Trade Secrets - the Cinderella of the IP World?

I think it’s fair to say that many organisations, particularly universities and SMEs, tend to focus on patents when considering protecting their inventions or technology.  Now there are many good reasons why they might do this (e.g., use as an ‘innovation’ metric, attract investors, ward off competitors), but it shouldn’t be to the exclusion of considering other forms of IP protection, particularly trade secrets.  There are relative advantages and disadvantages with each IP right, so organisations should consider both when deciding how best to protect their inventions, proprietary technology or confidential information.

I sometimes get the impression that trade secrets are seen as the ‘poor relation’ in IP protection, with patents being held up as the ‘gold standard’.  Maybe it’s because they are considered less tangible than patents, where it is much easier to cite the number of patent families you have on your company website, annual report or your personal CV to demonstrate how innovative you are to investors, shareholders, funding bodies or potential employers? Or perhaps trade secrets are thought to be more difficult to deal with, there being no clearly defined legal path to secure protection before the national intellectual property offices as there is with patents.  Or maybe it’s concern about how you ensure the information doesn’t leak out into the public domain, or how you monetise or license it without fear of disclosing it to third parties?  Whatever the reason, trade secrets often get overlooked or are dealt with inadequately when organisations set out to protect their IP.

But don’t forget, trade secrets offer several advantages over patents.  For one thing, they can be used to protect both technical and non-technical information such as client lists, business plans and algorithms which can’t be patented. For another, provided they don’t become public knowledge, they can be protected indefinitely whereas the lifetime or term of a patent is generally 20 years. Take the coca cola formula for example, it has been kept secret since 1886, despite illegal efforts by some employees to sell the formula to competitors!  So, measures can be put in place to successfully maintain secrecy and to stop third parties stealing your confidential information.  Even if they fail, proprietors can successfully enforce their rights in the courts as we saw earlier this summer when US courts awarded Propel Fuels $833 million and Zest Labs $222 in separate trade secret misappropriation cases. 

The message is clear, ignore trade secret protection at your peril!