Businesses often find themselves wondering whether to take the considerable step of applying for patent protection for their trade secrets.
So when should a patent be pursued? This inquiry often proves difficult. Patent applications become accessible to the public within 18 months, which means your once-secret, proprietary idea becomes public. This is often referred to as the trade off patentees make – in exchange for a 20-year monopoly on your invention and its equivalents, you permit the disclosure of your “secret.” The rationale behind this exchange is to encourage innovation and fair competition in the industry, and, as set forth in Article I, Section 8 of the U.S. Constitution, to “promote the progress of science.”
Aside from the financial investment involved in obtaining patent protection, one cannot overlook that oftentimes the value of an innovation relies on public disclosure. For example, Procter & Gamble’s Gillette products would have little value to the company if kept secret. However, absent proper patent protection any Gillette product marketed to the public would inevitably become susceptible to easy and fair duplication. This is a clear example of where patent protection is favored. It allows a company to enjoy revenue from the products and, importantly, to force the removal of any competitor from the marketplace who copies any patented Gillette product.
On the flip side, the value of an innovation may be heavily reliant on its nondisclosure. The Coca-Cola story is one of the most widely known instances of a company successfully keeping its beverage-making process secret from the public and, most importantly, from its competitors. The company’s winning strategy has been to implement carefully monitored and strictly enforced internal safeguards to keep company information secret. By not disclosing its secretive process, it is able to enjoy an indefinite advantage. This is one of the largest benefits of trade secret protection – because a trade secret is tied to its secrecy, it can last indefinitely. So long as the secret is kept and so long as someone does not independently develop it, a company can enjoy the monopoly over its secret forever.
The ultimate inquiry regarding the decision of whether to publicly release your secret will depend on the circumstances of your particular business and on the nature of the innovation involved. In fact, in some instances patent protection is not available. For example, customer lists, supplier lists and some manufacturing processes are typically not sufficiently inventive, thus patent protection is unavailable. To maintain any advantage these items may provide, a company must implement appropriate measures to keep the secret. If released, the primary benefits of the information could suddenly vanish.
So when should you obtain a patent? Patentability requires that the claimed invention be novel, useful and non-obvious to one skilled in the field. Patenting is favored if these factors are met, and public disclosure is necessary or the innovation is susceptible to easy reverse engineering. If a patent is not obtained in these instances, public disclosure will eliminate any trade secret protection, and your innovation will become the target of duplication.
Likewise, if a competitor may develop an equivalent of your invention, patenting is favored as there would be a chance you could then exclude your competitor’s product from the marketplace. Imagine, however, you decide not to get a patent, but your competitor obtains one on its product. You may find yourself in the unanticipated position of being forced to pay your competitor a licensing fee for your invention.
If the field of your invention is already greatly developed, the better option would probably be to keep it as a trade secret. Otherwise, all you would be able to obtain is a narrow and restricted patent, which in some cases would be of marginal value. But if the innovation is truly novel, the likelihood of obtaining a broadly scoped patent would be greater, thereby making a patent more attractive. In either situation, if the anticipated life of your innovation is under seven years, the average time it takes to obtain a patent would promote your company keeping its trade secret.
Finally, one must always bear in mind that a patent must generally be pursued within 12 months of publicly using the invention or offering the invention for sale. Such disclosure terminates trade secret protection, and an inventor will be forever barred from obtaining a patent if this time period expires. If you desire patent protection, you must act promptly.
Alexander D. Brown, a senior associate at Tripp Scott in Fort Lauderdale, focuses his practice on complex business litigation, including patent and other intellectual property issues.