Allergan, Merz, and Unfair Trade Practices


March 9, 2012

Allergan, Merz, and Unfair Trade Practices

Word came earlier this week from Santa Ana, CA that Merz’s new product, Xeomin, will not be available for the cosmetic industry some time.  Xeomin has been on the market in Europe for years and has been used to treat cervical dystonia here in the US since 2010.  Merz was planning to begin marketing the product to the aesthetic community later this month.  The cosmetic product will compete with Allergan’s Botox product.

Allergan filed suit in federal court to block the sales of Xeomin based upon trade secret violations.  Merz hired Allergan employees to promote Xeomin.  Allergan claimed that its former employees stole trade secrets, customer lists, sales figures, and other confidential material before moving over to Merz.  Judge Andrew J. Guilford seems to agree.  Judge Guilford found “…dramatic examples of misappropriation” of Allergan’s proprietary information.  With that, Judge Guilford issued an injunction that prohibits Merz from selling Xeomin as a cosmetic injectable.  The full terms and duration of the injunction will be released March 9th.

This type of cases that involve ex-employees’ stealing corporate secrets to use at their new job happen from time to time.  In 2009 Starwood Hotels sued Hilton Hotels after several of its executives jumped ship for Hilton.  Starwood claimed “wholesale looting” of its proprietary information. In the 1990″s General Motors accused Volkswagen of hiring away eight former executives to misuse its trade secrets.  The lawsuit ended with VW agreeing to purchase $1 billion worth of GM parts over seven years.

I understand Allergan’s position, but I don’t like it.  No one wants to be stolen from.  I get the “We’re going to teach those bastards a lesson” mentality.  But here is my problem; I don’t like the involvement of physicians and patients in their battle.  Physicians should have the information and opportunity to provide their patients with alternate treatment options.  Allergan’s approach of blocking Xeomin hurts people beyond Merz.  Allergan and Merz can litigate monetary damages from the corporate theft without blocking access to Xeomin.  Allergan and Merz have a private dispute over money.  Fine.  I would hope that Allergan would have enough respect for physicians and patients to handle this dispute on its own and not leverage them all for maximum litigation value.  While the Jolly Roger may fly proudly over Merz’s corporate headquarters, that is a matter for Allergan to deal with.  Unfortunately, for now physicians and consumers are collateral damage in this garden variety case of corporate greed.