As a business owner, if you are not thinking about trade secrets, you may be costing yourself a lot of money. One of the reasons we like to encourage business owners regularly to work with an attorney is because a good business attorney can help you spot issues you might not otherwise have considered until it’s too late. Today, that issue is trade secrets.
Trade secrets are a type of intellectual property that protect information which has independent competitive value and that value comes from the secrecy of the information. Some examples of trade secrets include customer lists, manufacturing processes, or a secret formula for a soft drink. Critical to trade secret protection is that the owner keeps the information SECRET.
Trade secrets and patents are the two types of intellectual property that protect your company’s secret information. While patents are very useful and they have their proper place, trade secrets can have some very important advantages for your company.
There are three general advantages of trade secrets over patents. First, a trade secret does not require a formal filing. The most important thing you need to do to protect a trade secret is make sure that, within your company, the information is kept absolutely secret. This will likely involve some cost, but there is no lengthly filing process. Patents, on the other hand, require a formal filing process that can last a year or more.
Second, a trade secret does not require you to disclose your secret information. In fact, it is essential to the trade secret that you do not disclose the information. You need to keep it secret from the outside world, and potentially restrict the information even within your company. Conversely, a patent filing requires you to disclose the information in the filing. This filing is a public record, so even if you are protected during the filing, anyone will be able to see the information. Additionally, if a patent filing is rejected, then the information is now public and you can’t gain any commercial advantage from the information.
Third, a trade secret can potentially last forever. As long as the information remains secret and continues to provide a competitive advantage for your business, the trade secret can continue. One of the most famous trade secrets is the formula for Coca Cola. The company has kept the trade secret for over 100 years and has used that to create one of the biggest and most recognizable brands in the world. Patents, on the other hand, expire after 14 or 20 years and the protection disappears.
Trade secrets can be a powerful tool for your business. If you are not yet thinking about them, schedule an appointment with your business lawyer to discuss it. Chris Werner talked to business owners about trade secrets this morning on anchor.fm. Check out the discussion below and feel free to contact us directly if you have questions.