The life sciences sector is in its “golden era” of innovation with the convergence of disciplines
—including genetics, immunology, cell biology, and artificial intelligence—changing the speed, efficiency, and cost at which innovation occurs.  

With this era has come a fierce market for talent, resulting in the frequent movement of professionals between life sciences companies. Employee mobility in this space has not, however, gone unnoticed by the affected companies. Over the past decade, there has been a steady increase in the number of lawsuits brought by life sciences companies against former employees for trade secrets misappropriation. 

While some of these lawsuits have led to astronomical awards for plaintiffs, not all plaintiffs have had such positive outcomes. Most recently, on April 26, 2024, a Pennsylvania jury awarded $26.6 million in damages on breach-of-contract and breach-of-fiduciary duty counterclaims to five scientists, who were accused of stealing trade secrets from SigmaPharm Laboratories LLC (“SigmaPharm”), a maker of generic and brand name drugs that treat a variety of conditions including psoriasis and hepatitis B.

The legal saga began in late 2014 when SigmaPharm sued the scientists, its former employees, for $849 million in damages. Spiridon Spireas, SigmaPharm’s Chief Executive Officer, apparently had recruited these scientists—all of whom worked for him in graduate school—to join his new venture when he founded the company in 2005.

Among SigmaPharm’s specific allegations were that one of the scientists had improperly arranged a potential deal in India involving SigmaPharm’s materials, and that another of the scientists was allegedly working with a competing company to produce vaccines in his home country using SigmaPharm’s proprietary information. The scientists’ counterclaims were based on allegations that SigmaPharm improperly withheld stock in the company that was promised to them when they joined the CEO at the start of the company. 

After the scientists’ work computers and emails were seized contemporaneously with their firing, SigmaPharm purportedly did not find sufficient evidence to ultimately support its allegations. This dearth of evidence is what ultimately struck a big blow to SigmaPharm’s case, with the jury finding against it on all claims.

SigmaPharm filed a motion for a new trial to challenge the verdict. While the outcome of this motion is yet to be seen, one thing is certain: life science companies need to understand not only how to protect their trade secrets, but also how to marshal convincing circumstantial evidence to prove a case for trade secret theft. 

Because those who misappropriate trade secrets generally keep their actions hidden, it can be difficult to find direct evidence of theft. Often, plaintiffs must prove their case with circumstantial evidence. It is important, though, to keep in mind that there is a real difference between permissible inference and impermissible speculation.

As the life sciences landscape continues to grow, so too will the use of trade secrets and the lawsuits involving allegations of misappropriation of such secrets.  

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Photo of Joseph Drayton Joseph Drayton

A first-chair trial lawyer, Joe Drayton has represented some of the nation’s most prominent companies across a wide array of industries in all facets of intellectual property (IP) litigation before both state and federal courts, as well as the International Trade Commission and…

A first-chair trial lawyer, Joe Drayton has represented some of the nation’s most prominent companies across a wide array of industries in all facets of intellectual property (IP) litigation before both state and federal courts, as well as the International Trade Commission and American Arbitration Association.

Joe has more than two decades of experience specializing in both domestic and international intellectual property and complex commercial disputes, including patent, trade secrets, copyright, trademark and trade dress and false advertising across diverse industries. He also counsels clients in all aspects of IP acquisition, transfer, protection and enforcement.

Joe is a trusted advisor for several corporate executives and a national leader in the legal community. He is regularly recognized as one of the top lawyers in the U.S., having consistently been named to the IAM Patent 1000 list. Most recently, Joe received the C. Francis Stadford Award by the National Bar Association, the highest award bestowed by the association that is given to a member whose leadership, integrity, legal skills and devotion have inspired colleagues and contributed greatly to the legal profession. A longtime bar leader, Joe served as the 76th president of the National Bar Association and is also a former vice president and Board chair of the New York City Bar Association.

Photo of Michelle M. Ovanesian Michelle M. Ovanesian

Michelle Ovanesian is an associate in the Litigation Department, where she focuses on intellectual property and life sciences. Michelle has worked on a range of matters in federal district courts, including serving on the successful trial team in the Amgen Inc. v. Sanofi

Michelle Ovanesian is an associate in the Litigation Department, where she focuses on intellectual property and life sciences. Michelle has worked on a range of matters in federal district courts, including serving on the successful trial team in the Amgen Inc. v. Sanofi remand jury trial in the District of Delaware.

In addition to intellectual property and life sciences, Michelle’s practice has encompassed a variety of other legal matters, including privacy and cybersecurity, and bankruptcy litigation. Most recently, Michelle was part of the litigation team that represented the Financial Oversight and Management Board in the Commonwealth of Puerto Rico’s bankruptcy proceedings.

Michelle maintains an active pro bono practice, with a focus on immigration law and civil rights. As part of her pro bono work, Michelle has filed an amicus brief in state court supporting the constitutionality of executive orders.