Trade Secrets & Patents Perfect Together

A trade secret is any valuable business information that is not generally known and is subject to reasonable efforts to preserve confidentiality. One of the world’s most famous trade secrets is the formula for Coca-Cola. 

A trade secret will be protected from misappropriation from exploitation (through state law) by those who either obtain access through improper means or who breach a promise to keep the information confidential. Trade secret misappropriation is really a type of unfair competition. Remedies for infringement of a trade secret include damages, profits, reasonable royalties, and an injunction. Some statutes also provide for enhanced damages and attorneys fees in certain circumstances.

A patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office.  There are three very different kinds of patent in the United States: (1) a utility patent, which covers the functional aspects of products and processes; (2) a design patent, which covers only the ornamental design of useful objects; and (3) a plant patent, which covers a new variety of living plant. Each type of patent confers “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. It is important to note, however, that patents do not protect ideas, but rather protect only tangible or identifiable structures, methods and uses.

While trade secrets last until the information is no longer secret, which can be 1 day or decades (as is the case with the Coca-Cola formula), the duration of patent protection in the United States is dependent upon the type of patent that is acquired, whether additional fees are paid to keep the patent current, and whether any time is added to the exclusive period due to governmental delay.  Typically when the generic term “patent” is used most are referring to a utility patent.  Generally speaking utility patent protection last for 20 years from the date on which the application for the patent was filed in the United States.

It is important to understand how patent and trade secret law overlap. It is worth noting that many people erroneously believe that when an inventor applies for a patent all trade secrets are lost. This is simply not true. Anyone who tells you this is either over simplifying the process or does not understand patent law. US patent law requires an individual to disclose the best way to make and use the invention, which is referred to as the “best mode” requirement. Because the invention is defined by the claims, you must disclose the best way to make the invention you claimed, not necessarily the best way to make what you invented. The critical distinction comes into play as a result of the difference in what may be claimed and what was invented. Additionally, the requirement that the best way be disclosed is satisfied by disclosing the preferred embodiment at the time the application is filed. In other words if you learn more about your invention after you file the patent application you do not need to disclose that information. This is significant because much of the invention can frequently be retained as a trade secret, if there is appropriate claiming and preservation of trade secret information. Because a trade secret exists only so long as it remains a secret, the inventor must be careful to take particular precautions to preserve the integrity and secrecy of all information related to the invention and the invention process.

So when you are inventing you should always realize that both patent and trade secret assets can be particularly valuable.  Likewise, if you are ever luck enough to be able to license your invention you want to license both the patent and associated trade secrets.


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One comment so far.

  • [Avatar for Sanjiv]
    December 13, 2010 06:14 am

    The article is very informative. It explained beautifully about patents and trade secret. Thanks…
    I found another article which comprehensively describe difference between patents and trade secrets. And which one to prefer under specific circumstances. To read more please check..