Trade Secrets As A Response To Compulsory Licensing

• Published date: 23 July 2020
• Subject Matter: Intellectual Property, Patent, Trade Secrets
• Law Firm: Silva
• Author: Mr Sebastian Alvarado

It has become a trend over the recent years the consideration of compulsory licensing based on inaccessibility grounds i.e. high pricing of patented pharmaceutical products, which are not related to cases of extreme urgency as required from article 31 of the TRIPS Agreement and in the case of Chile, article 51 N' 2 of the Law 19.039 on Industrial Property. When said consideration is supported by Governments, it opens the door to potentially applying compulsory licensing to any patented product or method, not only for Pharmaceuticals but also for any other field or industry in general. This situation generates fear among right holders i.e. innovation companies, since their patents will become less valuable, non-enforceable and eventually, will suffer a considerable economic lost since their investment in R&D will not be recovered as expected when forced royalties are decided by a third party such as a Judge or the Patent Office. Trade secrets can come into play as a response to this emerging trend, essentially when disclosure is not required by Law or regulations of competent agencies; and in where the holder is able to commercially exploit it while securing its confidentiality by the way of agreements with third parties and internal practices within its organization in order to comply with the 'reasonable measures of protection' requirement for trade secrets. Responding with trade secrets to this emerging trend of patent compulsory license will save companies from the uncertainty of politics and changes in Government administration that end up targeting on innovative products or processes for a cheaper access - ignoring the years of efforts in its creation - through a burdensome process for the holder in where, at least in the case of Chile, it is initiated by a public declaration issued by a competent authority on circumstances that would justify the granting of a compulsory license - hence, configuring its grounds - and then, opening the possibility for any third party to request license itself before the Patent Office in a procedure in where the provisions of the license are determined e.g. imposed royalty duration, grant of rights, among others (in the case of article 51 N'2 and 51 bis C of the cited Law 19.039)

Now, concerning trade secrets per se, the scope of protection is broader as compared to patents, since it protects any information (yes, even including negative know-how); thereby, not subject to the restrictions commonly found on Patent Law...