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Choosing Between Trade Secret and Patent Protection: A Primer for Businesses

By Darren M. Franklin
May 01, 2022

When an employee conceives of a new innovation, a business is often confronted with a difficult decision — whether to apply for patent protection on the innovation or whether to keep the innovation confidential as a company trade secret. There are many considerations that a business must take into account stemming from different characteristics of trade secrets and patents.

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Overview of Patents and Trade Secrets

A patent is a right to exclude others from making, using, offering for sale, selling or importing a patented invention. It is generally enforceable up to 20 years after the patent application filing date. Filing for patent protection entails a significant quid pro quo — in exchange for exclusivity over the term of the patent, the patent applicant must make a disclosure of the invention sufficient for a person reading the patent to make and use the invention. Once the 20 years are up, the invention is then dedicated to the public and may be used by anyone.

A trade secret, in contrast, is kept confidential within the business. There is no right to exclude others from making, using, offering for sale, selling, or importing the technology, unless that technology has been misappropriated from the business — i.e., the technology has been obtained from the business through an improper means like theft or espionage, or there has been a disclosure without consent, such as through a violation of a nondisclosure agreement. As a result, a trade secret provides no protection against a competitor's independent invention of the technology or a competitor's reverse engineering of a product embodying the trade secret. On the other hand, a trade secret, unlike a patent, has no expiration date and theoretically can last forever — as long as the trade secret stays confidential within the company.

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