Once you have learned what trade secrets are, you may wonder when it is appropriate to utilize trade secret protection. Trade secret protection is used when patent, trademark, or copyright protection cannot be obtained or is inadequate.
When Other IP Protection is Not Available
A requirement for patent, trademark, or copyright protection is originality. Therefore, collections of data cannot be protected by either of those types of intellectual property. You did not create the data, you merely collected and assembled it. If you create a database of client names and contact information, you cannot patent or copyright that information.
However, this information is not generally known and affords you a competitive advantage- therefore it constitutes a trade secret. If you take the proper steps to maintain the confidentiality of this information, it will be entitled to legal protection as such.
When Other IP Protection is Inadequate
Trade secrets are most often used as an alternative to patents. Patents can be very powerful and valuable IP assets, but they have some drawbacks and are not appropriate in every situation. Patent protection begins at the time your patent is granted, which may be three, four, or even more years after you initially file your application, and only lasts 20 years from the time your application is filed. Patents also must be enforced by the patent owner.
When Patent Protection is Too Short or Begins Too Late
Software applications generally have one of the longest wait times at the Patent and trademark Office. If you have some software that you invented that is going to be obsolete in three years, it may not make sense to file a patent application that is not going to issue for five years. On the other end of the spectrum, if you have a recipe that you may be using for 100 years (e.g. Coke), you don’t want your protection to expire after only twenty years, leaving your recipe in the public domain (patents are publicly available).
When Enforcement of Your Intellectual Property Rights is Difficult
With some technology it is difficult to prove that someone is infringing your patent. For example with software, the code may be run on a remote server and may be inaccessible to you. Therefore, it may be difficult to get enough information about the suspect software to determine if it is worth spending the money to initiate a patent infringement lawsuit. Why get a patent and disclose your invention to the public if it will be difficult or impossible to stop your competitors from using that information?
Conclusion
The use of trade secrets should be a part of your overall intellectual property strategy. When it is time to decide whether you can protect a given asset, or how best to protect it, consider the relative benefits and drawbacks of different types of protection. You should at least consider trade secret protection when 1) your intellectual property cannot be protected by patents, trademarks, or copyrights, 2) when the term of patent protection would be too short or start too late, or 3) when a patent would be difficult to enforce.
{ 2 comments… read them below or add one }
Attorney Hyra,
I agree with your conclusions for trade secret protection when patent protection is not a viable solution. If Biski is upheld, trade secret protection may be the only avenue left for software IP deemed non statutory. However, permanent obfuscation of software code is next to impossible and very expensive. Do you know if the D.C.M.A. Section 1201(a)(2) (Violation of Anti-trafficking Provision) has carried any weight thus far? What do you think will happen to the cost of software development and licensing?
Thank you – Eileen Adams
Eileen,
Actually Bilski as it now stands does allow for the patenting of software, you just have to jump through a few more hoops than you did before, which jeopardizes some applications filed before the decision came down without knowledge of what the new requirements would be. It is possible the Supreme Court could categorically rule out software patents, but it seems unlikely.
The DMCA has been a very important body of law for copyright owners, particularly the movie and music industries. Although reverse engineering of software is fair use (not copyright infringement) when used to discover functionality, the DMCA makes it illegal to circumvent encryption or to make a product that is designed to circumvent such encryption. I could see this potentially being a powerful tool in maintaining trade secret protection for software, although the difficulty of enforcement persists. It may be difficult to prove that your encryption was bypassed, as opposed to a competing product being developed independently.
I do not know whether the DMCA has been an effective tool for the software industry in protecting proprietary software. Copyright infringement is not quite as hot an issue in software as in movies and music. If anyone is familiar with use of the DMCA by software companies, please contact me or leave a comment.