Comparatively Speaking: Patent vs. Trade Secret

By: Anthony J. O'Lenick Jr., Siltech LLC

Posted: November 2, 2011

In this "Comparatively Speaking," Tony O'Lenick explains the difference between patents and trade secrets, both of which cosmetic chemists will encounter during their careers. This information will assist in determining whether a technology should be patented or maintained as a trade secret.

Patents

Patents are property rights that secure to the inventor, for a limited time, exclusive rights to his or her invention. These rights exclude others from making, using and selling the invention in the United States for the period of the patent. In return, the inventor must disclose how to practice the invention so the at the end of the patent, anyone is free to practice the invention. Patents are rather well-known and understood in the personal care industry.

Trade Secrets

Trade secrets are the type of intellectual property covering secret formulas or processes. These can be regarded as the antithesis of patents in that they are inventions that have no patent protection; rather, the owner of the information has chosen to not disclose the technology publicly and therefore forgoes the protection provided by a patent. Unlike patents that require full disclosure, trade secrets require no disclosure, i.e., they can only be known to a restricted number of individuals in order to be considered valid and they cannot generally be known to those skilled in the art.

Unlike patents, which are based in the federal constitution, trade secrets are protected under laws that are generally controlled by each state and may vary from state to state. In most states, a trade secret may consist of any formula, pattern, physical device, idea, process or compilation of information that both provides the owner of the information with a competitive advantage in the marketplace and is treated in such a way as to reasonably prevent the public or competitors from learning about it, absent improper acquisition or theft.

Trade secrets are not registered with the government; they are simply confidential and last for as long as they are kept confidential. Once a trade secret is made available to the public, trade secret protection ends. Independent discovery, reverse engineering or improper protection will destroy a trade secret's status and allow others to use the information.