Every business has intellectual property. These are aspects of their business and products that differentiate them from and give them an advantage over the competition. A common question is how the company should protect certain elements of their business – with patents or trade secrets. Your business strategy should include identifying your intellectual property and what mechanisms the company will use to protect it.
When to use a Patent
Patents are used to protect inventions and methods. When you get a registered patent, you get the exclusive right to practice your patent for 20 years from the date you filed the patent application. If you invention or method is one that can be easily copied by your competition, obtaining a patent is an effective way to create a legal monopoly for yourself to recoup the costs of developing your invention and bringing it to market.
There are industries that are developing so fast that it’s not worth it to obtain a patent, because the technology will be obsolete before the patent expires. Conversely, there are industries where it’s possible to dominate a niche for more than 20 years with a particular development, and having patent could be limiting. When you file a patent application, you must provide sufficient information that another person could create your invention, and all that information is public. In those cases, not filing a patent is the best strategy, but rather keeping your invention as a trade secret.
When to use a Trade Secret
A trade secret gets its value from remaining a secret. Maintaining the secret gives the company a competitive edge. The classic example of a trade secret is the recipe for Coca-Cola. Very few people know or have access to the full recipe. The employees who work in the factory don’t know it; they know only the portion of the process that is related to their specific job.
When a company has a trade secret, they have to take reasonable steps to keep it a secret. This means keeping any files or documents in secure locations and limiting the number of people who know it to those who require the information for their job. The employees who are entrusted with trade secrets are likely required to sign non-disclosure agreements, and often times, the companies treat them exceptionally well so they will have no motivation to disclose the secret.
| PATENTS | TRADE SECRETS | |
|---|---|---|
| PROTECTS | Inventions and methods | Anything that gives a company value by remaining a secret |
| DURATION | 20 years from patent application filing date | As long as the secret is kept a secret |
| SHARED WITH | Patent applications are public records | As few people as necessary |
| PROTECTED WITH | Registered patents | Non-disclosure agreements and security measures |
Should you use a patent or a trade secret to protect your company? Ask your intellectual property lawyer. Deciding how to protect your intellectual property is often as much of a business question as it is a legal question. How you set up your business may determine what is the right strategies for you.
Every legal situation is different and needs to be evaluated based on your specific needs. If you need help with a patent or trade secret, please send us a message. We have lawyers licensed in Arizona, New York, and Connecticut and we can handle federal intellectual property matters in any U.S. state as well as assist with international matters. For even more information, sure to connect with us on Facebook.
Post written and edited by social media attorney Ruth Carter.