Reverse burden of proof and trade secrets in patent litigation – Part one

litigation and family attorneys

Background – lack of protection

For a long time in many European countries, pharmaceutical compounds were not eligible for patent protection. Prior to the adoption of TRIPS, there were actually 22 countries in which the protection of pharmaceutical compounds was unavailable. Innovative pharmaceutical developers were only able to indirectly try to protect their pharmaceutical product by protecting the process for manufacturing the product. At the time, some states made efforts to compensate for the lack of product protection in different ways. In Finland, you could apply for a so called “analogous process patent”, by which you were able to get a patent for if you had developed a new product, but the scope of protection was, odd as it may seem, nevertheless restricted to the manufacturing process.

Shifting the burden of proof

In patent litigation, the plaintiff would usually have to show that his patent is infringed. In case of a process patent, the plaintiff would have to show that the defendant’s process is infringing. But this is not always the case. Namely, based on Art. 34 of TRIPS and many corresponding national rules in Europe, the defendant would in certain situations have to establish proof that his process does not infringe the patent. Considering both the lack of product patent protection as well as the difficulty in proving the process actually used by the defendant, such an allocation of the burden appears quite rational.

When the burden of proof shifts to the defendant, an interesting question arises. What if this process constitutes a trade secret (which it very well may)? TRIPS art. 34 (3) establishes that the legitimate interests of defendants in protecting their trade secrets should be taken into account in such situations. As demonstrated by this provision, a certain tension between the patent holder’s legitimate interest to protect and enforce his patent and the defendant’s legitimate interest in protecting his trade secret can be observed.

There are several interesting questions in when discussion the reverse burden of proof pursuant to TRIPS art. 34, and I will only touch upon a few of them here. TRIPS art. 34 gives the judicial authorities the power to order a reversal of the burden of proof if the subject matter of a patent is a process for obtaining a product. Ergo, for example process patents as such won’t suffice, it must be a process “for obtaining a product”. Also, product patents are naturally outside the scope of the provision (a reversal would not be needed for in relation to product patents anyway). But, what about product-by-process patents or medical use patents (first, second or further medical use)? Additionally, the defendant’s product should be identical. A too strict literal interpretation of this term would probably not be appropriate, but the question is where to draw the line.

Additionally, TRIPS art. 34 (1) (a) empowers the legislator to introduce a rule on reversal if the patent holder’s product is new. Nevertheless, this should not necessarily be interpreted in the same way as the novelty requirement in patent prosecution. Also, a legitimate and quite interesting question would be, at which point in time should this “newness” be assessed?

It is finally very important to note that TRIPS is a minimum standard agreement, which allows the members states to allow for more stringent rules in the protection of IP. Therefore, member states of TRIPS are, as a point of departure, free to implement a rule on reversal of the burden of proof also in other circumstances than the ones described in TRIPS art. 34.

What about the defendant’s trade secret?

As previously pointed out, pursuant to art. 34 (3) of TRIPS, the legitimate interests of defendants in protecting their trade secrets should be taken into account when the burden of proof shifts. This raises many theoretical and practical questions, such as how the proceedings could be conducted in order to ensure that the trade secret is secured. The defendant may want to protect his trade secret both against the public and the counterparty in the litigation. Could the public be excluded from the proceedings and are e.g., in camera proceedings allowed? Would it be possible to exclusively disclose the trade secret to an outside expert? To a large extent the availability of these possibilities will be dependent on national rules, since TRIPS gives quite a lot of room from member states to maneuver. These national rules can be quite different, which makes these questions quite interesting for further research.

Further thoughts

I have discussed the above questions in a lot more detail and provide some guidelines in my recent article in the European Intellectual Property Review (EIPR) (Issue 4): “Reverse Burden of Proof and the Protection of Trade Secrets in European Pharmaceutical Patent Litigation: Part One”. For those interested in the subject, I warmly recommend you to read the EIPR article.

Here’s a link to the article on Westlaw:

There will be a sequel to the above mentioned article in Issue 5 of the EIPR, which will be more focused on Europe and wherein I inter alia will deal with the new Trade Secret Directive and the Agreement on the Unified Patent Court. Once said article is published, I will write a post in relation to these issues as well.

Vilhelm Schröder

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