Developing a comprehensive strategy for protecting your innovation is essential to protecting your company's assets. Many innovations protected by applying for a patent could also be protected as trade secrets. A granted patent provides rights to exclude others from using the patented invention for a period of up to 20 years from filing. By contrast, there is no fixed term of protection for trade secrets. A trade secret may retain the exclusive innovation of a company for as long as it remains secret.
Therefore, for innovations that can be kept secret and are expected to protect a source of value extending beyond 20 years, trade secrets represent a valuable means of protection. However, the risk is that an incidental disclosure will result in the trade secret becoming publicly known, with no other rights available to ensure exclusivity.
In addition to providing certainty of term, once a patent has been filed, your innovation can be disclosed without impacting patentability. This provides freedom to disclose the invention in investment discussions and to potential partners. In the biofuels sector, for example, innovators routinely collaborate with other innovators such as universities and energy companies, so the ability to openly discuss an innovation has great commercial value.
Where an innovation is to be protected as a trade secret, safeguards should be put in place. Employees are most likely to have access to the information, so effective education and procedures are essential to ensure they appreciate the importance of secrecy and what information must not be shared publicly. An effective way to do so in some instances is to separate the innovation into discrete elements, to reduce the number of people with knowledge of the entire innovation. It is also essential to consider which third parties might have access to the development. Contractors might not be under the same obligations as employees and access for regulatory authorities and any other visitors, such as investors or journalists, must be considered carefully.
Trade secrets can be used to protect non-patentable developments, such as business methods and strategies. For instance, if a new layout for a manufacturing site is found to improve the volume of biofuel produced in a given timeframe, this would be challenging to patent, but could be protected as a trade secret.
How your innovation will be used and marketed is an important consideration. New products that will be sold directly are typically possible to reverse engineer. In these instances, patent protection is preferable to trade secret protection. By contrast, improved processes, which are not publicly disclosed, could be protected using trade secrets because third parties should not have access to them. For example, an improved manufacturing process resulting in a 5% increase in biofuel yield would provide an important competitive advantage.
Cost may also be a factor for protecting innovation through trade secrets compared with patents. There are fees associated with filing patent applications, and most jurisdictions require substantive examination before granting patents. By contrast, there are no formal fees associated with trade secret protection, and costs are associated with maintaining secrecy and educating those with access to the innovation.
Another factor that should be considered before committing to rely on trade secret protection is the likelihood of competitors independently arriving at the same innovation. If a competitor independently develops the same innovation, and applies for patent protection, this could greatly limit future use of your innovation. In the biofuels industry, where there is widespread active innovation, the risk of losing freedom to operate is significant, so this warrants serious consideration prior to selecting trade secret protection. For instance, a 2023 study identified over 5000 biofuel patent filings since 2003, providing an average filing of about 250 biofuel patent applications each year1.
Many jurisdictions, including member states of the European
Patent Convention, provide a limited exception to patent
infringement to allow prior use to continue. However, this
allowable prior use is typically limited to the scale and location
at which it was already taking place, so such a
position would limit any scale-up or relocation of the process. If
manufacturing using the process commenced at a laboratory site,
transferring this to a manufacturing site would be unlikely to fall
within the exception.In summary, both patents and trade secrets
represent valuable forms of protection for biofuel innovation.
Whilst patents provide an arguably more reliable right, the term
and scope of trade secret protection can extend far beyond that
available for patents.
Footnote
1. What can Patent Landscape Analysis Tell Us About Innovation in Biofuel Production? 6 November 2023, Questel.
Originally published by Chemistry & Industry
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.