1. CEIPI Advanced Training Program
Module 9
AI, Trade Secrets, and Medical Innovation
May 2018
Nari Lee, Professor of IP, Hanken School of Economics, Finland
nari.lee@hanken.fi
Hanken Svenska handelshögskolan / Hanken
School of Economics www.hanken.fi
2. Outline
1. Overview of Trade Secrets
2. AI, Patents and Trade Secrets
3. Trade Secrets, AIs in Personalized medicine
3. Readings
Primary source:
» Directive(EU)2016/943of the European Parliament and of the Council of 8 June
2016 on the protection of undisclosed know-how and business information (trade
secrets) against their unlawful acquisition, use and disclosure
» TRIPS Art 39/ Paris Convention
» EU Trade Secret Study:
http://ec.europa.eu/internal_market/iprenforcement/docs/trade-
secrets/130711_final-study_en.pdf
Secondary source:
» Burk, Dan L., Patents as Data Aggregators in Personalized Medicine (April 22, 2015).
Boston University Journal of Science and Technology Law, Vol. 21, No. 2, 2015; UC
Irvine School of Law Research Paper No. 2015-47. Available at
SSRN: https://ssrn.com/abstract=2597525
» Sherkow Jacob S. The CRISPR Patent Landscape: Past, Present, and Future, The
CRISPR Journal.Feb 2018. ahead of print http://doi.org/10.1089/crispr.2017.0013
» Simon, Brenda M., and Ted Sichelman. "Data-generating patents." Nw. UL Rev. 111
(2016): 377.
4. AI: TS vs IPR
AI object
as subject matter of
rights
Patent eligibility,
Copyright ability
Trade Secrets
AI person
as creator,
inventors, or
data generator
AI and juridical
capacity
AI and liability
AI and contract
AI (Technical
Protection)
Trade Secrets
AI tool
using AI in the process
of creation or Invention
AI as contractual
object
AI as component
of invention
AI as an element
of creative works
Trade Secrets
6. Trade Secrets in
Paris Convention Art 10 bis
The Paris Convention Article 10bis
1) The countries of the Union are bound to assure to nationals
of such countries effective protection against unfair
competition.
(2) Any act of competition contrary to honest practices
in industrial or commercial matters constitutes an act
of unfair competition.
(3) The following in particular shall be prohibited:
(i) all acts of such a nature as to create confusion by any means
whatever with the establishment, the goods, or the industrial or
commercial activities, of a competitor; (ii), (iii)
7. Confusing start: TRIPS Art 39…
SECTION 7: PROTECTION OF UNDISCLOSED INFORMATION, Article 39
1. In the course of ensuring effective protection against unfair competition as
provided in Article 10bis of the Paris Convention (1967), Members shall
protect undisclosed information in accordance with paragraph 2 and data
submitted to governments or governmental agencies in accordance
with paragraph 3.
2. Natural and legal persons shall have the possibility of preventing information
lawfully within their control from being disclosed to, acquired by, or used by
others without their consent in a manner contrary to honest commercial
practices so long as such information:(a) is secret in the sense that it is not, as
a body or in the precise configuration and assembly of its components,
generally known among or readily accessible to persons within the circles that
normally deal with the kind of information in question; (b) has commercial
value because it is secret; and (c) has been subject to reasonable steps under
the circumstances, by the person lawfully in control of the information, to keep
it secret.
Trade secret
Data exclusivity
8. Compare Footnote 10 to TRIPS
39.2
» For the purpose of this provision, “a manner contrary to
honest commercial practices” shall mean at least practices
such as breach of contract, breach of confidence and
inducement to breach, and
» includes the acquisition of undisclosed information
by third parties who knew, or were grossly
negligent in failing to know, that such practices
were involved in the acquisition.
9. EU Commission proposal COM
(2013) 813 final.
Why?
According to the assessment study done by the
European Commission SWD(2013) 471:
→ the level of protection of trade secrets is very
different in various Member States;
→ these differences arguably form a restriction on
cross border cooperation between companies in
different countries
→ which in turn weakens the efficient functioning
of the internal market and the competitiveness of
the European Union
10. The EU TS Directive
» Directive 2016/943 of 8 June 2016 on the protection of
undisclosed know how and business information (trade
secrets) against their unlawful acquisition, use and
disclosure.
» Member states need to transpose it to national law by 9
June 2018
» 40 recitals and 15 Articles on substantive aspects of TS
protection including definitions of TS, unlawfulness,
lawfulness, remedies
12. Solution? The Scope of the
Directive (Art 1)
It shall not affect:
» The exercise of the right to freedom of
expression and information;
» Disclosure for reasons of public interest;
» Limiting employees’ use of experience and
skills honestly acquired in the normal course of
their employment;
» Mobility of employees
à Also in the exceptions and limitation
13. Minimum harmonisation
» Art 1: ‘Member States may…provide more far-reaching
protection...than required by this Directive’
» Provided:
» Lawful acts (art 3)
» Exceptions (art 5)
» General obligations in terms of remedies (Art 6) and also
proportionality and safeguards against abuse (Art 7(1))
» Limitation period (Art 8)
» Limits on duties of confidence in proceedings (Art 9(1));
balancing clause and data protection (Art 9(3)-(4))
» Disclosure of trade secret in return for guarantees of
compensation not allowed (Art 10(2))
» Proportionality criteria in relation to interim and final
injunctions and publication of decisions (Arts 11, 13, 15(3))
14. Art 2. Definitions 1.
(1) ‘trade secret’ means information which meets all of the following
requirements:
(a) it is secret in the sense that it is not, as a body or in the
precise configuration and assembly of its components, generally
known among or readily accessible to persons within the circles
that normally deal with the kind of information in question;
(b) it has commercial value because it is secret;
(c) it has been subject to reasonable steps under the
circumstances, by the person lawfully in control of the
information, to keep it secret;
15. Art 2. Other definitions
(2) ‘trade secret holder’ means any natural or legal person
lawfully controlling a trade secret;
à No need to be the initial creator or the information: claim to
the entitlement based on the ‘lawful control’
à Not an IP ?
(3) ‘infringer’ means any natural or legal person who has
unlawfully acquired, used or disclosed a trade secret;
à A right? - ‘infringer of a right?
(4) ‘infringing goods’ means goods, the design, characteristics,
functioning, production process or marketing of which
significantly benefits from trade secrets unlawfully acquired, used
or disclosed.
16. Art 4.1. Unlawful acquisition, use and
disclosure
Article 4 Unlawful acquisition, use and disclosure of trade
secrets
1. Member States shall ensure that trade secret holders
are entitled to apply for the measures, procedures and
remedies provided for in this Directive in order to prevent, or
obtain redress for, the unlawful acquisition, use or disclosure
of their trade secret.
àUnlawfulness is the basis for protection?
àOther causes actions exist (but required)?
àNot a property right nor a conduct regulation as such but a
parasitic protection requiring a host protection? (Bone)
17. Art. 4.2 Unlawful acquisition, use and
disclosure 2
2. The acquisition of a trade secret without the consent of the
trade secret holder shall be considered unlawful whenever carried
out by:
(a) unauthorised access to, appropriation of, or copying of any
documents, objects, materials, substances or electronic files,
lawfully under the control of the trade secret holder, containing
the trade secret or from which the trade secret can be deduced;
(b) any other conduct which, under the circumstances, is
considered contrary to honest commercial practices (italic
here).
à Minimum protection: does this create a separate and
independent cause of action based on the consent of TS holder if
member states did not make them unlawful before
à Creation of new kind of wrong? Wrong against honest
commercial practices?
à Commercial morality is the purpose of protection?
18. Art 4.3. Unlawful acquisition, use and
disclosure 3
3. The use or disclosure of a trade secret shall be considered
unlawful whenever carried out, without the consent of the trade
secret holder, by a person who is found to meet any of the
following conditions:
(a) having acquired the trade secret unlawfully;
(b) being in breach of a confidentiality agreement or any other
duty not to disclose the trade secret;
(c) being in breach of a contractual or any other duty to limit the
use of the trade secret.
à Unlawful if no CONSENT: Protection of contractual promise?
à A new cause of action creatable by contract?
19. Art. 4.4 &5 Third Party Liability
» 4. The acquisition, use or disclosure of a trade secret shall
also be considered unlawful whenever a person, at the time of
the acquisition, use or disclosure, knew or ought, under the
circumstances, to have known that the trade secret had been
obtained directly or indirectly from another person who was
using or disclosing the trade secret unlawfully within the
meaning of paragraph 3.
» 5. The production, offering or placing on the market of
infringing goods, or the importation, export or storage of
infringing goods for those purposes, shall also be considered
an unlawful use of a trade secret where the person carrying
out such activities knew, or ought, under the circumstances, to
have known that the trade secret was used unlawfully within
the meaning of paragraph 3.
»
20. Article 5 Exceptions
Article 5 exceptions
Member States shall ensure that an application for the measures, procedures
and remedies provided for in this Directive is dismissed where the alleged
acquisition, use or disclosure of the trade secret was carried out in any of the
following cases:
(a) for exercising the right to freedom of expression and information as set
out in the Charter, including respect for the freedom and pluralism of the
media;
(b) for revealing misconduct, wrongdoing or illegal activity,
provided that the respondent acted for the purpose of protecting
the general public interest;
(c) disclosure by workers to their representatives as part of the legitimate
exercise by those representatives of their functions in accordance with Union
or national law, provided that such disclosure was necessary for that
exercise;
(d) for the purpose of protecting a legitimate interest recognised
by Union or national law.
21. Also, Art 3. Lawful acquisition,
use and disclosure
Article 3
» Independent discovery or creation;
» Results of studies, tests (reverse engineering) etc;
» Workers information and consultation;
» Any other practice which is in conformity with
”honest commercial practices”
22. Art 9. Preservation during legal
proceedings
Preservation of confidentiality of trade secrets in the course of legal proceedings
1. Member States shall ensure that the parties, their lawyers or other
representatives, court officials, witnesses, experts and any other person
participating in legal proceedings relating to the unlawful acquisition, use or
disclosure of a trade secret, or who has access to documents which form part
of those legal proceedings, are not permitted to use or disclose any trade
secret or alleged trade secret which the competent judicial authorities have,
in response to a duly reasoned application by an interested party, identified
as confidential and of which they have become aware as a result of such
participation or access. In that regard, Member States may also allow
competent judicial authorities to act on their own initiative.
2. The obligation referred to in the first subparagraph shall remain in force after
the legal proceedings have ended. However, such obligation shall cease to
exist in any of the following circumstances: (a) where the alleged trade secret
is found, by a final decision, not to meet the requirements set out in point (1)
of Article 2; or (b) where over time, the information in question becomes
generally known among or readily accessible to persons within the circles
that normally deal with that kind of information.
23. Remedies? Civil Remedies
against TS misappropriation
» Provisional and precautionary measures
» Injunctions and corrective measures
» Damages
» Prohibition of import, marketing or or
offering of infringing goods
» Publication of judicial decisions
» NOT A CRIMINAL REMEDY
24. Art 12 infringing goods
2. The corrective measures referred to in point (c) of
paragraph 1 shall include:
(a) recall of the infringing goods from the market;
(b) depriving the infringing goods of their infringing quality;
(c) destruction of the infringing goods or, where appropriate,
their withdrawal from the market, provided that the
withdrawal does not undermine the protection of the trade
secret in question.
3. Member States may provide that, when ordering the
withdrawal of the infringing goods from the market, their
competent judicial authorities may order, at the request of the
trade secret holder, that the goods be delivered up to the
holder or to charitable organisations.
25. Conditions to remedies (Art 11&
13)
» the competent judicial authorities shall be required to take
into account the specific circumstances of the case, including,
where appropriate:
(a) the value or other specific features of the trade secret;
(b) the measures taken to protect the trade secret;
(c) the conduct of the infringer in acquiring, using or disclosing
the trade secret;
(d) the impact of the unlawful use or disclosure of the trade
secret;
(e) the legitimate interests of the parties and the impact which
the granting or rejection of the measures could have on the
parties;
(f) the legitimate interests of third parties;
(g) the public interest; and
(h) the safeguard of fundamental rights.
26. Limited scope for enforcement:
Recital 37
» The Directive does not aim to establish harmonised
rules for judicial cooperation, jurisdiction, the
recognition and enforcement of judgments in civil
and commercial matters, or deal with applicable law.
Other Union instruments which govern such matters
in general terms should, in principle, remain equally
applicable to the field covered by this Directive.
à Brussels Regulation : Forum
à Rome I& II Regulations : Applicable law
» Extra-territorial enforcement : should follow Brussels and
Rome I&II Regime
27. AI, TRADE SECRETS AND
OTHER FORMS OF
PROTECTION
2. TS vs other rights
28. Trade Secrets vs Other IP, Rights
» Trade secret law versus no protection
» Trade secret law versus patent
» Trade secret law versus copyright
» Trade secret law versus trademark
» Trade secret law versus design protection
29. TS as Tort remedy for Wrong
» Legal remedies for physically impossible measures of
protection
àBreaking of the protective measures to keep the
information secret
àE.I.du Pont de Nemours & Co Inc vs. Christopher
(USA)
Unfair business practice: socially unacceptable behaviour
that should be illegal
à ‘FAIRNESS’ Consideration
à ‘Criminal liability’ is the main?
30. TS as Investment Protection?
» Should investment in intangible be protected just by the
facts of investments regardless of the value of the
underlying subject matter?
» Investment in what?
» IP ineligible subject matters: Investment on
Information with IPR worthy values may be protected
under IPR regime à AIs and Data
» Investment on ‘reasonable measures of keeping the
information secret’ : Compare Anti-circumvention
measures
» Investment to make sure rivals (and the public at large)
do not benefit from the valuable information?
31. AIs and Trade Secrets
» TS: No qualitative eligibility
» AIs (data, algorithm or other types of information) may
well be protected as trade secrets
» AIs generated works, inventions and data may be protected
as trade secrets
» AIs when used as part of a product may be protected as
trade secrets
32. EC Communication (10.1.2017)
Data Economy
» Raw machine-generated data are not protected by existing
intellectual property rights since they are deemed not to be
the result of an intellectual effort and/or have any degree of
originality. The sui generis right of the Database Directive
(96/9/EC) – which gives makers of databases the right to prevent
extraction and/or reutilisation of the whole or of a substantial part of
the contents of a database – may provide protection only under the
condition that the creation of such a database involves substantial
investment in the obtaining, verification or presentation of its
contents. The recently adopted Trade Secrets Protection
Directive (2016/943/EU), to be transposed into national law by
June 2018, will grant protection to trade secrets against their
unlawful acquisition, use and disclosure. For data to qualify
as a "trade secret", measures have to be taken to protect the
secrecy of information, which represents the 'intellectual
capital of the company".
33. AIs: Revisit
AI object
as subject matter of rights
Patent eligibility,
Copyright ability
Trade Secrets
AI person
as creator,
inventors, or
data generator
AI and juridical capacity
AI and liability
AI and contract
AI (Technical
Protection) Trade
Secrets
AI tool
using AI in the process of creation or
Invention
AI as contractual object
AI as component of
invention
AI as an element of creative
works
Trade Secrets
1. AI as subject
matter of TSà
YES
AIs can be
protected with TS
2.1 Can AI own TS
2.2. Can AI
misappropriate?
(civil liability)?
à Theoretically
maybe
3.1 Can patent claim
include AIs?
3.2 Can AI be used to
lawfully acquire TS?
34. 1. AI as subject matter of TS
à Revisit Art 2.1.
(1) ‘trade secret’ means information which meets all of the following
requirements:
(a) it is secret in the sense that it is not, as a body or in the
precise configuration and assembly of its components,
generally known among or readily accessible to persons
within the circles that normally deal with the kind of
information in question;
(b) it has commercial value because it is secret;
(c) it has been subject to reasonable steps under the
circumstances, by the person lawfully in control of the
information, to keep it secret;
35. 2. AI owner and liability
2.1. Can AI own TS? Art 2. 2
(2) ‘trade secret holder’ means any natural or legal person
lawfully controlling a trade secret;
à No need to be the initial creator or the information: claim to
the entitlement based on the ‘lawful control’
à AI?
(3) ‘infringer’ means any natural or legal person who has
unlawfully acquired, used or disclosed a trade secret;
à A right? - ‘infringer of a right?
à AI?
(4) ‘infringing goods’ means goods, the design, characteristics,
functioning, production process or marketing of which
significantly benefits from trade secrets unlawfully acquired, used
or disclosed.
36. 2.2. Can AI misappropriate?
Article 4 Unlawful acquisition, use and disclosure of trade
secrets
1. Member States shall ensure that trade secret holders
are entitled to apply for the measures, procedures and
remedies provided for in this Directive in order to prevent, or
obtain redress for, the unlawful acquisition, use or disclosure
of their trade secret.
à MS can legislate misappropriation by AIs.
37. 2.2. Can AI misappropriate?
2. The acquisition of a trade secret without the consent of the trade secret holder shall be
considered unlawful whenever carried out by:
(a) unauthorised access to, appropriation of, or copying of any documents, objects,
materials, substances or electronic files, lawfully under the control of the trade secret holder,
containing the trade secret or from which the trade secret can be deduced;
(b) any other conduct which, under the circumstances, is considered contrary to honest
commercial practices (italic here).
3. The use or disclosure of a trade secret shall be considered unlawful whenever carried out,
without the consent of the trade secret holder, by a person who is found to meet any of the
following conditions:
(a) having acquired the trade secret unlawfully;
(b) being in breach of a confidentiality agreement or any other duty not to disclose the trade
secret;
(c) being in breach of a contractual or any other duty to limit the use of the trade secret.
à AI’s unauthorized acquisition, of another? (based on own
decision?
à AI’s disclosure and use of TS protected data, when there is a
duty of confidence or other contractual duty (based on own
decision)?
à Contractual restriction of AI based reverse-engineering?
38. 2.2. Can AI. Misappropriate? +
3. AI tool ? 3rd party liability and AI
» 4. The acquisition, use or disclosure of a trade secret shall also be considered unlawful
whenever a person, at the time of the acquisition, use or disclosure, knew or ought, under
the circumstances, to have known that the trade secret had been obtained directly or
indirectly from another person who was using or disclosing the trade secret unlawfully
within the meaning of paragraph 3.
» 5. The production, offering or placing on the market of infringing goods, or the
importation, export or storage of infringing goods for those purposes, shall also be
considered an unlawful use of a trade secret where the person carrying out such activities
knew, or ought, under the circumstances, to have known that the trade secret was used
unlawfully within the meaning of paragraph 3.
à Can the third party liability applicable to AIs?
à 4.4. ‘person’ : maybe not,
à but 4.5, as part of the ‘infringing goods’ : yes
39. 3. Using AI as a tool to misappropriate?
Exception & lawfulness applicable to AI use?
Article 3 (acquisition, disclosure, use)
» Independent discovery or creation;
» Results of studies, tests (reverse engineering) etc;
» Any other practice which is in conformity with
”honest commercial practices”
àAI’s own TS Use (2.2. misappropriation?) ?
àUsing as AI as a tool to lawfully acquire?
41. Personalized medicine and AI
» Personalized medicine?
» Targeted treatment of different subgroups of patient
» Tailored treatment to the best-responding patients
» Screen non-responders or patients that are likely to suffer
adverse effects
à Requires Data, Large Sets of Data
à Often genetic data
à Leading to innovation in medical methods (diagnosis,
treatment, surgery etcs
42. Using AIs in Genomics
» AIs /Machine learning algorithms are used often
» to discover genes and variants related to specific
decisions,
» to analyse data in the full context of other genomics and
clinical information
» to handle next generation sequencing (Massively
parallel or deep genome sequencing’)
» gene editing (i.e CRISPE)
» Predictive direct to consumer genetic testing
45. Gene editing and AI
https://www.deskgen.com/landing/blog/machine-learning-crispr-guide-design
46. CRISPR Inventions
» CRISPR Technology - Clustered Regularly Interspaced Short
Palindromic Repeats (CRISPR)-CRISPR associated (Cas) system : a
combination of protein and ribonucleic acid (“RNA”) that can alter
the genetic sequence of an organism
» ‘The CRISPR/Cas system is a naturally occurring form of immune
defense employed by bacteria to fight off invading viruses’.
» Community effort to understand CRISPR and develop it since the
discovery of Japanese researcher’s DNA sequence of E.coli bacteria
47. CRISPR-Cas9: Genome Editor
» a powerful tool to modify specific deoxyribonucleic acid
(“DNA”) in the genomes of other organisms, from plants to
animals.
» “With CRISPR, scientists can create mouse models of
human diseases much more quickly than before, study
individual genes much faster, and easily change multiple
genes in cells at once to study their interactions.” (Pennisi,
Exh. 22312, at 834.)
» A Research Tool
» ‘CRISPR is a broadly applicable, enabling technology platform, similar
in many respects to “research tools”: equipment, re- agents, and methods
that enable a broad range of downstream research’
49. Patent Protection in PM
» Patent eligibility is restricted for medical methods and genetic
innovation in general
» US: 35 Usc 101, Myriad, Mayo (Ariosa)
» Europe : EPC Art 53 Biotech Directive, Brüstle, ISCC
» Ineligibility of patent protection results in TS shifting (Burk,
Sichelman, Sherkow, others: case Myriad) :
» Eligible and yet uncertain patent protection may also results in
TS (case Google search engine algorithm: case Alice)
50. e.g. EPC Art 53 exceptions
Article 53 Exceptions to patentability
European patents shall not be granted in respect of:
(a) inventions the commercial exploitation of which would be
contrary to "ordre public" or morality; such exploitation shall not be
deemed to be so contrary merely because it is prohibited by law or
regulation in some or all of the Contracting States;
(b) plant or animal varieties or essentially biological processes for
the production of plants or animals; this provision shall not apply to
microbiological processes or the products thereof;
(c) methods for treatment of the human or animal body by
surgery or therapy and diagnostic methods practised on
the human or animal body; this provision shall not apply
to products, in particular substances or compositions, for
use in any of these methods.
51. PM and Data and AIs
» Data to process but also Generate by use of the invention
» DATA: Patent Ineligible ?
» Data generating patent and possibility of ever-greening via TS
» Eligible Data set? Data written into claim of patent (component or element) vs
TS protected data
» GDPR subjected private data set – all genetic data usable for personalized
medicine
» DATA Generated through Use ?
» Myriad
» AIs generated data (leading to invention?): who have the right to claim them?
» Protection, Ownership uncertain
à Trade Secret
52. TS and PM ?
Pitfall Direct consumer PM kit
EU TS Directive problem: infringing goods
» Data embodying object. à ‘infringing goods’: EU Directive, knowledge and
negligence 3rd party liability
» TS infringing goods and Personalized medicine product specific problems
» example:
» sale of generally programmable devise targeting TS protected data bank
» sale of specific diagnostic kits including biomarker analysis SW or apparatus (extra
territoriallty) communicating with central data bank (TS)
» diagnostic kits with analysis service using central data bank protected by TS
» diagnostic kits with AI algorithm (TS)
» à problem: localization of data: localization of AI, applicability of the
remedies
53. Concluding remarks
» TS ideal for AIs and AI related work, if they can be kept
secret
» Yet, an imperfect solution
: however exception (Art 5.b& d) :
disclosure for the sake of safety reasons? (product
safety etcs.) à next module
» Policy implications of protection ‘regime shifting’ and
regulatory arbitrage
» TS ever greening ?
» Characterization of AI to evade liability
