Trade Secret Protection Versus Patent Protection

This post is part of a series of posts entitled A Legal Guide to the Internet. For a comprehensive list of articles contained in this series, click here.

Generally, a trade secret is information such as a formula, pattern, compilation, compound, device, mechanism, method, or technique that provides some actual or potential value to its owner, is not known to or discovered by others, and is maintained in secrecy by its owner. As long as all trade secret requirements are maintained, trade secret protection will persist, i.e., there is no expiration of trade secrets based on duration of ownership.

State Law & Trade Secrets

State law governs trade secrets, and therefore varies from state to state. An important common thread, however, is the necessity to maintain the information in secrecy. Legal remedies for misappropriation of a trade secret are surrendered upon breach of this secrecy, on the grounds that the information has consequently fallen into the public domain and is no longer a secret. It is this characteristic of trade secret law that is at odds with patent law policy, thereby sharply dividing these two forms of intellectual property protection.

Specific information or subject matter is therefore incapable of being protected by both trade secrets and patents, as these forms of protection are mutually exclusive. This is not to say that concurrent protection for related, yet different subject matter cannot be obtained. For example, trade secret and patent protection may be cooperatively used to patent a software process while maintaining the underlying source and object code as a trade secret. While United States patent law requires that the best mode for carrying out the invention be disclosed in a patent application, the United States Court of Appeals for the Federal Circuit has held that the actual program code need not necessarily be disclosed in order to meet this obligation. Whether program code needs to be disclosed in a patent application depends on the nature of the particular software invention, but most often does not require its disclosure, and may therefore be maintained as a trade secret.

Protection of Software Under Trade Secrets

Although protection of software is available under both patent and copyright laws, trade secret protection remains an important instrument. In some instances, trade secret protection can be the most effective form of software protection because its protection is immediate and can be perpetual in duration.

This and the following posts have been copied or adopted from A Legal Guide To The INTERNET – Sixth Edition, published through a collaborative effort by the Minnesota Department of Employment & Economic Development and Merchant & Gould.