Abstract
This paper draws attention to the nexus of trade secrets and patent law. The author aims to answer a few questions like- (1) whether this should be the right preference of protection or not. (2) whether one can opt for both the protection in a single invention or not. The paper outsets the origins of patent and trade secret laws and the scope of their protection. Furthermore, the author briefly discusses the legal aspects of protection they can offer to an inventor or company. The paper guides an inventor or company in deciding the best possible protection for their secrets.
Introduction
The modern world is approaching the metaverse for making transactions of their assets and crafts. In a fast-paced time of pirating and reverse engineering, it's inevitable to protect their intellectual property. Since to cover such fragile wrecks, we have vigorous protectors of intellectual property known as Patent law and Trade Secret law. A patent protects novel innovation whilst trade secrets can broadly protect anything of economic value to the holder. However, the information that gets protected under patent law can be covered by trade secrets law whereas, information protected under trade secrets is not necessary to get patented. In this article the author pens down the origin, protection, and reasons for choosing between trade secret and patent by showing their real nature.
Origin of Patent Law and Trade Secret
The Patent law is one of the oldest codified forms of intellectual property all across the globe. King Edward III of England had originated the concept of letter’s patent on 16 July 1331 by protecting a Flemish weaver of woollen clothes named John kemp. Primarily by Act VI of 1856, Indian inventions got their first patent legislation, albeit later Act XV 1859 granted exclusive privileges to the holders.The purpose of creating patent law is to “promote the Progress of Science and useful Arts by securing for limited Time to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”. Even the drafters achieved the purpose by providing exclusive rights to patent owners for a specific period. Subsequently, after getting patented, owners can sue others for selling, stealing or copying their invention. But the possession of the patent is not sufficient to punish the infringer since the patent owner has to find the infringer himself for pursuing compliance.
Maintaining the secrecy of valuable information of business is not a noval concept. Earlier information was kept under lock and key later protected by laws. Trade secret laws are not codified and not being registered by any government authority. Comparing both later appears to be a recent concept until a scholar traces its roots in Roman law, where an employee got prohibited from stealing the trade secret from his master and giving it to a third party. In India, there is no statute, yet trade secret laws are enforced through contract law, the principle of equity etc. Whereas, in the US laws, Courts recognised trade secrets in Vickery v. Welch case in 1837. Later, mentioned in Restatement of torts in 1939 and then in Uniform Trade secrets in 1985. Trade secret means information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from no being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Trade secret law and patent law are intertwined and serve different purposes. Patent law mainly promotes the publicizing of information. Moreover, trade secret law promotes secrecy and protects the holder from theft. Prior are governed by the policies hence are more susceptible than the latter.
Preferences between Patent Law and Trade Secret
Eligibility
Primary and perhaps the most vital inquiry is to determine whether the information comes under the eligibility criteria of the patent. The company's information like, customer lists, mathematical formulas, plans, are patent ineligible. Patent-eligible subject matter information is 1) a process, machine, manufacture or article of manufacture, or composition of matter, 2) and which do not embrace judicially recognized exception-laws of nature, physical phenomena, or abstract ideas.
Whereas, a trade secret is a secret recipe that runs the company mainly:-
It is secret or confidential for others
It has monetary value or competitive advantage in the market
The owner made an effort to maintain the secrecy of such information, and can get protected by trade secret laws.
Trade secrets do not get registered by any government agencies. Therefore, the ways of its protection are different from other intellectual property. Mainly, they get secured by other means such as contracts, non-compete forms, NDA and other documents. These documents draft guidelines to prevent the acquainted person from sharing the secrets of a trade secret with others. Attorneys purposely design such contracts or agreements to limit the person's ability from disseminating them to the company's competitors or with others for maintaining the secrecy of trade secrets.
Tenure
Patent terms can enjoy the protection till 20 years from the date of filing of an application. In reality, patents are not being granted on the same day but after a long period which gives substantially less than 20 years. However, an ideal term of protection depends upon the invention and country.
Trade secrets have a more extensible approach for information protection and do not require any interference from governmental agencies. The tenure of protection of trade secrets gets decided by the company's demands and can remain forever.
Injunction
Companies claiming money damage will be considered more feasible under trade secret protection. The threshold for getting an injunction on patent infringement was raised higher by the Supreme court in 2006. Therefore, one requires to pass the test:-
It must have suffered an irreparable injury;
Remedies available at law are inadequate to compensate for that injury;
Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
Public interest would not be disserved by a permanent injunction.
Even the law recognizes once the trade secret gets revealed, it cannot be recovered, due to which injunction is the primary form of relief in trade secret cases.Therefore, standards for getting an injunction in such cases are comparatively low. In trade secret cases, one gets injunctions for misappropriation as well as for threatened misappropriation.
Publication
The nature of trade secrets is to maintain the secrecy of information in the form of a Non-disclosure agreement, and publicizing it will destroy its essence. If a trade secret losses its confidentiality, it can be misused or reverse engineered by the public. In such a situation, patent protection seems a plausible option for a company. However, in getting patent protection written description of the invention has to be published. Publication of patent applications provides an edge to the competitors. Moreover, rivals use those strategic observations in designing modified forms of the same inventions.
Cost-effective
In the final analysis, regardless of the company's beliefs related to protecting the information of their invention or innovation, it will choose the cost-effective option. In the majority of the countries procurement of patents is way more expensive than trade secret protection. Patent prosecution fees and costs get escalated relying on the duration of prosecution, a country in which protection requires. Further attorneys charge fees for maintaining the application from getting abandoned till the legal expiration date.
In opposition to the maintenance of trade secrets does not require any filing in a government office. It is the most economical alternative to protect inventions. However, the nature of information and the jurisdiction must qualify the "reasonable " measure to maintain the secrecy of information under trade secrets law.
Opted both Patent Law and Trade Secret
The scrutiny doesn't end here because the question of whether or not a company can use both patent and trade secrets for its company's protection remains unanswered. The infallible answer is positive patent and trade secrets are complementary. We can attain the benefit of both in several ways.
Non-Disclosure
Mere submission of the application for a patent does not disclose your trade secrets in public. The application maintains the secrecy of information for the first eighteen months after filing. During this period, As long as the trade secret described in the patent application remains as such, reasonable secrecy is maintained, and wrongful disclosure of the information is punishable. Be the patent application gets issued or held unenforceable.
Even after eighteen months, a company can protect trade secrets from disclosure by filing a request for non-publication with the patent application but only in limited circumstances. Non-publication is available in almost all inventions. It can get revoked if a company files patent protection with publication applications in a foreign country.
Particulars of invention
Despite the publication of patents, trade secrets can get protected. Every patent covers a limited aspect of an invention, not the complete invention. The patent application requires a sole description of the face of the project "claimed" and not broad details regarding the making and operation of that particular invention. In this way, one can parallelly hold the protection of both patent and trade secrets.
Furthermore, Karl F. Jorda recognizes the effects of combining different forms of intellectual property as:
They cover other subject matters of the invention.
They intensify the exclusiveness of the product.
Gets privilege of more remedies in litigation
Other rights stay even if primary IP rights get nulled.
Best mode
"Nothing is impossible", a company can protect the same invention at the same time by both patent and trade secrets.
U.S. code says that the patent should disclose the best mode contemplated by the inventor or joint inventor of carrying out the invention. Due to this disclosure, the question arises, whether the best mode contemplated by the inventor can get protection under trade secrets? Well, the answer is Yes. Primarily, this obligation applies only to the best mode contemplated by the inventor, not otherwise. Therefore, if the assignee knows the better mode unknown to the inventors, he is not bound to reveal it.
The best mode requirement applies only at the time of filing the patent. Therefore, if the best mode gets discovered after filing, then it can be kept as a trade secret.
Conclusion
The nexus between trade secret and patent maintains the equilibrium of publicizing and secrecy. USPTO perceives Trade secret protection as a complement to patent protection. Whereas authors also believe that trade secrets and patents can serve better if used together rather than as an alternative. Proper ways should be published for the company to know- how to use both for their company's protection? Letting them use both of the protection's in a complementary manner will shield the company's information in the best way.
So well drafted, and informative blog
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