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Trade Secrets vs. Patents – A Brief Comparison

In the United States, both trade secrets and patents can provide valuable protection for a client’s intellectual property. The cost and scope of protection associated with patents, however, can differ significantly compared to those of trade secrets. For these reasons, clients are often required to decide between protecting their intellectual property with trade secrets or with patents. In some circumstances, a comprehensive protection strategy may include both trade secrets and patents.

Patents – U.S. patents grant their owners an exclusive right to exclude others from making, using, or selling an invention for a 20-year term. This right to exclude others is granted to the owner by the government and provides protection against a wide range of infringing third parties, including innocent infringers. Patents also protect against reverse engineering of others.

Trade Secrets – Conversely, trade secrets in the U.S. provide a potentially unlimited protection period, so long as reasonable precautions are taken to maintain secrecy. Costs to obtain a trade secret can be relatively low compared to patents as there are no formal filing requirements – but the cost and effort necessary to maintain the secrecy of a trade secret can be significant depending on the nature of the trade secret. Moreover, trade secrets do not prevent others from learning the details of the trade secret through lawful means, such as reverse engineering, independent discovery, independent invention, or inadvertent disclosure. This can be problematic as trade secret protection dissolves when the details of the trade secret are no longer a secret.

Which one is right for you? Trade secret protection may be preferred when the invention is likely to be useful beyond the 20-year patent term. Patent protection is preferred if the subject matter of the invention can be easily reverse engineered. Similarly, if others are likely to independently create or discover the invention, patent protection is likely a more viable option. Lastly, if the administrative costs associated with maintaining secrecy are high, or if maintaining secrecy is not a reasonable option, patent protection is recommended.

Please reach out if you would like to discuss your own protection strategy in more detail!

Category: Intellectual Property, Patents, Trade Secrets