Can collection and analysis of information from the public domain be a trade secret?

Written on 14 Feb 2018

What has happened?

The Court of Justice of the EU handed down judgment on 5 February 2018 in a long running dispute over data, claimed to be confidential, which appeared in reports prepared by the European Medicines Agency (EMA) in the course of an application for marketing authorisation for a new treatment for cystic fibrosis.  Documents held by EU institutions are generally accessible to third parties under the general principle of transparency under Article 15(3) TFEU, so it has long been accepted that third parties may request access to such data. But in this case, for the first time, the Court has explained how the confidentiality of the information should be assessed.

Background

The applicant, Pari Pharma, developed a new and improved treatment for cystic fibrosis by combining its own specialist inhaler technology with a known drug developed by Novartis.  The drug had been used in inhalers before, but some patients had suffered from coughing as a result.  In accordance with the regulatory process for new medicinal products, Pari Pharma applied for their approval by comparing their product with the existing approved inhaler, relying on the data already held by the EMA about that product.  When the EMA raised further questions about the additional benefits of Pari Phamra’s product, Pari Pharma compiled further information from a variety of sources including the Cystic Fibrosis Society and other public sources, but also conducted a market survey seeking direct clinical information, which it compiled into further submissions.  The EMA duly recommended approval of the product.

When, however, a subsidiary of Novartis sought access to the EMA’s documents relating to Pari Pharma’s product approval, Pari Pharma brought a claim challenging the EMA’s decision to permit Novartis to see the material.

Pari Pharma’s objections were not limited to claiming that the independent research it had carried out was confidential.  Instead, it argued that the entire report compiled by the EMA’s Committee on Human Medicinal Products (CHMP), referring to and discussing its submissions, including both the information compiled from public sources and the independent research, was confidential and should not be disclosed.  Pari Pharma’s argument was that there is a general presumption of confidentiality which covered the report since, taken as a whole, it disclosed Pari Pharma’s confidential regulatory strategy and know how, so that not only the research data but the entire process covered by the CHMP report was the source of competitive advantage. Pari Pharma claimed that insofar as the EMA needed to disclose any data about their product, the information was already published in the form of the European Pharmaceutical Assessment Report (EPAR) and nothing more should be given.

How did the CJEU assess the claim?

The CJEU looked first at the question of a general presumption of confidentiality, which it has accepted in earlier cases may apply in respect of some private commercial documents.  However, it did not accept that such a presumption applied in these circumstances.  In those cases where it had been accepted, the documents had related to judicial or administrative investigations where, had disclosure of the confidential documents to third parties been given in the course of proceedings, the conduct of the subsequent investigation and decision could have been affected.  Here, the regulatory approval process was over and no disclosure could affect its outcome.  Further, no grounds for a general presumption were set out in any of the relevant regulations or Guidelines.  Consequently, no such presumption applied. Instead, the best Pari Pharma could do was argue that a commercial confidentiality exception should be applied to the general principle of transparency.

The EMA’s approvals procedure is governed by Regulations 141/2000 and 726/2004, neither of which contains any restriction on the uses which can be made of the documents submitted to the EMA.  Indeed, essentially the opposite principle applies: it is an overriding public interest that all medicinal products should be subject to public scrutiny to ensure the best possible reporting of safety or efficacy issues.  Accordingly, any claim of confidentiality must be thoroughly justified in order to outweigh that public interest.

In this case, Pari Pharma’s justifications failed to make the grade.  It was indisputable that much of the information in the CHMP reports was already in the public domain, either through the EPAR or on websites which, the CJEU pointed out repeatedly, could now be searched using modern search engines thereby bringing quickly and relatively easily to light information which might otherwise have been known only to a limited number of specialists.  Pari Pharma failed to show that its collection and systemisation of that information for the EMA in itself provided added value.  The categories of information which Pari Pharma had assembled had been largely defined by the questions which the CHMP had asked it to answer.  Although it was accepted that the results of Pari Pharma’s independent research were confidential, the nature of that research was again dictated by the CHMP’s questions.  Finally, Pari Pharma failed to describe in any specificity what competitive advantage was gained by its knowledge of and strategy for handling the regulatory process, which was itself laid down by law and guided in any given instance by the EMA.  In principle, such know-how could be commercially valuable, but it was necessary to identify “specifically and actually how, once the documents have been disclosed, competitors would be able to enter the market“.  The CJEU observed that Pari Pharma’s arguments were “vague in that regard, to say the least“.

How should businesses define confidential information to avoid running into this problem?

The CJEU’s assessment in this case confirms that while much information held by a business may be commercially confidential, when faced with a public interest in its disclosure, a business needs to define scrupulously and rigorously exactly what is confidential, and why it deserves protection.  Pari Pharma’s instinct that having put effort and skill into collating and presenting the information ought to justify being able to withhold it from third parties will be shared by many businesses.  But an over-reaching definition of what is confidential hurts more than it helps, and the nature, extent and cause of the damage which would result from disclosure need to be identified and thoroughly backed up by evidence.