Trade Secrets Under Pressure: What the Arcturus Case Means for Life Sciences Companies

By: Robert Counihan

What You Need To Know

  • Arcturus Therapeutics sued AbbVie and Capstan Therapeutics for allegedly misusing its lipid nanoparticle (LNP) delivery technology after former staff joined Capstan.
  • The case spotlights the high potential for trade secret misappropriation in the life sciences sector and emphasizes that protecting platform know-how is as critical as developing it.
  • Strengthening trade secret governance, managing R&D personnel transitions carefully, expanding diligence in transactions, and adopting clean onboarding protocols may help manage risk.

Arcturus Therapeutics has sued AbbVie and its subsidiary Capstan Therapeutics, alleging misappropriation of LNP delivery know-how. The case underlines trade secret risks in the life sciences sector, raising questions about how companies protect core platform technologies when employees, consultants, and information move across competitors.

According to the complaint, key Arcturus personnel moved to Capstan, one as an employee and another as a consultant. Months later, patent applications associated with Capstan published that appeared to echo aspects of Arcturus’s platform, which the complaint describes as the point where the overlap became visible and the dispute escalated. Following AbbVie’s purchase of Capstan, exposure tied to the contested technology rests with the buyer as well as the target. Arcturus seeks injunctive relief in addition to damages, which can place early pressure on preclinical plans, regulatory timing, and integration.

For life sciences companies and their investors, the significance of this case extends beyond the immediate parties: It highlights the vulnerabilities that can arise when core platform technologies, human capital, and transactions converge.

Impact Across the Life Sciences Ecosystem

Trade secret disputes in the life sciences sector rarely stop at the courtroom door. They can disrupt clinical trial timelines, delay Investigational New Drug (IND) or Biologic License Application (BLA) submissions, and complicate regulatory strategy when ownership of data or delivery systems is challenged. Because these cases may involve platform technologies like LNPs, CRISPR, or other delivery modalities, the potential impact extends across an entire pipeline, not just a single program.

For boards and investors, these disputes may translate into valuation volatility, renegotiated partnerships, and heightened risk in licensing or M&A. Even unproven claims may cast uncertainty over product development and raise disclosure burdens in SEC filings or investor updates. Protecting proprietary know-how, and demonstrating that protection, is as important as developing the underlying science.

Key Takeaways

  • People are the pressure point. When scientists or consultants move between competitors, their access to sensitive data often becomes the focal issue. Courts probe what is “general skill and knowledge” versus protectable know-how.
  • Patents and trade secrets overlap. Patent applications that track too closely to a competitor’s platform may ignite misappropriation claims, particularly in emerging therapeutic spaces.
  • Acquirers inherit risk. Buyers and investors may be drawn into litigation based on a target’s prior practices, consultant relationships, or pending patent filings.
  • Injunctions may halt development. Beyond damages, injunctions may stop preclinical work or delay clinical trials, creating immediate strategic and financial consequences.

Practical Considerations for Life Sciences Companies

Protect Trade Secret Governance Across the Pipeline
Companies should consider treating trade secrets in the same way they treat their most important information, such as IND-enabling data: as critical, regulated assets. Training R&D staff on handling competitor information is important, particularly when data may be relevant to FDA submissions or publications. Strong governance may not only reduce risk but also provide evidence of care if disputes arise.

Manage Talent Movement in R&D
Personnel transitions are the flashpoint for many disputes. Companies should consider designing exit processes that explicitly address lab notebooks, electronic repositories, and data stored on personal devices or cloud accounts. Departing scientists should confirm in writing that they will not retain or use confidential material. Onboarding of new hires should include clean room protocols, project segregation, and certifications disavowing use of prior employer secrets. Consultants and advisors should be monitored with equal rigor, particularly if they straddle multiple biotech companies working on overlapping platforms.

Expand Diligence in Transactions
In licensing or M&A, diligence should not stop at published patents. Acquirers and investors should consider evaluating scientist mobility, consultant relationships, CRO/CMO engagements, and pending applications relative to competitor platforms. Interviews with technical staff and reviews of laboratory notebooks or data repositories may uncover red flags before they undermine deal value. Integration planning should include explicit protocols to prevent commingling of protected information.

Hiring Companies as a Special Case
Organizations recruiting from competitors should consider focusing on building a demonstrable record of preventive steps. Onboarding certifications, technical segregation of projects, and clean team documentation may all help establish that the company took reasonable measures to avoid misappropriation. In high-stakes therapeutic areas, these safeguards can mean the difference between attracting investment and defending against an injunction that clouds an entire pipeline.

Key Risk Moments in Life Sciences Where Trade Secrets Issues May Arise

  1. Recruiting or onboarding bench scientists from competitors, particularly in platform areas like RNA delivery or gene editing.
  2. Filing patents near IND or BLA milestones, timing that increases scrutiny of inventor contributions and prior access.
  3. Consultants or advisors working across multiple biotechs, as overlapping engagements may create inadvertent conflicts.
  4. Integration after acquisitions or licensing deals, as merging data repositories or research teams without clean protocols may lead to complications.
  5. Submissions to regulators and scientific conferences, as these disclosures may inadvertently draw on or reveal competitor know-how.

Bottom Line

Recent lawsuits illustrate a growing reality: In life sciences, trade secret disputes may cascade across clinical, regulatory, and commercial fronts. Because these conflicts often implicate entire platforms, they carry stakes well beyond a single product. Companies that invest now in robust governance around trade secrets, personnel transitions, patent strategy, and deal diligence may be better positioned to protect both their science and their enterprise value. In an industry where speed and trust drive competitive advantage, proactive management of these risks is crucial.