Deciding to Patent Trade Secrets?

In enacting patent laws and providing patent protection to inventors, the U.S. Congress made the decision to encourage the disclosure of new inventions by helping inventors protect their invention. The inventor of matter eligible for patent protection must, therefore, elect whether to avail himself or herself of such protection, accepting the disclosure obligations, or decide to keep the information secret, relying upon the protection extending to trade secrets under common law and certain statutes. Depending on the situation, one or the other may be an obvious choice, in other situations the choice may not be as easy. For instance, if the discovery is to be embodied in a product that will be sold, patent protection may be the better choice.

Necessity of Exercising Option

The existence of the option between trade secret or patent protection means only that initially the discoverer may choose one or the other. Although patent and trade secret protection may be simultaneously available for related components of an article or steps in a process, one may not rely upon both forms of protection as to the same matter. A patent constitutes a public disclosure of matter expressed in it which was formerly a trade secret. Conversely, use of secret matter eligible for patent protection probably constitutes a ”public use” in the patent law sense. If such use exceeds the permissible statutory period of one year prior to application for a patent, it would bar the user’s right to a patent.

One who suppresses an invention may not only forfeit the right to a patent, but might also lose the status as ”first inventor” for purposes of opposing a patent application of a subsequent inventor. Thus, a claim of trade secret and patent protection for the same matter is inherently inconsistent if the matter is published, and open to intense fact scrutiny if the matter held as a trade secret by the first ”true” inventor is asserted against a later ”inventor” of the same subject matter.

Secret use of a patentable invention raises an inherent question as to whether such use constitutes ”concealment” or ”suppression.” If it does, a subsequent inventor may be eligible to receive a patent although such a subsequent invention cannot meet the novelty test of the Patent Act. Thus, a second person to invent something may get a patent over the opposition of the first inventor if the latter made the invention in the United States and suppressed or concealed the invention. Yet the same second person may be denied a patent if the first inventor published the invention in some obscure journal prior to the second’s claimed invention date, provided that the one could reasonably locate the prior art reference. In both situations, the second inventor has not invented something novel and was equally unaware of the first inventor’s work.

Requirement of Disclosure in Exchange for Patent Monopoly

The patent monopoly conferred upon the inventor is given in exchange for the full disclosure and public dedication of new and useful invention. Disclosure of the invention, and of the manner and process of making and using it, must be made in clear and concise terms so that any person skilled in the art could make and use it; the disclosure should indicate the best mode contemplated by the inventor for carrying out his invention. Given the statutory requirement of full disclosure, attempting to secure a patent and yet withhold statutorily-required information as a trade secret would appear to jeopardize the validity of any patent that issues on the basis of such application. On the other hand, retention of information related to a patent but not required to be disclosed as a trade secret is permissible.

Level of Invention Required for Patent

The standard for patent protection is more exacting than that required for trade secret protection. Matter which is not patentable may nonetheless be maintained as a trade secret.

Risk of Loss

A patent provides protection against innocent as well as willful infringement. Thus, unlike the owner of a trade secret, a patent holder can redress infringement even against one who innocently practices the invention. Additionally, the patent owner’s right to prevent all others from making, using, or selling the patented invention lasts for the duration of the patent regardless of how many infringers there are. Proliferation of use of trade secret matter will extinguish the protected status which is based upon secrecy and once the patent expires, protection ceases. By contrast, trade secret protection is of indeterminate duration because it lasts until the matter becomes generally known.

Trade Secret Protection of Matter for Which a Patent Application is Pending

Protection afforded under the patent laws does not commence until the patent is granted, the grant is deemed to put the world on notice of the patentee’s claims. Yet there is always some period of time between the date of filing and the issuance of a patent. Prior to the grant of patents, trade secret protection applies if the matter otherwise meets trade secret standards. Consequently, wrongful use or disclosure of secret matter, even though that matter will be disclosed by the patent, prior to the issuance of the patent is actionable. Recovery for such wrongful use or disclosure is entirely independent of whether the patent application ripens into a valid patent or if the patent subsequently proves unenforceable.