Patent or Trade Secret ?
Most of the industries in the business of formulations always find it tough to select right way (either to protect it with classical IP rights, for example by filing for patent protection or to keep it as a trade secret) of protecting innovations. Filing for a patent requires them to disclose the process whereas maintaining a trade-secret may be tough to do. Further, if any of their competitors come up with the same process, files for a patent, they can stop everyone in the market from using the same process. Well, it’s a difficult choice at times to select between patent and trade-secret. Some commonly known tips which might help the innovators:
The first important parameter that one must consider before choosing between patent or trade secret is that whether the process is difficult to do reverse-engineer on it. If the answer is Yes, the one may choose to protect the process by maintaining it as a trade secret. The advantage of maintaining a secret is that it makes the product very unique, the process if not required to be disclosed to anyone, you save upon heavy attorney fee and life of a trade secret is not limited by any specific time period. As long as the innovator is able to maintain the secrecy of the process, till then one can enjoy the protection.
The Black’s Law Dictionary defines trade secrets as “A formula, process, device, or other business information that is kept confidential to maintain an advantage over competitors; information — including a formula, pattern, compilation, program, device, method, technique, or process”. Thus, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret. As we all know that not all “inventions” can be protected as patents, for instance, scientific theories, recipes, mathematical methods, and commercial methods cannot be patented.
First time in the history, trade secret was introduced under Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which talks about trade secrets.
Few popular trade-secrets cases are, Coca-Cola, KFC, McDonald’s Big Mac Special Sauce and Google search algorithm, and only one thing is common among all of them is they have maintained well.
The biggest risk in the process could be leakage of your trade secret. Once your secret is out, there is no way to restore it. Therefore, you must have stringent processes in the form policies, processes, contracts that can be implemented. It’s also important to know that it’s legitimate for anyone to reverse engineers your trade-secret and replicate the process. In other words, we can say that the independent creation of a trade-secret is legitimate.
The innovator needs to analyse the following points carefully and decide the best way he can protect the process:
1. Is your process easy to reverse-engineer?
2. Is the asset in question commercially valuable and worth keeping a secret?
3. What is the likelihood of independent creation of work?
4. Would this process be valuable after 20 years?
5. What are the chances of getting a patent? If chances are bleak, you will face double hit. You will disclose your process and later if patent also gets rejected, you have nothing in hand.
6. Your competitor may come up with a similar process, file for a patent and later stop you from using it.
7. Are your policies, processes, enough to maintain the secrecy of the process?