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No 'real risk' in patent expert sharing confidential information about former employer's drug product, Court of Appeal rules

Out-Law News | 07 Jun 2012 | 11:32 am | 4 min. read

A company cannot obtain an injunction banning a patent expert it used to employ from offering advice to her current employer on a legal dispute involving both firms, the Court of Appeal has ruled.

The Court of Appeal said that pharmaceuticals firm Teva had failed to show that there was a "real risk" that its former employee would use confidential information in order to advise her current employers on a patent dispute involving a patented drug licensed by Teva. The Court therefore allowed rival firm Mylan's appeal against a previously-imposed injunction banning its director of intellectual property from advising on the case.

Mylan has challenged whether it has infringed on patent rights owned by Yeda Research and Development Company (Yeda) for the drug Copaxone and is also seeking a ruling that the patent for the drug be revoked. The drug helps treat multiple sclerosis and Teva is the exclusive licensee of the product.

Mylan's director of intellectual property (IP) used to work for Teva and Teva claimed that she had been privy to confidential information about patent litigation involving Copaxone during her employment with it. Teva argued that she should be barred from sharing any of that knowledge with Mylan's solicitors for use in its rival patent case with Yeda.

Mylan's director of IP has insisted that she has "no recollection" of being handed any confidential information about Copaxone, but despite this the High Court had ruled to serve an injunction banning Mylan from seeking her advice during the company's legal dispute with Teva over Copaxone.

The Court of Appeal, though, upheld Mylan's appeal and said the High Court had been wrong to issue the banning order. However, the three Court of Appeal judges did not all form the same reasoning for reaching that conclusion.

Sir Robin Jacob said that the director of IP had the "burden" of disproving that she would not misuse the confidential information to which she was supposedly privy to. However, she was exonerated of that burden because Teva acted too slowly to initiate an injunction against her, the judge said. The lack of action indicated that the company "itself did not really regard a possibility of misuse as realistic," he said.

"Even though, once it is shown that a litigator has received confidential information, the burden of showing that there is no risk of misuse lies on her, the evidence in this case discharges that burden," Sir Robin Jacob said in the ruling.  "The Judge overlooked some key points in coming to his assessment."

"For instance Teva do not say when they first knew that Mylan's in-house patent attorney would or might be working on Copaxone litigation. The fair inference on the evidence is that it knew that at least eight months before it applied for an injunction. Its own conduct shows that there is no real risk of misuse of this peripheral point."

"If a former client (or employer) really believes that there is a risk of misuse or disclosure of confidential information, then it will act at once. If it stands by, allows the litigator to get well into the case, and then claims there is a real risk of mis-use, the court will view the claim with considerable scepticism. If someone is treading on your toe or about to do so you shout. If you wait for months first then complain in a desultory way, you are apt not to be believed," he said.

Lord Justice Etherton and Lord Justice Ward disagreed with Sir Robin Jacobs' view that the burden had fallen on Mylan's director of IP to disprove the allegations against her. In contrast the burden was on Teva to show that there was a "real risk" that its former employee would act against its interests with the benefit of confidential information, they said. Teva did not provide sufficient evidence that this would be the case, Lord Justice Etherton said.

"A mere suspicion on the part of the [High Court] Judge that '[Mylan's in-house patent attorney's] memory of [the relevant information on which the respondents rely] may be at the back of her mind and may … unconsciously … in fact influence her strategy and conduct and the consequent instructions she gives in the case' falls well short of satisfying the burden on Teva to prove a real risk that the information would be used or disclosed by Mylan's in-house patent attorney in connection with her role in the conduct of these proceedings," Lord Justice Etherton said.

"Moreover, the effect of the injunction would be to prevent Mylan's in-house patent attorney carrying out perfectly lawful activities for Mylan, and using her general skill and knowledge as a patent attorney in her current employment. This is not an exceptional case in which, in the absence of a restrictive covenant, it would be right to make a barring order against an employee," he said.

Lord Justice Ward agreed and added that it would have been wrong to require Mylan's director of IP "to prove a negative."

"[Teva] has no contract on which to rely: [Teva's] cause of action is for breach of confidence," the judge said. "Good reason should be established to interfere with the liberty to work and so [Teva] should show cause why he is entitled to an order restraining trade."

"The search for justice should not require a former employed solicitor or an assistant solicitor to prove a negative and show there is no risk that confidential information will fall into the possession of those with an adverse interest to his former employer/client," Lord Justice Ward said.

Each of Sir Robin Jacob, Lord Justice Etherton and Lord Justice Ward gave a different answer to the question of whether confidentiality obligations on lawyers in private practice should be treated the same as those imposed on lawyers acting as employee in-house counsels or employee patent attorneys.

Sir Robin Jacob accepted that they should be treated the same, Lord Justice Etherton ruled that there were sound reasons of principle and policy why they should be treated differently. Lord Justice Ward stated that "there is a thicket of confusion" surrounding this topic but that resolution of this issue should be left "for another case and another day when full argument will guide through the thicket."