When should the inventor use trade secrets? There are a few
scenarios when trade secrets would be favorable:
1) When other
competitors cannot reverse engineer your invention
A classic example would be the secret formula for Coca-Cola,
which cannot be reverse engineered. This is because even though we might be
able to identify most of the ingredients, there are a few that are hard to
identify since their tastes are so similar; plus, it would be impossible to
figure out the exact amount of usage and conditions of these ingredients, even
though we can’t really differentiate the tastes among different mixers.
2) Trade secret can
theoretically last forever unless there is a disclosure
Patent will only remain in force for 20 years since the
filing date of the patent application, but trade secret protection has the
advantage of not being limited in time. If
the inventor of Coca-Cola formula had applied for patent protection, this
formula would be made public a long time ago and became accessible by anyone.
However, keeping this formula as a trade secret has allowed Coca-Cola to
continually dominate the soft drink industry over one hundred years.
3) Something that is
not patentable
In the case of customer lists, sources of supply or
manufacturing process, these are clearly not patentable. Firms however would
love to keep information like these secrets to protect their businesses.
4) The ownership of
the technology has short duration
If it takes longer for a patent to be issued than the
technology to be used, obtaining a patent has very little or no use for
short-lived and soon-to-be obsolete technology.
5) Trade secrets do
not need to be registered
This means first of all, the inventor doesn’t need to pay
for the expensive registration costs. Costs involved with filing a patent
include:
-
Patent search with detailed patentability
assessment
-
Provisional patent application prepared and
filed
-
Filing fee to the USPTO
-
Nonprovisional patent application based off
provisional filing
-
Filing fee to the USPTO for nonprovisional
patent application
-
Professional illustrations for nonprovisional
patent application
Costs vary based on the technology involved. Some simple
inventions may cost under $10,000, but for a complex technology, the cost can
easily go up to $15,000 to $30,000 and more.
On the contrary, trade secrets need none of these above.
Yet, be mindful, depending on what kind of information it is, the costs to keep
the information confidential can be extreme high in some situations.
Hi Tian! I really liked this post about the option of using a trade secret instead of a patent to protect your invention or idea. Coca-Cola is a great example, and I know it's often sited when trade secrets are brought up. It is one of the greatest success stories after all. One problem I can see with trade secrets, especially among today's technological developments, is the fact that inventions often come from many people working separately but at the same time on one problem. In a way it goes with your first point. Many of the inventions created today can be reverse engineered, and even if it's not reverse engineered, there's a good chance that someone else somewhere else in the world will have come up with a similar solution. Now if we could only all work together, maybe we would come up with these inventions faster and not have to worry about competition so much. But I guess that's probably asking too much. What do you think?
ReplyDeleteThe benefits that you listed in regard to trade secrets definitely highlights that it is the better way to go for companies if it is possible for them. What is interesting about trade secrets though is that it relies heavily on human resources. Since it is a trade secret, the structure of the organization must be very strong and intact so that as years go by, the trade secret is not lost or escapes. I have found this to be very true in most organizations as they expand. The company's ability to be successful on a small scale is often difficult to maintain on a bigger scale and in long term.
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