Who Owns What Biotech Staffs Know?

Switching jobs is a wrenching experience for anyone. But biotech scientists who move to a competitor face the added strain of a possible suit if they can take their knowledge with them. The problem is highlighted in a case brought by Genentech, the San Francisco biotechnology company. The suit, filed February 8, accuses five former employees of misappropriating trade secrets relating to TPA, the company’s blockbuster, new drug to dissolve blood clots, and other recombinant proteins after they took jobs with a competitor, Invitron Corp. of St. Louis. The defendants are contesting the charges. The suit may force industrial research managers to reassess corporate security measures, say scientists and industry observers. It may also cause staff scientists to think hard about the legal implications of a career move. "People’s understanding of what information is protected in the biotechnology business is confused,” said molecular biologist Leroy Hood of the California Institute of Technology. "This new industry must now go through the painful legal process of sorting things out." A senior academic scientist, who is also an officer of a biotech firm, said that Genentech’s lawsuit "will alert people to the complexities of trade secrets and . . . will make more scientists aware of the legal details of their circumstances, such as employment and rights. That is both good and bad. It can drain resources." The problem is expected to worsen as the technology becomes increasingly sophisticated. As high-tech companies become less likely to hire inexperienced staff, they will turn increasingly to scientists with skills acquired at previbus jobs. The distinction between someone with specific but generic skills and someone with proprietary information is blurry, say lawyers. And the stakes are high in a field where even small bits of data can tip a competitive balance. One effect of the suit, which also involves Invitron’s partners, Monsanto and C.D. Searle, may be a requirement that scientists and other workers sign employment or exit agreements, spelling out who owns what information and for how long. And employees who once sought legal counsel only after they left a company are now seeking advice before they resign. Lawyers in the Techlex Group, the high-tech legal firm within Reed, Smith, Shaw and McClay of Pittsburgh, advise their clients to "break cleanly." Attorneys Arthur Schwab and Gregory B. Jordan suggest creating "as much separation as possible" and recommend against recruiting former colleagues to the new company. "Above all," say the Techlex attorneys, "take nothing with you." Scientists often erroneously believe that they are entitled to take away any paper they wrote while working at a company. In fact, only published papers, are in that category. Jeffrey Kestler, secretary and general counsel for AT&T Bell Labs, advises department employees to “be up front with management” and to refrain from taking away any property "in your hand or your head." Litigation to protect trade secrets can be risky, say Schwab and Jordan. A suit may result in the inadvertent disclosure of trade secrets, thus exacerbating the problem it was intended to solve. It also can divert the attention of management and damage morale. "There are less confrontational and expensive approaches [than litigation] available," the Techlex attorneys note. Yet such suits are sometimes worth the cost. "To deal with the problem once as a means of avoiding controversy may be the most cost-effective method for protecting technology," they said. "The employer may want to establish a precedent so as to increase [the company's] ability to fully protect its technology in the future." Companies being sued in trade secret disputes generally pursue two lines of defense, said Thomas Wettach, a Techlex specialist in intellectual property matters: "They can claim they were brought in in a different capacity in their new positions, or they may claim that the technology [in dispute] is not secret," he said. "In fact, a claim of secrecy is difficult to prove. Such claims vanish after an idea is published or disclosed at a trade meeting. Ideas developed with government money may be considered part of the public domain. Proprietary rights may also be forfeited during patent litigation. Equally important is the idea that technology is secret only if its owners treat it so. Kestler said that a company that hopes to preserve its trade secrets must guard its knowledge from the first day. "This means, for example, having a guard at the door, educating staff about what is secret, marking documents and having company instructions on what can be done with the information," Kestler explained. "If information is not protected, it may not be proprietary." Moffat is a freelance writer in Ithaca, N.Y

Who Owns What Biotech Staffs Know?

Interested in reading more?

Become a Member of