Protection of Pharmaceutical Formulation Know-How Without Patent Filing

Introduction : Pharmaceutical innovations go beyond merely discovering new active pharmaceutical ingredients. Commercial value can also be found in the process of developing formulations, which include the choice and the proportion of excipients as well as stability enhancing techniques. The knowledge on such formulations may offer a significant competitive edge to a pharmaceutical company even when it is not possible or not required to have patent protection. Therefore, a pharmaceutical company should take into consideration the possibility of making its formulation either public by filing for a patent or keeping it confidential as know-how. Patenting a formulation results in giving the owner an exclusive right only for the limited period in exchange for disclosure of the information, while confidentiality may enable protecting valuable commercial information indefinitely.

Nevertheless, the use of confidentiality also presents certain difficulties in practice. The formulation data may have to be accessed by employees, contract manufacturers, regulatory authorities, and other third parties, raising the likelihood of information being disclosed. Moreover, in some cases, a competitor would be able to discover the formulation data legally by way of reverse engineering or development independently. In such circumstances, it is necessary to take into account not only the commercial value of the formulation but also the potential for patent protection, reverse engineering, mandatory disclosure, and maintaining adequate confidentiality. This paper addresses this issue under the laws of India and evaluates the balance between the disclosure required by the patent law and the maintenance of confidentiality.

Legal Provisions 

The Patent Act, 1970 lays down the essential principles which govern whether the know-how in relation to pharmaceutical formulations can be covered under patent protection. As per Section 2(1)(j), an invention means a new product or process involving an inventive step and capable of industrial application, and as per Section 2(1)(ja) an inventive step. Hence, the pharmaceutical formulations should be having the characteristics of novelty, inventive step, and industrial applicability. But there could be exceptions arising from Sections 3(d) and 3(e). According to Section 3(d), the mere discovery of a new form of a known substance which does not result in enhancement of the known efficacy does not qualify as an invention; whereas according to Section 3(e), substances obtained by the mere admixture of two or more known substances which do not produce any new quality, property, or use. Section 10 says that the specification shall disclose the invention in a complete and clear manner, thereby leading to the basic dilemma of having to give either the patent protection or keeping the formulation information secret. Section 53 lays down the limit of the patent term to twenty years from the date of filing.

Where a pharmaceutical company opts out of patenting, the knowledge of its formulation could be protected by way of confidentiality and trade secret laws. There is no specific legislation dealing exclusively with the protection of trade secrets in India at the moment. The protection will come through contracts, the laws against breaches of confidence, and equitable considerations. The requirement set out in Article 39.2 of TRIPS Agreement plays a critical role in this regard as it requires protection of undisclosed information if it is secret, has commercial value due to its being secret, and there have been reasonable steps taken to keep it secret. These criteria would play a key role in pharmaceutical formulation know-how as the party wishing to get protection based on confidentiality should not only prove the commercial value and secrecy of the information but also take reasonable efforts to protect it.

Pharmaceutical industry is likewise regulated by a framework of regulations under which a company would be required to provide certain scientific and technical information to the regulatory authorities. The Drugs and Cosmetics Act, 1940, the Drugs and Cosmetics Rules, 1945, and the New Drugs and Clinical Trials Rules, 2019, among others, regulate various features of pharmaceutical products and the process of their approval. This results in significant distinction between the information which has to be provided to regulatory authorities and information which can remain secret as the know-how of a company. Further, Article 39.3 of TRIPS discusses protection of the undisclosed test or other data which is submitted to the governmental authorities for the approval of pharmaceutical or agricultural chemical products including new chemical entities. As a result, a pharmaceutical company interested in implementing a secrecy approach has to evaluate both its obligations to disclose information to obtain the patent and the obligations to disclose the information to regulatory authorities to determine what aspects of the company’s formulation can really be kept secret. The legal framework provides for the possibility of using secrecy as an alternative to patents, but this approach can be effective only if the information will remain secret.

Legal Analysis 

Whether the protection of a pharmaceutical formulation should be achieved through the confidentiality approach, or by opting for the patents option, will have to consider the type of information involved, its economic value, and whether it is possible to maintain secrecy with respect to that information. The confidentiality approach is appropriate when the pharmaceutical formulation or the production process involved cannot be easily reverse engineered, and when the company can limit access to it, while at the same time, such information is likely to have commercial value even beyond the twenty-year period of a patent right. In some cases, confidentiality may be used because of uncertainty regarding the patentability of the product, considering the difficulties involved as per Sections 3(d) and 3(e) of the Patents Act, 1970. However, unlike in the case of a patent, confidentiality does not stop independent discovery or reverse engineering.

The problem of confidentiality increases in difficulty if knowledge about formulation is communicated to the firm’s employees, to its consultant or contract manufacturer or regulatory bodies. In order for a firm to keep its information confidential, the confidential nature of the information and reasonable precautions in regard to its protection should be demonstrated. The access to this information should be limited to cases of necessity only, and obligations in regard to the use and communication of this confidential information should be stated in the employment agreement and confidentiality agreement. The same should be done in relation to the contract manufacturer: access to this information, its use, subcontracting, disclosure and further steps in case of the termination of the agreement should be regulated. In addition, disclosure of this information to regulatory bodies requires special consideration since drug companies may be required to file technical information with regulators.

Ultimately, the decision is one involving a tradeoff between the certainty and relatively short period of protection afforded by patents on the one hand, and the unlimited but highly uncertain character of protection through secrecy on the other hand. Whereas the patent entails a disclosure in return for the granting of an exclusive right during twenty years, confidentiality in case of know-how is indefinite in so far as it fulfills the conditions of secrecy and is commercially useful. But secrecy does need to be actively maintained with respect to continual efforts on contractual, organizational, and technical levels, and is always open to independent discovery, reverse engineering, or even accidental or intentional disclosure. A more mixed approach might thus be preferred when the formulation is patentable or easily discoverable, and where valuable manufacturing processes, optimization procedures, or implementation know-how can be kept secret.

Relevant case laws 

Novartis AG v. Union of India

In the case of Novartis AG v. Union of India, the Supreme Court considered the patentability of the beta-crystalline form of imatinib mesylate on the basis of Section 3(d) of the Patents Act, 1970. In this case, the Supreme Court found that the form in question did not meet the condition of increased efficacy required by law. This case is important for the issue of pharmaceutical formulation know-how in that it shows that an innovation or change in a known pharmaceutical substance cannot necessarily be patented. This means that if there is any doubt about the patentability of a formulation, a pharmaceutical company might have to think about keeping its formulation as confidential know-how rather than attempting to patent it.

Emergent Genetics India Pvt. Ltd. v. Shailendra Shivam

In Emergent Genetics India Pvt. Ltd. v. Shailendra Shivam, the Delhi High Court examined a case dealing with claims relating to misappropriation of confidential information and trade secrets by former employees. The Court highlighted the requirement of confidentiality quality in the information, communication of such information under circumstances where there is a duty of confidence, and efforts taken to keep the information confidential. The Court noted that information which is already in the public domain or common knowledge cannot be made into trade secrets merely by calling it confidential information. This case law is especially significant in regard to pharmaceutical formulation know-how since it shows that, in order for a company which relies on confidentiality to succeed in protecting the information, it must clearly specify the information which it wants to protect, and the measures taken to do so.

Practical Implications

In pharmaceutical companies that choose not to file a patent for their formulation know-how, confidentiality needs to be viewed as an ongoing strategy rather than merely the lack of a patent. First, the company needs to define the exact information which gives it its competitive edge. This includes the exact ingredient ratio, the conditions under which the formulation can be made, optimization data, process information, and stability information. Access to this kind of information needs to be limited to the staff and people who have a need-to-know about such information. There need to be suitable confidentiality provisions included in employment and consultant contracts in order to achieve this aim. Where the formulation information needs to be disclosed to a third party, such as a contract manufacturer or laboratory, there need to be clear provisions dealing with how it may be used, who it may be disclosed to, the security of the information, how it will be returned or destroyed after use, and so forth.

Additionally, it must evaluate the likelihood of keeping confidentiality given regulatory disclosures and reverse engineering. It must first consider what formulation-related information will have to be provided to the regulatory agencies and whether such information could become available in the public domain. Secondly, it must consider the ability of its competitors to analyze the finished product to figure out the formulation. Where reverse engineering can occur easily, patent protection could be more effective in ensuring that there are no discoveries of the formulation. However, where manufacturing processes, optimization parameters, and other technical aspects of implementation cannot be easily understood from the finished product, then confidentiality can still protect such information. Therefore, companies should regularly evaluate their protection strategy depending on how the technology has evolved and how valuable the formulation is at different points in time. In situations where the formulation is patentable and manufacturing/optimization information can be kept confidential, using both patent protection and confidentiality can be an effective strategy.

Conclusion 

The commercial viability of protecting pharmaceutical formulation know-how without the filing of a patent exists in situations where the information is feasible to keep confidential and is valuable because of being kept confidential. Unlike the patent, which gives exclusive rights for a defined period in return for disclosure of the information, confidentiality might offer protection of valuable formulation know-how even after the twenty-year patent period expires. Nevertheless, such confidentiality is contingent upon the company making reasonable efforts to maintain confidentiality. Confidentiality can be severely undermined by issues such as access to the information by employees, disclosure of the information to contract manufacturers, submission to government regulations, and poor information security practices.

Thus, instead of treating patents and confidential information as two separate alternatives, it would be better for pharmaceutical companies to follow a case-by-case approach in their decision-making. If a formulation is hard to decode and its secrecy can be ensured, then confidential information will serve as an efficient commercial asset. However, if the formulation is patentable and easy to decode, then patents will be more suitable. If, on the other hand, the core formulation is patentable but manufacturing procedures can be kept secret, then the two may complement each other.

Author:- Twinkle Singh, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or   IP & Legal Filing.

Endnotes

1. Patents Act, 1970, s. 2(1)(j).
2. Patents Act, 1970, s. 2(1)(ja).
3. Patents Act, 1970, ss. 3(d) and 3(e).
4. Patents Act, 1970, s. 10.
5. Patents Act, 1970, s. 53.
6. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), art. 39.2.
7. Drugs and Cosmetics Act, 1940.
8. Drugs and Cosmetics Rules, 1945.
9. New Drugs and Clinical Trials Rules, 2019.
10. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), art. 39.3.
11. Novartis AG v. Union of India, (2013) 6 SCC 1.
12. Emergent Genetics India Pvt. Ltd. v. Shailendra Shivam, Delhi High Court.
13. World Intellectual Property Organization (WIPO), resources on trade secrets and the protection of confidential business information.
14. World Trade Organization (WTO), TRIPS Agreement, provisions relating to the protection of undisclosed information under Article 39.
15. Intellectual Property India, Manual of Patent Office Practice and Procedure, relating to patentability requirements, specification and disclosure obligations.