Patents or trade secrets?

Innovation quickly leads to the question of how best to protect the intellectual property generated. Technology can often be protected through patents, and much of current R&D is underpinned by the patent system. However, in certain cases secrets can be an attractive alternative, commonly referred to as “trade secrets” or “know-how”. A number of factors need to be considered when deciding whether to pursue patent protection for an innovation, or to keep it as a trade secret.

Patent protection can last for 20 years, but it involves disclosing the invention to the world as part of the patent process. In addition, obtaining patent protection involves considerable expense, with an associated risk of rejection of the patent application. However, if successful, a patent can provide very strong protection, including against independent creation by third parties, and once the patent application is filed an information breach is of little consequence.

Trade secrets are a very different model of protection. Importantly, protection as a trade secret can potentially last forever (the well-known example being the recipe for Coca-Cola). There is no need to apply for protection, but it is imperative to manage the relevant information carefully, since trade secrets are extremely vulnerable to an information breach. Trade secrets also do not provide any protection against independent creation by third parties.

Some of the key considerations which should form part of the decision process are as follows.

Would it be possible to tell whether a patent to the technology is being infringed?

Obvious as it may sound, a patent is only useful if it is actually possible to tell whether someone has infringed it. In some areas of technology this is very straightforward, in others it can be a much trickier issue. Consider what would need to be done in order to prove that infringement has occurred. For example, if the patent covers a process for making a product, would it be possible to prove that a competitor’s product was made via the process, or would access to their process be required?

Can the invention be reverse-engineered from commercial products?

Would it be possible for competitors to start copying the invention based on the commercial products being sold to the public, possibly including publicly available information under associated legal requirements such as safety data? In such cases trade secrets are of little use since the information is being disclosed as part of the commercial activities, so a patent is likely to provide better protection.

How important is it to be able to stop others from using the invention?

Sometimes it is worth simply stepping back for a moment. Do you actually want to keep the innovation to yourself?

In addition, since obtaining patent protection is a costly process, it should be considered whether the invention is likely to have enough commercial value to warrant patent protection. Furthermore, other protection may already be in place, such as patents for other elements of the innovation.

Might other parties want to patent the technology?

Depending on the information available, it is also important to consider the risk of a competitor independently arriving at the invention. If they did, and they obtained patent protection, how much of a problem would that be?

Some jurisdictions have provisions for “prior user rights”, but these usually limit the activities of a party to continuing what they were doing before only, while any later improvements may infringe the competitor’s patent.

Is licensing of interest?

Licensing a patent can make an important contribution to a business. In addition, there may be an option to cross-license with related technologies.

Is it viable to keep a trade secret contained?

In a scenario where trade secrets look to be an attractive option, it is of the utmost importance to consider whether it is possible to control the dissemination of the proprietary information. Are the internal processes robust enough? Can the secret be kept while complying with e.g. safety requirements? Might some of the work need to be outsourced? Are there any weak points in the supply chains?

Are there likely to be objections from the patent office?

When considering patent protection, one of the most important questions is whether the invention is patentable. In most jurisdictions, this would mean the invention would need to be different from anything which was already known and in the public domain, it would need to not be obvious over what was known, and it needs to not be excluded from patent protection under the local laws. These matters can, however, vary widely among jurisdictions a qualified patent attorney can help with this.

One of the questions when considering patentability should be whether the scope of protection which could be obtained would actually be commercially useful.

Patents and trade secrets?

The most successful strategies often use a blend of both patents and trade secrets.

It is always worth reviewing new innovative technology as a whole. More often than not, innovations can be divided into elements which should be protected by one or more patents, which therefore need to be disclosed for this purpose, and elements which are more valuable as a trade secret.