Patent Or Trade Secret, How To Decide!

Transcript

how do you know if you should patent an invention or maintain it as a trade secret we'll answer that question and more in this video before we get into the answer to this question we need to Define and differentiate the terms patent and trait secret now I could give you the definitions of these terms off of the top of my head but instead of doing that let's go straight to the horse's mouth well maybe a couple of different horse's mouths the first horse is wipo the world intellectual property organization according to the world intellectual property organization a patent is an exclusive right granted for an invention which is a product or process that provides in general a new way of doing something or offers a new technical solution to a problem to get a patent technical information about the invention must be disclosed to the public in a patent application the second horse we'll be listening to is the United States Patent Trademark Office the US PTO according to the US PTO a US patent gives you the inventor the right to exclude others from making using offering for sale or selling an invention or importing it into the US a planed patent gives you additional rights on the parts of plants for example a plant patent on an apple variety would include rights on the apples from the plant variety what is granted is not the right to make use offer for sale sell or import The Invention but the right to stop others from doing so if someone infringes on your patent you may initiate legal action us patents are effective only within the US and its territories and possessions keep in mind though that you can have patent protection outside the United States and other countries you can have patent protection in other countries if you choose to apply in those countries for patent protection and you're successful at doing so what about the definition of trade secret for the definition of trade secret we'll turn to the uniform law commission the ulc let's start with a little bit of background about the ulc taken from the About Us section of the uniform law.org website the uniform law commission ulc also known as the National Conference of Commissioners on uniform state laws is a nonprofit organization established in 1892 that provides states with nonpartisan well-conceived and well-drafted legislation that brings Clarity and stability to critical areas of State statutory law ulc members must be lawyers qualified to practice law they are practicing lawyers judges legislators and legislative staff and law professors who have been appointed by state governments as well as the District of Columbia Puerto Rico and US Virgin Islands to research draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical in other words their goal is to create consistency with respect to certain state laws involving certain issues and in certain legal areas this makes it easier for businesses and people doing business to conduct business as they move through different states this gives them some degree of certainty that the law in one State won't be radically different from the law in another state and so it makes doing business from state to state much easier one of the uniform laws created by the ulc is the uniform Trade Secrets act the uniform Trade Secrets act or UTSA created by the nonprofit organization uniform law commission defines a trade secret as 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 and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy State legislates can adopt the UTSA or modify it to suit their specific requirements one example adoption of the UTSA is the Illinois Trade Secrets act which is codified as 765 Illinois code section 1065 the Illinois Trade Secrets act defines a trade secret as information including but not limited to technical or non-technical data a formula pattern compilation program device method technique drawing process financial data or list of actual or potential customers or suppliers that one is sufficiently secret to derive economic value actual or potential from not being generally known to other persons who can obtain economic value from its disclosure or use and two is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality the UTSA has also been adopted by federal law and the us protection of Trade Secrets act codified as 18 us code section 1839 the statute provides definitions and defines the term trade secret as meaning all forms and types of financial business scientific technical economic or engineering information including patterns plans compilations program devices formulas designs prototypes methods techniques processes procedures programs or codes whether tangible or intangible and whether or how stored compiled or memorialized physically electronically graphically photographically or in writing as long as a the owner has taken reasonable measures to keep such information secret and B the information drives independent economic value actual or potential from not being generally known to and not being readily ascertainable through proper means by another person who can obtain economic value from the disclosure or use of the information when comparing the UTSA with state and federal laws you can see the differences between the UTSA and the actual versions as adopted the Illinois Trade Secrets act kept the words of the UTSA definitions but added financial data or list of actual or potential customers or suppliers and modified the term information as including but not limited to technical or non-technical data in addition to all inclusions of the UTSA the federal version the us protection of Trade Secrets act added quite a long list of protectable trade secret information which can be Financial business scientific technical economic or engineering information the text highlighted in green is the original text from the UTSA the text surrounding the green text is a text is modified by the legislators as can be seen the legislator can adopt the UTSA as needed to meet their specific requirements it's important to note that you can license a trade secret just as you can license a patent if the invention whether patented or kept as a trade secret is a value and by a value I mean someone would want to use it then you have the potential to generate licensing Revenue so in my view one important aspect that comes into play in making the determination of whether to go with patent or trade secret protection is the issue of [Music] detectability I Define detectability as the question of whether your inventive subject matter can be detected in an alleged accusing product by the term inventive subject matter I mean the inventive subject matter that you intend to claim if you were to decide to file a patent application now this may involve some initial invention analysis to determine what claims directed toward your inventive subject matter might look like but this is an entirely other topic of discussion and I've discussed this question before in other videos getting back to the question of detectability the first test is whether your inventive subject matter would be readily observable just by looking at the accused product if yes congratulations you have detectability if not then you move on to the second test the second test asks can your invention be detected by disassembly or testing or both disassembly and testing of the accused product if yes then your invention has detectability in that case seeking patent protection is an option because you would be able to detect infringement of your patent claims in accused infringing products your patent claims would have a value in stopping making using and selling of your invention if your patent claims would have detectability then seeking patent protection is a good option because infringement of your patent claims would be readily detectable it's also relatively easy to prove then that somebody is making using selling or importing into the United States your invention but what if your invention has no detectability or detectability would be extremely difficult for example let's say your invention is embedded very deeply in the software or firmware of the particular product in that case it might be possible to detect infringement but it may be prohibitively expensive to do so maybe it would be impossible to do so any of these factors would indicate a lack of detectability and in that case trade secret may be a better option in a case like that you may decide to forego patentability and just maintain the invention as a trade secret another possible scenario might be that your invention is just so good that you don't want to disclose it to the public by filing a patent application in that case maintaining it as a trade secret might give you an acceptable marketing Edge to allow you to be first to the market to gain Market exposure and to start making sales on a product that embodies your invention without disclosing the secret sauce of how it's done remember that when you file a patent application it's a quid pro quo meaning something for something and that something is you're gaining rights by giving away how to make and use the invention if your invention is so good that you just don't want to give away how to make and use it then trade secret protect ction may be a better option in other words you spent significant time and money to develop a solution why give your competitors the same Edge that you have by telling them how to do it of course this is operating under the assumption that your competitors won't be able to figure out how to do it and yet others have not already filed patent applications for something similar or an invention that's the same as what you want to maintain as a trade secret so there is a bit of a balancing that has to be done why not just maintain the Competitive Edge again in this case the answer may be related to the detectability an important aspect to understand about Trade Secrets is that in order to be a trade secret it has to be maintained as a trade secret once the information becomes public well the cat is out of the bag and anybody that knows the secret can now use it unless the secret was misappropriated by theft finding out the trade secret through any other means that's not theft would allow anybody to use the secret and it's no longer a trade secret unless the trade secret was improperly obtained use of the information can't be stopped one way the information can become known is by reverse engineering now you can sell products with restrictions on reverse engineering back in the days when software was sold in a box off the shelf the software came with contracts that took effect when you open the box and these were referred to as shrink wrap contracts because if you open the plastic shrink wrap the Box you were acquiescing to the contract for online software purchases the new term was coined which is the click wrap contract where you click to agree to the terms of the software license agreement all of these contracts are outside the scope of this discussion and they may require several videos of their own to properly address them for now I just want you to know that these types of contracts almost always Place restrictions on reverse engineering and so from that standpoint you do have some contractual tools that may be able to limit or prevent reverse engineering but these are primarily contractual tools used in the software industry for products more generally reverse engineering is a legally permissible way to discover how products work if any Trade Secrets could be discovered by taking a product apart and inspecting it well this could be one permissible way to discover a trade secret in that case it wouldn't be much of a secret any longer would it this is a scenario that could happen if the inventive subject matter is detectable in other words detectability makes keeping an invention a trade secret less valuable if someone can figure it out by reverse engineering in other words detectability of an invention would make keeping it a trade secret less valuable if someone could readily determine what that trade secret is by performing reverse engineering so where does that leave you assuming the invention is detectable you'd be taking a risk by maintaining it as a trade secret because someone could come along and figure out the Secret Sauce by reverse engineering it if you file a patent application and you're able to obtain a patent on the invention well eventually you may be the one that has to take a part of accused infringing product and test it to determine if that accused infringing product is infringing your patent so now that you know this and you know what your options are and the possible consequences you can make business decisions as to whether to maintain an invention as a trade secret or to pursue patent protection for that invention if you found the information in this video helpful please like And subscribe that helps the channel a lot also if you know anybody else that might benefit from this information please share it that also helps the channel I really appreciate your viewership and remember stay [Music] [Music] inventive [Music] [Music] [Music] [Music] [Music] [Music] is [Music] [Music] [Music] [Music]