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Keeping Trade Secrets Secret and Patent Applications

By John DiGiacomo

In general, a trade secret is only legally protectable as long as the information is kept secret. Under both federal and state law, a trade secret is generally defined as any information from which commercial value is derived from the fact that the information is secret. Information as simple as customer or vendor lists can be trade secrets as long as the lists are kept secret and commercial value arises from the fact that the lists are secret.

But what about patent applications? Does a person or business lose trade secret legal protection by filing a patent application? The answer is “no.” The reason is that a patent application is not published and is deemed confidential when filed with the US Patent & Trademark Office (“USPTO”). Patent applications retain their confidential status for 18 months. Thus, any information contained in a patent application will remain a “trade secret” for at least that long. It is possible to ask the USPTO to publish a patent application after four months and also possible to request an extension beyond the normal publication at 18 months.

That being said, once the USPTO issues the patent, the patent becomes public and all information therein is no longer secret. As such, the trade secret legal protections are lost. But, in exchange, the patent has significant legal protections. Those infringing on the patent can be brought to justice and required to pay money damages in a patent infringement lawsuit even though the information underlying the patent is now publicly known. The reason is, of course, that patents provide notice of the owner’s exclusive right to use or license the patent. Without publication, other third parties would not know they are infringing on patented technology, methods or processes.

Note, however, that the same is NOT true when filing a foreign patent application. Those become publicly available upon filing. Thus, to protect trade secrets, it is obviously best to file for a patent in the United States first, then seek a foreign patent.

It should be further noted that patent protection only lasts for 20 years (or shorter for design and other patents). Generally, this is sufficient time to maximize the commercial profitability of a new invention, but it DOES raise the question of whether protecting an invention through trade secret law is a better option. Obviously, this depends on unique circumstances surrounding the invention including whether a competitor is “hot on the trail.” If a competitor obtains the patent first, then you may lose the ability to use the new invention and may end up as the target of a potential patent infringement lawsuit. But, there may be value in protecting an invention through trade secret law — for a least a short time — before seeking a patent. Holding the invention secret for a year or two can effectively extend the period of legal protection.

In the opposite direction, there may be value to asking the USPTO to publish a patent application after four months. This allows a patent applicant to pursue infringement litigation (rather than trade secret litigation) as quickly as possible.

When considering how best to protect commercially valuable information, it is best to seek the legal advice and counsel of experienced trade secret and patent lawyers.

If you have questions about protecting your trade secrets or filing a patent, or if you need to initiate trade secret or patent litigation, contact the trade secret and  patent lawyers at Revision Legal at 231-714-0100.

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