How can patents interfere with or strengthen trade secrets?

When developing a product or technology, companies must determine the best method to protect their intellectual property rights, whether through patent, copyright, trademark, or trade secret.  Often, the best solution relies on multiple forms of intellectual-property protection.  For example, in developing a new computer chip, a company can patent the chip’s physical design, protect its manufacturing process as a trade secret, and copyright the computer code used to program the chip.  Companies should be aware, however, that patents can both strengthen and undermine the protection afforded to their trade secrets. 

Patents and trade secrets take fundamentally different approaches to protecting intellectual property, and their requirements can conflict.  A company must disclose an invention when seeking a patent.  That is a fundamental principle of our patent system – in exchange for a monopoly over a patented technology, an inventor must disclose the invention to the public.  By contrast, a company must not disclose information to the public to maintain it as a trade secret.  Patented technology, therefore, cannot be protected as a trade secret.  And the patent application process can also jeopardize related but distinct trade secrets by, for example, disclosing information that permits “reverse engineering” by competitors.

Patents can also strengthen trade secrets.  If a technology is protected as a trade secret, obtaining a limited patent covering only certain parts of the technology can facilitate discussions with investors and other third parties, thereby accelerating the trade secret’s commercialization.  And the limited patent can also provide a backstop in case the trade secret becomes known to the public or is independently developed.  In such cases, the limited patent will restrict competitors’ ability to use the trade secret. 

Patents and trade secrets are powerful tools for protecting intellectual property.  Combining the two, however, has advantages and disadvantages.  Businesses should consult experienced counsel to determine what type of protection best suits their individual circumstances. 

To learn more about trade secrets and related business disputes, go to www.mololamken.com and follow us on LinkedIn.  “Brilliant lawyers with courtroom savvy” — Benchmark Litigation.  Copyright MoloLamken LLP 2022.