What is a Trade Secret?

Sometimes a copyright, trademark, or patent is not the answer. Formulas, practices, processes, designs, instruments, patterns, or compilations of information can be protected as trade secrets. A trade secret is something which gives a business an economic advantage. It also cannot be known to the public. A great example is the recipe to Coca-Cola. The exact formula is not known to the public and it gives Coca-Cola an economic advantage because of its distinct flavor.

Each state has developed its own trade secret law. You do not need to register your trade secret with anyone. You can protect your trade secrets on your own through non-disclosure agreements or non-complete clauses. If someone violates those agreements you can bring the infringers to court to enforce your rights and inflict penalties.

Why not a Patent?

Inventions such as formulas can be protected by patents. However there are a couple disadvantages to obtaining a patent for a trade secret. First a patent typically lasts for only 20 years while trade secrets can be protected as long as they are kept secret. Secondly, patents are disclosed to the public. If a trade secret is disclosed as a patent it automatically loses its status as a trade secret! That’s why Coca-Cola has never held a patent on its secret recipe. Thirdly, people are allowed to reverse engineer a patent but it is illegal to reverse engineer a trade secret.

If you have any issues or concerns with your trade secrets feel free to contact Stone Law at 732-444-6303 or leave us a message on our website.