COPENHAGEN – While sales of insecticide-treated bed nets have skyrocketed in recent years and boosting their use is among the UN Millennium Development Goals, two producers of the nets have been caught in a rigorous legal case involving trade secrets. Now the English High Court has ruled that one of the companies, Bestnet, has misused the trade secrets of the other company, Vestergaard Frandsen (VF).

Both companies were set up in Denmark with Danish owners. Bestnet later moved to the United Kingdom. The ruling is available here.

The court ordered an injunction against Bestnet’s first generation product called Netprotect; it has to pay the costs of the case (estimated to be some £4.5 million, according to VF) and publish a statement about the ruling on its website. A Court of Appeal is deciding whether Bestnet’s current bed net (third generation) will also be subject to an injunction, and the judge has “ordered an ‘inquiry as to damages/account of profits’,” according to VF.

The case is about a kind of mosquito net with an in-built insecticide. VF said in a press release that the trade secrets in question “concern complex and highly effective technology, whereby insecticide is incorporated into bed nets to kill mosquitoes and the nets are designed to last for several years of active use.”

The court found that the three owners of Bestnet – two of whom had been employed at VF and one of whom had been a consultant – had misused VF’s trade secrets to produce a bed net on their own.

The former VF employees, Torben Holm Larsen and Trine Sig, left the company to set up Intection in 2004. It was later moved to the United Kingdom where they formed Bestnet together with inventor – and the external consultant in question – Ole Skovmand.

The court found Larsen and Skovmand guilty of having lied to the court and forged vital documentary evidence, according to VF.

Word against Word

A VF spokesperson told Intellectual Property Watch that Bestnet had “misused confidential information belonging to VF contained in a database which records development work undertaken for VF.”

A representative of Bestnet told Intellectual Property Watch that the case boils down to whether an external consultant working for “customer A” and developing some scientific background data for this, is allowed to use the same data when working for “customer B.” Does this data constitute general knowledge about the subject matter, or is it a trade secret?

The representative said that VF and Skovmand had not had any written agreement as to who owned the rights to the database he had developed when making tests for an agricultural net he had developed for VF. He also said that although Skovmand is the main person in this case, he is not a part of the UK court case as a similar case is currently running in Denmark.

The Bestnet representative said that Skovmand had declined to present the UK court with the database in question, which made it hard to decide what role it had played in developing Bestnet’s net.

Bestnet had not been found guilty of infringing the rights of the VF net itself, he said, but the means of producing it. Bestnet argues that they are not identical as VF’s net is dipped in insecticide after the polyester net has been produced, while Bestnet’s net is produced with the insecticide mixed within the net. The insecticide is therefore inside, and not on the surface, he said.

Bestnet said the question is whether they have used the database as a springboard to get to the market faster, as the representative said Bestnet could have produced its net without using Skovmand’s database.

Set to Continue

Bestnet notes on its website that, “The Netprotect product launched in October 2005 was used primarily for promotional purposes.”

VF has appealed the injunction and argues that Bestnet’s current net derives from the first and therefore also violates its trade secrets.

“The defendants have made no ‘clean break’ in the development of the ‘newer versions’ of their Netprotect product,” VF told us, and therefore the current net, “is ‘derived’ from their misuse of VF’s trade secrets.”

“In the event the current product is not injuncted by the Court of Appeal, VF will seek royalties on future sales by Bestnet,” it said in a press release. Bestnet said it will appeal the UK ruling, but VF said the “High Court has refused Bestnet permission to appeal.”

Both Bestnet’s and VF’s mosquito nets have been granted World Health Organization Pesticide Evaluation Scheme (WHOPES) recommendations. And the nets constitute a good business for the producers. Bestnet said it has sold more than 10 million nets since October 2005, according to VF.

“The use of insecticide-treated bed nets (ITNs) to protect children from malaria has risen six-fold in the past seven years, according to research funded by the Wellcome Trust,” Science Daily wrote in November 2008. However, some 90 million children lack access to them.

One of the UN Millennium Development Goals, according to Science Daily, is to ensure that at least 80 percent of vulnerable children sleep under ITNs by 2015.