On November 23rd, Pfizer filed a complaint against former employee Chun Xiao “Sherry” Li in a California federal court alleging that Li pilfered over 12,000 files worth of critical documents and trade secrets. U.S. District Judge Cathy Ann Bencivengo granted Pfizer’s motion for a temporary restraining order barring Li from using, disclosing or transmitting any confidential information or trade secrets owned by Pfizer, destroying or altering any of that information or destroying any devices storing the information. Li also must return any hard copy documents containing Pfizer’s confidential information or trade secrets, Judge Bencivengo said.
Hired as associate director of statistics in Pfizer’s global product development group at Pfizer’s facility in La Jolla, California in 2006, Li sought greener pastures at Xencor Inc. in 2021. Perhaps in the spirit of the upcoming holiday season, Li treated herself to a parting gift of what Pfizer calls its clinical “playbook.” Its complaint also cited misappropriation of documents containing operational goals, goals for various drugs including cancer drugs, clinical development plans and clinical trial techniques.
To quell the breach, Pfizer confronted Li who initially gave the appearance of cooperation, according to the suit. Upon further forensic inspection, however, it became clear that Li instead misled Pfizer about what she took, how she took it, when and why she did it, and where those files (and possibly others) can be found today. To conceal her misdeeds, Li supplied Pfizer’s security team a decoy laptop, leading Pfizer to believe it was the one she used to download the 12,000 files from her Google Drive account. Forensic analyses confirmed it was not, and Li likely remains in possession of the actual computer that contains those 12,000 files.
Trade secrets in the pharmaceutical industry often include technical know-how and experimentation information, and thus can be extremely valuable to potential competitors. To discourage misappropriation of trade secrets, full profit disgorgement often is awarded for products created using stolen trade secrets, while only portions of a product’s profits attributable to an infringed patent is generally awarded absent willfulness.
Besides the massive influx of stay-at-home workers, the pandemic has also led to an increase in employee turnover. As a result, the great resignation sweeping the nation could have a massive effect on the misappropriation of invaluable trade secrets. According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July 2021. Resignations have remained abnormally high for the last several months, with a record-breaking 10.9 million open jobs at the end of July. Several surveys suggest that one in four workers plan to look for a new job after the pandemic. Possibly placing the protection of trade secrets on precarious ground, the particularly vulnerable tech and health care industries suffer the highest rate of resignations.
Traditionally, strong non-compete agreements have been useful in protecting confidential and proprietary trade secret information. Complicating the issue, however, President Biden recently signed an executive order aimed at promoting competition in the American Economy. Among other things, the executive order will make it easier to change jobs by banning or limiting non-compete agreements. In the end, only time will tell what lasting effects the pandemic will have on the future of trade secrets. For now though, there still exists a considerable toolbox of reasonable steps to protect vital trade secrets and confidential information in the midst of the ongoing pandemic.