Patent vs. Trade Secret Protection: Which One Is Better?

In some cases, trade secret protection of an invention is a viable alternative to patent protection. A trade secret is information, including a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value from not being generally known to or readily ascertainable to others who might obtain economic value from its disclosure or use.

In order to maintain its value, a trade secret owner must take precautions to prevent disclosure of the secret information. Conversely, patent protection requires the inventor to provide detailed information about the invention in order to be granted the right to exclude others from making, using, or selling the invention for a specific period of time.

The two types of intellectual property also have a number of other key differences:

Process for protection: Unlike patents, trade secrets cannot be federally protected through applications to the U.S. Patent and Trademark Office. Rather, the owner of the trade secret holds the responsibility for keeping it safe. If the holder fails to maintain secrecy or if the information is independently discovered or otherwise becomes pubic knowledge, protection as a trade secret is lost.

  • Range of protection: U.S. patent law limits the scope of patent protection to include any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof. A trade secret can include any of the various types of information referenced above such as customer lists.
  • Timeframe for protection: Trade secret protection can begin at any stage of the inventing process, while patent protection must comply with deadlines established under federal patent law.
  • Limitations of protection: Patents granted by the USPTO are limited to the United States, unless the inventor takes further steps to gain international protection. So long as the information remains confidential, trade secret protection can extend globally.
  • Term of protection:While patents have a specific term of years, trade secret protection does not expire. However, trade secrets can be discovered through independent discovery and reverse engineering.

Given the significant differences, choosing the most beneficial type of protection involves careful consideration of both the business and legal implications.

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