Alnylam’s (NASDAQ:ALNY) trade secrets
litigation case against Dicerna (NASDAQ:DRNA) could see the jury influenced by
emotive arguments of document theft, as opposed to entertaining the finer
details of nuanced trade secret law, lawyers said.
Alnylam acquired Merck’s (NYSE:MRK) RNAi
subsidiary Sirna for USD 175m in 2014, however 18 months later Alnylam
initiated legal proceedings for trade secret misappropriation against Dicerna –
a separate RNAi company that also bid for Sirna -- related to GalNAc
technology. Dicerna is alleged to have misappropriated trade secrets
surrounding Sirna’s technology by hiring scientists laid-off by Merck, who took
confidential documents with them.
Lawyers noted that even those versed in law
may find trade secret law’s nuances challenging, and the case’s emotive nature
could influence a jury of laypeople, favoring Alnylam. Lawyers noted that a
settlement is likely, with the vast majority of trade secrets cases settling
before going before juries. Lawyers added that while Dicerna may not have
significant grounds in its antitrust case accusing Alnylam of stifling R&D,
it could use it as leverage to force an early settlement in the trade secrets
case.
A Dicerna 10Q statement notes the court has
set a trial date of 23 April 2018 for the trade secret case.
Alnylam noted it believes in the merits of its
case but declined to comment on pending litigation. Merck and Dicerna did not
respond to requests for comment.
Jury trial clouds potential judgement
A jury trial makes it challenging to say which
company will have the upper hand based on legal merit, said Patricia Carson,
partner, Kirkland & Ellis, New York. Juries often seek a moral or ethical
decision, and if jurors think Dicerna has done something wrong, for example the
alleged theft of documents, they may side with Alnylam, said Justin Beyer,
partner, Seyfarth Shaw, Chicago, Illinois. The jury may find some of the document
theft arguments more compelling – and definitely more intriguing – than the
finer details of what is and what isn’t a trade secret, said Beyer and Annsley
Merelle Ward, senior associate, Bristows, London, UK.
This news service reported on 7 February that
Dicerna’s key defence may rest upon the idea that the information used to
generate its technology was public and thus not a misappropriated trade secret.
It also reported that Merck’s procedures to protect internal documents could
come into question.
Most people, including lawyers, do not
understand the nuanced factors of trade secret law, so “buzzwords” used by
lawyers on both sides will likely seek an emotive impact on the jurors, said
Ward.
Dicerna could well lose the case if it goes to
trial, as the American public is generally pro-prosecutor and pro-plaintiff,
especially in cases where something is acquired improperly, Beyer said.
Dicerna’s lawyers could also appeal to public
interest, asserting that Alnylam is trying to monopolize RNAi therapeutics that
could help people, said Ward. Dicerna’s most advanced candidate is the Phase I
DCR-PHXC for primary hyperoxaluria, while Alnylam has seven clinical programs
in development ranging from Phase I to FDA registration.
Quantifying actual damages may be challenging
as neither company has yet a marketed product from which accounting information
can be analysed, said Beyer and Ward. However, damages can also be assessed to
compensate for savings in R&D time and money in reaching a specific point
and the investment attracted as a result of the misappropriation, although all
must be proven, said Ward and Beyer.
While a jury could be susceptible to
persuasion by some facts in the case – such as the scientists leaving Merck
with documents – the judge will give clear instructions to jurors about what
the law is, with both sides offering counterarguments, a biotechnology industry
attorney said. Thus, he said, while some facts may sway a jury in theory, that
is unlikely as juries frequently do well at weighing evidence.
Settlement
possible before the trial
Most of these trade secret lawsuits end up in
a settlement, tipping the odds in this case as well, said Beyer. There are many
reasons for companies to settle as a trade secrets owner may not want to
broadcast its secrets to the other side -- usually their competitor -- and when
the trial approaches the judge will increasingly pressure the parties to limit
redacted materials or materials only discussed in a closed courtroom, Ward
said. Avoiding negative publicity or any chilling effect on investment
opportunity may also motivate the defendant as well as trade secrets owners to
settle.
A settlement could involve a structured
royalty payment, a lump sum agreement, some sort of licensing deal, periodic
accounting or any combination of these, said Ward. The court would likely also
order the destruction of any documents that the defendant may still have and
may prevent Dicerna from using the confidential information, she noted. In
addition to a royalty structure or cross-licensing of technologies of mutual
interest, there could also be an agreement between the two companies over what
each one could do with the respective products they develop, such as what
indications they could pursue, the trade secrets attorney said.
Beyer noted he believed a royalty agreement
was most likely for a settlement, wherein Dicerna would pay a percentage of any
future sales of the product to Alnylam.
Antitrust case
could be settlement tactic
On 9 August 2017, Dicerna filed an antitrust
lawsuit accusing Alnylam of scheming to undermine Dicerna from developing
metabolism disorder treatments using RNAi by filing its trade secrets
litigation case. It’s possible that the trade secrets litigation could
influence the decision of the antitrust suit, as both arise from the same
series of events, said Carson. Beyer pointed to the Noerr-Pennington Doctrine,
which notes that one cannot be charged or found to be in violation of antitrust
law for suing someone in another court. He added for this reason, he questioned
the credibility of Dicerna’s complaint. Neither of the companies have marketed
or competing products, and these are often critical to antitrust cases, he
noted. Ward agreed noting that Alnylam cannot be said to have a dominant
competitive position, which is key to antitrust law.
Beyer noted that he believed the motive behind
Dicerna’s antitrust case against Alnylam is to sway the dispute toward an early
settlement. Even if Alnylam has a strong case, it will likely want to avoid a
lengthy federal antitrust case, which could be costly, he explained. Ward
agreed, saying no company wants to be embroiled in an extended antitrust case
so it is likely Discerna’s strategy will be to help settle.
Alaric DeArment
Reporter, New York
Alaric DeArment covers cancer drug development for
BioPharm Insight. He served as associate editor of Drug Store News from 2008 to
2014, covering branded and generic drugs from development to distribution,
retail and specialty pharmacy and regulatory affairs. In 2011-2012, he edited
the book Contestation and Adaption: The Politics of National Identity in China.
A native of Seattle, he graduated with honors with a bachelor’s degree in
journalism from Ball State University and lived in China from 2001-2004.
Hamish McDougall
Reporter, London
Hamish has a BSc in Neuroscience from the University
of Sussex and is primarily covering the neuroscience indications for BioPharm
Insight. Prior to joining us he was assistant commissioning editor for a
well-known collection of biomedical journals at Expert Reviews, including
Expert Review of Gastroenterology & Hepatology, Expert Review of Clinical
Pharmacology and Expert Review of Respiratory Medicine.