Trade Secrets

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A trade secret is any information, design, device, process, composition, technique, or formula that is not known generally and that affords its owner a competitive business advantage. Examples of trade secrets are a chemical formula, a manufacturing process, a “magic-type” secret (such as techniques used to produce laser light shows and fireworks), and a recipe. Because these types of information and know-how go to the very heart of a business’s competitive position, businesses expend a great deal of time, energy, and money to guard their trade secrets.

The trade secret owner need only take reasonable precautions to keep the information confidential in order to acquire and maintain trade secret rights. Also, an employer should have all employees who have access to company trade secrets sign an agreement to keep the information confidential. Assuming that an invention has been kept secret, an inventor can rely on trade secret principles to enforce rights on the invention.

When a patent issues, the public has complete access to the ideas, techniques, approaches, and methods underlying the invention. This is because a patent application must clearly explain how to make and use the invention. Because the application is printed verbatim when the patent issues, all of this “know-how” becomes public. This public disclosure doesn’t usually hurt the inventor, however, because the patent can be used to prevent anyone else from commercially exploiting the underlying information. The PTO treats patent applications as confidential so it is possible to apply for a patent and still maintain the underlying information as a trade secret during the patent application process, at least for the first 18 months.

In this section we provide a basic information about trade secrets, distinguish trade secret protection from patents, list the advantages and disadvantages of trade secret versus patenting, and explain how to acquire and maintain trade secret rights.