Have you come up with a brilliant idea or invention that you want to protect? As an innovator, it’s crucial to understand the different options for securing your intellectual property. Two common types of intellectual property for protecting your idea our patents and trade secrets. But how do you decide which intellectual property is the best for you? In this article, we’ll dive into the pros and cons of protecting your idea with patents versus trade secrets.
Understanding patents and trade secrets: What are they? How do they differ?
Patents and trade secrets differ in many ways such as:
- What they protect?
- What they protect against?
- Whether you need to complete a registration process?
- The term (i.e., life span) of the patent or trade secret.
- The cost to obtain the patent or trade secret.
| Type of IP | Protects | Infringement | Registration Process | Term | Comparative Costs |
|---|---|---|---|---|---|
| PATENTS - Utility Patent | Functional Aspects | Make, Use, Offer, Sale, Import | Yes | 20 years from filing date | Expensive |
| PATENTS - Design Patent | Ornamental Features | Make, Use, Offer, Sale, Import | Yes | 15 years from grant date | Moderate |
| TRADE SECRETS | Information | Misappropriation | No | Indefinite | Depends |
Utility and design patents protect ideas. Utility patents protect functional aspects. Design patents protect ornamental features or the way a product looks. For both, the patent owner can prohibit others from making and selling the patented invention to others.
To obtain a patent, the inventor must file a patent application and convince an examiner that the idea is worthy of a patent. The examiner must believe that the idea is novel and nonobvious.
Utility patents are enforceable for 20 years upon filing. Design patents are enforceable for 15 after the grant.
The cost for a utility patent and design patent is between a few thousand dollars to tens of thousands of dollars.
A trade secret, on the other hand, protects information. Your idea is information. As such, it can be protected as a patent or trade secret.
A trade secret, unlike a patent, protects others from stealing your invention. This type of stealing isn’t just copying your product. To tell you the truth, the law allows people to copy your ideas in certain circumstances. For example, if you market your idea for a long time, eventually, your idea will be to the public and others can legally copy your ideas.
Misappropriation of a trade secret may be in the form of obtaining your information by lying to you.
A trade secret does not have a registration process. The best part of trade secrets is that a trade secret can last forever, whereas patents have a definite term or life of up to 2o years.
Can all ideas be protected as a trade secret?
As I stated above, your ideas and information can be protected as a trade secret. At least in the short term, that’s a true statement. However, in the long run, you cannot protect all ideas as a trade secret.
For example, if your idea is a new widget that you sell to consumers, then once you sell your widget to consumers, they will know how to make and use your new widget. At that time, your idea of the new widget is no longer your trade secret.
As such, in the short term, the idea of the new widget may be your trade secret. However, in the long term, the idea of the new widget cannot be protected as a trade secret. In this instance, you need to protect the idea of the new widget with a patent, not a trade secret.
Other ideas are prime for protecting as a trade secret. For example, a manufacturing process can be protected by a trade secret. When you make a product and no one can figure out how that product is manufactured, then as long as you take steps to maintain that secrecy, that manufacturing process can be protected as your trade secret.
Think of Coca-Cola. The actual ingredients for Coca-Cola are listed on the side of every Coca-Cola product. However, the exact manufacturing processes are not known. The trade secret for Coca-Cola has existed for decades.
Should you protect your idea as a patent or trade secret?
The choice between protecting your idea with a patent or as a trade secret isn’t a simple one. In most instances, it’s a balancing between the pros and cons of each type of intellectual property.
Certainly, if in the long run, you can’t protect your idea with a trade secret, as discussed above, then you should protect the idea with a patent.
Some ideas should be protected as a trade secret, not with a patent. For example, recipes and food products are typically protected as trade secrets. These are good examples of the types of ideas which should be protected as trade secrets.
Some ideas must be protected as trade secrets. They cannot be patented. For example, a customer list must be protected as a trade secret. They have no functional value other than as information. Customer lists cannot be patented.
Other ideas should be protected with a patent, not as a trade secret. For example, a new functional product feature should be protected with a patent.