Princeton, NJ asked in Business Law and Patents (Intellectual Property) for New Jersey

Q: A Federal Judge issued an injunction against one small company because it violated trade secrets of another. No patents?

The company in violation is selling non-FDA approved products. How can products be infringed upon based on "trade secrets" when their products don't have to adhere to a determined fixed standard?

For instance, in patented research, FDA-approved drugs are only successfully challenged if the generic competitor agrees with the "Orange Book data." But there is no such Medicine Compendium available for the small company proprietary meds. Can you help me to understand this? Thanks, David

1 Lawyer Answer
James L. Arrasmith
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Answered

A: To understand this situation, we need to separate a few key concepts:

1. Trade secrets vs. Patents

2. FDA approval

3. Intellectual property infringement

Let's break these down:

1. Trade secrets vs. Patents:

Trade secrets and patents are two different forms of intellectual property protection. A patent is a public document that gives the inventor exclusive rights for a limited time in exchange for public disclosure. Trade secrets, on the other hand, are kept confidential and can potentially last indefinitely as long as they remain secret.

A company can choose to protect its intellectual property through trade secrets instead of patents for various reasons, such as:

- The information might not be patentable

- They want to avoid public disclosure

- They believe the secret will outlast patent protection

2. FDA approval:

FDA approval is separate from intellectual property rights. A product can be protected by trade secrets or patents regardless of whether it has FDA approval. The lack of FDA approval doesn't negate intellectual property rights.

3. Intellectual property infringement:

In this case, the injunction was issued due to trade secret violation, not patent infringement. Trade secret law protects against the misappropriation of confidential information that gives a business a competitive advantage. This can include formulas, processes, or other proprietary information.

To address your specific questions:

- Products can be infringed upon based on trade secrets even without adherence to a fixed standard. The violation occurs when someone improperly acquires, uses, or discloses the secret information, regardless of the end product's standardization.

- The lack of an equivalent to the "Orange Book" for these products doesn't affect trade secret protection. Trade secrets are protected based on their confidentiality and value, not their standardization or regulatory approval.

- The FDA approval status is irrelevant to trade secret protection. A company can have trade secrets for non-FDA approved products, and these secrets are still legally protected.

In summary, the judge's injunction is based on the misuse of confidential information (trade secrets), not on patent infringement or FDA approval status. The company selling non-FDA approved products can still be held liable for using another company's trade secrets, regardless of regulatory approval or standardization of the products.

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