Patent Protection vs. Trade Secret Protection.
Prepared by Patent Attorney Kathleen Kuznicki.
Patents and trade secrets both protect their owners, but they do so in different ways. While at first glance they seem similar, everything from the process of obtaining them to your legal protections is different between the two.
What is Patent Protection?
Generally, patent protection is the exclusive right to an invention. An invention includes but is not limited to, a:
- Method of making or method of performing a function
Or improvements thereof
When you file for a patent application, you will have to disclose details of the invention to the public. Once someone is issued a patent, they have the right to exclude others from producing, selling, or offering for sale the claimed invention disclosed in the patent. An issued patent allows the applicant or the assignee of the patent to pursue an infringement action against someone who copies the claimed invention and makes, uses, sells, or offers for sale the claimed invention without their permission.
Patents are valid for the country in which they’re granted. For example, if someone applies for, and obtains, a U.S. patent, it applies only in that territory.
Say for instance, you invented a new kind of zipper and wanted to patent the technology. The process would include filing a patent application, which would consist of a detailed description and drawings of the new zipper that you are disclosing, as well claims that cover the components or features of your new zipper. After your patent application publishes, theoretically this puts the world on notice about your inventive design and this should protect you from other manufacturers creating and profiting off your claimed zipper design without a license while the application is pending and if the patent issues, until the patent expires.
What is Trade Secret Protection?
Trade secret protection applies to valuable information because it is unknown to the general public. Generally, trade secrets include information that gives companies or parties an economic edge in their industry. It has value because it is guarded, and the information being publicly known could cause economic loss for the individuals with the secret.
To be a trade secret, the information should:
- Be known by a select few
- Should be kept confidential because it has economic value
- Be protected by the party holding the knowledge
Trade secret protection could apply to a secret recipe, manufacturing process, software/algorithm, or even client lists and strategy.
Trade secret protection protects the holder in the event of a breach of contract, or a misappropriation. For example, if you possess a trade secret on a family recipe for lemon bars, and an employee took the recipe and started their own company, you could hypothetically have grounds for litigation action against them.
Patent Protection vs. Trade Secret Protection
The Differences You Need to Know.
With a general overview of trade secrets and patents, here’s how the two differ.
A patent could be applied to a:
- New and useful device,
- Manufactured article
- Composition of matter
- Method or process
or any useful improvement thereof.
A trade secret generally boils down to:
- Customer lists
and any other proprietary information that gives an economic advantage.
Length of Time of Protection
Patents generally last 20 years, or 21 if the patent holder files for a provisional patent.
Trade secrets are indefinite, as long as the information is kept under wraps. Once it enters the public domain, it’s no longer protected.
Filing with Government
Patents require an application process with the government, which can be lengthy. Something isn’t officially protected until the patent is issued.
Trade secrets require no formal application process with the government. For trade secret protection to apply, you need only to take reasonable steps to keep the information a secret.
Information for a patent should be kept confidential until the 18-month publication date. That’s because the patent application will disclose the information that makes the item or process unique. In applying for a patent, the applicant discloses the process or designs of their claimed invention.
On the other hand, trade secrets hinge on complete confidentiality. Files and documents including trade secret information will always be marked confidential or trade secret. Only people with access to the information should sign an NDA or other confidentiality agreement.
For something to be patented, it must be deemed “novel” and not obvious to a “person having ordinary skill in the art” (PHOSITA). If someone else in the field or specialty not associated with the patent could draw a similar conclusion, it’s unlikely a patent will be granted.
Similarly, a trade secret can’t be known information in a field. It needs to be widely unknown and valuable in the fact that it’s unknown to be considered a trade secret.
If a competing party were to reverse engineer a technology or device that’s patented, the patent holder would have legal protection. In theory, the patent holder could prevent a competitor from producing the same item.
But, if a competitor reverse-engineered a trade secret, the holders of the secret don’t have legal protection. The competitors didn’t violate an NDA to figure out the formula or process.
It sounds serendipitous, but independent discovery is when multiple parties make the same discovery, whether using the same or different means.
In the case of patents, whoever is granted a patent first is protected, even if someone else comes to the same invention or formula independently down the line.
However, the same does not apply to trade secrets. If someone else comes to the same conclusion as the trade secret holder honestly, there’s no protection.
A violation of a patent hinges on infringement, which means the making, using, selling, offering for sale, or importing into the country the invention disclosed in patent claims. Meanwhile, a violation of a trade secret deals mostly in misappropriation, when an employee, former employees, hackers, scammers, or espionage leads to another party getting the secret.
Both violations of trade secrets and patents are litigated in court. Infringement litigation for patents takes place in Federal court. Misappropriation litigation for trade secrets can occur in both State and Federal courts.
When a patent holder takes legal action against infringement, they can seek injunctive relief, including:
- Monetary damages (complex can be based on a reasonable royalty, overall sales, sales attributable to invention)
- Treble damages (triple the amount of monetary damages)
- Attorney’s fees (if the infringement is found to be willful)
When a trade secret holder takes action against misappropriation, they can seek injunctive relief, including:
- Monetary damages
- Attorney’s fees (in some cases)
Trade secrets and patents both aim to protect those who own them. However, they do so in different ways, and apply to different instances. Generally, the process around patents is more formalized. However, trade secrets, as long as properly shielded, also offer layers of protection to their holder, and may apply to different types of information than a patent.
Kathleen Kuznicki is a Patent Attorney for The Lynch Law Group. For any questions about how to protect your intellectual property, call her office at (724) 246-6067.