Norbrook and Hanford in battle for lucrative market

It was a battle between a Northern Ireland and a New York State company over the injectable veterinary penicillin market in the US that led the US company to steal its competitor's key trade secret, a New York court has said.

In his judgment Senior District Judge Howard G Munson outlined the key details of the battle between the two firms for the lucrative market.

He found that secrets belonging to Norbrook Laboratories, of Newry, Co Down, the company owned by the former senator, Dr Edward Haughey, were stolen by GC Hanford Manufacturing Co, of Syracuse, New York.

The court heard that Norbrook employs approximately 1,000 people and sells its range of veterinary pharmaceuticals in more than 110 countries including the US. Hanford employs about 300 people.

In an attempt to create a new method for producing the penicillin product Norbrook employed a Newry scientist, Dr Philip Quinn, in 1986 to work on a cheaper production method. Time and money were put into the effort and eventually a new, secret process was developed. The US Food and Drug Administration (FDA) gave permission for the sale of the Norbrook product in the US in November 1998.

An immediate result of the arrival of the cheaper product was a significant inroad by Norbrook into Hanford's share of the US market. Hanford decided to fight back.

Dr Quinn left Norbrook in 1992. The work he had conducted for Norbrook was key to the development of the new cheaper product. As with all Norbrook employees, he had signed an agreement not to disclose any confidential information belonging to Norbrook to any other party.

The company went to great lengths to protect its trade secrets. "Fencing and walls, attended 24 hours a day by security personnel, surround Norbrook's facilities in Newry, while surveillance cameras maintain constant vigilance as well," the judge noted.

Visitors to Norbrook have to sign in and be accompanied at all times. They are prohibited from bringing cameras or computers into the premises. Key documents were kept in locked rooms and employees were given information on a "need to know" basis, according to the judge.

Dr Quinn left Norbrook voluntarily in 1992 after the FDA had rejected Norbrook's first application for clearance for its new product. Shortly after his departure it was discovered he had started a new company with another former Norbrook employee, and that they were going to use technology associated with a Norbrook product. Legal action by Norbrook brought an end to that project. A few years later the company again had to take action against Dr Quinn in relation to another matter, according to the judge.

The Newry company is also pursuing a defamation suit against Dr Quinn relating to a statement about the secret Norbrook process alleging the presence of glass and other foreign objects. The statement had been issued by a New York senator, Mr Charles Schumer.

During the discovery process in the defamation case, the Newry company learned about contacts between Dr Quinn and Hanford. According to the New York court, Dr Quinn initiated contact with Hanford in May 1999. Between that date and May 2000 there were 61 telephone calls or faxes to Dr Quinn from Hanford.

In June 1999 Mr Peter Ward, chief executive of Hanford, wrote to the FDA making allegations about the Norbrook process and suggesting glass contamination. This occurred soon after Dr Quinn had informed him that glass beads were used in the secret Norbrook process. The FDA never found evidence to support the allegation.

In July 1999 Dr Quinn visited Hanford to discuss developing a process similar to the one developed for Norbrook. He was asked to sign a confidentiality agreement. Consultancy work for Hanford continued over the following year. Hanford employees were uncomfortable with having Dr Quinn working with them, because of his former association with Norbrook.

In November 1999 Dr Quinn offered to perform tests for Hanford and did so in an Irish laboratory, Univet, "where he was a consultant". In January some Hanford executives travelled to Ireland to meet Dr Quinn. They watched him work at the Univet facility and took photographs.

The work Dr Quinn conducted for Hanford was "invaluable" to the US company's efforts to develop its own process, the New York judge found. A Norbrook expert told the court that Dr Quinn provided 75 per cent of the knowledge required by Hanford. Eventually Hanford was able to make a submission to the FDA for the sale of its new product.

"The information Dr Quinn provided Hanford about the (secret process) for manufacturing the injections constituted trade secrets belonging to Norbrook; the information Dr Quinn provided to Hanford was based on the work he completed for Norbrook," the judge found.

Norbrook has been given a temporary injunction against Hanford marketing its new penicillin product. The New York judge said the Newry company was likely to prevail in its misappropriation of trade secrets claim when the matter came to a full court hearing.

Norbrook has said it will pursue matters in the North arising out of the New York case. Efforts to contact Dr Quinn yesterday were not successful.