Advantages of Trade Secrets Over Patents

What are the Advantages of Trade Secrets Over Patents?

There are several important advantages of trade secrets over patents?  First, trade secrets offer exclusivity for as long as you can keep your secrets, secret, which can be a massive competitive advantage for a long, long time. For example, the Coca Cola formula has been a trade secret for over a hundred years. So, if you have a strong secret-keeping infrastructure in place and a technology that cannot be reverse engineered, your trade secret can last forever. Patents also offer exclusivity, but with a patent, your secret is immediately published for the world to see and study. Then, the moment your patent expires within less than 20 years, anyone can copy you, your exclusivity is gone. That’s right, there is no lifetime renewal of a patent and you cannot refile for the same patented invention once your patent expires. The very instant your patent expires, everyone in the world can copy your invention for no charge. Just look at what happens to patented drugs when the patents expire. The generic drugs companies come in and the prices drop.

A second advantage relates to expense. A patent is expensive to obtain, expensive to maintain, and even more expensive to enforce.  A trade secret is free to obtain. And, there are no filings, no registrations, and no prosecution with worldwide patent offices. So, once you have established your secret-keeping infrastructure (which is admittedly neither easy nor inexpensive), you can protect as many trade secrets as you want for no additional charge.

Third, with patents, protection must be obtained in every country where you need protection. In other words, if you want to enforce a patent in China, you must get patent protection in China. If you also want to enforce your patent in France, you must get patent protection in France. If you have patent protection in China and France but not in the US, no one can legally copy your patented technology in China and France, but everyone can copy your patented technology in the US. With trade secrets, there are no geographical restrictions. As long as you can keep your trade secrets secret, your protection will span the globe.

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