Patents vs. Trade Secret: Which is Right for You?

An Article in Schott, P.C.’s IP Law For Start-ups Series
By Stephen B. Schott

Patents prevent others from using your idea in exchange for you sharing that idea publicly. Trade secrets reward you for keeping your idea secret from others. So interestingly, the legal protection for each originates from different sources: open disclosure (patents) vs. secrecy (trade secrets).

You may face a decision about which one is right for you.

What is the Legal Right?

A patent is a government license to exclude others from making, using, or selling an invention for a set period.

A trade secret is:

• information, including a formula, pattern, compilation, program, device, method, technique, or process,
• that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and
• is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Considerations When Deciding Between Patents and Trade Secrets

Because trade secrets can be reverse-engineered or disclosed, patents provide a more reliable form of protection. The best trade secrets are things like the formulas for Coca-Cola and KFC’s fried chicken recipe, which despite their known ingredients resist people’s best efforts to reproduce them.

Patents, on the other hand, provide protection in spite of an invention’s simplicity. In fact, the simple, easier-to-copy inventions are ideal for patents. The hair scrunchy (SCUNCI(R)) was easy to copy but the inventor made money because she had a patent. Patents also give a company tangible assets and the ability to market products and services as “patented.”

If you have questions, contact me.
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