Reconsider the Way You Protect New Ideas

Most corporate legal departments have established processes to translate new ideas into patents. In many companies this approach is automatic, and trade secrets are not part of the conversation. Developments in both patent and trade secret law, however, suggest that it is time to revisit this approach. There is increasing appreciation for the flexibility of trade secret protection.

A wide range of information that can qualify for trade secret protection cannot be patented – for example customer lists, pricing and cost data, business plans and software code. Unlike patents, trade secret protection is not limited by time. So long as its holder can maintain secrecy, a trade secret can last forever. Unlike patents, trade secret damages can include compensation for unjust enrichment, and preliminary and permanent injunctive relief is commonly granted in trade secret cases.

The patenting process has also become very expensive. The average cost to obtain a relatively complex patent in the United States is over $10,000. This does not include the costs of protection outside the United States. The average annual budget for the intellectual property departments for large companies, which are typically the most dedicated to steering new ideas through the patent process, is over $6 million.

The author suggests three scenarios in which trade secret protection may prove superior to patenting: When the commercial value is uncertain; when the new idea cannot be reverse engineered; and when the new idea may not qualify for a patent.