Coca-Cola has one. So does Kentucky Fried Chicken. And of course, there’s the one that Google has that determines what you’ll see in your search results.

I’m talking about trade secrets. Could this lesser-used strategy for intellectual property protection be better than a patent? Let’s take a look at how and when a trade secret might work for your IP portfolio.

What Is a Trade Secret? 

A trade secret is information that has some level of value to a company — either the company derives value from that information or, if the information were to be released to the public, it would decrease the value of the company. For information to be classified as a trade secret, there must be reasonable means of keeping it a secret.

If your company has information that might be considered a trade secret, this IP protection option might be right for you.

Commingling Trade Secrets & Patents 

Although you can use patents & trade secrets to protect a specific system/process/etc. or related systems/processes/etc., doing so runs the risk of disclosing the trade secret via the publication of the patent application or the issued patent.  Once the trade secret information is in the public domain, the information no longer comprises a trade secret. However, there could be a scenario where you employ both protections for related but distinct systems, devices or processes. For example, perhaps an entity is utilizing three different processes that together make up a trade secret system. The entity could seek to patent at least one those processes so long as doing so does not enable reverse engineering of the other two processes/trade secret as a whole. 

Although using patents and trade secrets together may make sense, most companies use one or the other to protect their intellectual property.   

Related: Should You Pass on a Patent?

The Benefits of Trade Secrets

There are three main benefits to a trade secret over a patent:


  • Less information is disclosed to the public. 
    Patents protect your invention from being used by others who have reverse-engineered your concept, but you must provide complete information as to what makes your invention unique to obtain that protection. For some companies, sharing this information just isn’t worth it. Take Coca-Cola, for example. While they’re legally required to publish their ingredients, they can easily keep their processes and systems under wraps.

    Similarly, the Google algorithm is made up of dozens upon dozens of different factors, which frequently change.  Google does not produce a description of how their algorithm operates. By keeping their algorithm a trade secret, they’ve protected their algorithm from being lawfully used by others.
  • Protection does not have an end date.
    Trade secrets can protect your IP for a longer time period than a patent. As long as your trade secret information is not disclosed to the public or reverse engineered, your competitors can not lawfully use the trade secret information.    
  • They’re typically more affordable and less burdensome than a patent.
    Reasonable processes must be established to keep your trade secret information a secret.  Although there is a business cost with implementing these processes and legal costs associated with ensuring the processes are reasonable, the benefits from such an implementation can extend into perpetuity.  Furthermore, the out-of-pocket legal costs with establishing the protection can frequently be lower as compared to seeking patent protection as patents have hard costs associated with utilizing a patent attorney or agent to draft and submit your application and work with the patent office in obtaining an issued patent.  Additionally, once the reasonable processes are in place to protect the trade secret information, the only additional requirement to ensure protection is ensuring the processes are still reasonable with changing circumstances. These trade secret implementation and continuation actions are typically less burdensome than the usual years-long process to obtain an issued patent, which can include frequent intensive discussions with the legal team.  


Related: Protecting IP in the Food & Beverage Industry

Trade Secret Drawbacks

While trade secrets offer powerful protection for some circumstances, they do have drawbacks.


  • No protection from reverse engineering
    Patents are much more prevalent than trade secrets, and for good reason – trade secrets don’t protect you from reverse engineering.
  • Legal to compete if the secret gets out.
    Once you file a patent application, you have a guaranteed monopoly for 20 years from the filing date upon issuance of the patent.  However, with a trade secret, once the information made public, you have no right to prevent others from using your secret. You can only retaliate against the person or entity who stole your trade secret or breached an agreement with you. 


A Trade Secret Alternative?

One trade secret alternative is an accelerated patent application to gauge the patentability of your product. You can then withdraw the patent before public disclosure if the application is rejected and it is unlikely the rejection will be overcome. 

Here’s how that works: 

  • You file a patent application and pay the prioritization fee. 
  • Within a year, you receive a final rejection or a notice of allowance. 
  • If you receive a final rejection, you can abandon the application and keep your innovation a trade secret instead.

This strategy allows you to seek patent protection without disclosing the invention to the public and if the patent is unlikely to issue, rely on any trade secret protection you have set up to ensure the information is kept secret.   Although this option can get pricey, it’s a possibility to consider provided you already have trade secret protections in place when you file your patent application. 

Protecting Your Trade Secrets 

Is protecting your IP via a trade secret right for you? Then make sure you’re protecting your trade secrets properly. 

Limit access to the overall secret, by only providing people the information they need to do their jobs. As a further precaution, all employees who deal with the trade secret, even a small part of it, should sign a non-disclosure agreement.