Legal Blog

Trade Secret vs. Patent Protection - Which is Right for Me?

Intellectual property is often the backbone of a company. It is the essence of a brand’s or business’s success - the how and why of where they are. With that in mind, it only makes sense that keeping those ideas and details protected from theft and unlawful imitation is a top priority for businesses both big and small.

When most people think of protecting the property of a business, they think of a patent. You might even hear someone jokingly reply to a friend who comes up with an idea that they had better patent that before someone else does. The term itself has become so commonplace that it is used as an umbrella for all manner of property protection - but that isn’t accurate.

The truth is, there are limitations to what patents can do and how they should be used. In some cases - many more than most people realize - patents aren’t the right answer for protecting important information and details that are vital to a company’s success. In these cases, it might be best to weigh trade secret vs. patent protection. You might be surprised at what trade secrets have to offer!

Trade Secret vs. Patent Protection

Trade Secret vs. Patent - What’s the Difference?

Before you can determine which type of protection is best for your company’s most important information between a trade secret vs. patent protection, you’ll need to deepen your understanding of each term.

A patent is legal protection granted to a person or business that gives the entity sole ownership of the rights to create and distribute a product or service for a specified amount of time.

A trade secret is a more abstract type of protection. It is a type of secrecy that protects valuable information, such as:

  • Recipes
  • Formulas
  • Techniques
  • Devices
  • Patterns
  • Programs
  • Compilations, and more

For information to benefit from the use of trade secrecy, the business that uses that information would need to be negatively impacted by the release of that information.

So, which type of protection is best? That question lies with the business looking for protection. There are numerous reasons to choose a patent, but also important reasons to decide against it. There are legal qualifiers that have to be met to obtain a patent that are not necessary for the use of trade secrecy. Likewise, patents are costlier and do eventually expire, whereas trade secrets are essentially free unless combined with patent protection and are fully under the control of those who own them - forever.

The Big Benefits of Little Secrets

What are the advantages of keeping things secret? In the business world, the answer can be a lot.

Some famous examples of trade secrets include restaurant chain recipes and soda brand formulas. While these concoctions may not be the stuff of rocket science, their secrecy is part of their success. There are two reasons for this. The first is that they’re genuinely good products. A trade secret protects a formula, recipe, or other information that is worth wanting, after all. But perhaps more importantly, these secrets create success because they create scarcity and intrigue.

If you browse the popular hobby website Pinterest, there are hundreds or perhaps even thousands of posts claiming to have discovered a duplicate recipe for these famous formulas. They all vary slightly and all have numerous reviews ranging from “dead-on duplication” to “the original is still the best”. But even if a person successfully cloned these recipes, the original really would still be the best.

Because the real secret formula isn’t known.

People might guess. People might attempt to reproduce it. But in the end, only those who have access to the trade secret information actually know it. And that intrigue is part of the fun - and the selling point - for these products.

Patents Have Their Place, Too

All of this talk about trade secret vs. patent protection may make it sound as if patents aren’t a good source of protection for the ideas and information that businesses are built on - but that isn’t the case. There are still many scenarios in which a patent is indeed the best choice for protecting what is most precious to a company’s success.

Patents are legally-binding, whereas there is much less legal recourse in place for businesses should a trade secret be betrayed. It can be difficult to prove that a person with access to trade secret information is at fault for damages to a business - especially if the business is large or the list of people who have access to that same information is long. Having the concrete protection that a patent affords to a business or product creator can be reassuring and can come in handy, should problems with security and secrecy arise.

There are also instances in which a company or its members might accidentally disclose a trade secret, or a competing company might develop a similar or identical product purely by chance. If this happens and a patent is not in place, there is again little recourse for the company in question. Those who want maximum protection often opt for a patent, so they certainly still have an important place in protecting intellectual property.

If you feel that you could use additional guidance in determining which type of protection would be best for your business’s most sensitive information, don’t feel bad. Copyright law and intellectual property protection can be tricky business. That’s why it’s always best to trust the details to a professional.

When you need help navigating these situations, speak to the experts at Johnson|Dalal. With experience in patents, trademarks, copyrights, trade secrets and much more, they can help you choose the best way to protect what matters most - and get back to doing business without worry!

Give them a call today to learn more at (954) 507-4500

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