Choosing between patent vs. trade secret protection for your idea? Let's get into the differences between these two types of intellectual property and when they're best used.
You're trying to decide whether you need to use patent or trade secret law to protect your idea. Let's get into the differences between these two types of intellectual property and when they're best used.
Patents Are Public; Trade Secrets Are Private
The first big difference between a patent and a trade secret is that one is public and the other is not. You can probably guess which is which. The patent is actually a public disclosure of your invention, and the trade secret is something that you're actually not going to publicly disclose. If you're okay with public disclosure, then you can go the patent route. If it is something that public disclosure would threaten, then you may be leaning towards the trade secret route. But there is more that must be considered here.
Pre-Litigation Enforcement of Patents
A patent is a pretty well-defined item of intellectual property, whereas a trade secret could be a little bit ambiguous. This is because another party is going to know what your patent is, whereas they shouldn't know what your trade secret is unless you explain it to them. So in this sense, a patent is a little bit easier to enforce because you can send a cease and desist letter saying—put in the simplest way—here's our patent, here's our claim chart, here's how what you are doing fits into our claims, and therefore you need to cease and desist. Whereas with the trade secret, you need to pursue enforcement in a little bit different of a way than that.
Patents Automatically Fall into Federal Jurisdiction
Patents automatically get you bumped into federal district court if you go to enforce them through litigation. The federal jurisdiction over patent law is plenary, meaning that the federal government has authority over all patent infringement cases.
What it Takes to Get a Patent vs. Trade Secret is Different
What it takes to qualify as a patented invention and what it takes to qualify as a trade secret is quite different.
For something to be a patented invention, you actually have to apply for a patent from the United States Patent and Trademark Office. The USPTO is then going to examine your application to determine if it meets the requirements of the patent law. Read more about the requirements here. In short, your application needs to be written in a specific way that a member of the public could read it, they could understand your invention, and they could build or use it themselves.
The claims need to be written in a specific way. The invention needs to be eligible for patenting. It can't be an abstract idea or something like that. It needs to be novel. It needs to be not obvious. And you need to get through the examination process, which can take anywhere from two to three years for most patent applications.
Patents Involve a Legal Quid Pro Quo
In patent law, a legal quid pro quo is involved. You are giving the public the information they need to practice your invention in exchange for a time-limited monopoly on that invention.
On the other hand, a trade secret is done a little bit differently. You don't actually apply for it.
Trade Secrets Aren't Just Confidential Information
You take steps on your own to protect something as a trade secret, but it does have to qualify as a trade secret. This is not to be confused as just something that's confidential, "know-how," or proprietary information. A trade secret has to be something that you can define, and that derives independent economic value from the fact that you've kept it secret and from the fact that it's not easily accessed.
When we're putting together a trade secret for a company's IP portfolio, we put together a plan to keep that thing out of the public eye and include the steps that need to be taken to follow the criteria for maintaining it as a trade secret. As you can imagine, the plan is different depending on what the thing is that is to be kept as a trade secret.
Trade Secrets Last Longer than Patents
The term is quite different between a patent and a trade secret.
Compared to a trade secret, a patent is going to have a pretty short term. However, it's still long in the perspective of most businesses. A patent's term is generally going to last from the date that it's granted until a date that's calculated based on 20 years from the date you filed the patent application. This post explains patent terms in more depth.
A trade secret, on the other hand, has an indefinite term. That means that as long as you can maintain something as a trade secret, it can retain its trade secret status and enforceability under the various trade secret laws.
Patent vs. Trade Secret Costs are Not What You Think
People often assume a trade secret is cheaper than a patent. Sometimes it is. Sometimes not. The expenses involved with getting, maintaining, and enforcing a patent versus the expense of setting up and enforcing a trade secret are not as different as you think.
A patent has a lot of upfront costs, and it's really easy to do research to determine what these costs look like. A trade secret is totally custom. Building a trade secret plan really is bespoke to what that trade secret is, what your company is, and what stage your company is at. So it's a little bit harder to research what a trade secret costs up front.
However, as with most forms of IP, a lot of the costs come into play along the life of that piece of IP. Ongoing protection of a trade secret, particularly as your company scales, can get technically complex and expensive.
What is Patent vs. Trade Secret Protection Like?
And finally, the brass tacks. How well does the patent or trade secret protect your business? This really is a question you need to talk to an IP lawyer about, because whether a business needs to protect something with a patent or as a trade secret is going to depend on what that thing is and what the business's goals are.
This is why we tie everything we do at Stake back to IP strategy. And that needs to fit into your business strategy. Because once we have those down, we can make a decision about whether something is ripe for patenting or whether something should be maintained as a trade secret. And once we make that decision, we can determine how we need to implement those plans.
Choosing Patent vs. Trade Secret Protection
For something that you can keep as a trade secret, for which you can meet the requirements, and for which a trade secret is advantageous, you might want to go that route. For something that you're sending customers, or something that is going to be put into the public eye or into the public sphere, the patent route may be the better route.
The other thing you want to think about is the window of protection that you need. A patent, while it's going to give a shorter window compared to a trade secret, it's still a long time in the life of a business.
This is how we're going to think about patents and trade secrets as we're trying to decide which one is more appropriate for the thing that your business is trying to protect.