Keeping secrets?

21 December 2015

Businesses are often faced with the dilemma of needing to tell the world about their product whilst wanting to protect their technology from competitors. Some of the world’s best-known companies are based on trade secrets – think of Google and its algorithm, Coca Cola’s recipe, and the secret blend of WD40. Others, such as large pharmaceutical companies, rely heavily on patents to maintain a monopoly and would find it difficult to make a profit without them. While the decision between patents and trade secrets is often presented as a black and white choice, companies with well-developed IP strategies often use both to their advantage. 

The strength of a trade secret is the potential to keep a technology from your competitors indefinitely, in contrast to patents, where your protection is usually 20 years at most. However, the main weakness of trade secrets lies in the name - trade secrets can only be protected as long as they remain confidential.

If you release an innovative product into the market, and hope to keep it secret – beware, your competitors may well be able to reverse-engineer and produce it themselves and there would be nothing you could do to stop them. Alternatively, in a fast-moving field, where your competitors are researching the same area as you, they may well create the same product as you independently. Again, if they did this, there is nothing you could do to stop them selling this product, effectively releasing the secret. Worse still, if your competitor has independently developed a technology you have kept secret, and then files a patent on it, you may find your freedom-to-operate severely restricted.

So when should you file patents and when should you keep technologies a trade secret? Put simply, any product that is easily reverse-engineered and copied is not suitable for protection as a trade secret. Such products are far more suitable for patent protection, as long as they are considered ‘new’ and ‘inventive’ by a patent office. Preliminary searches in many patent databases such as Espacenet (a free online database run by the European Patent Office) can reveal what existing technologies are out there. This can help you gain an idea of whether your promising technology is in fact new, and inventive, and if it would be worth pursuing patent protection. 

Can you combine both patents and trade secrets to give you an advantage?  Many companies use patents to protect the ‘public’ side of their inventions – i.e. anything that your competitors could reverse engineer. The trade secrets can then protect some of the fine details that a competitor would find very difficult to find out. For example, while a product you develop could be protected by a patent, if you subsequently devised a particularly efficient way of making it, this method of production could be kept a trade secret. The balance of how much is kept as a trade secret and how much is subject to patent protection will depend on a company's particular circumstances. If, for example, a company realises that its competitors are researching in the same area of technology and is likely to file patents, the company will often lean toward patenting rather than relying on trade secrets. Similarly, companies which intend to licence technology often prefer the stronger protection of patents to trade secrets.

In conclusion, by having a combination of patents and trade secrets, it can give you the power to prevent competitors taking your key ideas while the patents are in force, but still allow you to remain ahead when the patents expire. 

Trade Secrets: Practical Tips

If your company wishes to use trade secrets, how can you maximise their protection?  Here are a few key pointers that can help.

  • Make sure your trade secret is recognised within your organisation and written down –if it is not clear to your employees what technology is commonplace and what is a valuable trade secret you could find it difficult to enforce your rights should the information be leaked.
  • Mark up key documents –Use the words ‘Confidential – Trade Secret’ on certain documents to avoid any confusion. However do not overuse this phrase as it will be weaken the impact on the most essential documents
  • Control confidential information within your organisation –create a clear system detailing who in the organisation is allowed access to certain information and under what circumstances. Restricting computer files to a certain number of employees is also advisable.
  • Make employees aware of policies and protocols on confidential information -While it may be clear to the scientists working on new technologies that everything is to be kept confidential, this may not be so clearly recognised by the sales team, who are naturally keen to shout about the exciting products and processes you are offering.
Alex Rogers

Alex Rogers

Partner

Our Expert
Alex Rogers
Alex Rogers
Location: Bristol (UK)

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