Patents vs. Trade Secrets

It is important for a founder/innovator to be clear on the strategic differences between a patent and a trade secret, and which one is best for your situation.

What defines a patent anyway? A patent protects an innovation having a physical structure, functional process, or a combination of these. Items eligible for patent protection include machines, manufactured items, processes, and compositions of matter.

Why should you consider pursuing patent protection? A patent becomes a property asset having an intrinsic value and gives you the right to exclude others from making, using, selling, or importing your patented innovation.

In order for a patent to be issued, an innovation must meet the burden of being useful, novel, and non-obvious. A reliable definition for “non-obvious” is an innovation that would not be readily produced by a person of ordinary skill in the art in which the innovation is created. Therefore, merely a new use of a known object is not patentable because the function and structure of the known object is already in the marketplace.

While it can be a substantial burden to meet all of these patentability qualifiers, a patent not only protects your innovation, but provides the patent holder with the right to produce and sell or license the patented innovation while providing a head-start in the market place.

What about trade secrets? Innovations that cover a new use, new object or process yet are obvious to an ordinary observer, may not be patentable. However, such innovations may find some protection in being held as a trade secret. A trade secret depends entirely on secrecy for its enforceability, without requiring the typical, multi-year process of patent examination and allowance necessary to obtain an enforceable patent.

The strength of a trade secret lies in the care and control taken to keep the secret known to very few. A good example is the recipe for syrup for Coca Cola. The Coca Cola company has put in place very stringent measures to ensure that only a very few people either know or have access to the Coke syrup recipe at any given time.

Maintaining a trade secret can be costly and time consuming due to the necessity of limiting access to only the very few who need to know. On the plus side, protection of a trade secret can begin right away and may continue as long as the secret remains undisclosed. However, the ability to enforce a trade secret is easily destroyed without proper control.

In weighing your decision, be aware that patent protection is much stronger and enforceable in a court of law and remember, it may only be granted to a machine, manufactured item, process, or composition of matter that is useful, novel, and non-obvious over publicly available prior art.

If you still have questions or wish to discuss further, please feel free to reach out to me directly: john@sotoip.com.