Intellectual Property Trade Secrets: Everything You Need to Know
Intellectual property trade secrets can be used to protect business formulas, patterns, methods, and processes from competitors. 3 min read
Intellectual property trade secrets can be used to protect business formulas, patterns, methods, and processes from competitors. Unlike other forms of intellectual property protection, trade secrets are not registered with the government. A trade secret can be documented in secret and notarized by an intellectual property lawyer. The secret owner is responsible for keeping the idea out of the public domain. Should the idea that is protected as a trade secret be leaked, the owner cannot sue other entities for using it.
Why Protection of Trade Secrets Is Complicated
Some types of intellectual property cannot be protected in the normal ways by using copyrights, patents, and trademarks. Generally, ideas cannot be copyrighted or patented but can be protected as trade secrets.
Other types of intellectual property that businesses protect using trade secrets can, theoretically, be protected by other methods. However, some business owners might think it is more prudent to keep them secret. Such secrets include restaurant recipes, drink ingredients, and so on. For intellectual property to qualify for trade secret protection, it should have the following characteristics:
- It should be used in business and be able to help a company have an edge over the competition.
- It should not be known by or available to competing businesses.
Trade Secret Protection and the U.S. Law
The U.S. is a signatory to the Trade-Related Aspects of Intellectual-Property Rights (TRIPS) agreement of the World Trade Organization (WTO) and is thus obligated to give a legal framework for the protection of trade secrets. In 2016, the U.S. passed the Defend Trade Secrets Act. Among other measures, the act puts in place a method for the prosecution of entities that leak trade secrets. The laws of U.S. states differ in their approach toward trade secrets, but generally, they mirror the approach of the federal government. However, the amount of protection a government can give for trade secret owners is inherently limited. It is generally the responsibility of the trade secret owner to keep the secret private. For example, government laws generally do not provide a means of prosecuting entities that use a trade secret that has been leaked and becomes public knowledge.
How to Protect Your Trade Secrets
Since it is in the interest of intellectual property owners to keep their property secret, such property is not registered with the government. Instead, the owner can record the trade secret and have it notarized by an intellectual property lawyer. Unlike trademarks, copyrights, and patents, which are registered with the government and made public knowledge, it is the responsibility of a trade secret owner to make sure the secret does not get into the public domain. The owner can attempt to protect the idea from entering the public domain by:
- Restricting the number of people who know the secret, and
- Requiring all people who are aware of the secret to sign nondisclosure agreements.
A trade secret can be leaked to the public. Although the owner can sue and get damages from the leaker, other people can take up the idea and use it without consequences. It is therefore in the interests of the secret owner to keep it private for as long as possible. Popular closely guarded secrets are the recipes of soft drinks, restaurant food, and the processes of manufacturing machinery.
Trade Secret Protection vs. Patent Protection
Although most intellectual property that can be protected by patents can generally also be protected by trade secrets, there is some property that cannot be protected by patents and can only be protected as a trade secret. Patents cannot generally be used to protect ideas, but only the expression of those ideas. Some businesses may also favor protecting certain intellectual property using trade secrets because of the advantages of trade secrets over patents:
- While patents expire after 20 years, a trade secret never expires until it is revealed by the owners.
- While a trade secret keeps intellectual property private, a patent is publicly available and might inspire copycats instead of protecting the property. Use of trade secrets is the only method used for sensitive intellectual property like restaurant recipes and soft drink formulas.
If you need help to protect your trade secrets, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.