Friday, January 28, 2005

8th Circuit Affirms Perpetual Injunction Against Use of Trade Secrets

If you're a user of Premarin brand hormone replacement product, you probably don't want to read footnote 2 in the 8th Circuit's decision in Wyeth v. Natural Biologics, Inc., No. 03-3651 (8th Cir. Jan. 24, 2005). The case involved allegations by the drug's maker that a competitor stole the trade secrets needed to make the product, whose prime ingredient, natural conjugated estrogens--and here's the yucky part--"is made by extracting conjugated estrogens from pregnant mare urine." (Slip op. at 3 n.2).

Of interest in the 8th Circuit's opinion is its discussion of a whole bunch of circumstantial evidence--there was no direct evidence of theft--that supported the district court's finding that the defendant misappropriated the secret process (pp. 5-6.) The court found it particularly significant that no one had, for decades, been able to replicate the Wyeth process, and the court believed that this fact gave rise to an inference that the defendant must have gotten it illegally.

But in the statute of limitations discussion, that fact proved a one way street headed exactly where the plaintiff wanted to go. A process may be so hard to replicate that when someone replicates it, it must be stealing, right? But when the trade secret owner sees that the defendant has replicated it, he isn't charged with notice that the defendant stole it. (pp. 6-9.) Huh?

Anyway, on to remedy. The district court forever barred the defendant from all activity related to the development of natural conjugated estrogens. The defendant thought that the injunction ought to be limited to whatever "head start" the misappropriation gave it. . . but forever? Sheesh!

The 8th Circuit affirmed the permanent timeout, however, primarily because the defendant acted very sneakily during the litigation, destroying evidence, lying, hiding things, whistling some nameless tune while looking around innocently, etc. So sneaky, in fact, that the district court felt that the defendant couldn't be trusted to comply with any order that gave it any wiggle room. The 8th Circuit affirmed on this point. (pp. 9-10.) And I would be missing a marketing opportunity if I were to fail to mention that this holding seems to be in line with my scintillating article, Permanent Injunctions in Trade Secret Actions: Is a Proper Understanding of the Role of the Inadequate Remedy at Law/Irreparable Harm Requirement the Key to Consistent Decisions?, 28 AIPLA Q. J. 124 (Spring 2000). Alas, the court didn't cite to it. Bummer.

To access the decision, go to the 8th Circuit's opinion search page, click on Opinions by Month/Year, select January 2005, and scroll 'til you come to it.

No comments: