentation. Or else one indulges in undue expansion and inclusion of details during the question and answer period, or spills too much about the latest breakthrough during social-hour small talk at conventions. The third facet of the problem is loss from outright theft. "Given the difficulties of preserving secrets in today's business climate and the dampening effect that disclosure restrictions have on research effort, it is tempting," says Air Products & Chemicals' E. Eugene Innis, "to say 'let's forget about trade secrets' and patent everything we can. Patents do provide exclusivity. Their value, Innis explains, "is in the one or more bilateral relationships under which another either refrains from practicing our invention or pays for the privilege of doing so. If no one is interested in our invention and would avoid it whether or not we had a patent... a not uncommon situation . . . then the patent can't be said to have much value." Further, he says that if the patent is to have value, one must be willing to enforce it or at least create that impression, which sooner or later probably is going to lead to expensive litigation. But as a rule of thumb, Innis says, only one out of every five inventions will support its own patent. Relatively few original ideas are capable of being protected adequately by a patent. Thus, there really is no choice and the trade-secret route must be followed. One advantage of the trade secret successfully kept, Innis says, is that it is effective worldwide. Consequently, if protection is needed throughout the world, one must weigh the very high cost of obtaining patents in many different countries against the simplicity and economy of keeping the invention a secret in the first place, though that requires great care. Perhaps the greatest threat to trade secrets is the "mobile em-
ployee," a syndrome to which scientists have not proved immune. And as Eli Lilly's Walter E. Buting says, "Any employer who expects the courts to protect his [or her] interests should have considered those interests long before [a] key employee is ready to depart. The courts have a number of difficulties in trying to reconcile the often conflicting rights of an employer and a former employee who takes a job with a competitor in determining if trade secret protection has been violated, but there are some key principles to be looked at. First, Buting says, is the principle that the body of work hired and paid for by the employer belongs to him [or her] and not the employee. Second, the employee has the right to change employment for any reason, or even without a reason. Employees have the right to use their general knowledge,
Trade secrets and patents are, by definition, opposites The Uniform Trade Secrets Act of 1979 defines trade secret as "information, including a formula, pattern, compilation, program, device, method, technique, or process that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." According to the U.S. Code, Title 35, Section 112, patent specifications must "contain a written description of the invention, and the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his [or her] invention. "The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his [or her] invention."
their skills, and experience in a new job. Third, although the degree of novelty required for a trade secret is not so high as that needed for a pat entable invention, the subject matter generally cannot be known or readily available. Fourth, the owner of the trade secret must take such steps to safeguard that secrecy as are required to demonstrate intent that the infor mation not be accessible to an outside company. But some industries, such as the pharmaceutical industry, don't have to worry about protecting trade se crets. "There really isn't any choice," says Stuart R. Suter of SmithKlineBeckman. The choice in the phar maceutical industry always falls to Eatents. Drugs, pesticides, and hericides do not lend themselves to trade secret protection because all must receive government approval prior to marketing. In obtaining that approval, the structure of the active component becomes known. Another problem is the fact that most phar maceuticals can be reverse engineered easily and thus in the absence of patent protection others who wanted to market the product could do so without much trouble. But obtaining the necessary worldwide patent pro tection does not come cheap, Suter notes. Filing in 50 or 60 countries, he says, is not unusual and fees for keeping the patent in force over its lifetime can range from $1000 to $20,000 depending on the country. Another industry that always opts for patents but does make some use of trade secret protection is biotechnol ogy. Protecting proprietary rights in this area, says Walter Dreger of Genentech, requires a departure from the more traditional means of ob taining and retaining rights to intel lectual property that has been fol lowed in the more classical industrial setting. Primarily, this is because the industry's scientific talent is drawn mainly from a limited pool of aca demic researchers who come from a tradition of "publish or perish" and free sharing of research results. What has resulted, Dreger says, is that "we've decided to bend in the direction of the scientists." Early leads in the development of a project are treated as short-term trade se crets. "We follow that procedure rig orously for the time it takes to devel op the concepts of the project into a Eatentable entity." It works, he says, ecause "scientists are as competitive as lawyers. Their goal in life is to be first and when they have a lead that they think will give them a 'first' upon completion of a project, they can keep
things as close to their vests as anyone can. But once the patentable entity is achieved, the scientists have very little time to wait before publishing their results as compared to what they were used to in universities. The time between completion of a project and patenting can amount to only hours, Dreger says. The whole process takes at most months from beginning
to end. "This is a very rapid-fire business and it requires a lot of dili gence and perserverance both on the part of the scientists and the patent attorney involved." This policy, he admits, may cause problems in the future once the in dustry's products finally enter the marketplace, and associated knowhow such as purity improvements will need trade secret protection. D
Indexes aid chemicals' risk assessment
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A strange thing happens when a gov ernment agency such as the Food & Drug Administration or the Occupa tional Safety & Health Administra tion sets out to protect the public from a perceived risk (or in the case of the current Administration role, back a regulation that is seen as providing no benefit). It often appears that, as Edmund A. C. Crouch of Harvard University says more generally, "the discussion of risks . . . proceeds in splendid isolation, usually with pro tagonists and antagonists ranged on two sides of an unbridgeable gulf, quoting contradictory and alarming risk estimates at each other." At the Symposium on Assessing Health Risks from Chemicals, orga nized jointly for the Kansas City meeting by the divisions of Chemical Health & Safety and Chemical In formation, Crouch noted that "the contradiction may be only apparent, the gulf bridgeable." In his own work, he is attempting to bridge that gulf by comparing the risks from nuclear power or chemicals with risks from everyday life, while at the same time providing an indication of which chemicals may need additional study. Crouch uses a linear model to esti mate a chemical's hazard index (number of cancers expected per year) based on the substance's po tency in test animals, a factor that relates that potency to potency in humans, total industrial production, the fraction of that production that is absorbed by humans, and a factor to convert between units and to convert from lifetime risk to annual risk. However, in calculating the hazard indexes presented at the meeting, Crouch considers only potency and production and assumes further that
all of the material produced is in haled, eaten, or drunk—the worst oase one possibly could envision and one that produces very high numbers. The hazard indexes that Crouch has calculated for 47 chemical compounds range from 0.5 death per year due to 2,4,6-trichlorophenol, to less than 130,000 for allyl chloride, to 6 million for 1,2-dichloroethane. Despite the crudeness of the ap proach, Crouch contends that the hazard index does provide a useful initial exercise in risk assessment. It also should draw attention to those chemicals needing further study— those that are capable of causing rel atively large numbers of cancers. Many symposium attendees did not seem so sure, fearing, perhaps, that publication of such estimates could lead to a public perception that the risks are greater than they actually are. And the public's perception of risks plays a key role in shaping the regu lation of what are perceived to be hazardous technologies. Whereas an expert's perceptions of risk correlate well with annual mortality, Paul Slovic of Decision Research pointed out that the public's do not. Once a perception is established, Slovic warns, disagreement about risks should not be expected to evaporate in the presence of evidence because definitive evidence, particu larly about rare hazards, is difficult to obtain. And weaker evidence is likely to be interpreted in a way that rein forces existing beliefs. Although even well-informed lay people exhibit bi ased perception, Slovic does not be lieve that the public should be re moved from the risk assessment pro cess. Public perception, he says, sometimes may be sensitive to im portant factors overlooked by experts. And even if experts generally are much better judges of risks, public participation offers the best hope for creating the informed citizenry nec essary for effective, long-term man agement of hazards. G Oct. 4, 1982 C&EN
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