Trade secret or patent: Which is best to protect your IP?

Businesses are faced with the dilemma of needing to tell the world about their product while at the same time protecting their technology from competitors. 

It can be done – some of the world’s best-known companies are based on trade secrets – think of Google and its algorithm, Coca Cola’s recipe, and the secret blend of WD40.Others, such as large pharmaceutical companies, rely heavily on patents to maintain a monopoly and would find it difficult to make a profit without them. 

While the decision between patents and trade secrets is often presented as a black and white choice, companies with well-developed IP strategies often use both to their advantage. When should you use one over the other and how can you combine them?

Trade secrets

The strength of a trade secret is the potential to keep a technology from your competitors indefinitely, in contrast to patents, where your protection is usually 20 years at most.

However, the main weakness of trade secrets lies in the name. By their very nature, trade secrets can only be protected as long as they remain confidential. If you release an innovative product into the market, and hope to keep it secret – beware, your competitors may well be able to reverse-engineer and produce it themselves and there would be nothing you could do to stop them. 

Alternatively, in a fast-moving field, where your competitors are researching the same area as you, they may well create the same product as you independently. Again, if they did this, there is nothing you could do to stop them selling this product, effectively releasing the secret. Worse still, if your competitor has independently developed a technology you have kept secret, and then files a patent on it, you may find your freedom-to-operate severely restricted.

Patents

The main advantage of a patent is that it gives you a right to stop others using your invention, even if they have come up with it independently. That said, you need to be reasonably clear at the outset that your technology is suitable, and that you are aware of the effect of trying to patent your invention. 

To obtain a patent on a technology, you have to disclose the invention to the world. A patent needs to be able to explain how to make and use an invention in a fair amount of detail. Leaving important details out of a patent could render it invalid. This means a technology needs to have been developed to the working stage before filing a patent – it does not need to be perfected, but a prototype should ideally have been made.

Additionally, you can only obtain a patent on a product or process if it satisfies certain criteria. In particular, the technology needs to be ‘new’ and ‘inventive’. 

‘New’ in patenting terms means that the technology has not been publicly revealed anywhere in the world in a single disclosure (which can be a single document, a sale of an item or an oral disclosure at a conference). 

Once that criterion has been satisfied, the invention needs to be ‘inventive’. This is not such high a hurdle as some may imagine. To be inventive in patenting terms, the technology just does not have to be ‘obvious’ to the notional ‘skilled person’ in your field. This fictional ‘skilled person’ is not like your typical real-life researcher. They are not creative and don’t think laterally. 

Generally, to be inventive, you need to show that your technology has some sort of unexpected technical advantage over existing products or processes.

Which is right for you?

With the above in mind, when should you file patents and when should you keep technologies a trade secret? Put simply, any product that is easily reverse-engineered and copied is not suitable for protection as a trade secret. 

Read more about which is right for you – and how to protect your trade secrets – on page two…

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