A patent protection definition refers to the legal exclusive rights given to an inventor for disclosing a new process, object, or invention that is useful, non-obvious, and not occurring naturally.

What is a Patent?

In the past, patents were granted to protect scientific and tangible inventions, such as:

  • Zippers.
  • Circuit boards.
  • Heating coils.
  • Car engines.

However, patents have since been granted to protect a wider range of inventions. Examples include:

  • Genetically modified organisms.
  • Business practices.
  • Coding algorithms.

Within the United States, a patent grants legal and exclusive rights to the holder for importing, making, selling, using, and offering to sell the invention. When an inventor goes through the process of obtaining a patent, they must fully disclose all details about the product, process, or object, which could mean releasing information that would be considered to be a trade secret. If the idea meets all requirements, the United States Patent and Trademark Office (USPTO) will grant the patent, giving the holder those exclusive rights for up to nearly two decades.

Three Types of Patents

The three types of patents available are design, plant, and utility patents. A design patent offers protection on novel and non-functional designs used on any type of article of manufacture. A plant patent protects distinct and new plant varieties that are asexually reproducible.

A utility patent is granted to protect any invention that is new and useful, as long as it is one of the following:

  • Process.
  • Article.
  • Manufacture.
  • Machine.
  • Composition of matter.

A utility patent can also cover any useful or new improvement of one of these categories. Utility patents are the most commonly issued patents by the USPTO.

What Is a Trade Secret?

A trade secret is information that:

  • Derives economic value from not being readily ascertainable or generally known.
  • Is subject to any reasonable efforts needed to keep it secret.

Some examples of trade secrets under the Uniform Trade Secrets Act include:

  • Processes.
  • Formulas.
  • Techniques.
  • Patterns.
  • Devices.
  • Compilations.
  • Programs.
  • Devices.

Categories of Trade Secrets

Trade secrets can fall under several categories. The first includes those secrets that include information or inventions that are not eligible to be patented. These include ideas that are not innovative or novel enough to meet the patent criteria or lists of customers that need to be kept private but obviously can't be patented. Inventions that are potentially eligible for patent protection would fall under the second category if the inventor hasn't decided whether to keep the idea secret or file for a patent.

Advantages of Trade Secrets

Maintaining trade secrets can be advantageous for a company. Protecting those secrets is only an option when they include information that doesn't qualify for patent protection.

Protection of a trade secret may also benefit the owner when the technology exists for a short period of time. For example, if an invention will become obsolete within a year or two, it may not make sense to file for patent protection as the process of review and receiving approval can take several years. It may also make sense to maintain a trade secret if you would gain a significant competitive advantage if you are first on the market with the idea.

Trade secret protection also doesn't come with any time limits, while patent protection is granted for a specific period of time (depending on the type of patent issued).

Protection of trade secrets may be held as long as they meet the criteria. One of the most well-known examples is the secret formula used to make Coca-Cola. If the inventor of that formula, John Pemberton, had filed for patent protection when he developed it more than a century ago, that formula would now be available to the public for general use. By keeping it as a trade secret, the company has been able to maintain its position as a leader in the global soft drink industry.

Maintaining trade secret protection also doesn't require the payment of any filing or maintenance fees. Trade secrets also go into effect immediately, while filing for patent protection can take years.

Disadvantages of Trade Secrets

However, trade secrets do come with some disadvantages. An inventor may have to go to great lengths and spend a lot of money to maintain the secrecy, such as by restricting access to the buildings and grounds where the secret is used or kept, labeling and restricting access to confidential information, and protecting electronic trade secrets through expensive technical means.

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