Securing your company's edge with trade secrets

When companies strive to safeguard their intellectual property, they typically file for protection of their patents, trademarks and copyrights. For those desiring more flexibility in securing intellectual property, designating information as a trade secret may be useful alternative.

Although many people may recognize the recipes for Coca-Cola or the KFC blend of herbs and spices as examples of proprietary information, business strategies, financial algorithms and data compilations can all be protected under trade secret policy. The businesses that consider filing for trade secret status are not only those marketing soft goods but also those selling financial services.

The following points may help you begin a discussion on the type of protection you should seek for your intellectual property:

What is a trade secret?

In its most basic understanding, the trade secret designation is provided to a technique or practice businesses use to acquire a financial advantage over companies that do not employ it.

What is the benefit of obtaining trade secret status over patent?

In certain situations, practices or processes that businesses may seek to safeguard may not fulfill the requirements for patent issue. The solution to this problem is simple: designate the process as a trade secret.

If the option is available to either obtain patent or trade secret protection, companies may select the latter alternative for several reasons. Initially, it costs nothing to confer trade secret status on a process. The filing and drafting fees associated with patent protection can be quite prohibitive. Unlike the processing time of a patent, trade secrets protect immediately. Patents also have a limited life span; a trade secret may retain its status indefinitely.

How can the trade secret be protected?

The main drawback companies experience when opting for trade secret status occurs with the limited protection a trade secret designation can provide. This is not to say that businesses will have no recourse if a trade secret is misappropriated by a competitor. The United States is required to protect trade secrets; however, the remedies for theft are more limited and not as easily enforceable as those provided to patent holders. The Uniform Trade Secrets Act sets forth the protective measures set in place for trade secrets.

Of course, those who wish to use their trade secret to maintain an edge over competitors are ultimately responsibile for remaining vigilant in protecting proprietary information. When weighing the benefits and drawbacks, business owners should consider the trade secret as a viable option. A knowledgeable business attorney can help determine if the protection a trade secret provides is the best defense for your company.

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