By: Jeffrey G. Sheldon, Esq.
We are often asked the question, should I patent my invention or rely on trade secrets? As is typical in the law, there is no yes OR no answer; it depends. But a key point is they are not mutually exclusive. It is possible to have patent protection and trade secret protection available.
In deciding how to proceed, it is important to consider the advantages and disadvantages of trade secret protection. They are:
Advantages of Trade Secret Protection
Duration – In theory trade secret protection can last forever as long as the trade secret is kept secret. Patents have a limited life.
Initial cost – Trade secret protection initially is free. Contrarily, obtaining a patent has initial costs for preparation of a patent application. And there are ongoing maintenance fees to keep a patent in force. However, there usually is a cost in keeping information secret. For example, if a formulation is a trade secret, it might be necessary that the raw materials be received and relabeled off site, and then sent to the manufacturing plant.
Ease of Protecting Formulas, Methods, and Software – Product formulations, methods of manufacture and computer software – that cannot be readily discerned from products available on the open market – can be kept from the eyes of competitors by protecting such formulations, methods and/or software as trade secrets. Such formulations, methods, and/or software may also be protectable by patents, but patent law requires that the totality of such inventions be disclosed within the patent. Should a competitor choose to infringe a patent covering such formulations, methods and/or software, because the subject matter of the patent cannot be readily discerned from products available on the open market, discovery of such infringement may be difficult. Enforcement of such patents may be problematic.
Disadvantages of Trade Secret Protection
Easy Loss of Protection – It is easy to lose trade secret protection. A careless or dishonest employee can disclose the trade secrets to the world. A competitor can independently develop the same trade secret and disclose it to the public. Secrecy may be lost in a court proceeding to enforce the trade secret. The government may require disclosure or inadvertently disclose the secrets to a competitor.
No Protection Against Independent Development – Patents protect against an infringer, even if innocent. For example, if a competitor independently develops an infringing product, there still is liability. In contrast, trade secret protection only protects against those that misappropriate the trade secret. If a competitor develops the same product without misappropriating a trade secret, then there is no liability.