Protecting Innovation With Trade Secrets And Patents, Simultaneously

Written by Ben Esplin

We have posted several pieces recently about trade secret protection for innovation (the value of trade secrets, basic trade secret strategy, the importance of trade secrets in AI innovation). But to this point we have not discussed how a comprehensive intellectual property strategy may blend trade secret protection with patent protection.

Patents and trade secrets share the common goal of safeguarding innovation, but they do so in fundamentally different ways. Patents are premised on public disclosure: in exchange for a limited monopoly-typically lasting up to 20 years-an inventor must describe their invention in sufficient detail to enable others in the field to replicate it. This disclosure becomes a matter of public record, often within 18 months of filing. Trade secrets, by contrast, derive their value from remaining confidential. Below is a table highlighting the some key differences between these two forms of intellectual property protection.

The table above includes a fundamental incongruity: you cannot simultaneously patent and maintain a trade secret for the same aspect of an innovation. The act of patenting inherently destroys the secrecy that is the lifeblood of trade secret protection. Think of the formula for Coca-Cola or the algorithm behind Google’s search engine-these are protected not by disclosure, but by carefully maintained secrecy. Once an invention is published in a patent application or patent, any overlapping trade secret protection is irretrievably lost. That said, with careful planning, it is possible to partition an invention-patenting certain elements while keeping others, such as manufacturing processes or proprietary know-how, confidential as trade secrets. 

So, how can an innovator maximize protection with trade secrets and patent applications, and maintain strategic flexibility? A potential answer lies in managing public disclosure of the information included in a patent application (or patent applications) to keep the option of trade secret protection alive, at least temporarily. Patent applications at the U.S. Patent and Trademark Office (“USPTO”) are held confidential, until they are published or a patent issues. The absolute requirement of public disclosure does not “kick in” until a patent issues.

At present, it generally takes 18-24 from the filing of a utility patent application until a first Official Action is even received from the USPTO, and the prosecution process up until allowance and issuance can often take additional years after that. There are even simple tactics available to applicants that would delay this first Official Action even further (e.g., filing a provisional patent application prior to filing the utility patent application, filing a Petition to Withdraw from Examination, etc.). This means a company could protect the exact same innovation/information as a trade secret, and the subject of a utility patent application that has not been published for years before deciding whether patent protection or trade secret protection was ultimately more valuable and should be pursued.

By way of example, a company could follow this dual-protection strategy, and then choose to forego payment of the Issue Fee in a utility patent application that has been allowed, and let the application go abandoned – never to be disclosed to the public – in order to maintain trade secret protection. Alternatively, the company could allow the patent to issue, and refocus its trade secret protection on any information around the patented innovation that was not included in the patent application, such as details or know-how not included in the application, or refinements or extensions that have been developed subsequent to filing the application.

This dual-protection strategy is nuanced and care must be taken to ensure the patent application is not inadvertently allowed to become public (e.g., through publication, or issuance of a patent) without consideration of the impact to trade secret protection. Another danger is creating an appearance of improperly, intentionally lengthening the time it takes to get through prosecution of the patent application.

In conclusion, the tension between patents and trade secrets is not an insurmountable barrier, but rather a strategic challenge to be managed. By leveraging provisional applications, nonpublication requests, and the option of strategic abandonment, innovators can delay disclosure and preserve the flexibility to choose the most advantageous form of protection. The most successful companies treat intellectual property strategy as a dynamic process, evolving alongside their innovations and business objectives. By mastering the delicate balance between disclosure and secrecy, businesses can secure both immediate protection and long-term competitive advantage.