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Some Finer Points Regarding Trade Secret Law (No. 1)

Posted in Practice Commentary by Jake Ward on September 15, 2006

There are a number of factors to be considered in deciding how to protect an invention.  For instance, trade secret protection may be preferred if the technology is not patentable (e.g., lack of novelty) but still of value commercially.  Additionally, if the technology is difficult to reverse-engineer, holding the technology as a trade secret might provide longer protection than would be afforded by patenting (20 year term versus a potentially infinite term – Coca-Cola, anyone?). 

On the other hand, patents protect a technology regardless of whether someone else independently develops or reverse-engineers it.  Also, patents tend to have more value commercially, from both an investment and a licensing standpoint, owing to the definiteness of the patent term and the rights afforded by a patent (enforcable against infringers, etc.).

In addition, below is one of the finer points of trade secret (TS) law (and possibly one of the more commonly misunderstood points) that should be considered in choosing which IP strategy to employ:

Holding an invention as a trade secret does not prevent someone else from patenting the invention. 

That is, a TS that could otherwise have been patented cannot be used as prior art against a third-party applicant/patentee.  The authority behind this is § 102(g) of the U.S. patent laws, which states:  “A person shall be entitled to a patent unless . . . before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it.” (emphasis added).  The act of keeping an invention as a TS is a concealement of said invention that prevents a first inventor from blocking a third-party attempt to patent the technology. 

But Jake, you might say, what about § 102(a)?  Surely this section, which prevents patenting technology previously known or used by others in this country, prohibits patenting of a TS technology by a third party of?  Well, at first blush you might think this assertion is correct.  However, the “known or used” phrase of § 102(a) has been interpreted by the courts to mean knowledge or a use which is accessible to the public. Carella v. Starlight Archery, 804 F.2d 135, 231 USPQ 644 (Fed. Cir. 1986). Furthermore, knowledge or use is accessible to the public if there has been no deliberate attempt to keep it secret. W. L. Gore & Assoc. v. Garlock, Inc., 721 F.2d 1540, 220 USPQ 303 (Fed. Cir. 1983). See also MPEP 2132.  Accordingly, as trade secrets are by their very definition “not public,” they also cannot be used as prior art under § 102(a).

The danger that TS technology might be independently developed and patented by a competitor should be seriously assessed before committing to a trade secret strategy.  TS technology (unless it really isn’t secret) cannot be used as prior art to invalidate the patent of a later inventor/patentee.  This facet of the law may be somewhat counterintuitive, but practitioners and inventors alike should be aware of this risk.  Otherwise, one might easily become an infringer through practice of an invention that one was the first to invent!

JW Note:  I believe that the contrast between patents and trade secrets is ripe for discussion and that some points (the ones I find interesting, at least) deserve independent time and consideration.  Therefore, I’ve decided to break the post into at least three sections. 

Finer points of trade secret law to be discussed in upcoming posts are as follows:

  • Does holding an invention trade secret prevent the inventor from later patenting the invention?
  • Is an ex-employee required under the law to maintain the secrecy of a former employer’s trade secrets?
  • Trade secret topic suggestions by you, my loyal readers?  Feel free to post your comments, and I will run with it if it piques my interest.

Stay tuned!