What is a Trade Secret and How Can I Use it to Protect My Technology?

Oftentimes, people come to me wanting to know about patenting their inventions, but few people have considered other alternatives for their creations. One alternative that is often ignored is trade secret protection. Virtually any information that is valuable to a business and gives it a competitive advantage could be a trade secret.

The Uniform Trade Secrets Act (UTSA), which applies in some form in 47 states in the United States, says that a trade secret is:

  • information, including a formula, pattern, compilation, program, device, method, technique, or process;
  • that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and
  • is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

In plain English, if you have something that is valuable because other people don't know about it, and you take certain steps to keep it secret, you have trade secret information. Examples of trade secrets include:

  • Google's search engine algorithm,
  • WD-40's formula,
  • the recipe for Twinkies and Krispy Kreme's doughnut glaze, and
  • the method for getting "nooks and crannies" in Thomas' English Muffins.

Trade secret protection may be a viable option for your products, inventions, or other information. Here are some benefits to using trade secret law to protect your invention:

  1. Trade secret protection could potentially last a really, really, long time - maybe forever. Trade secret protection lasts as long as your information remains secret, while a patent generally only lasts for 20 years from the date the application is filed. If you think about the world's most valuable trade secrets, they've been around for a long time - think KFC's fried chicken recipe (more than 70 years old), Coca-Cola's secret formula (more than 100 years old), the method for making Zildjian cymbals (more than 400 years old).
  2. Trade secret protection is relatively inexpensive to obtain, and the protection is immediate. As long as you maintain reasonable efforts to keep your information secret, it is protected - and this happens automatically. This may not require outrageous upfront costs. You will need to have good confidentiality and non-disclosure agreements in place, as well as other policies that protect your trade secrets, but compared to patent protection, the startup costs are significantly lower. To get a patent you have to file a patent application with the United States Patent and Trademark Office (probably through a lawyer), which can be very expensive and take a long time.
  3. Your information is, well, SECRET. With trade secret protection, nothing gets filed with the government and no one gets the blueprint for your valuable information. If you apply for a patent, you have to tell everyone how to make your exact invention, so that in 20 years when your patent expires, everyone can make the same thing without fears of being sued.
  4. More stuff can be protected through trade secret law than patent law. Certain things are not patentable in the United States Patent and Trademark Office. Trade secret law essentially welcomes everything that has value and is kept confidential. Where this becomes quite important is with computer software (hey, my app developers!). It has become increasingly difficult to get a software patent in the United States given some recent case law from the United States Supreme Court. As such, trade secret protection may be an option for those types of inventions.

Final point:

Though most states use some form of the UTSA referenced above, each state may apply and interpret the UTSA in different ways. So, what works in one state may not work in another. If you have trade secret related questions, you'll need to consult with a lawyer licensed in your state about specifics. If we can help you in the states where we have licensed attorneys, please reach out to us here.