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Trade Secret Law

What is the difference between a trade secret and a patent?

Patents and trade secrets, in theory, are very similar; however, legally, a patent gives its owner a limited monopoly granted by the government in exchange for full and complete disclosure of an invention, whereas a trade secret may be a patentable invention which the owner chooses to keep secret instead of seeking patent protection.

The best example of a trade secret is the formula for CocaCola, which has never been patented, and thus, never disclosed; however, CocaCola has taken fantastic steps to keep its formula away from its competitors by protecting it as a trade secret.

In the U.S., the patent system comes from the Constitutional provision that empowers Congress “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

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Put simply, this says that the progress of science, technology, and other innovation will be promoted by encouraging inventors to fully disclose their innovations.

The U.S. patent laws encourage inventors to make such disclosures by granting them patents that confer upon them the exclusive rights to make, use, and sell their inventions for a limited time (approximately 20 years).

In contrast, trade secrets are not limited in time but, rather, are only limited to the time in which they are kept secret.  In fact, a trade secret could last forever if the information is kept secret.  Thus, according to U.S. law, the first step to acquiring on-going trade secret protection is secrecy.  This presents a simple problem: if the secret is not protected, i.e., gets out or is discovered independently, then the trade secret protection ends.

What this means is that if you sell your product and thereby make your trade secret “available” to the public, you will lose your legal trade secret protection.

Patent protection, on the other hand, protects against the unauthorized making, using, selling of the invention for the duration of the patent term in exchange for the patent owner making the invention “available” to the public. Unlike patents, trade secret laws come from tort misappropriation and unfair competition laws.

 

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