Study brokers Interspond, Elias Research head to court over alleged trade secret violations
Two trial management firms (TMOs), known more commonly in the industry as study brokers, have taken their disagreement to court.
In a trade-secret infringement lawsuit filed in Wisconsin civil court, Madison, Wis.-based TMO Interspond alleges that former employee Phil Billingsley, who left the company in August 2010 to start his own TMO, Elias Research Associates, violated the Uniform Trade Secrets Act by using documents developed by Interspond for the benefit of his new firm. The complaint alleges he unlawfully accessed Interspond’s client and customer list.
“I deny any and all claims of wrongdoing,” said Billingsley, who had been in charge of business development for Interspond for two years. “I was never asked by Interspond to sign a noncompete or confidentiality agreement, so it’s my belief that there is no legal basis for the complaint, and that once resolved, it will be resolved in our favor.”
Kathy Cox, founder and CEO of Interspond, said, “There are 2,500 sites conducting research in the U.S. Our list contains 250, so there are plenty of other business opportunities out there. I would never begrudge someone doing what I did—starting their own business and building a client base—but I have an issue when someone steps on my toes.”
She added that Billingsley had been her personal friend.
When the lawsuit was filed, Elias Research responded by challenging jurisdiction in Wisconsin, since the company is based in Idaho. In March, a judge ruled that Wisconsin has jurisdiction and allowed the case to proceed. In June, the judge denied Interspond’s attempt to get a temporary restraining order that would have restricted Elias from contacting any of Interspond’s clients.
But, said Cox, “The judge denied the motion for a temporary restraining order because he said we have a method of recourse—collection of monetary damages—if we win at trial, so there was no need to restrain him from contacting clients and customers.”
To help investigative sites avoid any confusion in the meantime, Interspond sent an email to all sites it works with stating that Billingsley now is with his own firm and no longer is authorized to use Interspond’s name, said Cox.
In 1996, Cox started one of the first trial brokering firms in the industry, PharmaSeek, which she sold in 2000, along with two sites she had started, Milwaukee Center for Clinical Research and Fox Valley for Clinical Research, she said. She then founded Paramount Research Consortium, a business development firm for sites. When the non-compete clause in her contract with PharmaSeek’s new owners had expired, Cox started Interspond, she said.
Before joining Interspond, Billingsley had been store director for Roundy’s Supermarkets, headquartered in Milwaukee, Wis.
The TMO, or site broker, business is relationship-intensive. The broker company establishes relationships with investigative sites, then approaches sponsors and CROs in an attempt to match up the parties. Most TMOs then help negotiate the contract and budget for the site, taking a percentage of what the site earns during the course of the study. Generally, TMOs’ relationships with sites are non-exclusive; the sites are free to work with other TMOs if they choose, or to approach sponsors and CROs directly.
This is what makes Billingsley scratch his head. “If you ask me whether I’m working with Pfizer and GSK, yes, as are a lot of people in this business,” he said. Is he working with the same sites with which Interspond had relationships? “There is some crossover,” he said.
Whether or not this is illegal will be determined by the Wisconsin court system. A trial date has not yet been set.
The TMO field is not particularly crowded. Its heavy hitters include PharmaSeek (Cox’s former company); Investigator Location Services (ILS); Investigator Support Services (ISS); and the Biomedical Research Alliance of New York (BRANY). Newcomers to the field include Elias, Principal Link and Elite Pharmaceutical Trials.
But Sarah Ebner, president and founder of ISS, said this corner of the industry is getting more populated. “A lot of new competitors are coming into the field,” she said. “A lot are solo practitioners, a single person who says, ‘I’m going to broker studies.’ I think this happens in many sectors where there have been layoffs. If a person has had some exposure to or experience in the area—in this case brokering studies—they feel they could put a few matches together and make money.”
Can they? Ebner said it’s a pretty small, niche part of the industry, but there are a lot of doctors who don’t know how to find trials, even though they may be listed in fairly obvious places, such as Quintiles’ database of studies. “Physicians are not always savvy about that or cognizant of those resources, so people new to the field can make money just from those inefficiencies,” she said.