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AI&IP CEIPI Training, Module 9

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AI&IP CEIPI Training, Module 9

  1. 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. 2. Outline 1. Overview of Trade Secrets 2. AI, Patents and Trade Secrets 3. Trade Secrets, AIs in Personalized medicine
  3. 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. 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
  5. 5. INT’L AGREEMENT AND IN EUROPE 1. Overview of Trade Secrets
  6. 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. 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. 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. 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. 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
  11. 11. 2016 Controversy ? » over whistle blower activities » journalistic freedom » Employee mobility
  12. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 27. AI, TRADE SECRETS AND OTHER FORMS OF PROTECTION 2. TS vs other rights
  28. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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?
  40. 40. AI, PERSONALIZED MEDICINE AND TRADE SECRETS 3. AI in Personalized medicine
  41. 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. 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
  43. 43. Using AIs in Gene Sequencing
  44. 44. Gene Editing AI
  45. 45. Gene editing and AI https://www.deskgen.com/landing/blog/machine-learning-crispr-guide-design
  46. 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. 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’
  48. 48. Direct to consumer genetic testing: Sequenom Invention
  49. 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. 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. 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. 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. 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

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