Patent or Trade Secret?

In recent years patent law has undergone drastic change, but trade secret law has also changed substantially. The enactment of the Defend Trade Secrets Act created the first-ever federal civil trade secret law and opened up U.S. district courts to original jurisdiction over cases brought under that statute.

In view of these developments, businesses should consider reevaluating their strategies for protecting IP rights for their innovations and other confidential information.

Trade secret protection might be more appropriate than patents in certain circumstances. If the determination is made that the information at issue can fall into either category, factors that come into play include how long the protection is needed, whether others in the industry are likely to discover the information independently, and whether the information could be reverse-engineered from a product on the market.

To make the determination, first assess the nature of what you want to protect. Information like customer lists or top secret formulas may be protectable under trade secret law, but not under patent law. Innovative methods of doing business or purely software-related inventions may be close calls as to patentability, but would be protectable under trade secret law.

On close calls, it may be preferable to protect the innovation as a trade secret because the risk of not getting a patent or losing it in litigation may be too high.

The authors provide a flowchart to assist in making decisions like the ones discussed in the article.