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Three Benefits of Trade Secret Protection Over Patents

Some individuals or companies apply for patents and have their applications denied for one reason or another. Others prefer not to publicly disclose their valuable information as part of the patent application process. Still, others wish to avoid the cost, uncertainty, and delays involved in obtaining a patent. Fortunately, patents are not the only means of safeguarding valuable knowledge. Trade secret protection is sometimes the better path to follow.

A number of well-known businesses take advantage of trade secret protection, including Tabasco Sauce (for its recipe) and Google (for its search algorithms), to take just two famous examples. But this is just the tip of the iceberg. Many, if not most, businesses have valuable information that can be protected as trade secrets. Though patent protection makes sense in some cases, trade secret protection provides several distinct advantages.

1. Any Kind of Information Can Be a Trade Secret

Patents generally only protect inventions, that is, new and useful devices and methods, or improvements on existing devices and methods. Patents are generally technical in nature. On the other hand, trade secret protection can be applied to any and all types of proprietary information. To be sure, some trade secrets are technical, but many are not. And trade secrets are not subject to the stringent novelty requirements for patents.

The Michigan Uniform Trade Secrets Act provides that trade secrets can include:

  • Formulas
  • Patterns
  • Compilations
  • Programs
  • Devices
  • Methods
  • Techniques
  • Processes

Federal and the laws in other states say something similar. The point is that any type of information—including information that cannot be patented—may in principle qualify for trade secret protection. For example, business information such as customer data, market research, and business plans can be trade secrets. A business can take advantage of trade secret protection for any secret information that provides it with a competitive edge.

2. Trade Secrets Have No Expiration Date

Patents provide protection for up to twenty years. That’s a fairly long time, but some technologies have a useful life much longer than that. After a patent expires, anyone can use and profit from the invention (and the invention will be disclosed for all the world to see in the patent). Trade secrets, by contrast, have no expiration date. A business company is entitled to maintain trade secret protection as long as it keeps the information secret.

Coca-Cola first developed its first recipe more than 100 years ago, and closely guards its recipes from its competitors to this day. Its recipes have been the target of attempted theft and espionage over the years. Of course, a recipe cannot be patented. But even if it could, the company could not have used patent law to protect its formulas for over a century.

It is important to recognize, however, that trade secret protection can be lost in a moment. Exposing your business’s trade secrets to the public or to third parties can destroy it forever. Moreover, if it was disclosed due to carelessness on the part of your business, a court may decide you are not entitled to legal relief. For these reasons, it is important to work with an experienced trade secret attorney to determine how best to protect your assets. Depending on the circumstances, this may include using carefully tailored nondisclosure agreements (NDAs) and implementing reasonable security measures to ensure that your information stays protected for as long as necessary.

3. There is No Formal Application for Trade Secrets

Patents provide many benefits and are sometimes exactly the right solution. But as is often the case in business, a one-size-fits-all approach to intellectual property is counter-productive. Obtaining a patent is often a complicated, lengthy, and expensive process.

Compare this with trade secret protection, which becomes effective the moment a company takes the proper steps to lock down its information. There are no filing fees to pay, and the legal standards are more flexible and case-specific. Additionally, by opting for trade secret protection, your business will not have to wait to learn whether its application has been approved, or what changes will be needed to get it approved. Though it is important to consult with counsel, trade secret protection is accomplished entirely in-house.

Protecting Your Trade Secret Rights

Modern technology makes trade secret misappropriation all too easy. If you’re not sure your company’s trade secrets are protected, an experienced trade secret attorney can help you take stock of the valuable information you have and devise a strategy for protecting it. Properly protecting your information makes it harder to steal. Equally important, such protection makes it easier to enlist the help of a court in the event your secrets are stolen.

Maxwell Goss Law represents clients in trade secret, intellectual property, and business litigation cases in Michigan and nationwide.

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