Reader Question: Patent or Trade Secret?
September 2nd, 2010 by rrm407
We have received a reader question from our August Newsletter http://mkgip.com/ajax/EmailPreview.php?RF_ITEM[]=Email$0@16;Email
The reader asks:
My company develops special formulations for customers that are typically using virgin plastic resins. We replace that material with ours which contains various biomass, i.e., corncobs, sunflower hulls. My question is how do we protect our formulations from competitors in the industry? We do not want to use patents as they tell everyone what our work entails.
Answer:
There are essentially two ways by which you can protect your formulations. One way is via patents and the other is through the use of trade secrets. While I understand your reluctance to use patents as once they publish the information is available to the general public, please bear in mind that a patent has a 20 year lifespan. There is also no such thing as innocent patent infringement. It does not matter whether or not the infringing party knew of your patent. With regard to trade secrets, independent invention is a complete defense to a trade secret infringement accusation. In other words, if someone comes up with your product on their own, or through reverse engineering, they have not violated your trade secrets. However, if you have a patent, they would still be an infringer. Patents and trade secrets are mutually exclusive, you either obtain a patent or keep a trade secret.
Assuming that you wish to maintain your formulations as trade secrets, then you must treat them as such. One of the leading reasons why trade secret actions fail is that the entity asserting that they had a trade secret did not protect it as such. Several factors go into protecting something as a trade secret. I will discuss a few of them here, however, we offer a comprehensive trade secret policy for download, on our website at http://mkgip.com/resources/downloads/building_an_effective_trade_secret_policy_within_your_company.html
I suggest that you download it. In order to qualify as a trade secret, the trade secret information must be identified as such. The information should not be generally available within a company and known only to those who need to know. The information should be kept under lock and key or password protected on one’s computer. Those that know of this information should be informed that the company considers it a trade secret. It is a good idea for a company to have a trade secret policy that all employees read and sign.