Patents versus Trade Secrets

In his CONVERTING QUARTERLY-sponsored Webinar last week, ExxonMobil intellectual-property attorney Bob Migliorini covered quite a lot of material on “Patent Law Fundamentals for Business and Technical Leaders.” This post will take a quick look at the basic differences between trade secrets and patents.

Intellectual-property law consists of four building blocks: Copyright, which covers works of authorship; trademarks, which cover things such as brand names; trade secrets, which is proprietary information used in your business; and patents, which cover inventions.

Trade secrets
Any information that gives its owner an opportunity to obtain an advantage over competitors who don’t know or use that particular information is a trade secret. Some examples are things like chemical formulae (think Coca-Cola), computer programs, manufacturing processes, customer lists, pricing information, drawings and non-public financial data. Key points about trade secrets:

  • The trade-secret information must be sufficiently secret to derive commercial value from it by the fact that others don’t know it.
  • There are no formalities required for gaining protection.
  • You must make reasonable efforts to maintain its secrecy or confidentiality.
  • State and federal laws protect trade secrets, such as misappropriation by others, lawsuits against former employees, and monetary damages.
  • There’s no application or registration process needed to protect trade secrets, so they are inexpensive to maintain. Rights are enforced through contractual actions (breach of contract or trust).
  • There’s the potential to protect trade secrets forever, but sometimes a secret can be independently discovered or reverse-engineered by others.

A document issued by the federal government that grants to its owner a legally enforceable right to exclude others from practicing an invention is a patent. More difficult to obtain than other types of intellectual property such as copyrights and trademarks, patents must disclose the best mode of practicing an invention. They are governed exclusively by federal law and are obtained through a somewhat complicated application process. Other key patent points:

  • Patents are costly to obtain due to attorney fees and the inventor’s time for patent-application preparation, filing, prosecution, issuance and maintenance.
  • In the US, patents are awarded to the first inventor. In most other countries, they are awarded under a first-to-file system.
  • Patent claims define the invention and hence the exclusive right to exclude.
  • Terms of protection: Patents applied for today provide 20 years of protection from the date of filing.

Why patent an invention?
There are several reasons why your company should patent its inventions. A patent gives you a competitive advantage by excluding others; it creates a licensable (cross-licensable) asset for your business; and it enhances the technical reputation of your company and its employees. Patents help protect your freedom to operate as well as your customers’ freedom to operate.

US patents are presumed valid by statute. This is a great defense of your company’s intellectual property because the invalidity of a patent must be proven by clear and convincing evidence in court. The standard is something much more than “more likely than not” but not as much as a criminal case’s “beyond a reasonable doubt.”

This entry was posted in coating/laminating, digital printing, flexible packaging, labels, package printing, paper/paperboard/cartons, printed electronics, slitting/rewinding and tagged , . Bookmark the permalink.

1 Response to Patents versus Trade Secrets

  1. Pingback: How to develop and protect your ideas | The Converting Curmudgeon

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