Trade Secrets in Healthcare Technology: Analyzing Glytec LLC v. Prisma Health and Its Industry Implications

Disclaimer: The views and opinions expressed in this essay are solely those of the author and do not reflect the views, opinions, or positions of any employer, organization, or institution with which the author may be affiliated.

Abstract

The recent federal court decision in Glytec LLC v. Prisma Health represents a watershed moment for healthcare technology companies, establishing critical precedents regarding trade secret protection, reverse engineering prohibitions, and competitive practices within the digital health ecosystem. This case, decided in the U.S. District Court for South Carolina on June 25, 2025, centers on allegations that Prisma Health systematically reverse-engineered Glytec's proprietary insulin management software algorithms to develop a competing product, potentially violating both contractual obligations and federal trade secret laws.

The court's preliminary injunction ruling demonstrates several key principles that will reshape how healthcare technology companies approach intellectual property protection, vendor relationships, and competitive strategy. First, the decision affirms that complex algorithmic configurations in healthcare software can qualify for robust trade secret protection, even when some underlying methodologies are publicly known. Second, it establishes clear boundaries around what constitutes impermissible reverse engineering under licensing agreements. Third, it balances intellectual property protection against patient care continuity, creating a framework that prioritizes healthcare delivery while still protecting innovators' rights.

Key implications for the healthcare technology industry include:

• Enhanced requirements for trade secret identification and protection protocols

• Stricter contractual language and enforcement mechanisms in software licensing agreements

• Greater scrutiny of competitive intelligence gathering and product development practices

• Increased litigation risk for health systems developing internal alternatives to licensed technologies

• New considerations for due diligence in healthcare technology acquisitions and partnerships

This analysis examines the case's factual background, legal reasoning, and broader implications for stakeholders across the healthcare technology value chain, from startup innovators to enterprise health systems to venture capital investors.

Table of Contents

1. Executive Summary

2. Case Background and Factual Context

3. Legal Framework and Court Analysis

4. Trade Secret Protection in Healthcare Technology

5. Contractual Obligations and Reverse Engineering

6. Industry-Wide Implications

7. Strategic Considerations for Health Tech Companies

8. Risk Management and Compliance Framework

9. Future Outlook and Emerging Trends

10. Conclusion

Executive Summary

The Glytec LLC v. Prisma Health decision fundamentally reshapes the landscape for healthcare technology companies by establishing that sophisticated algorithmic configurations can receive strong trade secret protection, even when underlying methodologies are publicly available. The court's ruling that Prisma Health likely violated both contractual obligations and trade secret laws by reverse-engineering Glytec's insulin management software creates new precedents that will influence how healthcare organizations approach vendor relationships, competitive intelligence, and internal product development.

At its core, this case demonstrates the tension between healthcare organizations' desire for technological independence and intellectual property holders' rights to protect their innovations. The court's balanced approach—allowing continued patient care while preventing external dissemination of allegedly misappropriated technology—provides a framework that other courts are likely to follow in similar disputes. This precedent suggests that healthcare technology companies can expect stronger protection for their proprietary algorithms and methodologies, while healthcare organizations face increased scrutiny when developing internal alternatives to licensed technologies.

For health tech entrepreneurs, this decision validates the importance of robust trade secret protection strategies and demonstrates that courts will enforce contractual restrictions on reverse engineering, even in the healthcare context where patient care considerations might otherwise favor broader access to technology. The ruling also highlights the critical importance of clearly identifying and documenting trade secrets, implementing comprehensive confidentiality protocols, and crafting licensing agreements with specific restrictions on competitive uses.

Case Background and Factual Context