Patents and trade secrets are extremely similar in that both protect something that could be extremely valuable to a business. In fact, some businesses even choose to utilize both of these forms of protection for the same piece of intellectual property. However, despite these similarities, these two forms of protection could not be more different and treated more differently by businesses.
DISCLOSURE VS. SECRECY
There’s one fundamental and crucial difference between patents and trade secrets: patents obtain legal protection by disclosing their details to the public in exchange for a limited period of protection, while trade secrets obtain their protection in the most old-fashioned way possible: by remaining a secret. While a patent expires after certain amount of time and their disclosure means their details have been made public, a trade secret is protected only by the lips of those who know their contents.
Let’s look at two famous examples. In the late 1800s, Alexander Graham Bell Registered United States Patent No. 174,465, the most famous and lucrative patent in history: the telephone. Today, because the patent has expired, telephones are manufactured in all sorts of shapes and sizes and the technology has improved monumentally, while the Bell estate no longer has the ability to profit off of the original patent (though Bell certainly made his money at the time).
Ten years after that famous patent, however, Dr. John Pemberton created the formula for a product that continues to be monumentally influential even to this day: Coca Cola. It might actually shock you to learn that the recipe for this refreshing and long-time favorite soda has never been patented. Why? Because patenting it would require that its contents be disclosed to the public, and after 20 years anyone would be free to replicate it and use it on their own. Coca cola as a company would lose all claim to the product that has made them so famous and lucratively profitable. So instead, the recipe is literally kept in a vault at the company’s headquarters in Atlanta, and its full contents are accessed by nobody beyond a small handful of executives. As a result, this trade secret has remained protected for over 100 years, but not without the threats that are associated with trade secrets.
NO LEGAL PROTECTION
Trade secrets carry a much larger risk. Why? Because trade secrets aren’t actually protected in the same way a patent would be. Trade secrets are protected because they are secret. If the secret is misused or illegally obtained, then the secret holder could potentially hold the violator responsible legally, but proving so requires extensive investigation, making them difficult to uphold. However, as we have seen, the lucrative profitability they can carry could make it worth the effort.