Identifying, Securing, and Defending Intellectual Property Rights

Trade Secrets

Businesses and individuals should consider whether to protect their ideas as a trade secret. A classic example of a trade secret is the formula for Coca-Cola.

Trade Secret Law. What constitutes a trade secret depends on state law. The Uniform Trade Secrets Act (UTSA) defines a trade secret as:

information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and

(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

However, not every state has adopted the UTSA. See which states have adopted the UTSA here. Generally, a trade secret is something of value, that provides a business advantage, that the owner makes an effort to keep secret.

Trade Secret vs. Patent Protection. A trade secret protection is different from patent protection because patent protection requires that the inventor disclose the details of the invention to the public in a patent application. However a trade secret protection requires that the owner make efforts to keep the idea secret.

Business Goals. Whether to protect an idea as a trade secret or with patent protection depends on the ultimate goal sought by protection of the idea or invention. The motivation of most business is to benefit financially. Consider the following questions when determining the most appropriate protection:

  1. Is the idea patentable?
  2. Will you need to publicly disclose your idea?
  3. Will the business exploit the idea for longer than the term of a patent (20 years)?
  4. Will competitors be able to reverse engineer the idea from the ultimate product when the product is placed into commerce? If so, patent protection maybe preferred as the idea is difficult to protect and the deterrent effect of a patent may provide the best protection.
  5. Is your idea otherwise difficult to keep secret?
  6. Are your competitors patenting similar ideas? Will they seek to enforce those rights against you? In such case, patent protection may be preferred to induce cross-licensing in the face of threatened patent litigation.
  7. Is immediate revenue sought through licensing? If so patent protection may be preferred.
  8. Are up front costs a critical factor? There is no filing cost related to a trade secret, however costs required to ensure the information is kept secret should be considered.
  9. Are competitors likely to independently invent the subject matter of your idea even without access to your information? If so, patent protection may be your best protection.

Services. We help our clients protect their trade secrets by:

  • Identifying trade secrets
  • Crafting trade secret protection strategies based on business goals
  • Drafting non-compete agreements and confidentiality agreements
  • Counseling clients on best practices when an employee separates from the business