How do trade secrets compare to other types of intellectual property rights?

Trade secrets differ from other forms of intellectual property protection (e.g., patents, copyrights, and trademarks) in several ways.  First, trade secrets can protect a wider range of information and technology than other forms of intellectual property.  Under federal law, a trade secret can include “all forms and types” of commercial information that derive value from not being generally known, including things like customer lists a company has worked hard to compile or even “know how” derived from years of working on the same product or technology. 

Second, trade secrets do not expire.  Protection lasts as long as secrecy is maintained.  The recipe for Coca-Cola, for example, has maintained trade-secret status for over a century.  Other forms of intellectual property, such as patents, have a set expiration date.  For patents, it is generally 20 years after a patent application is filed.  The trade-off for having an extended term of protection for trade secrets is that the owner of a trade secret make ongoing efforts to maintain the secrecy of the protected information.  Once a patent is obtained, the patent owner merely has to pay maintenance fees to the U.S. Patent and Trademark Office.

Third, unlike other forms of intellectual property, trade secrets are not subject to a novelty requirement.  A company need not invent or discover a trade secret to claim protection.  Companies can thus seek trade-secret protection for technologies or information that may not be novel enough to be patented, provided they can show that the technologies or information are not known to competitors. 

Fourth, no government administrative body oversees trade secrets.  Importantly, this means that there is no application or approval process for securing trade secrets as intellectual property.  Trade-secret rights are established without waiting for government approval.  Patents, on the other hand, require an approval process that usually takes several years, and to which courts later give substantial deference. 

Finally, trade-secret protection does not provide a monopoly over information.  If another company develops the same information independently, then that company cannot be liable for using that information – even if the trade secret’s owner developed and protected the information first.  On the other hand, companies can exclude anyone from infringing a patent – even if another company independently developed its infringing product. 

To learn more about trade secrets and related business disputes, go to www.mololamken.com and follow us on LinkedIn.  “Brilliant lawyers with courtroom savvy” — Benchmark Litigation.  Copyright MoloLamken LLP 2022.

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