I took a deposition last week in a Trade Secrets case involving physicians, compounding pharmacies and the weight loss drug, Mounjaro®. As the corporate representative paused to think up an answer, I started watching the planes take off and land at Love Field from my 49th floor window. I began to think about the story of Albert Einstein’s “E=MC2.
I have seen a big jump in trade secrets cases, as non-competes are set to become illegal September 4. These claims really are all over the place, in part, because people don’t know what a trade secret is.
Part of the problem is people get confused– just because something (like a formula) “formula”) is on a statutory list of things that “might” be a trade secret, it doesn’t mean that the formula “is” a trade secret, if it doesn’t fit the rest of the definitions. Namely, it must be have some economic value because it is a “secret.” Unlike a patent, trademark, or an FDA approved drug, nobody in the government examines and preapproves a “trade secret” as valid IP claim.
Worse, trade secret litigation is often framed less by logic, and more by anger on the part of the litigant who yells the loudest or has the biggest “stick.” (See, also “arguing through vehemence,” or “argumentum ad baculum)”.
Which leads to some fun depositions like last week. Particularly in areas like MedSpas, Weight Loss and Botox Centers; which were once were the sole province of doctors, but are now rife with amateur neo-entrepreneurs:
“Q: So. . . do you think the practice of medicine is a trade secret?”
“Q: Are you saying that how doctors prescribe an FDA approved drug is your trade secret?”
And so, that’s how I came to be staring out the window watching the airplanes take off and land.
What Does “E=MC2” have to do with Patents, FDA Drugs and Trade Secrets? Admittedly, I know as much about the science of patents and the FDA approval process, as a horse knows about a road map. But like any good horse, with a little prodding I know enough to eventually get where I need to go.
Albert Einstein developed his “E=MC2” theories of relativity while working in a Swiss patent office in 1902 examining clock patents. Patents are how inventors keep others from copying their ideas. Clocks weren’t new in 1902, but trains which go fast (and the need to catch one on schedule) were.
While it was simple in the early days of trains to determine how much time it would take for a train to go from New York to another town, it was anybody’s guess what “local time” might be for passengers waiting at the station when the train arrived.
The problem lies in how the sun works. Noon occurs, and for that matter, any time ante meridiem or post meridiem, at different times in every town, as we travel east or west. Solar noon in New York happens earlier than solar noon in Cleveland. Which is a problem for making efficient train schedules people can count on. Anyone who figured out the answer could get rich from the patent.
And that’s what Einstein was doing in the patent office in Switzerland. People were trying to get official recognition or a “patent” on their ideas to synchronize distant clocks. Einstein had a little extra brain bandwidth than your average patent examiner, and used it to imagine what would happen to the speed of light, if it came from one of those moving trains. Would it go faster? If not, why not? Any physicist can fill a chalkboard with calculations, but it takes true genius to make all of it fit on your thumbnail, like “E=MC2”.
The train schedule problem was eventually solved when somebody got the more practical idea of using time zones, “why don’t we just ‘ballpark’ it?” And that’s how the planes at Love Field takeoff and land on time. We use time “zones” instead of precise solar time, which is a great idea, but also worth nothing.
The idea of “time zones” wouldn’t be a trade secret however, because it only has economic value, by not being a “secret.” It’s like the “Heimlich” maneuver— a good idea that only works, because everybody knows about it.
A Few other observations about patents, FDA approval and trade secrets:
(1) Patents are not a “secret.” The word “patent” as a noun, means the right to exclude others from copying the design, which shares the same root as the adverb “patently” (meaning “open, obvious.”) A patent application is a “claim,” to an invention of something “new and useful.” The formula or process is published. “What’s in it” or “how it works,” is not a secret.
(2) Patents are easier to get, harder to enforce. The government doesn’t enforce patents simply because a patent is granted. The government usually will raid warehouses to enforce an IP law only if there is some other intellectual property law involved, like the Lanham Act (trademark, “fake Rolexes”) or offending the FDA (“misbranding” or labelling violation.)
(3) Patenting a drug is just the first step to market. While the FDA could approve a drug without a patent, it costs too much for a seller to obtain FDA approval for a drug or device without a patent. Someone else could just copy it. Usually only patented drugs are worth the trouble. Then, the FDA takes over to determine if drug is also safe and effective, what instructions and warnings must come with the drug. But once approval is granted, the FDA will enforce exclusivity, including compounding generic versions.
(4) Compounding or off label prescribing. The FDA does not regulate doctors. If a doctor in his medical judgement, decides an FDA approved drug is safe and effective for another illness, he can prescribe the drug “off-label.” (Think, “Ivermectin” for COVID). The doctor is answerable to the medical board which may consider this a form of “Complimentary Alternative Medicine,” for which there must be written patient “informed consent,” after proper disclosures and warnings.
(5) Things get out of hand sometimes, even when everybody follows the rules. I handled dozens of Ivermectin Texas Medical Board complaints last year, after doctors were bombarded by patients who demanded Ivermectin as a prophylactic against COVID. While Ivermectin worked (it won a noble prize for medicine because it saved lives as an anti-parasitic in poor countries), it wasn’t covered by insurance unless the patient actually had parasites, which was the FDA approved use.
Doctors were legally able to prescribe Ivermectin for off-label use, but when the patient went to the drug store, the pharmacy billed insurance, who paid the claims, thinking the doctor had prescribed the drugs for rare parasite infections. Insurance paid and paid, until so many claims began piling up, that insurance began to wonder “how is it that everybody suddenly has this rare parasitic infection?”
The natural conclusion was that the doctors must be committing “fraud,” so Insurance filed complaints with the medical board against the doctors for healthcare fraud. Turns out, the doctors had no idea how insurance was billed by Walgreens or CVS. Even where the doctors told the patients not to claim the drug on insurance, they did it anyway.
As you can tell, I love talking about this, if you have any health law questions or better yet, need to refer a case, just drop me an email and I will answer it.
Next week, I will conclude the topic, with a discussion how the FDA works with states attorneys general Consumer Protection Divisions to protect the interests of big pharma.