Trade Secrets vs. Patents

DEREK FAHEY, ESQ.

Trade-secret protection can be an alternative to patent protection when valuable information derives economic value from remaining confidential and the owner takes reasonable measures to preserve secrecy.

When Trade Secrets May Fit

Trade secrets can protect formulas, methods, processes, customer information, pricing, manufacturing techniques, and other confidential business information. They can cover subject matter that is not patentable, as well as patentable inventions that a business chooses not to disclose.

Advantages

• Protection can continue indefinitely while secrecy is maintained.
• No public disclosure or government examination is required.
• No patent filing, prosecution, issuance, or maintenance fees are required.
• Confidential know-how that would not qualify for a patent may still be protected.

Disadvantages

• Lawful reverse engineering and independent development may defeat exclusivity.
• Public disclosure can permanently destroy the protection.
• Another party may independently patent related technology.
• Enforcement can be difficult, costly, and may risk further disclosure.
• Maintaining secrecy may require significant operational and contractual controls.

Choosing a Strategy

The right choice depends on whether the invention can be reverse engineered, whether secrecy can realistically be maintained, how long the advantage is expected to last, and whether public patent rights would provide stronger commercial leverage.